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/raid1/www/Hosts/bankrupt/TCR_Public/020501.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, May 1, 2002, Vol. 6, No. 85 Headlines 360NETWORKS: Court Okays Proposed Kajima Construction Settlement ACT MANUFACTURING: UST Amends Creditors' Committee Appointments AES CORP: Taps Stone & Webster to Complete Wolf Hollow Project ADELPHIA BUSINESS: U.S. Trustee Amends Committee Membership ARCH COAL: Will be Paying Quarterly Dividend on June 14, 2002 BRIGHTPOINT: Falls Short of Nasdaq Continued Listing Standards CHANNELL COMMERCIAL: Appoints Bruce Gidden to Board of Directors CLEARLY CANADIAN: Terminates McDonald's Engagement & Names COO COMDISCO: Court Okays De Minimis Lease Rejection Protocol CONSUMERS PACKAGING: Files Assignment in Bankruptcy in Canada CORNERSTONE PROPANE: Working Capital Deficit Tops $11 Million COVANTA ENERGY: Signs-Up Chilmark Partners for Financial Advice COVENTRY HEALTH: Posts Improved Operating Results for Q1 2002 DELTA AIR LINES: Will Be Paying Cash Dividend on June 1, 2002 DELTA AIR: CEO Leo Mullin Pins Hopes on New Strategic Direction DUANE READE: Posts Improved Sales Performance for March Quarter ENRON: U.S. Trustee Appoints Employee-Related Issues Committee EXIDE TECHNOLOGIES: Wants to Maintain Cash Management System EXODUS: 3-Creditor Plan Committee will Supervise Liquidation FEDERAL-MOGUL: Judge Newsome Names Warren Smith as Fee Auditor FLAG TELECOM: Seeks Approval to Obtain Super-Priority Financing FLEMING: Core-Mark Acquisition to Boost Distribution Revenues FORMICA CORP: Committee Hires Jefferies as Financial Advisor FRUIT OF THE LOOM: Files 2001 Annual Report on Form 10-K GEOWORKS CORP: Commences Trading on Nasdaq SmallCap Market Today GLOBAL CROSSING: Hutchison Buys Asian Unit's Assets for $120MM GUARDIAN TECHNOLOGIES: Nasdaq Delists Shares Effective April 29 HAWK CORP: Pursuing Initiatives to Restructure Credit Facilities HAYES LEMMERZ: Court Allows Panel Members to Trade Securities ICG COMM: Wins Nod to Pay Exit Financing Expenses & Break-Up Fee ICH CORP: Court Okays J.H. Cohn as Committee's Financial Advisor IT GROUP: Seeks Approval to Reject 23 Non-Residential Leases IMPSAT FIBER: Seeking Nod to Formalize Chapter 11 Restructuring INTEGRATED HEALTH: Wants to Assume Three More New Mexico Leases JUNIPER CBO: Fitch Hatchets Several Notes' Ratings to Junk Level KAISER ALUMINUM: Gets OK to Hire Seyfarth Shaw as Labor Counsel KASPER ASL: Shoos-Away Andersen and Signs-Up Ernst & Young KMART: Bluelight.com Wants to Reject Lease with Sun Microsystems KMART: Taps Creative Artists Agency to Help in Brand-Building LERNOUT & HAUSPIE: Obtains Fifth Lease Decision Period Extension LIONBRIDGE: Has Working Capital Deficit of $1.4MM at March 31 MCLEODUSA INC: Reaches Resolution on Disputed Claim Reserve MERRILL LYNCH: S&P Junks Class G P-T Certificates Ser. 1996-C2 NATIONAL STEEL: Pushing for July 15, 2002 General Bar Date OGLEBAY NORTON: Taps CIBC World Markets as Financial Advisors PETROMINERALS CORP: Fails to Meet Nasdaq Listing Requirements PILLOWTEX CORP: Intends to Assume 3 Citicapital Lease Agreements POLAROID CORP: Files Proposed Reorganization Plan in Wilmington PSINET INC: Court to Hear on Texas Property Sale on May 20, 2002 REFAC: Board of Directors Adopts Shareholder Rights Plan SAFETY-KLEEN: Wants to Preserve Avoidance Actions for 180 Days SHELDAHL INC: Files for Chapter 11 Reorganization in Minnesota SHENANDOAH RESOURCES: Alberta Court Grants CCAA Protection SPECIAL METALS: Secures New $60 Million DIP Credit Facility STARWOOD HOTELS: Taps Robert Koren to Lead W Hotels Expansion USG CORP: Enron Unit Wants to Terminate US Gypsum Swap Agreement U.S. STEEL: Adjusted Net Loss Narrows to $96MM in First Quarter U.S. STEEL: Selling 8M Shares of Common Stock in Public Offering WARNACO GROUP: Has Until July 31 to Decide on Mills Corp. Leases WILLIAMS COMMS: Chapter 11 Cases Reassigned to Judge Bernstein WORKGROUP TECHNOLOGY: Taps Covington to Seek Strategic Options * Meetings, Conferences and Seminars ********* 360NETWORKS: Court Okays Proposed Kajima Construction Settlement ---------------------------------------------------------------- 360networks inc. obtained Court approval of its proposed Stipulation with Kajima Construction Services to settle their disagreement. The Debtors and Kajima Construction Services are parties to a Design-Build Agreement with regards to design and construction of a POP facility at a real property known as 3554 Ruffin Road South, in San Diego, California. The premises were leased by the Debtors from H.G. Fenton Company, formerly known as Western Salt Company. Kajima Construction alleges that the Debtors breached the Contract by failing to pay the sum of $3,501,842 and filed for a mechanic's lien. The proposed stipulation provides that: (i) the Debtors consent to the relief from the automatic stay for the sole and limited purpose of permitting Kajima Construction to continue the State Court Action in the Superior Court of the State of California for the County of San Diego against the owner of the premises; (ii) approval of this stipulation by the Court will constitute relief from stay to permit Kajima to fully enforce and foreclose its mechanics lien against the premises and the owner, provided, however, that it does not affect any rights and claims Kajima might assert with the Debtors or any property of the Debtors' estates. The Debtors reserve all rights with respect to any such rights and claims. (360 Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) ACT MANUFACTURING: UST Amends Creditors' Committee Appointments --------------------------------------------------------------- J. Christopher Marshall, the United States Trustee appoints these creditors to serve on the Official Committee of Unsecured Creditors on the Chapter 11 cases of ACT Manufacturing, Inc., effective April 26, 2002: 1. Joseph Mazzini, Credit Manager c/o MEMEC LLC 296 Concord Road Billerica, Massachusetts 01821 Tel. No.: 978-439-4552 2. Richard P. MacKenzie c/o Heilind Electronics, Inc. 58 Jonspin Road Wilmington, Massachusetts 01887 Te. No.: 978-657-4870 3. Frank Carroccia, VP Clerk Pro Team c/o Teradyne, Inc. 44 Simon Street, MS-001 Nashua, NH 03060-3094 Tel. No.: 603-879-3369 4. Guillaume D. Boccara, Portfolio Manager c/o R2 Investments, LDC 301 Commerce Street Suite 2975 Fort Worth, Texas 76102 Tel. No.: 817-332-9500 5. Laura L. Moran, Assistant VP c/o State Street Bank and Trust Co. 2 Avenue de Lafayette Boston, Massachusetts 02111 Tel. No.: 617-662-1753 6. Robert T. Kittel c/o Silver Creek Management, Inc. 1670 Bayview Avenue, Suite 308 Toronto, Ontario, Canada M4G 3C2 Tel. No.: 416-485-1706 7. Dennis Losik c/o Avnet Em. 3030 Sale Creek Lane, Suite 120 Arlington Hills, Illinois 60005 Tel. No.: 847-797-7401 8. Lucia M. Valente, Counsel c/o Tyco Printed Circuit Group, LP 12 Lynwood Court Courtland Manor, New York 10567 Tel. No.: 914-734-1484 9. Betti Monti, Corporate Counsel c/o Arrow Electronics, Inc. 25 Hub Drive Melville, New York 11747-3509 Tel. No.: 516-39-1300 10. Colin Lancaster, General Counsel c/o Staro Asset Management, as agent For Stark Trading and Shepherd Investments International Ltd. 1500 Market Street Mequon, WI 53092 Tel. No.: 262-240-3142 ACT Manufacturing, Inc. provides value-added electronics manufacturing services to original equipment manufacturers in the networking and telecommunications, computer and industrial and medical equipment markets. The company filed for chapter 11 protection on December 21, 2001. Richard E. Mikels, Esq., Deena C. Ethridge, Esq. and Daniel S. Beck, Esq. at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo PC represent the Debtor in its restructuring efforts. As of December 21, 2001, the company reported assets of $374.1 million and liabilities of $231.2 million. AES CORP: Taps Stone & Webster to Complete Wolf Hollow Project -------------------------------------------------------------- Last month, AES Corporation (NYSE:AES) signed an agreement with Stone & Webster Inc., a subsidiary of The Shaw Group (NYSE:SGR), to provide engineering, procurement, and construction services for the completion of the 730 mega-watt Wolf Hollow project in Texas. AES replaced the original turn-key contractor, NEPCO (Bothell, Wash.), a business unit of now-bankrupt Enron, some 14 months after the start of construction. For more information including equipment and other project details, view the entire article at http://www.industrialinfo.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's placed its double-'B' corporate credit and senior unsecured debt ratings on The AES Corp., its single-'B'-plus rating on AES' subordinated debt, and its single-'B' rating on the company's trust preferred securities on CreditWatch with negative implications. Standard & Poor's also placed its triple- 'B' rating on AES' subsidiary IPALCO Enterprises Inc. and its triple-'B' rating on AES' affiliate Indianapolis Power & Light Co., whose ratings are linked to AES, on CreditWatch with negative implications. AES Corporation's 10.25% bonds due 2006 (AES06USR1), DebtTraders reports, are quoted at a price of 76. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. ADELPHIA BUSINESS: U.S. Trustee Amends Committee Membership ----------------------------------------------------------- The United States Trustee for Region II amends the appointment of the Official Committee of Unsecured Creditors, in Adelphia Business Solutions, Inc.'s chapter 11 cases, by replacing Morgan Stanley Investment Management with Fujitsu Network Communications Inc. The Committee is now comprised of: A. Bell South Corporation 1155 Peachtree St., Suite 1929, Atlanta, GA 30309-3610 Attn: Bradley O. Greene, Exec. Dir. - Corp. Development Phone: (404) 249-4506 Fax: {404} 249-4740 B. Fidelity Management & Research Co. 82 Devonshire St., E20E, Boston, MA 02109 Attn: Nate VanDuzer Phone: (617) 392-8129 Fax: (617) 476-5174 C. Fujitsu Network Communications Inc. 2801 Telecom Parkway, Richardson, TX 75082 Attn: Charles R. Owen, Assistant General Counsel Phone: (972) 479-3713 Fax: (972) 479-2992 D. Wilmington Trust Co. Rodny Square North, 1100 Malat St., Wilmington, DE 19801 Attn: Michael Diaz Phone: (302) 656-8326 Fax: (302) 636-4140 E. The Bank of New York 5 Penn Plaza, 13th Floor, New York, NY 10001 Attn: Loretta Lundborg, Vice President Phone: (212) 896-7273 Fax: (212) 328-7302 F. Bank of America 901 Main St., Dallas, Texas 75202 Attn: Robin Phelan Phone: (214) 209-0966 Fax: (214) 290-9490 (Adelphia Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARCH COAL: Will be Paying Quarterly Dividend on June 14, 2002 ------------------------------------------------------------- The board of directors of Arch Coal, Inc. (NYSE: ACI) has declared a quarterly dividend of $.0575 per share on the company's common stock. The dividend is payable June 14, 2002, to shareholders of record on June 4, 2002. Arch Coal is the nation's second largest coal producer, with subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch provides the fuel for approximately 6% of the electricity generated in the United States. * * * As reported in the March 15, 2002 edition of Troubled Company Reporter, Moody's Investors Service assigned ratings to Arch Coal, Inc. and its subsidiary Arch Western Resources, LLC. The rating actions are: Arch Coal, Inc. - * Ba1 rating for the $350 million senior secured revolving facility, * Ba1 senior implied and Ba2 senior unsecured issuer ratings were affirmed. Arch Western Resources, LLC - * Ba1 for the $150 million senior secured term loan due 2007, * Ba1 for the $525 million senior secured term loan due 2008. Moody's changed its Outlook from positive to stable. No rating downgrade is foreseen as this time since Arch Coal will benefit in 2002 and 2003 from sales contracts it negotiated last year. Arch Coal's ratings mirrors the risks prevalent in mining companies (adverse conditions, labor, safety and health issues) and a near $550 million of balance sheet liabilities. However, the company is supported by its relatively stable operating profile and cash flow. BRIGHTPOINT: Falls Short of Nasdaq Continued Listing Standards -------------------------------------------------------------- Brightpoint, Inc. (NASDAQ:CELL) received a notice today from Nasdaq of the Company's failure to comply with the U.S. $1.00 minimum bid price requirement for continued listing on the Nasdaq National Market as set forth in Nasdaq Marketplace Rule 4450(a)(5). Accordingly, the Company's common stock is subject to delisting from the Nasdaq National Market if the Company cannot demonstrate that it is in compliance with the Rule by July 29, 2002. The Company believes that delisting from Nasdaq would have a material adverse affect on the Company and therefore, it intends to take the actions it believes are necessary to avoid the delisting of its common stock from the Nasdaq National Market. The Company's Board of Directors has approved a 1 for 7 reverse split of its common stock. The Company intends to submit the reverse split for approval by the Company's stockholders at the Company's Annual Meeting of Stockholders currently scheduled for June 26, 2002. If the Company's stockholders approve the reverse split, the Company believes that it will be able to comply with the Rule which should allow it to avoid delisting of its common stock. Additionally, if the reverse split is effected, the Company would have approximately 8 million shares of common stock issued and outstanding of 100 million shares of common stock authorized. Brightpoint is one of the world's largest distributors of mobile phones. Brightpoint supports the global wireless telecommunications and data industry, providing quickly deployed, flexible and cost effective third party solutions. Brightpoint's innovative services include distribution, channel management, fulfillment, eBusiness solutions and other outsourced services that integrate seamlessly with its customers. Additional information about Brightpoint can be found on its Web site at http://www.brightpoint.comor by calling its toll-free Information and Investor Relations line at 877-IIR- CELL (877-447-2355). CHANNELL COMMERCIAL: Appoints Bruce Gidden to Board of Directors ---------------------------------------------------------------- Channell Commercial Corp. (Nasdaq:CHNL) announced Bruce Glidden has been elected to the Channell Board of Directors, replacing Jacqueline M. Channell, who resigned from the board effective May 1, 2002. Channell served on the board for 36 years. Glidden was with U.S. Steel for 29 years, holding a number of management positions including vice president, engineering and vice president, western region of the American Bridge Division and general manager, design of U.S. Steel. From 1981 to 1985 he was president of U.S. Steel's American Bridge Division. In 1985, Glidden formed Glidden & Co., Ltd., a consulting firm serving the engineering profession and the construction industry. Richard A. Cude, chief executive officer, said: "On behalf of the board of directors, I want to express our appreciation to Jacqueline Channell for her many years of dedicated service. Mrs. Channell has made significant contributions to the company's growth over those years and her presence will be missed. I am pleased to welcome Bruce Glidden to the Channell board. He has extensive senior management experience and we look forward to his contribution." Channell Commercial Corp. is a global designer and manufacturer of telecommunications equipment primarily supplied to telephone and broadband network operators worldwide. Major product lines include a complete line of thermoplastic and metal fabricated enclosures, advanced copper termination and connectorization products, fiber optic cable management systems and coaxial-based passive RF electronics. Channell's headquarters and U.S. manufacturing facilities are in Temecula. International operations include facilities in Toronto, London, Sydney, Australia and Kuala Lumpur, Malaysia. Channell, at December 31, 2001, had a working capital deficit of about $4 million. CLEARLY CANADIAN: Terminates McDonald's Engagement & Names COO -------------------------------------------------------------- Clearly Canadian Beverage Corporation (OTCBB: CCBC)(TSE: CLV) has recently concluded the engagement of McDonald Investments as its investment banker and financial advisor. Working with McDonald Investments, Clearly Canadian completed a strategic restructuring in 2001 and the first quarter of 2002, highlighted by the Company's U.S. subsidiary's divestiture of its U.S.-based production facility assets and bottling plant and its branded water and private label bottled water business - initiatives that Clearly Canadian anticipates will reduce costs while improving its financial and operational position. "As a result of our strategic restructuring, Clearly Canadian can now focus on its core competencies - the marketing of premium alternative beverages - and to direct greater focus on the selling and marketing of the Company's beverage brands in an effort to maximize shareholder value and to provide additional working capital for our marketing initiatives," said Douglas Mason, President and Chief Executive Officer of Clearly Canadian Beverage Corporation. Appointment of COO As part of Clearly Canadian's strategic restructuring, the Company also announced that it has recently appointed Tom Koltai to the position of Chief Operating Officer. In his role, Mr. Koltai will be responsible for directing the efforts of the Company's sales, marketing and operations departments in an effort to increase the efficient use of Company resources. Mr. Koltai has held several senior positions within the Company since joining Clearly Canadian in February 1995, most recently as its Vice President of Operations. Prior to arriving at Clearly Canadian, Mr. Koltai's experience included a 14-year career at Molson Breweries, Petro-Canada and Gulf Canada Products Limited. He earned his degree in Economics from the University of Victoria. Based in Vancouver, B.C., Clearly Canadian markets premium alternative beverages and products, including Clearly Canadianr sparkling flavored water, Clearly Canadian O+2r and Tre LimoneT, which are distributed in the United States, Canada and various other countries. Clearly Canadian also holds the exclusive license to manufacture, distribute and sell certain Reebok beverage products in the United States, Canada and the Caribbean. Additional information on Clearly Canadian and CC Beverage may be obtained on the world wide web at http://www.clearly.ca COMDISCO: Court Okays De Minimis Lease Rejection Protocol --------------------------------------------------------- Comdisco, Inc., and its debtor-affiliates obtained the Court's authority to establish procedures to reject certain leases of de minimis value without further Court approval. Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, relates that the procedures will be used for leases with: (i) payments less than $10,000 per month; or (ii) remaining payments due, in the aggregate, total less than $100,000. Specifically, the Debtors will reject each De Minimis Lease by mailing written notice, via overnight delivery, of their intention to reject such De Minimis Lease. Under the proposed procedures, the Debtors are authorized to reject any De Minimis Lease effective on the date the Debtors mail a written notice to: (i) the respective lessor; (ii) the Creditors' Committee; (iii) the Equity Committee; and (iv) the United States Trustee. Furthermore, Ms. Perlman relates that in any event that the Debtors receive a properly timed objection within 10 days from the Effective Date, the Debtors will schedule a hearing with this Court. However, in the event the Court overrules the objection or the objection only relates to rejection damages, such De Minimis Lease will still be deemed rejected as of the Effective Date. Ms. Perlman tells the Court that if each of the Notice Parties indicates its approval in writing, and none provide written notice of an objection, then the Debtors are authorized to consummate the settlement agreement and to record an allowed claim in the settled amount. Moreover, Ms. Perlman asserts that the Lessors of the De Minimis Leases will not be prejudiced by these procedures since the rejection will not be effective until the tenth day from the mailing of the Rejection notice. (Comdisco Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSUMERS PACKAGING: Files Assignment in Bankruptcy in Canada ------------------------------------------------------------- Consumers Packaging Inc. (TSE: CGC), formerly Canada's largest manufacturer of glass containers, has filed an assignment in bankruptcy. KPMG Inc. of Toronto has been appointed as trustee. During the last 10 months, Consumers Packaging Inc. has been operating under the protection of the Companies Creditors' Arrangement Act. During this period, virtually all of its Canadian and overseas assets have been sold and the claims of its secured creditors have been settled. The Canadian glass manufacturing business was sold to OI Canada Corp. in October, 2001 and the Canadian plastic container manufacturing business (Pet-Pak) was sold to Amcor PET in December, 2001. According to Richard Harris, Senior Vice President of KPMG: "The bankruptcy will provide the appropriate forum for distribution of the remaining proceeds of sale among Consumers' ordinary creditors. KPMG estimates that valid creditors' claims of about $400 million will be filed against residual assets of about $25 million to $30 million." CPI's directors resigned on April 29, 2002. At the Company's request, trading in the common shares of CPI was suspended by the Toronto Stock Exchange on December 31, 2001. CORNERSTONE PROPANE: Working Capital Deficit Tops $11 Million ------------------------------------------------------------- CornerStone Propane Partners, L.P. (NYSE: CNO) reported earnings before interest, taxes, depreciation, amortization and non- recurring charges ("EBITDA") of $32.7 million for its fiscal third quarter ended March 31, 2002, compared with $42.7 million in the same period in 2001. Results for the period were adversely affected by lower sales volumes due to continued mild winter weather in the regions served by the Partnership. Weather for the months of January, February and March was 8.5% warmer than the same quarter last year and 10.2% warmer than the thirty year normal average as computed by the National Oceanic and Atmospheric Administration. Year to date the weather has been 16.7% warmer than last year in the markets served by the partnership. The Partnership reported net income of $10.7 million for the fiscal third quarter, compared with net income of $19.5 million during the same period last year. Fiscal third quarter 2002 results include a non-recurring charge of $2.3 million related to the divestiture of assets and closure of the U.S. crude, U.S. natural gas and Canadian natural gas operations that were included in the Coast Energy Group segment. CEG's ongoing businesses will be natural gas liquids marketing and supply operations (consisting primarily of propane) and the logistics business. "We've taken a number of steps to mitigate the effects of lower sales volume resulting from warm winter weather," said Keith G. Baxter, president and chief executive officer of CornerStone. "We continue to reduce cash operating expenses and interest expenses, and we have reduced our working capital balance by $59 million from March 31, 2001 to March 31, 2002. Operating expenses in our retail propane distribution operations were $4.3 million or 13.5% lower than the prior year. We also continue to focus on internal growth. Through the third fiscal quarter, we've set approximately 9,000 net new propane tanks this fiscal year vs. approximately 5,000 at the same time last year. We have substantially reduced our risk profile by restructuring CEG operations to focus on our core propane operations." Baxter continued, "In addition to the progress made to improve our base business in the face of very warm winter weather, we have continued to serve our customers and have expanded our markets while pursuing the strategic options announced in January. I am very proud of our team members." Credit Facility Update Reducing leverage has been a key objective of the Partnership. Borrowing levels on CornerStone's $50 million credit facility as of March 31, 2002 totaled $10.7 million, with $0 on the working capital line, $10.7 million in term debt and $5.6 million in outstanding letters of credit. The credit facility extends to November 28, 2002. The Partnership has met the clean down requirement and is in compliance with all covenants of debt agreement. The amount outstanding under the credit facility decreased by $59 million from $69.7 million a year ago. Business Restructuring The restructuring of Coast Energy Group is nearly complete. All operations for the U.S. crude, U.S. natural gas and Canadian natural gas businesses have been divested or closed as of this date, with only final accounting activities and a few minor transactions remaining to be closed. The remaining transactions are offsetting, therefore exposure is expected to be immaterial. Substantially all activities related to these businesses within CEG will be completed by June 30, 2002. Strategic Options Review As announced on Jan. 18, 2002, the Partnership has retained Credit Suisse First Boston Corporation (CSFB) to pursue strategic options, including the possible sale or merger of the Partnership. To date, a significant number of parties, both within and outside the propane industry, have expressed serious interest in a sale or merger and have signed confidentiality agreements as a condition in the process. A series of management presentations have been conducted with potential partners, and preliminary non-binding valuations have been received. A second round of due diligence meetings is currently underway with selected organizations. Selection of a partner for final negotiations is planned within the next two months. There can be no certainty, however, that any transaction will occur. The Partnership is currently formulating alternative plans in the event a sale or merger is not realized. These approaches include efforts to continue to serve our customer base and successfully operate in our current markets, to manage the maturity of the credit agreement, to deal with the expiration of NorthWestern Corporation's commitment to guaranty the credit agreement, and to satisfy the Partnership's payment obligations on its senior notes beginning in July 2003. There can be no assurance that these issues will be successfully addressed or what effect they will have on the Partnership going forward. Operating Results Revenues for CornerStone's third fiscal quarter decreased to $277.2 million from $865.4 million reported for the same quarter last year. The revenue decline is due primarily to the sale and exit of certain businesses of Coast Energy Group as it focused on its natural gas liquids business. Retail revenues for the third quarter were $117.7 million, compared with $172.6 million for the same quarter last year. The reduction in retail revenues stemmed primarily from lower propane prices and secondarily from fewer gallons sold due to the warmer weather compared to last year's quarter. Fiscal third quarter 2002 retail sales volumes were 93.3 million gallons, representing a decrease of 8.2 million gallons or 8.1% from the same period last year. Overall operating expenses for the quarter totaled $38.3 million, a decrease of $2.6 million or 6.3% from the same period last year. This decrease is a result of the Partnership's continuing efforts to reduce overall administrative and operational expenses and, to a lesser extent, the sale of certain business units in both the retail and CEG segments. Depreciation and amortization expenses decreased to $9.9 million in the quarter from $12.3 million last year. The decrease is related to the implementation of SFAS No. 142, Goodwill and Other Intangible Assets, which impacted amortization by approximately $2.0 million. Non-recurring charges for the quarter and year to date relate to the impact of divesting and closing certain business units primarily within CEG. Interest expense for the quarter decreased to $9.0 million, from $10.5 million for the same quarter last year, primarily due to lower working capital requirements and lower interest rates. At March 31, 2002, CornerStone Propane Partners, L.P. reported a working capital deficit of about $11 million. CornerStone Propane Partners, L.P. is a master limited partnership. The Partnership is one of the nation's largest retail propane marketers, serving approximately 440,000 customers in more than 30 states. For more information, please visit the Web site at http://www.cornerstonepropane.com COVANTA ENERGY: Signs-Up Chilmark Partners for Financial Advice --------------------------------------------------------------- Jeffrey R. Horowitz, Covanta's Senior Vice President-Legal Affairs, applies to the Court to authorize the retention of Chilmark Partners, LLC, nunc pro tunc effective as of April 1, 2002, as investment banker to Covanta Energy Corporation and its debtor-affiliates in the Chapter 11 cases. The Debtors have determined that, during the administration of these cases, it is necessary to engage investment bankers with knowledge and experience in the area of Chapter 11 reorganization cases and workouts. Chilmark has such experience, having assisted and advised debtors, creditors and other constituencies in numerous Chapter 11 cases. Mr. Horowitz continues that the Debtors, therefore, propose to retain and employ Chilmark as their investment bankers. Chilmark is one of the country's leading investment banks with expertise in mergers and acquisitions, reorganizations and other financial advisory services. Chilmark also has extensive experience representing the interests of debtors, creditors and institutional investors in business reorganizations and workouts both in and out of Chapter 11 and in representing clients in a wide range of industries. Chilmark is well qualified to provide the Debtors with financial advice and services in connection with their Chapter 11 cases. He adds that significant reorganizations in which Chilmark or its principals have participated include: ContiGroup Companies, Inc.; Global Marine, Inc.; Fruit of the Loom, Inc.; Genesis Health Ventures, Inc./The Multicare Companies, Inc.; MTS, Inc.; MobileMedia Communications, Inc.; Long John Silver's Restaurants, Inc.; Iridium Operating LLC; Revco D.S., Inc; Chrysler Corporation; Zapata Corporation; Bruno's, Inc.; Itel Rail Corporation; AM International; USG Corporation; SI Corporation; and Lodgian, Inc. On March 28, 2002, Covanta entered into an agreement with Chilmark to provide investment banking services to the Debtors. Pursuant to the Agreement, Chilmark is to provide these services to the Debtors: a) Develop valuation, debt capacity and recovery analyses in connection with developing and negotiating a potential restructuring of the Debtors; b) Based on a review and analysis of the Debtors' businesses, prospects, long-term business plan, and financial liquidity, Chilmark will advise Debtors with respect to its alternatives regarding its Obligations; c) Evaluate the Debtors' debt capacity and alternative capital structures to develop various restructuring scenarios and analyze the recoveries of different stockholders under these scenarios; d) Assist in the development of a negotiating strategy and, if requested by the Debtors, assist in negotiations with the Debtors' creditors and other interested parties with respect to a potential Restructuring or Disposition; e) Facilitate and advise with respect to the value of securities offered by the Debtors in connection with a potential restructuring of the Debtors; and f) Provide such other advisory services as are customarily provided in connection with the analysis and negotiation of a Restructuring, as reasonably requested by the Debtors. Other principal and salient terms of Agreement: a) Term: Retention will commence on March 28, 2002 and continue on a month-to-month basis until terminated by either party upon 30 days' written notice without cause, or at any time for cause. b) Compensation: The Debtors agree to pay the following fees to Chilmark for its financial advisory services: (i) A monthly advisory fee in the amount of $150,000 per month. The Debtors have paid Chilmark a retainer of $450,000 to cover the period from March 28, 2002 through June 27, 2002. (ii) Upon either a Successful Restructuring or a Disposition, an additional fee equal to $7,000,000. The term "Successful Restructuring" means the execution, confirmation, effectiveness, and consummation of a Chapter 11 plan for Covanta or any of its subsidiaries. (iii) If the Debtors sell, spin-off, or otherwise dispose of all or substantially all of the assets of the Debtors or its subsidiaries, Chilmark will be paid a fee in cash equal to 1.0% of the Aggregate Consideration upon completion of the transaction. This will not include the distribution of stock, debt or other consideration pursuant to a stand-alone Chapter 11 plan or reorganization. (iv) If the Debtors make an extraordinary distribution of cash, stock or other value, Chilmark will be paid a fee in cash equal to 1.0% of the value of each distribution upon completion of the distribution. However, if the extraordinary distribution consists of the proceeds of (iii) above, Chilmark will not be paid both the Transaction Fee and the Distribution Fee. Additionally, this does not include the distribution of stock, debt or other consideration pursuant to a stand-alone Chapter 11 plan of reorganization. (v) If a Transaction Fee or a Distribution Fee is payable, the fee will reduce the Restructuring Fee, but not to an amount less than zero. (vi) Reimbursement of all reasonable out-of-pocket expenses incurred during this engagement, payable promptly following delivery of invoices setting forth in reasonable detail the nature and amount of such expenses. Indemnification The Debtors will indemnify and hold harmless Chilmark for any losses, claims, damages or liabilities in connection with any matters related to this engagement, unless it is finally judicially determined to have resulted from gross negligence or bad faith on the part of Chilmark. If for any reason this indemnification is unavailable to Chilmark, the Debtors will contribute to the amount paid or payable by Chilmark taking into account the relative economic interests of the Debtors and Chilmark as well as the relative fault of the Debtors and Chilmark. Mr. Horiwitz relates that the Debtors also seek approval of the Fee Structure, as defined and as provided for in the Agreement, in accordance with Section 328(a) of the Bankruptcy Code, which provides, in relevant parts, that a debtor "with the court's approval, may employ or authorize the employment of a professional person under Section 327 on any reasonable terms and conditions of employment, including a retainer, on an hourly basis, or on a contingent fee basis." (11 U.S.C. Section 328(a).) Section 328(a), therefore, permits the Court to approve the Fee Structure. The Fee Structure appropriately reflects the nature of the services to be provided by Chilmark and types of fee structures typically utilized by Chilmark and other leading investment bankers, which do not bill their clients on an hourly basis. Although Chilmark does not bill by the hour, states Mr. Horowitz, Chilmark will maintain general, daily records of time spent by its professionals in connection with the rendering of services for the Debtors. In addition to Chilmark, by separate application the Debtors have also sought to employ Loughlin Meghji & Co. (LM) as their financial advisors. The Debtors will utilize LM and Chilmark in such a way as to avoid duplication of services. Chilmark will provide investment banking services, which LM does not provide. For example, Chilmark will provide ongoing valuation analysis for the Debtors' businesses, which will be essential to the restructuring process. Another example is that the Debtors may require additional financing in connection with an exit from these Chapter 11 proceedings. The services of an investment bank are essential to arrange such financing. In the event the Debtors are successful in attracting additional equity financing from KKR or another investor, the investment banking services of Chilmark will be indispensable to complete such a transaction. LM, on the other hand, will assist the Debtors, on a day to day basis, with respect to the financial and other decision making requirements of the Debtors In Possession for issues relating to the assumption or rejection of contracts, distribution of the proceeds of the Debtors' assets to be liquidated and debtor in possession financial reporting obligations. The Debtors submit that the retention of Chilmark and LM represents distinct needs of the estate. In connection with Chilmark's provision of investment banking services to the Debtors, the Debtors hereby disclose that the Debtors comprise a large and complex organization and that there are complicated relationships among them. These relationships demonstrate that the Debtors' affairs are significantly interconnected and the Debtors' interests are substantially identical. To facilitate evaluation of the Debtors' relationships, the Debtors offer these facts: a) Covanta owns 100% of the equity of Covanta Energy Group Inc., Ogden Services Corporation, Ogden Management Services Inc. and Covanta Financial Services Inc., of which two - Ogden Services Corporation and Covanta Financial Services, Inc. - are debtor entities in these Chapter 11 proceedings. The remaining 121 Debtors are either indirectly wholly owned subsidiaries of Covanta or partnerships in which Covanta owns the majority interest. In addition, the Debtors have 77 non-debtor domestic affiliates and 85 non-debtor foreign affiliates. b) The Debtors are separate corporate entities, but, along with their non-debtor affiliates and subsidiaries, act in a consolidated manner with respect to various corporate functions. In addition, they share a number of common officers and directors. c) Various services required by the Debtors, including without limitation, financial, audit and legal, are coordinated on a company-wide basis. The financial statements of the Debtors and their non-debtor affiliates are audited on a consolidated basis. d) There is a significant amount of inter-company accounting by the Debtors in connection with or related to: (i) payment of all revenues and receipts earned at the subsidiary level up to Covanta; (ii) disbursements and payments made by Covanta in respect of all expenses incurred at the subsidiary level; and (iii) the Debtors' operations in the ordinary course of business. The amounts of any inter-company claims are, to the Debtors' knowledge, undisputed. The Debtors do not believe that their relationships to each other and to their non-debtor affiliates pose any conflict of interest in these Chapter 11 cases because of the general unity of interest at all levels, offers Mr. Horowitz. Accordingly, the Debtors submit that Chilmark's provision of investment banking services to all Debtors is permissible under Section 327 of the Bankruptcy Code and is in the best interest of all creditors of these estates. To the best of the Debtors' knowledge, and except as set forth herein the members and other professionals of Chilmark do not have any connection with the Debtors, their creditors, equity security holders or any other parties in interest in any matters relating to the Debtors or their estates. As disclosed in the Rosenberg Declaration, Chilmark currently provides and may also in the future provide investment banking and business advisory services to certain of the Debtors' creditors, equity holders and other parties in interest in matters wholly unrelated to these proceedings. Chilmark has fully informed the Debtors of its ongoing relationship with such entities, and the Debtors have consented to Chilmark's continued provision of investment banking and financial advisory services to these entities in matters unrelated to these proceedings. The Debtors believe that Chilmark's current and future relationship with these entities will not in any way adversely affect Chilmark's provision of investment banking services to the Debtors. To the best of the Debtors' knowledge and as disclosed in the Rosenberg Declaration, Chilmark does not hold or represent any interest adverse to the Debtors or their estates, Chilmark is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code, and Chilmark's employment and retention is necessary and in the best interests of the Debtors and their estates. Mr. Horowitz reminds Judge Blackshear that, as discussed above, upon retention, Chilmark was paid a retainer of $450,000 to cover the Monthly Fees for the period from March 28, 2002 through June 27, 2002. Chilmark holds no claim against the Debtors for amounts owing for prepetition services rendered. The Debtors understand that Chilmark intends to apply to the Court for allowance of compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules and the Local Rules and orders of the Court. In connection with the reimbursement of actual, necessary expenses, the Debtors have been informed that it is the Firm's general policy to charge its clients for all other reasonable incremental expenses incurred in connection with the clients' cases. The expenses charged to Chilmark's clients include, among other things, telephone and telecopier toll, mail and express mail charges, special or hand delivery charges, document processing charges, photocopying charges, travel expenses, expenses for "working meals," computerized research, transcription costs, as well as non-ordinary overhead expenses such as secretarial overtime. The Debtors have been assured that Chilmark will charge the Debtors for these expenses in a manner and at rates consistent with charges made to other clients and maintain or submit the necessary documentation. Mr. Horowitz asserts that no promises have been received by either the Firm or any member, professional or other employee thereof as to compensation or payment in connection with this case other than in accordance with the provisions of the Bankruptcy Code. Chilmark has no agreement with any other entity to share with such entity any compensation received by Chilmark in connection with these Chapter 11 cases. The Debtors request that an order be entered authorizing them to employ and retain the firm of Chilmark Partners, LLC as their investment banker, nunc pro tunc effective as of April 1, 2002, under a general retainer in these cases under chapter 11 of the Bankruptcy Code, and that the Court grant to the Debtors such other and further relief as is just and proper. (Covanta Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVENTRY HEALTH: Posts Improved Operating Results for Q1 2002 ------------------------------------------------------------- Coventry Health Care, Inc. (NYSE: CVH) reported operating results for the first quarter ended March 31, 2002. Operating revenues totaled $848.5 million for the quarter, a 12.9% increase over the first quarter of 2001. Net earnings were $28.4 million, or $0.45 per diluted share, a 46.1% increase over net earnings first quarter of 2001 and 55.2% on a per share basis. "This was an outstanding quarter of superior earnings results for our company and shareholders" said Allen F. Wise, president and chief executive officer of Coventry. "We were able to continue to expand our operating margins through prudent risk selection and financial discipline. Although commercial membership declined in total, it was the result of continued pruning of unprofitable business; new business growth in the first quarter was strong and we are seeing similar sales results for the second and third quarters. This sales momentum, coupled with acquisition opportunities like the recently announced New Alliance transaction, will provide our company tremendous opportunity for continued profitable growth." First Quarter Highlights: -- Membership. As of March 31, 2002, Coventry had a total of 1.81 million members, an increase of 80,734 members, or 4.7%, over the prior year. As compared to the prior year, commercial risk membership decreased 36,988 members or 3.1% due to the previously announced loss of 25,000 members in the Raytheon group in Wichita as well as other pricing-related membership losses in recent acquisitions. Medicaid membership grew 72,389 members or 35.1% due to continued growth in existing markets as well as participation in a new mental health program in the Pennsylvania market starting in the fourth quarter of 2001. Medicare+Choices membership grew 10,618 members or 22.0% primarily due to acquisition and organic growth in the Kansas City market. Non-risk membership grew 34,715, or 12.1% primarily through acquisition. -- Commercial Rate Increases. Coventry achieved commercial rate increases in excess of 15% on first quarter renewals, representing 55% of membership. These rate increases were over 50 basis points higher than previously announced expectations. The Company expects commercial rate increases to exceed 18% for the second quarter of 2002 representing a little over 5% of its membership. -- Medical Loss Ratio (MLR). MLR was 84.5% for the quarter, a 130 basis point improvement over the fourth quarter of 2001 and a 170 basis point improvement over the prior year first quarter. Commercial MLR of 84.1% was a 270 basis point improvement over the prior year quarter and was the main driver of overall MLR improvement. Total commercial inpatient days per thousand in the first quarter of 224 were 5.5% lower than the prior year quarter. Lower than expected inpatient utilization coupled with price increases contributed to the MLR improvement. -- Selling, General & Administrative (SG&A) Expenses. SG&A expenses were 12.3% of operating revenues for the quarter, an increase of 30 basis points over the prior quarter and 10 basis points over the prior year. The increase in the SG&A rate was partially due to certain timing and seasonal issues related to broker commissions, employee commissions, and payroll taxes that the company historically has experienced in the first quarter of the year. -- Balance Sheet. Cash and investments grew to $959.2 million during the quarter, up $6.7 million from the prior year- end. Total days in medical liabilities decreased less than half a day and remain at the high end of historical ranges. -- Cash Flow. Cash flow from operations was $13.8 million for the first quarter. Cash flow adjusted for the timing of CMS payments for Medicare+Choices beneficiaries was $44.2 million. -- Effect of Accounting Rule Changes. Effective January 1, 2002, the company adopted FAS 142 which requires companies to cease amortization of goodwill. For the year ended December 31, 2001, goodwill amortization averaged approximately $1.9 million per quarter. Coventry Health Care is a managed health care company based in Bethesda, Maryland operating health plans and insurance companies under the names Coventry Health Care, Coventry Health and Life, Carelink Health Plans, Southcare, Group Health Plan, HealthAmerica, HealthAssurance, HealthCare USA, Southern Health and WellPath. The Company provides a full range of managed care products and services including HMO, PPO, POS, Medicare+Choice, and Medicaid to 1.81 million members in a broad cross section of employer and government-funded groups in 12 markets throughout the Midwest, Mid-Atlantic and Southeast United States. More information is available on the Internet at http://www.cvty.com At December 31, 2001, Coventry Health Care has a working capital deficit of about $173 million, down from $186 million recorded at September 30, 2001. DELTA AIR LINES: Will Be Paying Cash Dividend on June 1, 2002 ------------------------------------------------------------- The Board of Directors of Delta Air Lines (NYSE: DAL) declared a cash dividend of two and one-half cents per common share at its regular meeting held in Washington, D.C. The dividend is payable on June 1, 2002 to shareowners of record at the close of business on May 8, 2002. Delta Air Lines, the #3 US carrier (behind UAL's United and AMR's American), is expanding its US regional operations while building a global alliance. With hubs in Atlanta, Dallas/Fort Worth, Cincinnati, New York City (Kennedy), and Salt Lake City, Delta flies to 205 US cities and about 45 foreign destinations. It also serves more than 220 US cities and nearly 120 destinations abroad through code-sharing agreements. In the US, Delta owns regional carriers Delta Express, Atlantic Southeast, and COMAIR. Internationally, it has formed the SkyTeam alliance with Air France, AeroMexico, and Korean Air Lines to compete with rival alliances Star and Oneworld. Delta also owns 40% of computer reservation service WORLDSPAN. As reported in the September 25, 2001, edition of the Troubled Company Reported, Standard & Poor's lowered its corporate credit, senior secured debt and senior unsecured debt ratings on Delta Air Lines Inc., to the low-B level, and were placed on CreditWatch with negative implications. The downgrades, S&P said, reflected the severe impact of sharply reduced air traffic since the September 11 terrorist attacks in New York City and Washington, D.C., with expectations for only a slow recovery in the coming months. This worsens significantly an already grim airline industry outlook, with depressed business travel and higher labor costs. The extent of the downgrades was determined principally by: * The risk of a downward rating action prior to the current crisis, and thus how much credit "cushion" was available within those ratings; * The cash and bank lines available to Delta Air Lines Inc., as well as the amount of owned, unsecured aircraft that could be used in secured debt or sale-leasebacks to raise further funds; and * The ability of Delta Air Lines to reduce cash operating expenses and commitments for capital spending. Delta Air Lines' 9.75% bonds due 2021 (DAL21USR1) are quoted at a price of 91, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=DAL21USR1 DELTA AIR: CEO Leo Mullin Pins Hopes on New Strategic Direction --------------------------------------------------------------- Delta Air Lines (NYSE: DAL) CEO Leo F. Mullin reported at the company's annual shareowners meeting that "Delta will thrive, and emerge as a better, stronger, more competitive and more successful company than ever before." "Prior to 9/11, Delta had developed a strong foundation which served us well in the aftermath of the crisis and will continue to serve us going forward," Mullin said in Washington, D.C. "Delta has a well-defined strategic direction which builds on our strong foundation and provides us with more opportunities to succeed than any other airline." Mullin cited Delta's strong, industry-leading position, with the strongest balance sheet of the nation's hub and spoke carriers. "In key financial measures for the industry -- including operating profit margin, cost per available seat mile and return on investment -- Delta exceeded all hub and spoke airlines," said Mullin. Mullin said that, going forward, the airline "must think through the fact that old assumptions no longer prevail, and think through how to both respond to these changed assumptions and also how to take advantage of them." Delta is not, he said, "waiting for the world to come back and fill its flights once more." Mullin stressed that the airline must continue to put customers first, find innovative ways to meet the growing strength of low- cost carriers, and work with the government to ensure that returning airline passengers experience the level of customer service they deserve. Delta Air Lines, the world's second largest carrier in terms of passengers carried and the leading U.S. airline across the Atlantic, offers 5,581 flights each day to 410 destinations in 72 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please go to http://www.delta.com DUANE READE: Posts Improved Sales Performance for March Quarter --------------------------------------------------------------- For the first quarter ended March 30, Duane Reade's (New York, NY) net income, before the cumulative effect of a change in accounting practices and the adoption of SFAS 142, increased 76.9% to $4.6 million, as total sales grew 12.6% to $305.8 million. The improvements, F&D Reports observes, were largely the result of opening 33 new stores, while closing only five, over the last 12 months, combined with an 80 basis point improvement in SG&A margin. Despite the strong top and bottom line gains, comparable-store sales left much to be desired as overall comps increased 5.3% and front-end comps dropped 1.3%. Looking ahead, the Company anticipates sales growth of 9.5% to approximately $335.0 million in the second quarter and 15% - 18% to approximately $1.32 - $1.35 billion for the full year. Exclusive of one-time charges, earnings per share are expected to be between $0.40 - $0.44 for the quarter and $1.64 - $1.68 for the year, compared to $0.36 and $1.20 for the corresponding periods of the previous year. Analysts' consensus EPS estimates for the quarter and the year are $0.41 and $1.65, respectively. * * * A 'BB-' rating was assigned on April 10, 2002, to drug store operator Duane Reade's proposed $110 million senior unsecured convertible notes due in 2022. The other ratings on Duane Reade were also affirmed at that time. Proceeds from the debt issuance will be used to repay amounts outstanding under the company's credit facility and a portion of the 9.25% senior subordinated notes. Rating outlook is stable. ENRON: U.S. Trustee Appoints Employee-Related Issues Committee -------------------------------------------------------------- Pursuant to Section 1102(a) and 1102(b) of the Bankruptcy Code, and effective March 29, 2002, Assistant United States Trustee Mary Elizabeth Tom for the Southern District of New York appoints these Enron Corporation's former and current employees and plan fiduciary to the Employment-Related Issues Committee, for the purpose of investigating the issues relating to: (1) the continuation of health or other benefits for former employees of the Debtors; (2) the investigation of claims uniquely held by employees, as such, against the Debtors; (3) the treatment of employees' claims under any plans of reorganization or liquidation; (4) possible Warn Act violations by the Debtors in discharging employees; (5) possible violation by the Debtors of state labor laws and certain provisions of ERISA; and (6) dissemination of non-confidential information regarding the issues that will be investigated to employees, former employees, or groups: -- Michael P. Moran Esq. mpmoran@aol.com -- Richard D. Rathvon rrathvon4@houston.rr.com -- Diana S. Peters computer_girl50@hotmail.com -- Jess Hyatt jhyatt@msn.com -- State Street Bank and Trust Company, in its capacity as special fiduciary for certain Enron plans Independent Fiduciary Services Department 2 International Place Boston, Massachusetts 02110 Attn: Ms. Monet Ewing monet_ewing@ssga.com Ms. Tom explains that State Street Bank's inclusion in the Committee is made on the assumption that the Court will approve the Debtors' motion to approve its fiduciary services agreement with State Street Bank. (Enron Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE TECHNOLOGIES: Wants to Maintain Cash Management System ------------------------------------------------------------ Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones P.C. in Wilmington, Delaware, informs the Court that Exide Technologies' Cash Management System is an integrated network of approximately 22 bank accounts maintained by the Debtors, and six bank accounts maintained by Exide U.S. Funding Corp., Exide's non-debtor subsidiary. The Cash Management System facilitates the timely and efficient collection, concentration, management, and disbursement of funds used by the Debtors and their non-debtor affiliates. The Debtors' Cash Management System has two components: the Exide concentration system and the Exide miscellaneous bank accounts. All of the three U.S. operating global business units are part of the Exide concentration system, which accounts for the majority of the Debtors' banking activities. Recently, in an effort to consolidate their Cash Management System, the Debtors have closed several unused or little-used bank accounts at various banks. As part of this continued effort, the Debtors may in the future determine to close additional bank accounts. Although the Cash Management System as it relates to the Exide concentration system includes numerous accounts, Ms. Jones submits that the Debtors' Cash Management System has a simple and logical structure. The Debtors maintain three concentration accounts. Exide U.S. Funding maintains one additional concentration account. Ms. Jones explains that funds that are received in the United States through operations of the Debtors are deposited into one of 10 collection accounts held at First Union National Bank, Mellon Bank and Citibank. Five of these accounts are maintained by the Debtors, and five accounts by Exide U.S. Funding. These funds are received from the Debtors' customers through checks processed through lockboxes, wire transfers, and other miscellaneous deposits. The funds in nine of the collection accounts are automatically swept into concentration accounts at each of the three banks. The funds collected by the 10th collection account (Bank One of Louisiana Account # 247900315796, maintained by the Debtors and used to collect check deposits made to Exide's Baton Rouge smelter) are automatically swept into a disbursement account maintained by Exide at Bank One of Louisiana (Account # 7900649082) which pays for certain medical benefits services of the Debtors. The vast majority of funds from customers are received by the five Exide U.S. Funding collection accounts at its accounts with First Union, Citibank and Mellon. With respect to disbursement accounts, Ms. Jones states that the Debtors' Cash Management System includes approximately 10 accounts that are held at Citibank, Mellon, First Union, Bankers Trust, Bank One of Louisiana and Wells Fargo, all of which are maintained by the Debtors. The Exide Disbursement Accounts include three accounts that are used to fund payroll for certain of the Debtor entities; three accounts that are used to fund accounts payable for certain of the Debtor entities; one which funds junk battery returns; one imprest account for Exide's Baton Rouge plant; and two two accounts which are used to pay medical benefits. Disbursements are made by check, wire transfer, or ACH debit. Nine of these disbursement accounts are funded directly from the concentration accounts at Citibank, Mellon, or First Union on a daily basis. The 10th disbursement account, held at Bank One of Louisiana, is funded primarily by Exide's collection account at Bank One of Louisiana. To the extent that this account is not fully funded, it receives additional funding from the First Union Concentration Account. Certain of the Debtors (Exide Technologies and Exide Delaware, LLC) maintain a total of four additional bank accounts that are utilized for miscellaneous purposes. Two of these bank accounts (Toronto Dominion Bank Account #'s 02747315255 and 02740511525) collect receipts from Canadian customers, and make disbursements related to Canadian operations. Another is a collection and disbursements account related to Exide Delaware, LLC (First Union Account # 2000003284009). All three of these accounts are funded by the First Union Concentration Account. Their collections are automatically transferred into the First Union Concentration Account. The fourth account is a pre-funding account maintained at Mellon Bank (Account # 900-6994) to fund direct deposit payroll of the Debtors, which is funded by the First Union Concentration Account. Given the size and complexity of the Debtors' operations, Ms. Jones believes that a successful reorganization of the Debtors' businesses simply cannot be accomplished if there is substantial disruption in the Debtors' cash management procedures. It is essential, therefore, that the Debtors be permitted to continue to consolidate management of their cash and transfer monies from entity to entity as needed and in the amounts necessary to continue the operation of their business. According to Ms. Jones, the Debtors have used the basic structure of the Cash Management System described herein for more than five years and it constitutes the Debtors' ordinary, usual and essential business practices. The Cash Management System is similar to those commonly employed by corporate enterprises comparable to the Debtors in size and complexity. The widespread use of such systems is attributable to the numerous benefits they provide, including the ability to tightly control corporate funds, invest idle cash at higher returns, ensure cash availability, and reduce administrative expenses by facilitating the movement of funds and the development of timely and accurate account balance and presentment information. These controls are particularly important given the significant amount of cash that flows through the Debtors' consolidated Cash Management System on an annual basis. Given the corporate and financial structure of the Debtors and their non-debtor affiliates, Ms. Jones believes that it would be difficult, if not impossible, for the Debtors to establish an entirely new system of accounts and a new cash management system for each separate legal entity. For example, if the Debtors were required to open separate accounts as Debtors In Possession and to rearrange their Cash Management System, it would require reopening roughly 22 separate accounts. There would also be attendant delays in the Debtors' ability to operate their businesses while pursuing these arrangements. Therefore, preserving the "business as usual" atmosphere and avoiding the unnecessary distractions that would inevitably be associated with any substantial disruption in the Debtors' Cash Management System obviously will facilitate the Debtors' reorganization efforts. If the Debtors are not permitted to continue to utilize their consolidated Cash Management System in its current form (modified to the extent necessary by the debtor in possession financing arrangements), Ms. Jones claims that their operations would be severely, and perhaps, irreparably, impaired. Accordingly, the Court should authorize the Debtors' continued use of their existing cash management system. Ms. Jones contends that it is critical both to the continued operation of the Debtors' businesses and to the preservation of the value of those businesses that the Debtors continue to utilize their existing Cash Management System without disruption. Accordingly, it is appropriate and, equally important, entirely consistent with applicable provisions of the Bankruptcy Code and case law, for the Court to approve the Debtors' centralized Cash Management System in its current form (except to the extent it needs to be modified in accordance with the Debtor In Possession financing arrangements). (Exide Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXODUS: 3-Creditor Plan Committee will Supervise Liquidation ------------------------------------------------------------ Exodus Communications, Inc.'s Creditors' Committee, until the Effective Date of the Liquidating Chapter 11 Plan, will continue to exercise its powers and perform its duties specified in Section 1103 of the Bankruptcy Code. It will also perform other duties as it may have been assigned by the District Court prior to the Effective Date. However, the Committee will be dissolved and its members deemed released of all their duties, responsibilities and obligations in connection with the Chapter 11 Cases or the Chapter 11 Plan and its implementation. The retention or employment of the Creditors' Committee's attorneys, accountants and other agents will terminate, except with respect to all Fee Claims and any appeals of the Confirmation Order. A Plan Committee, on the effective date, will be formed and constituted and consist of three Creditors' Committee members who will be appointed by the Creditors' Committee. Membership to the Plan Committee is on an institutional and not on an individual basis. Thus, in the event that a member of the Plan Committee resigns from the position on the Plan Committee, such member has the right to designate a successor. If the resigning member does designate a successor to the Plan Committee within ten days after resignation, the non-resigning members of the Plan Committee have the right to designate a successor. The Plan Committee will have independent standing to appear and be heard in the District Court on any matter relating to the Plan, the Plan Administrator, the Estates or Reorganized EXDS and shall have ultimate supervisory authority over the Plan Administrator. The Plan Committee and the Plan Committee will have the power to remove the Plan Administrator and are responsible for: A. Instructing and supervising Reorganized EXDS and the Plan Administrator with respect to their responsibilities under the Plan and the Plan Administrator Agreement; B. Reviewing and approving the prosecution of adversary and other proceedings, if any, including approving proposed settlements thereof; C. Reviewing and approving objections to and proposed settlements of Disputed Claims; D. Performing other duties that may be necessary and proper to assist the Plan Administrator and its retained professionals, and remain in existence until such time as the final distributions under the Plan have been made by the Reorganized EXDS. Except for reimbursement of actual expenses, the Plan Committee members will serve without compensation for their services. They will be indemnified and held harmless for acts or omissions in the fulfillment of their duties as Committee members. Lawyers and other professionals retained by the Plan Committee are entitled to reasonable compensation and reimbursement of actual, necessary expenses upon the submission of invoices to the Reorganized EXDS. (Exodus Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) FEDERAL-MOGUL: Judge Newsome Names Warren Smith as Fee Auditor -------------------------------------------------------------- Judge Newsome directs the employment of Warren H. Smith & Associates, P.C. as the fee auditor in Federal-Mogul Corporation and its debtor-affiliates' chapter 11 cases. Mr. Smith will act as a special consultant to the Court for professional fee and expense review and analysis effective, nunc pro tunc, to March 1, 2002. Judge Newsome arrives at this decision after having determined that the size, complexity and duration of the Debtors jointly administered cases will result in numerous and lengthy written applications for payment of professional fees and reimbursement of expenses in significant amount, Warren Smith will serve: A. all professionals in these cases employed or to be employed; B. all members of the official committees; C. the Legal Representative for Future Claimants; and, D. any claims for reimbursement of professional fees and expenses to the extent permitted by the Court except: a. professionals providing services pursuant to a flat monthly fee arrangement; b. ordinary course professionals retained upon the Court's Order; c. fees earned by professionals that represent a percentage of a specified transaction; and, d. as otherwise ordered by the Court. The specific duties of the Warren Smith are: A. The auditor will review in detail Interim Fee Requests and Final fee applications filed with the Court by applicants; B. During the course of its review and examination, the auditor will consult with each applicant concerning such applicant's fee application if he notes any areas of concern regarding reasonable, actual and necessary fees and expenses; C. During the course of his review, the Auditor may review any filed documents in these cases and is be responsible for general familiarity with the docket in these Chapter 11 cases; D. Within 30 days after service of a fee application, the auditor must communicate in writing to the applicant concerning the auditor's initial report regarding such fee application; E. Within 15 days after the date of the initial report, if the Auditor has noted any issues with respect to an applicant's fee application in such initial report, the auditor must contact the affected applicant concerning the finding, and the auditor and the affected applicant will engage in an informal response process; F. Within 45 days after the date of the initial report, the auditor will conclude the informal response process by filing with the Court a final report with respect to each fee application; G. The auditor serves each final report upon the affected applicant and the Notice Parties; and, H. The auditor must be available for deposition and cross- examination by the Debtors, each of the Committees, the United States Trustee and other interested parties, consistent with Rule 706 of the Federal Rules of Evidence. Judge Newsome declares that the fees and expenses of Warren Smith are subject to application and review and will be paid from the Debtors' estates as an administrative expense. The compensation of Warren Smith will be charged at the lesser amount of (1) the ordinary hourly rate of the auditor for services of this nature, or (2) 1% of the aggregate applicable billings reviewed by the auditor that are subject to the Court's Order over the life of the Debtors' bankruptcy proceeding. (Federal-Mogul Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLAG TELECOM: Seeks Approval to Obtain Super-Priority Financing --------------------------------------------------------------- FLAG Telecom Holdings Limited and its debtor-affiliates move the Court for interim and final Orders authorizing them to incur secured indebtedness with administrative super-priority. The Debtors contemplate borrowing cash from FLAG Telecom Holdings Ltd., or FTHL, to fund operations and then repay that cash either through the collection of receivables or through a global reorganization of the Debtors. Upon approval of this borrowing arrangement, the $210,000,000 million transferred from FTHL to its wholly owned subsidiary, FLAG Pacific Holdings Limited, will be returned. The terms and conditions for the use of the FTHL cash are: The Lender: FLAG Telecom Holdings Limited Debtor-Borrowers: FLAG Limited, FLAG Pacific USA Limited, FLAG Telecom Group Services, FLAG Telecom Limited, FLAG Telecom USA Ltd., and FLAG Asia Limited The Non-Debtor Subsidiary Borrowers: FLAG Telecom Development Limited and its direct and indirect subsidiaries (FLAG Telecom Global Network Limited, FLAG Telecom France Services, FLAG Telecom Deutschland GmbH, FLAG Telecom Services Italia Srl, FLAG Telecom Nederland BV, FLAG Telecom Hellas AE, FLAG Telecom Austria GmbH, FLAG Telecom Korea Limited, FLAG Telecom Taiwan Services Limited) Use of Cash: The Borrowers are authorized to use the cash of FTHL to pay actual expenses incurred in the ordinary course of business as consistent with past practice and in the amounts set forth in the monthly budget. This is provided, however, that the amount of the Debtors' disbursements does not exceed 110% of the total amount set forth in the budget without consent of a majority of the Official Committee of Unsecured Creditors, or if no Creditors' Committee has been duly appointed, by consent of a majority of a committee composed of the bondholders of FTHL willing to serve and Alcatel and Reach Ltd. (if willing to serve). Disclosure of Use of Cash: The Debtors will disclose to the Creditors' Committee, or the Steering Committee if no Creditors' Committee has been duly appointed, the use of the FTHL cash on a rolling weekly basis for each week. The disclosure of each week's cash use will be transmitted to counsel to the Creditors' Committee, or if no Creditors' Committee has been duly appointed, then to Kasowitz, Benson, Torres & Friedman LLP (counsel to the ad hoc FTHL bondholders' committee) and Proskauer Rose LLP (counsel to Alcatel) within seven days after the end of each weekly period. Adequate Protection for Use of Cash: As adequate protection for the use of the FTHL's cash, FTHL will be granted (i) a super-priority administrative claim, subject only to $7 million carve-out for professionals retained by the Debtors' estates pursuant to Section 364(c)(1) against each Debtor- Borrower receiving cash, in the amount of cash received by such Debtor-Borrower that cash has not be repaid to FTHL and (ii) a lien on such Debtor-Borrower's inter-company accounts receivable. Borrowing by Non-Debtor Subsidiaries: Any disbursement of FTHL cash to a Non-Debtor Subsidiary (which may occur through direct or indirect funding by FTHL) is deemed to be an inter-company loan to such Non-Debtor Subsidiary. Such inter-company loans will be secured by a lien on the inter- company account receivable of such Non-Debtor Subsidiary receiving FTHL cash. Borrowing by FLAG Atlantic: If the financial institutions that lent money to FLAG Atlantic Limited pursuant to that certain Credit Agreement dated as of October 8, 1999 consent, which consent will be communicated to the Debtors and the Court by the agent, then FTHL's cash will be lent to FLAG Atlantic pursuant to an approved budget in accordance with the provisions regarding Use of Cash of FTHL and Disclosure of use of cash. Adequate Protection for Borrowing by FLAG Atlantic: As adequate protection for the use of FTHL's cash to FLAG Atlantic, FTHL will receive a priming lien on all assets of FLAG Atlantic, its wholly-owned subsidiaries and FLAG Atlantic Holdings Limited pursuant to section 364(d), and a priority administrative expense claim pursuant to section 364(c) in the amount of FTHL cash received by FLAG Atlantic. Events of Default and Remedy: If the Borrowers fail to provide a monthly budget after the end of the period covered by the monthly budget, the cash use order and the Borrowers' and FLAG Atlantic's authority to use the cash of FTHL will terminate at the end of the period covered by the latest budget. Enforceability: The Creditors' Committee, or the Steering Committee if no Creditors' Committee is duly appointed, will be entitled to enforce the rights contained herein. The Debtors have prepared a Budget, that they have shared with counsel to the ad hoc committee of FTHL bondholders, counsel to the ad hoc committee of FLAG Limited bondholders, counsel to the Lenders under the FLAG Atlantic Credit Agreement and counsel to Alcatel Submarine Networks. Conor D. Reilly, Esq., at Gibson, Dunn & Crutcher LLP, says it is essential that the Debtors obtain access to sufficient use of cash for the success of their Chapter 11 cases. Without access to the working capital financing that will be available to the Debtors under the proposed Term-sheet on an interim and final basis, the Debtors will be unable to fund their payroll and other crucial operating costs of their businesses. Therefore, they will be unable to preserve their values as going concerns. Or, absent such use of cash, the Debtors' cases could possibly be converted to cases under Chapter 7 of the Bankruptcy Code. The Debtors' continued viability and their ability to reorganize successfully depend heavily upon the timely approval of the use of FTHL Cash as contemplated in the Term-sheet. The Debtors believe that given the general economic climate and current market conditions of the telecom industry, they would not be able to secure financing from any other source. Request for Immediate Interim Relief Pending the Final Hearing, the Debtors request that the Court schedule an interim hearing as soon as practicable to consider authorizing them to obtain emergency interim use of FTHL's cash. Mr. Reilly says the Debtors require immediate financing to pay payroll and continue to provide services to its customers. Existing Indebtedness Until the Petition Date, FLAG Atlantic Limited, FLAG Atlantic Holdings Limited, FLAG Atlantic USA Limited and certain of their non-debtor subsidiaries received operating financing under a Credit Agreement. As of the Petition Date, amounts outstanding under the Credit Agreement totaled approximately $257 million. As security for all obligations under the Credit Agreement, the FLAG Atlantic Group granted the Lenders a security interest in substantially all of their personal property assets, including accounts receivable, inventory, general intangibles and proceeds and certain real property. FTHL, pursuant to two indentures dated as of March 17, 2000, issued $300 million in principal amount of 11-5/8% Senior Notes due 2010 and 300 million Euros in principal amount of 11-5/8% Senior Notes due 2010 for an aggregate of approximately $450 million. Also, pursuant to an indenture dated as of January 30, 1998, FLAG Limited issued $430 million in principal amount of 8- 1/4% Senior Notes due 2008. (Flag Telecom Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING: Core-Mark Acquisition to Boost Distribution Revenues ------------------------------------------------------------- F&D Reports (April 29, 2002 edition) says that following the successful completion of Fleming's proposed acquisition of Core- Mark, the company will soon have another opportunity to potentially boost its convenience-store distribution revenues by more than $2.00 billion. Core-Mark is currently the largest supplier of 7-Eleven (Dallas, TX) franchise locations in the US, while Wal-Mart's McLane Company supplies 7-Eleven's US corporate units. However, 7- Eleven's 10-year distribution agreement with McLane expires in November, and 7-Eleven is "obtaining and evaluating proposals from McLane and other companies to provide distribution services after the current contract expires," F&D says. One factor in Fleming's favor: 7-Eleven officials have hinted at their disappointment with the current contract, by stating that any future distribution agreement, regardless of who it is with, will "be on terms more favorable than those set forth in the existing agreement with McLane." 7-Eleven expects improved terms due to "the increased competition in the marketplace with potential suppliers, the size of the Company's current store base and the attractiveness of its growth strategy to a potential supplier." During fiscal 2001, over 40% of all merchandise purchased by 7-Eleven, or more than $2.00 billion, was purchased from McLane. Commenting on its supply situation at a recent conference call, in which F&D Reports analysts participated, 7-Eleven indicated that it expects to have a new distribution agreement finalized by the fourth quarter and in place by the first quarter of next year. With or without new competitive bidding, 7-Eleven's financially distressed position 10 years ago certainly was the primary factor in negotiating terms of the McLane contract. * * * Fitch Ratings affirms Fleming Companies, Inc.'s 'BB+' rated secured bank credit facilities, 'BB' rated senior unsecured notes and 'B+' rated senior subordinated notes. The affirmations follow the company's announcement of its acquisition of two convenience store distribution companies for total cash consideration of approximately $430 million (including assumed debt), to be financed with a combination of debt and equity. The Rating Outlook remains Negative, reflecting the uncertainty as to the achievement of Kmart's sales levels, the ultimate nature of Fleming's agreement with Kmart, as Fleming's contract with Kmart has not yet been confirmed in the bankruptcy process and the inherent integration risks associated with the acquisitions. Also of concern is the possibility for additional Kmart store closures, beyond those already announced. FORMICA CORP: Committee Hires Jefferies as Financial Advisor ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Formica Corporation's chapter 11 cases asks the U.S. Bankruptcy Court for the Southern District of New York for permission to retain Jefferies & Company, Inc as its financial advisor, effective March 13, 2002. The Committee tells the Court that it selected Jefferies because of the Firm's expertise in providing financial advisory services to debtors and creditors in bankruptcy and distressed situations. The Committee will look to Jefferies to: a) become familiar with and analyze the business, operations, properties, financial condition and prospects of the Company as directed by the Committee and as reasonably necessary; b) advise the Committee on the current state of the "restructuring market"; c) assist and advise the Committee in developing a general strategy to effectuate a restructuring of the Debtors' outstanding indebtedness; d) assist and advise the Committee in formulating and implementing a Plan; e) assist and advise the Committee on developing a strategy with respect to recapitalization possibilities for the Company; f) assist and advise the Committee in evaluating and analyzing Restructuring transactions, including valuing any securities that may be issued under a Plan; g) advising the Committee in evaluating the value of the Company and its assets, including preparation and provision of expert testimony relating to valuation, if required; h) assist the Committee and counsel in identifying potential financing sources for a recapitalization; and i) such other services as the Committee may reasonably request from time to time in connection with the Chapter 11 cases. Jefferies will charge a $125,000 monthly fee and wants a 1% success fee based on the Total Consideration received by the Debtors' unsecured creditors. Formica, together with its debtor and non-debtor-affiliates is a preeminent worldwide manufacturer and marketer of decorative surfacing materials. The company filed for chapter 11 protection on March 5, 2002. Alan B. Miller, Esq. and Stephen Karotkin, Esq. at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. As of September 30, 2001, the Company reported a consolidated assets of $858.8 million and liabilities of $816.5 million. DebtTraders reports that Formica Corp.'s 10.875% bonds due 2009 (FORMICA1) are quoted at a price of 17. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FORMICA1for real-time bond pricing. FRUIT OF THE LOOM: Files 2001 Annual Report on Form 10-K -------------------------------------------------------- Fruit of the Loom, Inc., delivered its Annual Report on Form 10- K to the Securities and Exchange Commission. A full-text copy of that filing is available at no charge at: http://www.sec.gov/Archives/edgar/data/771298/000095013702002189/0000950137- 02-002189.txt Fruit of the Loom, Ltd.'s parallel Form 10-K is available at: http://www.sec.gov/Archives/edgar/data/1053303/000095013702002190/0000950137 -02-002190.txt Kmart Fallout Reporting on the effects of Kmart's bankruptcy filing, Fruit of the Loom management states, on January 22, 2002, Kmart Corporation and certain of its affiliates filed petitions for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois. Kmart has been Fruit of the Loom's second largest customer, as a percentage of Net sales, in each of the three years in the period ended December 29, 2001. The collectability of accounts receivable from Kmart and the prospects for future business with Kmart cannot be estimated at this time. The effect of Kmart's Chapter 11 cases on Reorganized Fruit of the Loom's future performance cannot be predicted at this time. The Company believes adequate provision has been made in the accompanying consolidated financial statements for estimated losses on Kmart's account receivable as a result of Kmart's Chapter 11 cases. Management Discussion & Analysis Net sales decreased $522,200,000 in 2001 compared to 2000. Net sales to unrelated parties decreased $211,800,000 or 13.6% in 2001 compared to 2000. The decrease in Net sales to unrelated parties was principally caused by the elimination of non-core product lines and less profitable products, decreased production and sales of irregulars, reduced pricing on certain products, and a loss of market share in certain segments. In the first quality product category, $185,700,000 of the decrease was due to a reduction in volume and a change in product mix, and $27,900,000 was attributable to lower pricing in the face of increased competition. Gross earnings increased $58,000,000 in 2001 compared to 2000. Gross earnings on sales to unrelated parties increased $72,500,000 or 31.2% in 2001 compared to 2000, and gross margin increased 7.7 percentage points to 22.7% for the year. Gross earnings in 2001 were favorably impacted by lower production costs of $133,700,000, the finalization of prior year promotional programs of $9,900,000, a favorable impact of $27,400,000 related to closeouts and irregulars, decreased freight charges related to the reduced volume of $6,200,000, improvements in obsolete inventory as a result of reduced obsolescence charges of $4,600,000 and duty refunds in 2001 of $5,300,000. Cost reductions were partially offset by price decreases aggregating $27,900,000, sales volume and production mix declines totaling $58,200,000, increased physical inventory adjustments of $8,900,000, a $9,000,000 reversal in 2000 of an accrual for property taxes and duty costs and unfavorable miscellaneous adjustments of $10,600,000. The volume declines were in line with the Company's strategy of eliminating low volume and unprofitable SKU's. Operating selling, general and administrative expenses in 2001 were equal to 2000 even though the Company reinstituted television advertising in 2001, which offset other decreases. During 2001, advertising and promotion expenses increased $30,100,000, and bad debt expense increased $6,300,000 over 2000, principally related to the Chapter 11 bankruptcy filing of a major customer in January 2002. These increases were offset by a $12,600,000 reduction in salaries and employment costs, a $5,900,000 reduction in office and related expenses, a $7,800,000 reduction in software expense and a $7,200,000 decrease in royalty expense as a result of the decrease in Net sales. The Company incurred and recognized several one-time or non- recurring costs in both 2001 and 2000. In 2001 and 2000, the Company incurred $42,600,000 and $73,300,000, respectively, in consolidation costs recorded in Selling, general and administrative expenses, principally related to the closure of certain of the Company's higher cost production facilities. Interest expense decreased $26,900,000 or 21.6% in 2001 compared to 2000. The decrease reflected a lower average interest rate and lower average borrowing levels in 2001 compared to 2000. Reorganization items represent costs incurred by the Company related to the Reorganization Cases. Reorganization items in 2001 and 2000 aggregated approximately $33,800,000 and $48,200,000, respectively, and consist of professional fees that include legal, accounting, consulting and other services provided to the Company related to the Reorganization Cases. As a result of the foregoing, Fruit of the Loom produced a net loss of $175,800,000 in 2001, compared to a net loss of $225,700,000 in 2000. (Fruit of the Loom Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 609/392-0900) GEOWORKS CORP: Commences Trading on Nasdaq SmallCap Market Today ---------------------------------------------------------------- Geoworks Corporation (Nasdaq: GWRX) announced that Nasdaq has approved the Company's request to have its common stock traded on the Nasdaq SmallCap Market effective May 1, 2002. The securities will continue trading under the symbol GWRX. The Company has until May 30, 2002 to satisfy Nasdaq's requirement that there be three independent directors on the Company's audit committee. The Company is actively seeking qualified candidates for its audit committee. Geoworks must also continue to meet the other Nasdaq listing requirements in order for its common stock to remain listed. Geoworks Corporation is a provider of leading-edge software design and engineering services to the mobile and handheld device industry. With nearly two decades of experience developing wireless operating systems, related applications and wireless server technology, Geoworks has worked with industry leaders in mobile phones and mobile data applications including Mitsubishi Electric Corporation and Nokia. Based in Emeryville, California, the company also has a European development center in the United Kingdom. Additional information can be found on the World Wide Web at http://www.geoworks.com GLOBAL CROSSING: Hutchison Buys Asian Unit's Assets for $120MM -------------------------------------------------------------- Asia Global Crossing and Hutchison Telecommunications Limited, a wholly owned subsidiary of Hutchison Whampoa Limited announced that they have reached an agreement for Hutchison to acquire Asia Global Crossing's stake in their respective joint venture companies in Hong Kong, namely Asia Global Crossing's 50 percent interest in Hutchison Global Crossing, its 42.5 percent interest in ESD Services and its 50 percent interest in Hutchison Globalcenter, for a total consideration of US$120 million in cash. Under the agreement, Hutchison Global Crossing and Hutchison Globalcenter will become wholly owned subsidiaries of Hutchison, while Hutchison will have an indirect 85 percent stake in ESD Services. HWL Group Managing Director Canning Fok said, "Hutchison Global Crossing, Hutchison Globalcenter and ESD Services have always been important assets of the Hutchison Group, and we are pleased to acquire control of the Hong Kong businesses." Mr. Fok reassured customers of the three companies that operations will not be affected by the change in ownership and the core management team will remain largely unchanged. "We have a very good working relationship with the management of Asia Global Crossing and our companies will continue commercial relationships with Asia Global Crossing in Hong Kong," Mr. Fok added. Hutchison and Asia Global Crossing have agreed to continue to use each other's services. Hutchison will access the Asia Global Crossing networks for its regional capacity needs, and Asia Global Crossing will continue to provide city-to-city services in Hong Kong through Hutchison Global Crossing. "The telecommunications industry and regulatory landscape have changed since we formed Hutchison Global Crossing three years ago, and Hutchison and Asia Global Crossing each have business goals that are better met with a continuing commercial relationship instead of through the existing joint venture. Asia Global Crossing's business strategy is to be the leading telecommunications infrastructure and services provider among the major business centers in Asia, so we are pleased to continue to connect to Hutchison Global Crossing for our Hong Kong requirements," said Jack Scanlon, vice chairman and acting chief executive officer, Asia Global Crossing. "Additionally, this divestiture benefits our ongoing financial restructuring activities, and we expect that the US$120 million will extend our runway well into 2003." Hutchison Whampoa is a Hong Kong-based multinational conglomerate with origins dating back to the 1800s. Hutchison is also part of the Li Ka-shing group of companies, which together represent about 15% of the total market capitalization of the Hong Kong stock market. In 2001, HWL's consolidated turnover (including associates) was HK$89,038 million and net profit was HK$12,088 million. With over 100,000 employees worldwide, Hutchison operates and invests in five core businesses in 36 countries: ports and related services; telecommunications; property and hotels; retail and manufacturing; and energy and infrastructure. Worldwide, the Group is one of the leading owners and operators of telecommunications infrastructure, offering a wide range of related services. These include mobile telephony (voice and data), fixed-line services, Internet services, fibre optic broadband networks, paging, trunked mobile radio and radio broadcasting services. For more information, visit http://www.hutchison-whampoa.com Asia Global Crossing, a company whose largest shareholders include Global Crossing, Softbank (Tokyo Stock Exchange: 9984), and Microsoft (Nasdaq: MSFT), provides the Asia Pacific region with a full range of integrated telecommunications and IP services. Through a combination of undersea cables, terrestrial networks, city fiber rings and complex web hosting data centers, Asia Global Crossing is building one of the first truly pan- Asian networks, which will provide seamless connectivity among the region's major business centers. In addition, in combination with the Global Crossing Network, Asia Global Crossing provides access to more than 200 cities worldwide. As part of its strategy to provide city-to-city services, Asia Global Crossing partners with leading companies in each country it connects to provide backhaul networks. Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1), DebtTraders says, are quoted at a price of 22. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1 for real-time bond pricing. GUARDIAN TECHNOLOGIES: Nasdaq Delists Shares Effective April 29 --------------------------------------------------------------- Guardian Technologies International, Inc. (Nasdaq:GRDN), has been notified by NASDAQ that the Company's securities will be delisted from the NASDAQ Stock Market effective with the open of business April 29, 2002, for failure to meet NASDAQ's maintenance requirement for continued listing with respect to net tangible assets/shareholders equity. The Company was further notified that its securities are automatically eligible for trading on the OTC Bulletin Board once the Company's Annual Report on Form 10K is filed with the Securities and Exchange Commission. Guardian, through its wholly-owned subsidiary Guardian Security & Safety Products, Inc. (GSSP), serves the law enforcement, security and military communities and the global security industry. GSSP's majority-owned subsidiary, ForceOne, LLC, manufactures a variety of high-end ballistic protective equipment including patented personal protection devices commonly referred to as body armor. Guardian, through its wholly-owned subsidiary Guardian Steel, is engaged in structural steel fabrication and provides among its products, structural steel used primarily in military base refurbishments and other projects under Federal contract. HAWK CORP: Pursuing Initiatives to Restructure Credit Facilities ---------------------------------------------------------------- Hawk Corporation (NYSE: HWK) reported a net loss for the first quarter ended March 31, 2002 of $0.07 per diluted share compared to net income of $0.10 per diluted share in the first quarter of 2001. The reported results were better than analysts' estimates for the quarter. The Company reported net sales of $49.8 million in the first quarter of 2002, a 7 percent decrease from $53.8 million in the year-ago first quarter. As expected, the Company did not see a full rebound in the markets it serves. Although the friction products and precision components business segments were below the corresponding first quarter of 2001, both segments posted gains above the revenue levels achieved in the fourth quarter of 2001. Net sales in the motor segment increased over year earlier first quarter levels as net sales from the Company's Mexican facility increased. The Company reported income from operations of $1.2 million in the first quarter of 2002, a decrease of $2.7 million or 69 percent compared to income from operations of $3.9 million for the comparable quarter in 2001. The decline in operating income was due primarily to volume declines in the quarter, product mix and to a lesser extent, continued funding of the Company's Mexican, Chinese and metal injection molding start-up operations. Compared with the fourth quarter of 2001, net sales increased $8.8 million, or approximately 21 percent. Income from operations improved by $3.0 million, to $1.2 million in the first quarter of 2002, from a loss of $1.8 million in the fourth quarter of 2001. The improvements in net sales and income from operations were due to improving economic conditions in the United States, a continuing comeback in the Company's aerospace market, the seasonal growth during the quarter in some of the markets served by the Company, including lawn and garden and agriculture, as well as continued emphasis on the Company's previously announced cost cutting initiatives. "Although we still operated in difficult market conditions during the quarter, we have experienced positive signs since the end of 2001," said Ronald E. Weinberg, Chairman and CEO. "We expect this gradual recovery in our markets to continue through the balance of 2002. We have improved our cost structure during the last six months and our new product applications should provide us additional operating benefits as the economy continues to recover." Segment Results In the friction products segment, first quarter net sales decreased 12 percent to $26.0 million from $29.6 million a year ago. Compared to the year-ago quarter, the friction products segment experienced volume declines in most of its markets during the quarter, especially the aerospace market, which declined 27 percent, primarily as a result of the events of September 11. However, sales to the aerospace market increased by $0.5 million, or 12 percent in the first quarter of 2002 from the fourth quarter of 2001. Overall, compared to the fourth quarter of 2001, sales in the friction products segment increased 13 percent. Income from operations during the first quarter of 2002 was $0.8 million, a decrease of $2.1 million, or 72 percent, from $2.9 million in the comparable quarter of the prior year. The decline in operating income was caused primarily by volume declines, product mix and continuing start-up costs at the Company's Chinese facility. Nevertheless, the Chinese facility continues to operate on target for 2002 and we expect the facility to contribute operating profits by the fourth quarter of 2002. In the precision components segment, net sales decreased 3 percent to $17.2 million in the first quarter of 2002 from $17.8 million in the year-ago quarter. The decline during the quarter was due to volume reductions primarily from customers in the lawn and garden, heavy truck and office equipment markets. The segment reported income from operations in the first quarter of 2002 of $0.1 million compared to income from operations of $1.1 million during the comparable quarter of 2001. This segment experienced increased sales of 30 percent compared to the fourth quarter of 2001. Net sales in the Company's performance automotive segment, which consists of high performance racing clutches and drive train components, decreased 7 percent, to $3.9 million, in the first quarter of 2002, from $4.2 million in the year-ago quarter. This decrease was the result of the soft economy reducing sponsorship money for race teams in 2002. The segment reported income from operations for the first quarter of 2002 of $0.8 million compared to income from operations of $0.4 million in the comparable prior year period. The increase in operating income was primarily the result of cost cutting initiatives undertaken by the Company in the latter half of 2001. In the Company's motor segment, first quarter 2002 net sales increased $0.5 million, or 23 percent, to $2.7 million from $2.2 million a year ago. This increase is due to new customers at the Company's Mexican facility. Losses from operations during the first quarter of 2002 were $0.5 million compared to a loss of $0.4 million in the comparable quarter of 2001. Revenues in this market increased 17 percent compared to the fourth quarter of 2001 as the Mexican facility continues to increase its volumes. Balance Sheet The Company's bank credit facilities are due in March 2003. As a result, during the first quarter of 2002, the Company reclassified $29.3 million of debt outstanding under these facilities as current portion of long-term debt. As previously stated, the Company is in the process of pursuing strategic financing alternatives, including the restructuring or refinancing of its debt and bank credit facilities, both of which are due in 2003. Working capital assets increased in the first quarter of 2002, primarily as a result of increased sales activity during the quarter in addition to seasonal stocking programs for customers in its lawn and garden markets which typically require extended payment terms. The terms of these programs provide for the collection of the receivables in the second quarter of 2002. Business Outlook "The first quarter performed to our expectations as we gradually emerge from this difficult economic environment," according to Mr. Weinberg. "We are beginning to see the return of our revenue base, especially when compared to fourth quarter levels and we remain confident with regard to our expectations for the rest of the year. In spite of the tentative economic outlook, we still expect to see revenue growth in a range of 5 to 10 percent for 2002, as a result of new product introductions in the friction and precision component segments, as well as new customer relationships being established in the Company's motor group." The Company still expects that the improvements in the economy will be gradual and will be more pronounced during the second half of the year. Mr. Weinberg stated that, "The Company is still expecting its EBITDA for the full year 2002 to be approximately 20 percent higher than the EBITDA achieved in 2001." Accounting Change The first quarter 2002 results reflect the elimination of goodwill amortization as required by the Statement of Financial Accounting Standard 142 "Goodwill and Intangible Assets." The elimination of goodwill amortization in the first quarter of 2002 had a favorable impact on the Company's operating income of $0.8 million. The Company is in the process of preparing the valuation analysis required by this new standard to determine if there is any goodwill impairment. The analysis will be completed in the second quarter of 2002. Hawk Corporation is a leading worldwide supplier of highly engineered products. Its friction products group is a leading supplier of friction materials for brakes, clutches and transmissions used in airplanes, trucks, construction equipment, farm equipment and recreational vehicles. Through its precision components group, the Company is a leading supplier of powder metal components for industrial applications, including pump, motor and transmission elements, gears, pistons and anti-lock sensor rings. The Company's performance automotive group manufactures clutches and gearboxes for motorsport applications and performance automotive markets. The Company's motor group designs and manufactures die-cast aluminum rotors for fractional and subfractional electric motors used in appliances, business equipment and HVAC systems. Headquartered in Cleveland, Ohio, Hawk has approximately 1,550 employees and 16 manufacturing sites in five countries. HAYES LEMMERZ: Court Allows Panel Members to Trade Securities ------------------------------------------------------------- Judge Walrath grants the Hayes Lemmerz International, Inc.'s Unsecured Creditors Committee's motion to permit members' securities trading in its entirety and overrules all objections to the motion. As previously reported, those Committee members have a fiduciary duty to maximize returns for their clients through the buying and selling of securities. But as members of the Official Committee of Unsecured Creditors, these securities firms and their affiliates also owe a fiduciary duty to other creditors not to divulge any confidential or inside information regarding the Debtors. If a securities firm is barred from trading in the Debtors' securities during the pendency of these cases because of the firm's duties to other creditors, then that firm risks the loss of a beneficial investment opportunity for its clients. On the other hand, if that securities firm resigns from the Creditors' Committee, the interests of its shareholders may be compromised because that firm will now take less active role in Hayes Lemmerz' reorganization process. With this Court approval, the Creditors' Committee is allowed to adopt screening wall procedures that will allow them to trade in the Debtors' securities and at the same time remain as productive committee members, without violating their fiduciary duty to either constituency. The Court, thus, determined that those committee members, acting in any capacity, engaged in the trading of securities as a regular part of their business, can trade in the Debtors' stock, Notes, Bank Debt, and Synthetic Lease Debt obligations, or any other claim or interest against the Debtors' estates, without violating their duties as committee members. The members, therefore, will not subject their claims to possible disallowance, subordination, or other adverse treatment by engaging in any trading activities. A screening wall refers to a procedure established by an institution to isolate its trading activities from its activities as a member of the Creditors' Committee in a chapter 11 case. This screening wall includes features such as the employment of different personnel to perform each function and physical separation of office and file space. The Securities Firms must establish and effectively implement information blocking policies and procedures to prevent the misuse of non- public information obtained through their activities as Committee members. Additionally, along with the motion's approval, the Court to gives its blessing to these policies and procedures to implement an effective screening wall for the Securities Firms to use: A. Each person employed by a securities firm involved in committee matters shall execute a letter acknowledging that they may receive non-public information regarding the Debtors and that they are aware of the information blocking procedures which are in effect with respect to the non- public information and the securities; B. The employee of that firm shall not directly share any non- public information concerning these cases with other employees of that securities firm, except for regulators, auditors and legal personnel who will render legal advice to such employees and who will not share such non-public information; C. Each of the firm's employee shall maintain all files containing non-public information received in connection with or generated from committee activities in places that are not accessible to other employees of the securities firm; D. Each of the firm's employees shall not receive any information regarding the firm's trades in the securities in advance of the execution of such trades, except the usual and customary internal and public reports showing such securities firm's purchases and sales and the amount and class of securities owned by such securities firm, including the securities; and, E. The securities firm's compliance department shall, from time to time, review the screening wall procedures to ensure compliance therewith and shall maintain records of such review. (Hayes Lemmerz Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) ICG COMM: Wins Nod to Pay Exit Financing Expenses & Break-Up Fee ---------------------------------------------------------------- ICG Communications, Inc. and its subsidiaries and affiliates Debtors, represented by Marion M. Quirk of the Wilmington office of Skadden Arps Slate Meagher & Flom, present Judge Peter Walsh with an emergency motion for an order approving certain expense reimbursement and break-up fee provisions for the providers of a commitment for $65 million in new financing in connection with the Debtors' Second Amended Joint Plan of Reorganization. The New Financing Commitment From Cerberus The Debtors' Plan is dependent upon the closing of transactions that will provide the reorganized Debtors with $65 million in exit financing. The Debtors have pursued numerous exit financing alternatives for many months, including new debt or equity investments in the Debtor, and the exit financing set forth in the proposed Plan and Disclosure Statement is the most favorable -- and in fact the only -- new financing that the Debtors have been able to obtain from any party. As Ms. Quirk assumes Judge Walsh is well aware, it is extremely difficult to obtain financing in the highly troubled telecommunications industry in which the Debtors operate. Months ago, the Debtors entered into preliminary discussions with one potential source of new financing, Cerberus Capital Management, L.P. Indeed, the Debtors obtained this Court's authority on or about September 26, 2001 to reimburse CCM's due diligence costs, up to $500,000, in order to incentivize CCM to proceed to the next phase of negotiations and due diligence with respect to potential exit financing. $25M Term Loan On Consummation of Plan As contemplated by the Prior CCM Order, after many months of arms-length negotiations between the parties, on April 3, 2002, CCM and certain other parties executed a letter committing to provide $25 million of new financing to the reorganized Debtors, in the form of a $25 million secured subordinated term loan in connection with the proposed Plan, to be funded on the Plan's effective date, if the Plan is confirmed and consummated. ICG to Issue $40M Debentures; CCM to Purchase $35M In addition, on April 3, 20002, CCM and certain other parties executed commitment letters for an additional $40 million in new financing to the reorganized Debtors, in the form of $40 million of convertible unsecured debentures, of which CCM will purchase $35 million, in connection with the proposed Plan, to be funded on the Plan's effective date, if the Plan is confirmed and consummated. The Debtors believe that the terms and conditions negotiated with CCM and the other parties for the financing are reasonable, appropriate, and in the best interests of the Debtors' estates. The Debtors Pay Up to $1.1M in Expenses; $3.25M Break-Up Fee and Provide Indemnity Taken together, the commitment letters require the Debtors to: (i) reimburse the Investors for all reasonable costs, fees and expenses incurred by or on behalf of them in connection with the negotiation, preparation, execution of the commitment letter, the term sheets attached to the commitment letters, and any and all definitive documents relating thereto, including the reasonable fees and expenses of their counsel and consultants, up to a maximum aggregate reimbursement of $1.1 million, with $575,000 to be advanced by April 30, 2002. Unused advances shall be returned to the Debtors if the Financing is not consummated; (ii) pay break-up fees of $3.25 million, which constitutes approximately 5% of the total financing, in the event that the Debtors consummate, on or before the six month anniversary of the execution of the commitment letters, (a) a debt financing (other than the refinancing of the Debtors' existing $85 million bank credit facility with another similar facility) or equity financing (other than the Financing), or (b) a sale of all or substantially all of its assets; and (iii) provide certain indemnification to the Investors, as set forth in the commitment letters. The Indemnity The Indemnity in the commitment letter provides that, subject to Judge Walsh's approval, ICG agrees to indemnify and hold harmless the Lenders, their respective affiliates, directors, officers, employees, agents and assignees (including affiliates) from any and all losses, claims, damages, liabilities or other expenses to which such indemnified party may become subject, insofar as such losses, claims, damages, liabilities (or actions or proceedings commenced or threatened) or other expenses arise out of or in any way relate to or result from this commitment letter, the term sheet, or the commitment made in it, or in any way arise from any use or intended use of this commitment letter, the term sheet, or the proceeds of the financing, and ICG agrees to reimburse each indemnified party for any legal or other expenses incurred in connection with investigating, defending or participating in such loss, claim, damage, liability or other action or proceeding (whether or not the indemnified party is a party to the action or proceeding out of which indemnified expenses arise), but excluding all expenses, losses, claims, damages or liabilities that are finally determined in a non-appealable decision of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of the indemnified party. In the event of any litigation or dispute involving the commitment letter, term sheet or the financing, no Lender shall be responsible or liable to ICG or any other person or entity for any special, indirect, consequential, incidental or punitive damages. The obligations of ICG under this indemnity shall remain effective whether or not any of the transactions contemplated by the commitment letter are consummated, any definitive legal documents executed, and notwithstanding any termination of this commitment letter, and shall be binding upon Reorganized ICG in the event any plan of reorganization is consummated. Fair and Reasonable Terms The Debtors, with the assistance of their advisors, have been negotiating with the Investors for the past several months with respect to the proposed terms of the Financing. The Investors have insisted that their commitments be conditioned upon Court approval of the Expense Reimbursement, the Break-Up Fee and the Indemnification. The Debtors believe that the Break-Up Fee, Expense Reimbursement and Indemnification are fair and reasonable. The Investors have undertaken intensive analysis and due diligence prior to executing the commitment letters. Extensive documentation will now be required to implement the Financing. The Debtors do not anticipate pursuing any alternate financing, having done so extensively for many months. To be able to have the commitment letters remain binding on the Investors, and thus be in a position to confirm the Plan, the Debtors are required to have the Break-Up Fee, Expense Reimbursement and Indemnification approved by this Court by April 30, 2002. Accordingly, the Debtors are seeking approval of these provisions. The Debtors' Argument Historically, bankruptcy courts have approved bidding incentives such as break-up fees and expense reimbursement under the "business judgment rule," which proscribes judicial second- guessing of the actions of a corporation's board of directors taken in good faith and in the exercise of honest judgment. Recently, the Third Circuit Court of Appeals propounded standards for determining the appropriateness of bidding protections in the bankruptcy context. The court held that even though bidding incentives are measured against a business judgment standard in nonbankruptcy transactions, the administrative expense provisions of Bankruptcy Code section 503(b) govern in the bankruptcy context. Accordingly, to be approved, bidding incentives must provide some benefit to the debtor's estate. The Circuit Court identified at least two instances in which bidding incentives may provide benefit to the estate. First, benefit may be found if "assurance of a break-up fee promoted more competitive bidding, such as by inducing a bid that otherwise would not have been made and without which bidding would have been limited." Second, where the availability of bidding incentives induce a bidder to research the value of the debtor and submit a bid that serves as a minimum or floor bid on which other bidders can rely, "the bidder may have provided a benefit to the estate by increasing the likelihood that the price at which the debtor is sold will reflect its true worth." Whether evaluated under the "business judgment rule" or the Third Circuit's "administrative expense" standard, the Expense Reimbursement and Break-Up Fee pass muster. After months of discussions with numerous third parties for new financing, the Investors' commitments are the only commitments received by the Debtors to date. Numerous parties are, however, aware that the Debtors have been looking for new investment commitments. Until the Plan is confirmed, it is theoretically possible (albeit highly unlikely) that an alternate investor could emerge and offer a commitment for financing on higher and better terms, and that if so, the Debtors could be obligated to consider it. The Investors' commitments, issued after extensive diligence and negotiation, provides a floor against which other potential investors can rely and which the Debtors can disclose in their Disclosure Statement accordingly. The amount of the Break-Up Fee -- 5% of the value of the Financing -- constitutes a fair and reasonable percentage of a proposed investment. Importantly, here, while a 5% break-up fee is on the high end of break-up fees authorized in chapter 11 cases, the Debtors believe that the unusually extensive efforts undertaken by the Investors here, coupled with the virtual impossibility of obtaining new capital investments in telecommunications companies in today's market, plus the fact the confirmation hearing is literally a month away (making the likelihood of the break-up fee coming into play highly remote), justifies this amount. Further, the Investors would not have executed the commitment letters absent the Expense Reimbursement and Break-Up Fee. Therefore, such incentives will have "induc[ed] a bid that otherwise would not have been made and without which bidding would [be] limited." Moreover, the mere existence of the Expense Reimbursement and the Break-Up Fee permits the Debtors to insist that competing bids or offers be materially higher or otherwise better than the agreements with the Investors, which is a clear benefit to the Debtors' estates. Judge Walsh Agrees Acting quickly to keep this case moving toward confirmation, Judge Walsh grants the Motion, approves the fees and indemnity, and authorizes the Debtors to pay CCM as described in the Motion. (ICG Communications Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) ICH CORP: Court Okays J.H. Cohn as Committee's Financial Advisor ---------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases commenced by ICH Corporation secured approval from the U.S. Bankruptcy Court for the Southern District of New York to retain J.H. Cohn to perform certain accounting and financial advisory services. Specifically, J.H. Cohen will: a) review Debtors' short-term cashflow projections for reasonableness; b) gain an understanding of Debtors' accounting systems; c) monitor Debtors' post-petition operating results and cash flows; d) ascertain Debtors' current financial condition; e) review historical financial information; f) review key employee retention plans; g) review proposed financing commitments; h) review Debtors' expense structure and identify opportunities for further reductions; i) prepare a liquidation analysis; j) analyze restaurant-by-restaurant profitability to determine if additional unprofitable restaurant closings are appropriate; k) identify and/or evaluate strategies to maximize the value of the estate, including the sale of non-strategic assets; l) review the books and records of Debtors for related party and/or potential avoidance actions; m) ascertain the reasonableness of Debtors' long-term viability and plan of reorganization; n) render other bankruptcy and consulting services, attend hearings and/or meetings, and render such assistance as the Creditors' Committee and its counsel may deem necessary. The Debtors relate that J.H. Cohn will be rendering services on an hourly basis at the Firm's customary hourly rates: Senior Partner $450 Partner $385 Director $350 Senior Manager $300 Manager $275 Supervisor $250 Senior Accountant $210 Staff $160 Paraprofessional $110 ICH Corporation, a Delaware holding corporation, which operates Arby's restaurants, located primarily in Michigan, Texas, Pennsylvania, New Jersey, Florida and Connecticut. The Company filed for chapter 11 protection on February 5, 2002. Peter D. Wolfson, Esq., at Sonnenschein Nath & Rosenthal represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of over $50 million. IT GROUP: Seeks Approval to Reject 23 Non-Residential Leases ------------------------------------------------------------ The IT Group, Inc. and its debtor-affiliates ask for Court approval to surrender 23 nonresidential real property leases and related subleases, effective March 31, 2002. The Debtors have determined that these office and warehouse spaces are no longer needed in the Debtors' ongoing operations. The Debtors, however, remain obligated under the respective leases. The Debtors also waive their right to withdraw this Motion. Marion M. Quirk, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP in Wilmington, Delaware, accords that the rent and expenses for the leases is approximately $171,128 a month. These expenses due under the leases constitute unnecessary administrative expenses and only drain the Debtors' cash flow. Moreover, the Debtors do not believe that they would be able to obtain any value for the leases by assigning them to third parties, as revealed by the below-market sublease arrangements currently in place in regard to both the subleases proposed to be rejected. Mr. Quirk submits that the Debtors have sent letters to each affected landlord that the premises are abandoned. The keys to such premises have been returned by separate letter or hand delivery. The Debtors also arranged for utility charge accounts listed under any Debtors' name pursuant to the terms of the Leases, if any, either to be disconnected or switched over into the landlord's name, as appropriate. The Debtors also propose to return security deposits to subtenants, if any. The return of deposits would be pursuant to the terms of the master lease and any sublease to the extent appropriate pursuant to the non-bankruptcy law. This would be accomplished within 10 days after entry of the Court's approval of the rejection. In addition, they also propose to pay the undisputed administrative rent claims of the landlords whose contracts will be rejected. Similarly, Mr. Quirk says, the Debtors intend to remit to the lessors any and all monies paid to the Debtors by subtenants pursuant to any sublease to the extent such payment represents payment for rent or other obligations accrued on after the rejection date. This would be accomplished within 10 days after approval from the Court. In turn, the Debtors require the lessors to return any security deposits to the Debtors pursuant to the terms of any lease within 10 days after the Court approves this Motion. Mr. Quirk informs the Court that the leases and subleases to be rejected are: Landlord/ Nondebtor Party Site ------------------------- --------------------------------- Prudential Jack White Business Park Blvd, Anchorage, AK Fyfe Partnership East 59th St, Anchorage, AK East-West Towers Suite 200, Bethesda, MD Gateway 51 Partnership Columbia Gateway Dr, Columbia, MD Oregon Venture Group Bertelsen Rd, Eugene, OR Global Finance Airport Way, Fairbanks, AK College Partners College Ave, grand Rapids, MI PARMCO Broadway SW, Grandville MI Highwoods Realty Patewood Dr, Greenville SC Hunter's Chase Apartments Marlton, NJ H & W Realty Boundary Rd., Midlothian, VA Cary Gateway Morrisville, NC Skillman Corp. New Brighton, MN Woodmen of the Word Society Farnam, St., Omaha, NE W. 42nd Street Realty E. Wood St., Phoenix, AZ Washington Real Estate Inv Parklawn Dr., Rockville, MD Technology Park Partners San Bernardino, CA Transcontinental Realty San Francisco, CA Starwood Asset Management Washington, DC Geis Realty Group Drummers Lane, Wayne, PA Promenade Office Park Westlake Village, CA Walter M. Rose Kennedy Business Pk, Windsor, CT Windsor Industrial Park. Windsor, NJ (IT Group Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) IMPSAT FIBER: Seeking Nod to Formalize Chapter 11 Restructuring --------------------------------------------------------------- IMPSAT Fiber Networks, Inc. (NASDAQ: IMPT), a leading provider of integrated telecommunications services in Latin America, announced that as of May 1, 2002, Guillermo Jofre will step down as chief financial officer of the Company to pursue personal initiatives. Hector Alonso will replace Mr. Jofre and will be responsible for all financial and administrative functions including treasury, accounting, information technology, risk management and auditing. Mr. Alonso joined Impsat in 1993 and has held a number of senior executive positions with the Company, including his most recent one as chief operating officer. Commenting on the announcement, Impsat's chief executive officer, Ricardo Verdaguer stated, "We are very pleased to have Hector Alonso direct the financial operations of Impsat. His excellent performance as a member of the senior management along the past nine years, and his knowledge of the company and finance gives us great confidence in his abilities to help the company at this crucial time. "Guillermo Jofre has been an enormous contributor to our expansion across South America," continued Mr. Verdaguer. "He directed our efforts to obtain the financing that allowed us to develop the first pan-Latin telecommunications network during the past several years, and has been instrumental in the coordination of the Company's financial restructuring. We're pleased that he will continue as an advisor to the Company. On behalf of Impsat, we wish him the best in his personal endeavors." Mr. Jofre stated, "These past seven years at Impsat have been filled with exceptional professional rewards. I will always be grateful for them. After careful consideration, I've decided to begin a new phase in my life and undertake some personal initiatives that I had previously postponed." As recently announced, Impsat has reached an agreement in principle with several of its largest creditors in support of a restructuring plan to reduce the Company's overall indebtedness. The Company is currently involved in obtaining additional creditor support to formalize its financial restructuring plan under Chapter 11. Impsat Fiber Networks, Inc. is a leading provider of fully integrated broadband data, Internet and voice telecommunications services in Latin America. Impsat has recently launched an extensive pan-Latin American high capacity broadband network in Brazil, Argentina, Chile and Colombia using advanced technologies, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. The Company has also deployed fourteen facilities to provide hosting services. Impsat currently provides services to 3,000 national and multinational companies, government entities and wholesale services to carriers, ISPs and other service providers throughout the region. The Company has local operations in Argentina, Colombia, Venezuela, Ecuador, Mexico, Brazil, the United States, Chile and Peru. Visit us at http://www.impsat.com According to DebtTraders, Impsat Corp.'s 13.75% bonds due 2005 (IMPT05ARR1) (with IMPSAT Fiber Networks as underlying issuer) are quoted at a price of 4. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=IMPT05ARR1 INTEGRATED HEALTH: Wants to Assume Three More New Mexico Leases --------------------------------------------------------------- Integrated Health Services, Inc., including IHS Acquisition No. 151, moves the Court, pursuant to Secs. 105(a) and 365(a) of the Bankruptcy Code and Bankruptcy Rule 6006, for entry of an order authorizing the Debtors to assume three leases of improved real property in New Mexico. IHS 151 operates a health care facility at each of the locations covered by the three leases. The three leases are: A. The Casa Arena Blanca Nursing Center Lease: Location: 205 Moonglow, Alamagordo, NM 88310; Date of Lease: March 12, 1993; Term of Lease: Ten years, with four option periods of five years each; Landlord: LTC Properties, Inc.; Present Tenant: IHS 151; B. The Casa Maria Healthcare Center Lease: Location: 1601 S. Main St., Roswell, NM 88201; Date of Lease: November 1, 1992; Term: Ten years, with four option periods of five years each; Landlord: LTC Properties, Inc.; Present Tenant: IHS 151. C. The Las Cruces Nursing Center Lease: Location: 2029 Sagecrest Ct., Las Cruces, NM 88001; Date of Lease: April 5, 1991 (three amendments made in 1991, 1992 and 1995 respectively); Term: Expires March 31, 2007; Present Landlord: Las Cruces Associates, L.P.; Present Tenant: IHS 151. The Debtors wish to assume the Leases because they are all profitable, and generate a not-insignificant portion of the net revenue the Debtors need in order to reorganize. Specifically, the EBITDA numbers for fiscal year-end are: 2002 2000 2001 (Projected) -------- -------- ----------- Casa Arena $120,149 $150,014 $324,083 Casa Maria $597,087 $722,556 $687,418 Las Cruces $683,172 $685,921 $969,611 (Integrated Health Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) JUNIPER CBO: Fitch Hatchets Several Notes' Ratings to Junk Level ---------------------------------------------------------------- Fitch Ratings has downgraded its ratings on seven classes of notes issued by Juniper CBO 1999-1 Ltd. The deal is a collateralized bond obligation (CBO) backed predominantly by high yield bonds. The securities have been downgraded and removed from Rating Watch Negative: --$134,000,000 Class A-1 notes to 'AA-' from 'AAA'; --$34,000,000 Class A-2 notes to 'A-' from 'AA+'; --$60,000,000 Class A-3A notes to 'CCC-' from 'BB-'; --$40,000,000 Class A-3B notes to 'CCC-' from 'BB-'; --$26,000,000 Class B-1 notes to 'C' from 'B-'; --$13,000,000 Class B-2 notes to 'C' from 'CC'; --$10,000,000 Class B-2A notes to 'C' from 'CC'. As of its April 2, 2002 report, Juniper CBO 1999-1 Ltd. was failing its class A OC ratio at 98.3% with a trigger of 115% and its class B OC ratio at 87.2% with a trigger of 104%. The transaction's portfolio has experienced over $29.3 million (7.1% of collateral) in new defaults since the beginning of March 2002. Fitch previously downgraded six classes from this transaction on Feb. 4, 2002. In reaching its rating actions, Fitch reviewed the results of its cash flow model runs after running several different stress scenarios. KAISER ALUMINUM: Gets OK to Hire Seyfarth Shaw as Labor Counsel --------------------------------------------------------------- Kaiser Aluminum Corporation, and its debtor-affiliates wins the Court's approval to employ and retain Seyfarth Shaw as labor, employment and benefits counsel in their chapter 11 cases. Among other things, Seyfarth is expected to: A. Advise and assist the Debtors regarding issues relating to their collective bargaining agreements, employee benefit plans, and retiree benefit plans; B. Advise and assist the Debtors in collective bargaining negotiations with unions and other employee and retiree representations in connection with labor employment and benefit matters; C. Advise and assist the Debtors regarding labor practices and union representation matters; D. Advise and assist the Debtors in connection with grievances and arbitrations; E. Advise and assist the Debtors in connection with claims of employee discrimination; and, F. Advise and assist the Debtors in such other labor, employment and benefit matters as may be requested by the Debtors; Seyfarth's professionals who are primarily responsible for rendering services to the Debtors postpetition and their corresponding hourly rates are: Professional Position Hourly Rate -------------------- ------------ ------------- Jeremy P. Sherman Partner $375 William Factor Partner $300 Mark A. Casciari Partner $335 Joel H. Kaplan Partner $410 Ronald J. Kramer Partner $265 Philip A. Miscimarra Partner $435 Peter C. Miller Partner $335 Stacy C. Shartin Partner $385 Diana Tabacopoulos Partner $315 Kristin E. Michaels Partner $280 Gregory M. Davis Associate $260 Christopher DeGregoff Associate $260 Brian Stolzenbach Associate $170 Michael Gallion Associate $235 Catherine Yepsen Paralegal $130 (Kaiser Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) KASPER ASL: Shoos-Away Andersen and Signs-Up Ernst & Young ---------------------------------------------------------- Bankrupt Kasper A.S.L. Ltd. dismissed auditor Arthur Andersen LLP and has hired Ernst & Young LLP, according to a Form 8-K filed on Wednesday with the Securities and Exchange Commission. The New York-based Kasper did not report any disagreements with Andersen on accounting principles or practices. In its chapter 11 petition filed on February 5, 2002 with the U.S. Bankruptcy Court in Delaware, Kasper listed assets of $308.8 million and debts of $255.2 million. (ABI World, April 25) KMART: Bluelight.com Wants to Reject Lease with Sun Microsystems ---------------------------------------------------------------- Bluelight.com LLC seeks the Court's authority to reject -- effective as of April 3, 2002, these leases with Sun Microsystems Finance: (1) Master Lease $7099118 and the accompanying six Lease Schedules (Schedule #001, #002, #003, #004, #005, and #006); and (2) Master Lease #SL7099118 and the accompanying five Lease schedules (#64310453, #6408983AA, #64308983AB, #64308983AC, and #64308980). Pursuant to the Master Leases and the accompanying Lease Schedules, J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, relates that Sun Microsystems agreed to lease certain personal property, primarily computer equipment, to Bluelight.com. In return, Bluelight.com pays for the Equipment. Prior to the Petition Date, Mr. Ivester tells the Court that Bluelight.com used the Equipment for its eCommerce business. Specifically, Mr. Ivester says, the Equipment was used to serve applications in the web store and in merchandising, customer care and financial systems applications. In September 2001, Bluelight.com decided to outsource its technology operations to a third party provider. All applications were migrated in October 2001 and Bluelight.com discontinued using the Equipment in December 2001. Accordingly, Bluelight.com returned the Equipment covered by Master Lease #7099118 in December 2001. Bluelight.com also informed Sun Microsystems that the Equipment covered by Master Lease #SL7099118 was available for immediate return. According to Mr. Ivester, Bluelight.com was paying Sun Microsystems approximately $212,000 a month in lease payments for the Equipment. Since the Equipment is no longer necessary for Bluelight.com's ongoing operations, Mr. Ivester asserts that the Debtors' rejection of the Master Leases and the Lease Schedules are appropriate. (Kmart Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART: Taps Creative Artists Agency to Help in Brand-Building ------------------------------------------------------------- Building upon its recent aggressive marketing efforts, Kmart Corporation (NYSE: KM) retained Creative Artists Agency (CAA), the world's leading talent and literary agency, to provide entertainment-related marketing strategies and brand-building programs to the 103-year-old retailer. One of the nation's largest retailers, Kmart will look to CAA and its experienced brand marketing teams to identify and capitalize on entertainment- based initiatives in film, television, music and video games as they relate to Kmart's existing marketing efforts and exclusive core brands. "Entertainment provides a powerful means to connect with our customers," said Steven Feuling, SVP of marketing for Kmart, one of the leading sellers of music CDs, home videos, DVDs and video games in the U.S. "CAA's extremely early exposure and insight into entertainment properties, and its relationships with the talent and organizations behind these projects, will afford Kmart critical marketing opportunities that will help build a stronger brand and increase consumer reach and loyalty during our current restructuring process." Kmart recently launched a comprehensive, new brand positioning campaign including commercials directed by Academy-Awardr nominee Spike Lee. The commercials, featuring the tagline "Kmart. The Stuff of Life," focus on how Kmart's core assets, such as its exclusive brands, convenience and value, meet the needs and wants of American families every day of their lives. Kmart joins Coca-Cola, Motorola and Boeing, among other marketers, who look to CAA for entertainment-related marketing strategies and programs. Kmart Corporation is a $37 billion company that serves America with more than 2,100 Kmart and SuperCenter retail outlets, and through its e-commerce shopping site http://www.bluelight.com K Mart Corp.'s 9.875% bonds due 2008 (KMART18), an issue currently in default, are quoted at a price of 46, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18 LERNOUT & HAUSPIE: Obtains Fifth Lease Decision Period Extension ---------------------------------------------------------------- Judge Judith H. Wizmur entered an order further extending the time period during which Debtors Lernout & Hauspie Speech Products N.V. and L&H Holdings USA, Inc., may assume, assume and assign, or reject unexpired nonresidential real property leases. Judge Wizmur extends the period as to those leases where either of the Debtors is a lessee or sublessee to the effective date of a confirmed plan relating to L&H NV or Holdings, respectively. LIONBRIDGE: Has Working Capital Deficit of $1.4MM at March 31 ------------------------------------------------------------- Lionbridge Technologies, Inc. (Nasdaq: LIOX), announced financial results for the quarter ended March 31, 2002. The Company reported total revenues of $24.9 million for the quarter, compared to revenue of $27.3 million for the first quarter of 2001. Lionbridge reported a net loss of $1.9 million for the quarter, based on 31.5 million weighted average common shares outstanding. This compares to a net loss of $5.5 million for the first quarter of 2001. At the end of the first quarter, the Company's cash position was $10.3 million, compared to $11.7 million for fourth quarter 2001. The Company also reduced its total debt by $1.8 million during the quarter. Positive cash flow from operations was in excess of $650,000. At March 31, 2002, the company's total current liabilities exceeded its total current assets by about $1.4 million. "At a time when IT companies are facing a continued depressed economic environment, Lionbridge is staying the course with steady financial results from quarter to quarter," said Rory Cowan, Chairman and CEO, Lionbridge. "We are seeing the results of our broadened customer mix, strong recurring revenue and customer loyalty. With continued focus on top-line growth, cost control and organizational stability, we are look forward to a strong second quarter and positive net income occurring during the second half of the year." In the core localization business and in VeriTest, Lionbridge continued to broaden its customer base with new activity in the life sciences, financial and consumer goods industries. Lionbridge also benefited by the high recurring revenue nature of its business model and its loyal and satisfied customer base. About 70% of Lionbridge revenue for the quarter came from customers that have consistently done business with the Company within each of the past eight consecutive quarters. "Lionbridge continues to deliver high quality services to clients, while shedding excess costs. Many new customer projects began in the first quarter and our sales activity looks strong. This, combined with significant work in process, suggests a strong Q2 and the likelihood of meeting or exceeding previously communicated targets. These results demonstrate just how well Lionbridge is executing in this challenging economic climate," continued Cowan. Highlights for the quarter included: -- Premier localization customer wins. In the first quarter, Lionbridge secured multi-million dollar contracts with British Telecom, Microsoft (Digital Media Division and Windows Update Division) and the Lexmark consumer printer division. -- Testing and certification programs expand. VeriTest, the testing division of Lionbridge, expanded its Microsoft certification programs with the addition of Pocket PC 2002 and Smartphone 2002 certification programs. VeriTest also secured a win at Blue Cross Blue Shield of Massachusetts and was selected as the company's primary testing partner. -- Operational Efficiencies: Lionbridge continued to reduce its Sales and Marketing and G&A expenses both quarter on quarter and year on year, confirming the Company's continued focus on fixed expense reduction. Lionbridge Technologies, Inc. provides solutions for worldwide deployment of technology and content to global 2000 companies in the technology, life sciences and financial services industries. Lionbridge testing and compatibility services, globalization solutions, and multilingual content management technologies help clients reduce cost, speed time to market, and ensure the integrity of global brands. Based in Waltham, Mass., Lionbridge maintains facilities in England, Ireland, The Netherlands, France, Germany, China, South Korea, Japan, Taiwan, Brazil, and the United States. To learn more, visit www.lionbridge.com. MCLEODUSA INC: Reaches Resolution on Disputed Claim Reserve ----------------------------------------------------------- McLeodUSA Incorporated (Nasdaq:MCLDD), one of the nation's largest independent competitive local exchange carriers, reached an agreement with representatives of purported class action securities claimants concerning the amount of new common stock to be reserved under the Amended Plan of Reorganization of McLeodUSA Incorporated pending a resolution of the disputed claims. Under the Reserve Agreement, 36,775,663 shares of new common stock will be available for initial distribution to the holders of old common stock and a holdback will be set at 18,000,000 shares of new common stock pending a resolution of the disputed claims. The Reserve Agreement only involves the size of the reserve and does not address the validity, if any, of the alleged class action securities claims. As previously announced, under the Plan, McLeodUSA is not able to make any distribution of the 54,775,663 shares available for old common stockholders and purported class action securities claimants until the Court establishes a reserve of a portion of the available shares and permits the distribution of the remainder. Once the Court enters the order approving the Reserve Agreement, the Company will be able to make the initial distribution of 36,775,663 shares of new common stock to the holders of McLeodUSA old common stock. The Company expects that such an order will be entered on or before Friday, May 3, 2002. The initial distribution will equal approximately one share of new common stock for every 17.0695 shares of old common stock held on April 5, 2002, the distribution record date under the Plan. The reserve shares remaining, if any, after resolution of the disputed claims, will be distributed pro-rata to the holders of old common stock as of the distribution record date. Holders of the Company's old common stock who hold those shares in certificated form will receive a letter of transmittal from Wells Fargo Bank Minnesota, NA, the Company's disbursing agent. This letter must be completed and returned with the certificated shares in order for a holder to receive the shares of McLeodUSA new common stock to which that holder is entitled under the Plan. Holders of the Company's old common stock who hold their shares in street name will receive shares of McLeodUSA new common stock through their broker or other nominee. The Company expects to mail the letter of transmittal by the end of business on Friday, May 3, 2002. The Plan is described in detail in the Disclosure Statement with Respect to Amended Plan of Reorganization of McLeodUSA Incorporated filed as Exhibit 99.1 to Current Report on Form 8-K filed with the Securities and Exchange Commission on March 5, 2002 and, in less detail, in the Annual Report on Form 10-K filed with the SEC on April 12, 2002. The confirmed Plan of Reorganization is filed as Exhibit 2.2 to Current Report on Form 8-K filed with the SEC on April 22, 2002. McLeodUSA new common stock resumed trading on Nasdaq on April 18 under the symbol "MCLDD." McLeodUSA new Series A preferred stock also began trading on Nasdaq on April 18 under the symbol "MCLDO." McLeodUSA provides integrated communications services, including local services, in 25 Midwest, Southwest, Northwest and Rocky Mountain states. The Company is a facilities-based telecommunications provider with, as of December 31, 2001, 42 ATM switches, 60 voice switches, 485 collocations, 525 DSLAMs, and over 31,000 route miles of fiber optic network. Visit the Company's Web site at http://www.mcleodusa.com DebtTraders reports that McLeodusa Inc.'s 11.375% bonds due 2009 (MCLD2) are trading at about 25.25. See http://www.debttraders.com/price.cfm?dt_sec_ticker=MCLD2for real-time bond pricing. MERRILL LYNCH: S&P Junks Class G P-T Certificates Ser. 1996-C2 -------------------------------------------------------------- Standard & Poor's lowered its rating on class G of Merrill Lynch Mortgage Investors Inc.'s mortgage pass-through certificates series 1996-C2, to triple-'C' from single-'B' and removed it from CreditWatch with negative implications, where it was placed on Jan. 3, 2002. At the same time, the rating on the class F certificates is lowered to double-'B'-minus from double-'B'. In addition, ratings are affirmed on seven classes of the same series. The downgrades reflect sizeable appraisal reductions, and high delinquency levels. Delinquencies and REOs total $98.7 million, or 11.9% of the scheduled pool balance. Of the delinquent mortgages, $81.4 million are specially serviced. Of particular concern are the REO properties, which have created a cumulative appraisal reduction of $7.2 million. The affirmations are driven by the increased subordination levels, which are offset by the flat performance of the remaining mortgages in the pool, resulting in a weighted average debt service coverage ratio (WADSCR) of 1.37 times up from 1.32x at the last review, and 1.42x at issuance. The coverage levels are based on only about one-half of the pool reporting 2000 and 2001 financial information. Three REO properties, including two lodging properties and one retail property, total $17.4 million (or 2% of the pool). CRIIMI MAE Services L.P. has receivers in place at all three properties, while aggressively marketing the properties for sale. Based on 2000 and 2001 appraisals, CRIIMI MAE has applied appraisal reductions of $7.2 million. All three REOs have created an interest rate shortfall of $2.2 million to the unrated class H. A total of 27 mortgages are 90-days delinquent and total $78 million (or 9%). The mortgages include Shilo Properties Inc., Service Merchandise Co., Frank's Nursery & Crafts, and two multifamily properties. The Shilo Properties' loan represents $32.2 million (or 3.7%); the four mortgages are crosscollateralized and crossdefaulted. CRIIMI MAE has initiated foreclosure proceedings on all of the Shilo Properties, and the single-purpose entity responded by filing for Chapter 11 bankruptcy protection for all four hotels by March 27, 2002. As part of the foreclosure process, CRIIMI MAE requested that an independent auditor assess the financial condition of the hotels. The auditor found that the financial condition of the properties had improved, resulting in a WADSCR for the mortgages of 1.04x (October 2001), up from 1x (year-end 2000). In addition, the weighted average daily rate has increased to $90.02, from $89.38, during the same time period. CRIIMI MAE has requested an updated appraisal, to determine any potential losses. Both SMC and Frank's Nursery & Crafts are involved with proceeds from the bankruptcy court, for either liquidation or reorganization. SMC, which has 18 mortgages totaling $37.8 million (or 4.3%) are secured by properties owned by SMC-SPE Inc., a subsidiary of SMC, filed for Chapter 7 liquidation in March 2001. Frank's Nursery & Crafts filed for bankruptcy protection in March of 1999; the company is the borrower/tenant for six mortgages totaling $2.9 million (or 0.3%) that are supported by six separate garden and crafts stores. CRIIMI MAE reported that all mortgages are secured by properties that are well-located and desirable. Consequently, CRIIMI MAE disclosed that the SMC properties are garnering strong interest from prospective buyers, at levels above the current outstanding principal balance. As for the remaining mortgages, totaling $8.4 million (or 0.9%), CRIIMI MAE does not anticipate that they will result in significant losses to the trust. CRIIMI MAE's watchlist includes $169.5 million in mortgage loans (or 19.5%), which is historically higher than what was reported at the end of last year ($23.7 million), and reflects changes to the Commercial Mortgage Servicers Association watchlist requirements. These changes result in an expanded watchlist, because they include, all tenant bankruptcies, lease expirations, and maturities occurring within two years. Discussions with CRIIMI MAE revealed that seven mortgages, totaling $35.9 million, are of particular concern. These mortgages are secured by hotels located across the country. Based on discussions with CRIIMI MAE, the special servicer, Standard & Poor's stressed the mortgages in its analysis and determined that the current and stressed credit enhancement levels adequately support the assigned ratings. As of March 2002, the loan pool consisted of 249 fixed-rate mortgage loans totaling $869.5 million down from 300 mortgages totaling $1.138 billion. The top 10 mortgages represent 20.3% of the pool, down from 16.5%. The large majority of property types are concentrated in multifamily (42.2%) and retail (26.8%), with the remainder evenly distributed throughout a variety of property types. Only three states California (13%), Florida (12.8%), and Texas (10.5%), exceed a 10% geographic concentration. Debt service coverage for the pool has increased slightly to 1.37x, using 15% of the year-end 2001 and 40.1% year-end 2000 financials from 1.34x at issuance. To date, cumulative realized losses total $538,000. Rating Lowered And Removed From Creditwatch Negative Merrill Lynch Mortgage Investors Inc. Mortgage pass-thru certs series 1996-C2 Class Rating To From Credit Support (%) G CCC B/Watch Neg 2.95 Rating Lowered Merrill Lynch Mortgage Investors Inc. Mortgage pass-thru certs series 1996-C2 Class Rating To From Credit Support (%) F BB- BB 6.45 Ratings Affirmed Merrill Lynch Mortgage Investors Inc. Mortgage pass-thru certs series 1996-C2 Class Rating Credit Support (%) A-1 AAA 40.52 A-2 AAA 40.52 A-3 AAA 40.52 B AA+ 32.67 C A+ 25.47 D BBB 18.92 E BBB- 11.95 NATIONAL STEEL: Pushing for July 15, 2002 General Bar Date ---------------------------------------------------------- National Steel Corporation and its debtor-affiliates ask the Court to establish procedures and fix the final date within which proofs of claim can be filed against their estates. The Debtors further request that in the interest of efficiency, the Court authorize them to send a combined notice of the Bar Date, the Petition Date of these cases, and the 341 meeting of creditors. Mark P. Naughton, Esq., at Piper Marbury Rudnick & Wolfe, in Chicago, Illinois, states that the Debtors propose that the Bar Date be set for July 15, 2002 except for governmental units which shall have a Bar Date of September 6, 2002. "The Debtors' schedules of assets and liabilities are due on or before May 21, 2002 thus, the Debtors want to establish a Bar Date to determine what claims are asserted against them in addition to those listed on the schedules," Mr. Naughton adds. Furthermore, the Debtors request that creditors, on account of claims arising before the Petition Date, file proofs of claim. Creditors asserting these types of claims need not file a proof of claim: (a) any entity that has already properly filed a proof of claim against one or more of the Debtors in accordance with the procedures in this Bar Date notice; (b) any entity that: -- agrees with the nature, classification and amount of such claim in the schedules; -- whose claim against a Debtor is not listed as disputed, contingent or unliquidated in the schedules; (c) any entity whose claim against the Debtors previously has been allowed or paid by an order of the Bankruptcy Court; (d) any entity asserting a claim allowable as an administrative expense of the Debtors' Chapter 11 cases; or (e) any of the Debtors or any direct or indirect subsidiary of National Steel Corporation that holds claims against one or more of the Debtors. In addition, Mr. Naughton asks that holders of the Debtors' equity securities not be required to file a proof of interest solely on account of holder's ownership interest in or possession of such equity securities. However, any holder that wishes to assert a claim based upon transactions in the Debtors' securities, including to claims for damages or rescission based on the purchase or sale of such securities must file a proof of claim on or prior to the Bar Date. The Debtors also request that proofs of claim for any rejection damages claims arising during the Chapter 11 cases be filed by 30 days after the latest of these events: (i) date of any order authorizing the rejection of such executory contract or unexpired lease or (ii) the Bar Date. "Proofs of claim for any other claims that arose prior to the Petition Date under a Lease or Contract must be filed by the Bar Date," Mr. Naughton adds. Mr. Naughton explains that to provide ample time for mailing approximately 60,000 Bar Date notices and allowing the creditors time to prepare and file proofs of claim, the Debtors request that this Court fix July 15, 2002 as the Bar Date, with notices to be made no later than May 15, 2002. Accordingly, Mr. Naughton relates that the United States Trustee has scheduled the meeting of Creditors for June 10, 2002 at 1:30 p.m. "Because there are more than 50,000 entities to whom such notice will be given, the Debtors request that a combined notice of the Bar Date and the meeting of creditors be given," Mr. Naughton says. (National Steel Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) OGLEBAY NORTON: Taps CIBC World Markets as Financial Advisors ------------------------------------------------------------- Oglebay Norton Company (Nasdaq: OGLE) selected CIBC World Markets as its financial advisor to assist the Company in developing a plan to refinance its bank debt, due April 3, 2003. The Company anticipates presenting a plan to its bank group no later than June 30, 2002; however does not anticipate making its plans public at that time. In other news, at the Company's Annual Meeting held April 24, 2002, the shareholders of the Company elected all nine nominees for the position of director to serve for a period of one year and approved the 2002 Stock Option Plan. Elected as directors were: * John N. Lauer, who also serves as the Chairman of the Board and Chief Executive Officer of the Company * Michael D. Lundin, who also serves as the President and Chief Operating Officer of the Company * Albert C. Bersticker, who also serves as the outside Lead Director of the Company * Malvin E. Bank * William G. Bares * James T. Bartlett * Madeleine W. Ludlow * William G. Pryor * John D. Weil PETROMINERALS CORP: Fails to Meet Nasdaq Listing Requirements ------------------------------------------------------------- Petrominerals Corporation (Nasdaq: PTROE) said that as a result of reserving for certain Environmental Protection Agency liabilities, it is no longer in compliance with the Nasdaq Small Cap minimum equity standard of $2.0 Million and is subject to delisting upon further review by a Nasdaq Listing Qualification Hearing Panel. A previous delinquency resulting from the late filing of the Company's Form 10KSB for the year ended December 31, 2001 has been cured. In September 1989 and again in February 2000, the Company was advised by the EPA that it was potentially responsible for clean-up of waste disposal sites in Monterey Park, California, and Casmalia, California, respectively. Both sites involved the permitted disposition of non-hazardous drilling mud and oil field fluids. In 1973, 1975, and 1977 the waste disposed of at the Monterey Park site was from drilling operation of Century Oil Corporation, subsequently merged into Petrominerals and in 1980 and 1981 waste was disposed of at the Casmalia site from the Company's drilling operations in the Santa Maria, California area. Following protracted negotiations, Petrominerals settled both claims for future payments of approximately $725,000. Under the terms of Petrominerals' Nasdaq SmallCap Market Listing Agreement, the Company is required to maintain certain eligibility criteria, including a minimum shareholder equity of $2.0 million. After reserving for the EPA liabilities discussed above, Petrominerals' shareholder equity at December 31, 2001 fell to $1.3 million. The Company notified Nasdaq of this development concurrent with the filing of this Form 10-KSB. Management is currently engaged in negotiations on two separate projects, either one of which is expected to cure the Company's minimum equity deficiency. However, if neither of these efforts is successful or if the Company is unable to gain the time required to consumate one of these transactions, Petrominerals may be delisted from trading on the Nasdaq SmallCap Market. In this event, the Company intends to apply for a listing on the OTC bulletin Board. PILLOWTEX CORP: Intends to Assume 3 Citicapital Lease Agreements ---------------------------------------------------------------- Pillowtex Corporation and its debtor-affiliates seek the Court's authority to assume, as modified, three lease agreements with Citicapital SKA wherein the Debtors lease certain production equipment they use in their manufacturing operations. Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, states that each Lease Agreement has a term of 96 months and an option at the end of the term to purchase the equipment for fair market value. "The aggregate monthly rent under the Lease Agreements is approximately $39,470," Ms. Harris adds. As of the Petition Date, the Debtors owed Citicapital approximately $17,104 for payments due under the Lease Agreements. According to Ms. Harris, as part of the Debtors' strategy to restructure their production equipment leases, the Debtors have negotiated a restructuring of the Lease Agreements with Citicapital. The amendment of the Agreements materially reduces the amount of lease payments owed to Citicapital. Ms. Harris relates the material terms of the Amendments as: -- The Lease Agreements will be assumed, as modified by the Amendments. -- Each of the Lease Agreements will have a 60-month term, beginning January 1, 2002, and ending December 31, 2006. -- The aggregate balance due under the Lease Agreements as of January 1, 2002 is $2,970,250. As of January 1, 2002, Citicapital will reduce the aggregate balance due under the Lease Agreements to $1,460,000, the agreed fair market value of the Production Equipment. The new aggregate balance due under the Lease Agreements is equal to the Fair Market Value plus the Cure Amount. -- The New Principal Balance will be amortized over the new term, with aggregate monthly payments of $29,215.16. -- The Debtors will pay interest on the New Principal Balance at the rate of 7.5%, compounded annually. -- Citicapital would be entitled to submit an unsecured claim against the Debtors' estates for $1,510,250, which is the difference between the Old Lease Balance and the New Principal Balance. -- Provided that the Debtors remain current under the Lease Agreements, as modified, the Debtors would have the option to acquire title to the Production Equipment at the end of the new term for no additional consideration. "Assumption of the Lease Agreements, as modified, enables the Debtors to continue using the Production Equipment, which is necessary for their manufacturing operations, and substantially reduces their lease obligations," Ms. Harris asserts. In fact, the restructuring of the lease payments would convert over $1.5 million of the amounts due under the Lease Agreements into a general unsecured claim against the Debtors' estates. (Pillowtex Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Files Proposed Reorganization Plan in Wilmington --------------------------------------------------------------- Polaroid Corporation has filed a proposed plan of reorganization with the U.S. Bankruptcy Court in Wilmington, Delaware. The reorganization plan assumes that the court approves a previously announced sale of the company to One Equity Partners or to some other organization with a higher or better offer. It provides a general outline for the distribution of Polaroid's assets, including possible sale proceeds, to creditors. Polaroid also asked the court for more time to file a disclosure statement, which will provide specific information regarding the proposed distribution to creditors. The company continues to believe it is unlikely that there will be any recovery for stockholders. Gary T. DiCamillo, chairman and chief executive officer, said, "The proposed reorganization plan establishes a general framework for settling our debts based on the sale of Polaroid to a strong buyer. It's another step forward in our efforts to maximize value for our creditors and to emerge from Chapter 11 as an independent, ongoing business." Polaroid Corporation (OTC Bulletin Board: PRDQE) is the worldwide leader in instant imaging. The company supplies instant photographic cameras and films; digital imaging hardware, software and media; secure identification systems; and sunglasses to markets worldwide. Additional information about Polaroid is available on the company's Web site at http://www.polaroid.com PSINET INC: Court to Hear on Texas Property Sale on May 20, 2002 ---------------------------------------------------------------- On May 20, 2002, at 9:30 a.m. Eastern time, Judge Gerber will conduct the Texas real property Sale Hearing As previously reported, PSINet, Inc., and its debtor-affiliates proposed the sale of its real property located at 1333 Crestside Drive in Coppell, Texas. The Property consists of a building of approximately 80,000 square feet of rentable space improved with raised flooring, supplemental HVAC and redundant fiber network and power to make it suitable for use as a hosting center, together with approximately 6.527 acres of land. On March 15, 2002, PSINet Realty Inc. and Stream Realty Acquisition, L.L.C. entered into the Real Property Purchase and Sale Agreement. PSINet agrees to sell all of its right, title and interest in and to the Property to Stream Realty or an assignee as permitted under the Agreement for $10,500,000 subject to certain usual and customary adjustments as specified in the Purchase Agreement. The Sale is also subject to Stream Realty being satisfied with the results of its due diligence review. Although the Debtors believe the Purchase Agreement is fair and reasonable and reflects the highest and best value for the Property as of the date of the Motion, in order to obtain the greatest value for the Property, the Debtors intend to submit the Purchase Agreement to the test of the broader public marketplace through the bidding procedures including sale at a public auction if competing bids emerge. Thus, the Court entered a Sale Procedures Order approving the Debtors' proposed bid procedure terms. The Sale Order (i) authorizes the Sale to the Buyer for $10,500,000, pursuant to the Purchase Agreement (or such other buyer that the Debtors will propose to the Court at the Sale Hearing as the highest and best bidder) and (ii) directs that the Sale be free and clear of all liens, claims, encumbrances, rights and interests (other than Permitted Exceptions) and exempt from Transfer Taxes. The Buyer has placed $150,000 of cash into escrow as the initial deposit. Upon the expiration of the due diligence period (a 52- day period that commenced on March 15, 2002), if the Purchase Agreement is still in force and effect, then the Buyer will place into escrow a second cash deposit in the amount of $150,000 and a third cash deposit in the amount of $200,000. If the Buyer is satisfied with its due diligence and if the Court approves the sale of the Property to the Buyer, then the deposits will be credited against the Purchase Price on the Closing Date. If the Buyer declines to proceed to closing based on its due diligence review, or if the Court does not approve the sale to the Buyer, then the escrow agent will return all three deposits to the Buyer except that if the Buyer terminates the Purchase Agreement after the due diligence period and before the entry of the Sale Order, then the Seller will get the first and second deposits and only the third deposit will be returned to the Buyer. Under the Purchase Agreement, the Buyer may terminate the Purchase Agreement if (i) the Sale Order is not entered on or before 60 days after the Due Diligence Period has expired; or (ii) the Court enters an order approving the sale of the Property to a person other than the Buyer. The Seller will only make minimal, customary representations and warranties, which are set forth in the Purchase Agreement. Competitive Bidding Procedures Also, the Court authorizes the Debtors, outside of their ordinary course of business and in accordance with the Bidding Procedures, to solicit bids for a competing transaction involving the Property, and if any Competing Bids meeting the requirements of the Bidding Procedures are received, to subsequently hold a public Auction at which the Buyer and any qualified competing bidder may compete against each other to offer that bid which the Debtors will select as the highest and best bid for the Property and then propose to the Court for approval at the Sale Hearing. The Staubach Company - Northeast will help the Debtors actively market for sale. In this regard, Staubach expects to, among other things, make outgoing calls to potentially interested parties. Those parties that express an interest in purchasing the Property will be provided a copy of the Purchase Agreement. (PSINet Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) REFAC: Board of Directors Adopts Shareholder Rights Plan -------------------------------------------------------- Refac (AMEX:REF) said that on April 26, 2002 its Board of Directors adopted a Stockholder Rights Plan in which rights will be distributed as a dividend at the rate of one Right for each share of common stock, par value $0.10 per share, of the Company held by stockholders of record as of the close of business on May 9, 2002. The Company previously announced that it will reposition itself for sale or liquidation. The adoption of the Rights Plan should enhance the ability of the Company to carry out its plan in a manner which will be fair to all stockholders. Each Right initially will entitle stockholders to buy one ten- thousandth of a share of preferred stock for $5.95. The Rights generally will be exercisable only if a person or group acquires beneficial ownership of 15% or more of the Company's common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 15% or more of the Company's common stock. The Rights will expire on April 26, 2012. A copy of the Stockholder Rights Plan will be filed with the Securities and Exchange Commission shortly. For 50 years, Refac has been a recognized international leader in intellectual property management. Today, we are a leading consulting firm with expertise in licensing, product development, and graphic design and communications. SAFETY-KLEEN: Wants to Preserve Avoidance Actions for 180 Days -------------------------------------------------------------- Pursuant to sections 108 and 546 of the Bankruptcy Code, Safety- Kleen Corp., and its debtor-affiliates have until two years after the entry of the order for relief to commence avoidance and other causes of action pursuant to sections 544, 545, 547, 548 and 553 of the Bankruptcy Code, as well as to pursue various causes of action under applicable bankruptcy and non-bankruptcy law for which the applicable statute of limitations, but for the chapter 11 filing, would otherwise have expired during the initial two years of these chapter 11 cases. Avoidance actions include the recapture of preference payments (money unfairly paid to prepetition creditors on the eve of bankruptcy) and the estate's assertion of fraudulent conveyance claims (prepetition transactions that didn't realize full value from the debtor's perspective). The Debtors are currently analyzing the relevant financial information and payment histories to identify those causes of action that they believe the pursuit of which may ultimately yield value to these estates. In order to preserve those causes of action, the Debtors arguably will be required to bring them prior to June 9, 2002. However, the Debtors are mindful that there is a distinct possibility that certain, if not most of the potential causes of action the Debtors identify may be released or otherwise resolved in connection with the confirmation of a plan or plans of reorganization in these cases. Accordingly, the Debtors are proposing procedures that will permit the Debtors to preserve the causes of action without unnecessarily alarming potential defendants, many of whom are the Debtors' current vendors, and to prevent the Debtors, the potential defendants and the Court from having to expend time, effort and money on immediately pursuing full scale litigation with respect to proceedings that ultimately may be dismissed or otherwise disposed of without the need for litigation. Pursuant to these procedures, the Debtors are requesting that the Court permit the Debtors to file an initial summons and notice of pretrial conference and complaint with respect to each adversary proceeding under seal. The Debtors further request that the Court extend the time in which the Debtors would otherwise be required to serve the summons and Complaint on the defendant to 180 days. In the event the Debtors determine to pursue any sealed adversary proceeding, it will so notify the Clerk of the Court and will file and serve on the defendant the Complaint and an Amended Summons, setting forth an appropriate response deadline and a pretrial hearing date consistent with the local rules. At that point the adversary proceeding will become unsealed and will proceed in the usual manner in accordance with the applicable local rules and Federal Rules of Civil Procedure. Given the large number of potential Adversary Proceedings, the Debtors are also requesting the implementation of certain procedures to permit orderly and efficient case management and administration. The Procedures include: (a) intake procedures for the commencement of the Adversary Proceedings; (b) procedures for sealing the Adversary Proceedings; (c) procedures with respect to the issuance and service of process; and (d) procedures for establishing response deadlines and dates for pretrial conferences. Finally, the Debtors request authority to abandon those causes of action that upon the completion of their review the Debtors determine are of inconsequential value and benefit to the estates. The Debtors believe that implementing the proposed Procedures will reduce the administrative and economic burdens placed on the Debtors, the Court and the potential defendants, will preserve what may prove to be a valuable asset of the estates and will do so in a way that does not unnecessarily disrupt critical ongoing business relationships. The Procedures will permit the Debtors to file under seal and not immediately serve the Adversary Proceedings, thereby: (i) saving litigation costs that would otherwise be incurred now in the prosecution and defense of the Adversary Proceedings, (ii) reducing the immediate burden on the Court's resources, and (iii) providing the Debtors with sufficient time to finalize a plan or plans of reorganization and thereby know which, if any, of the Adversary Proceedings will be pursued and which will be disposed of or otherwise resolved pursuant to the terms of a confirmed plan. The Procedures The Procedures the Debtors propose are: (a) Scope of the Procedures. These Procedures are intended to apply to each Adversary Proceeding initiated prior to June 9, 2002 that the Debtors identify to the Clerk as being subject to these Procedures. (b) Commencement Procedures. Rule 7003-1 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware require the filing of an adversary proceeding cover sheet in connection with the commencement of an Adversary Proceeding. Notwithstanding Local Rule 7003-1, the Debtors understand that a Cover Sheet is not used in conjunction with the Court's electronic filing procedures. The Debtors request that the Court waive the requirement of Local Rule 7003-1 that a Cover Sheet be filed with each Complaint. (c) Filing Under Seal and Electronic Filing. The Debtors will manually file with the Clerk the Complaint and the Initial Summons for each Adversary Proceedings under seal pursuant to Local Rule 5003-1(b). Additionally, the Debtors will electronically file a single page document, using a unique identifier or other placeholder as a Substitute for the name of the defendant, indicating that the Adversary Proceeding was filed under seal with the Clerk of the Court in lieu of electronically filing the actual Initial Summons and Complaint. The Debtors will then provide the Clerk of the Court with a list that shows the case number assigned to each Adversary Proceeding. Upon completion of the procedures set forth in this paragraph, the Complaint shall be deemed filed. (d) Service of Process. The Debtors will prepare the Initial Summons, the form of which will be consistent with Form 108 of the Local Rules, except that information relating to the defendant's time to answer and a date to attend a pretrial conference will not be indicated. The initial Summons will be filed under seal with the Complaint, but neither the Complaint nor the Initial Summons will be served on the defendants until and unless the Debtors decide to proceed with the litigation and the Complaint is then unsealed. If the Debtors decide to prosecute an Adversary Proceeding, then the Debtors will prepare an amended Summons, which will contain the information required by Rule 4(b) of the Federal Rules, made applicable to the Adversary Proceedings by Rule 7004(a) of the Federal Rules of Bankruptcy Procedure, and the Amended Summons will be filed with the Clerk and served with the Complaint upon the applicable defendant. At such time the Adversary Proceeding will become unsealed and will proceed according to the applicable rules and any further orders of this Court. (e) Enlargement of Time for Service of Process. Bankruptcy Rule 7004(e) provides that all summonses issued by the Court in the Adversary Proceedings must be served within ten days of the date of issuance. To avoid incurring significant costs and expenses associated with pursuing the Adversary Proceedings that may ultimately be dismissed, the Debtors seek entry of an order with respect to each defendant located and served within the United States, extending the time limit for service of the Amended Summons and Complaint to 180 days after the filing of the Complaint, subject to the Debtors' right to seek additional extensions, if necessary, upon a showing of good cause. Further, the Debtors request that notwithstanding Bankruptcy Rule 7004(a), no Initial Summons or Amended Summons be deemed stale until the expiration of the 180-day period. The Debtors believe that implementation of the Procedures will promote the efficient administration of these cases and potentially avoid significant and time-consuming litigation that may prove wholly unnecessary. Additionally, the Procedures will permit the Debtors to preserve potentially valuable assets without prematurely disrupting existing business relationships. Abandonment of Potential Actions The Debtors are additionally seeking authority to abandon potential causes of action that they determine, upon completion of their review and in consultation with counsel to the Creditors' Committee and counsel to the secured lenders, are of inconsequential value or benefit to the estates to pursue. In the course of their investigation, the Debtors anticipate that they will identify many causes of action that, in the exercise of their reasonable business judgment, should not be pursued. The causes of action to be abandoned likely will include: (i) causes of action that have little or no value to the estates, or if pursued, the costs of litigating those causes of action would likely exceed the expected value of any recovery, (ii) causes of action where the Debtors believe the defendants have valid defenses, or (iii) causes of action that, if pursued, the potential harm to the Debtors' business in pursuing the causes of action would likely be outweighed by any potential recovery. The Debtors will notify the Creditors' Committee and secured lenders of those causes of action the Debtors intend to abandon. To the extent there is a significant disagreement between the Debtors and the Creditors' Committee or the secured lenders on a potential cause of action the Debtors propose to abandon that cannot be resolved, the party opposing the proposed abandonment can bring the matter before Judge Walsh for a ruling on whether the proposed abandonment is a reasonable exercise of the Debtors' business judgment. The Debtors' Arguments for Procedures The Debtors remind Judge Walsh that he has broad discretion to control his own docket. Moreover, section 105 of the Bankruptcy Code grants bankruptcy courts broad authority and discretion to take such actions and implement such procedures as are necessary to enforce the provisions of the Bankruptcy Code. The Debtors believe that the proposed procedures are entirely appropriate in this situation and will serve the interests of all involved. As a result of the two-year statute of limitations to commence certain causes of action, the Debtors are required to commence adversary proceedings against certain defendants now or potentially forfeit their causes of action. However, initiating litigation at this stage of these cases against a potentially significant percentage of the Debtors' current vendors could result in substantial harm to these estates and the Debtors' ability to complete the reorganization. The Debtors are thus faced with the tension of preserving potentially valuable assets for their estates and maintaining the strong support and creditor relationships that the Debtors have forged during the course of their reorganization. The Debtors believe that implementing the Procedures, which permit the Debtors to file an adversary proceeding under seal and not to serve them on defendants until it is known whether or not these adversary proceedings will be pursued, will effectively balance these competing concerns. Moreover, the Procedures serve the interests of judicial economy. It would be an enormous waste of limited judicial resources to force the Debtors to proceed at this point, as the only way of preserving potentially valuable causes of action, with the litigation of what could be thousands of adversary proceedings when it is possible that many, if not most, of those adversary proceedings will be settled or otherwise resolved without the need for litigation under the terms of a confirmed plan of reorganization. Finally, it is similarly in each potential defendant's interest that these procedures be adopted. By sealing adversary proceedings and not requiring service at this time, the defendants are not required to engage counsel and undertake the time and expense of defending against a proceeding that may ultimately be resolved in a plan of reorganization without the need for litigation. Moreover, no defendant will be prejudiced by the Procedures. In the event that the Debtors determine it is appropriate to pursue an adversary proceeding, the seal will be lifted, an Amended Summons will be issued, and the Complaint and Amended Summons will be served on the defendant in accord with applicable rules. The defendant will then be afforded every protection and applicable time period as if the complaint was first filed on the day the Adversary Proceeding is unsealed. According, implementing the Procedures serves the interests of all concerned. The Debtors' Arguments For Abandonment Similarly, authorizing the Debtors to abandon those causes of action they determine are of inconsequential value or benefit to the estates is appropriate. The debtor is afforded significant discretion in determining the value and benefits of a particular property for the purposes of the decision to abandon the property. The Debtors expect that, following the conclusion of their review, they will identify a significant portion of the tens of thousands of transactions that they believe should not be pursued. In many cases, it may simply not be cost-effective based on the size of the transaction to pursue the cause of action. In other cases the Debtors may determine that the available defenses will likely reduce any potential recovery so significantly that it is not cost-effective to pursue the cause of action. Additionally, in certain instances the Debtors may determine that the potential harm to the Debtors' business operations may outweigh any potential recovery from pursuing a cause of action. The Debtors will determine, in the exercise of their sound business judgment, the causes of action that they believe are burdensome to pursue or of inconsequential value or benefit to the estates and will not pursue those causes of action. Moreover, the Debtors will share their analysis with counsel to the Creditors' Committee and counsel to the Lenders. In the event either disagree with the Debtors' decision to abandon one or more of the causes of action, the party opposing the abandonment may bring the matter before Judge Walsh for decision. (Safety-Kleen Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) SHELDAHL INC: Files for Chapter 11 Reorganization in Minnesota -------------------------------------------------------------- Sheldahl Inc. filed a voluntary petition for Chapter 11 reorganization with the U.S. Bankruptcy Court for the District of Minnesota. The Company said it intends to reorganize by selling substantially all of its assets under a Section 363 sale pursuant to the U.S. Bankruptcy Code. Ampersand Venture Capital, Molex Inc. and Morgenthaler Partners, Sheldahl's three largest shareholders have indicated their intention to acquire the assets of Sheldahl in such a transaction. Sheldahl expects to continue to operate its business and meet all customer requirements. "We believe the transaction contemplated is the best alternative to maintain our service to customers, the confidence of our vendors and to retain as many employees as possible. Regrettably we do not anticipate any residual value for shareholders," said Benoit Pouliquen, President and Chief Executive Officer. "Over the last year we have successfully reorganized our operations to concentrate on our core Materials and Flex Interconnect businesses. Today's actions are intended to provide the capital structure to support the future growth of the business." Additionally Ampersand, Molex and Morgenthaler will provide the company with $1.5 million of Debtor-in-Possession (DIP) financing. Sheldahl anticipates receiving prompt approval for that financing from the Bankruptcy Court. John Lutsi, Chairman of the Board of Sheldahl and General Partner with Morgenthaler said, "Upon the consummation of the contemplated transaction, a new Company will emerge with sufficient capital to invest in key projects. This will help ensure the survival of a strong competitor in the Materials and Interconnect industry for years to come." Over the last year, Sheldahl's management has aggressively worked to lower its cost structure and position the Company to capitalize on growth opportunities in its core businesses, Materials and Flex Interconnect. The Company recently announced the closing of its Endicott, New York facility which is proceeding according to plan. In the fourth Quarter of 2001 the Company reported Earnings before interest, taxes, depreciation and amortization (Ebitda) of ($251,000) excluding write-offs for impairment of fixed assets, goodwill and intangible assets, a $6 million improvement over the prior Quarter. The Company further expects to report a slight improvement in its first Quarter 2002 Ebitda. Mr. Pouliquen concluded," The improvement of our financial performance over the last six months in spite of difficult market conditions is a significant achievement. The fact that our Materials and Flex Interconnect operations located in Northfield have achieved positive operating cash flow (Ebitda) in the last two Quarters demonstrates the success of our operational restructuring. The restructuring of our balance sheet is the next logical step in our efforts and will allow us to capitalize on future growth opportunities. We are committed to the restructuring of our finances and believe that with the resources of Ampersand, Molex and Morgenthaler, we will be successful in our efforts." Sheldahl, Inc. is a leading producer of high-density substrates, high-quality flexible printed circuitry, and flexible laminates primarily for sale to the automotive, electronics and data communications markets. The company, which is headquartered in Northfield Minnesota, has operations in Northfield; Longmont, Colorado; Endicott, NY; Toronto, Ontario, Canada; and Chihuahua, Chih., Mexico. Sheldahl's Common Stock trades on the Nasdaq National Market tier of the Nasdaq Stock Market under the Symbol: SHEL. Sheldahl news and information can be found on the World Wide Web at http://www.sheldahl.com SHENANDOAH RESOURCES: Alberta Court Grants CCAA Protection ---------------------------------------------------------- Shenandoah Resources Ltd. (CDNX: "SNN") said that an Interim Order has been granted by the Court of Queen's Bench of Alberta which provides creditor protection to Shenandoah and permits it to develop a financial restructuring plan to present to its creditors. The Order was granted under the Companies' Creditors Arrangement Act. The Court granted a stay of proceedings which prevents creditors from taking any legal actions against Shenandoah or its assets. Shenandoah is currently in discussions with certain parties with respect to structuring a financial arrangement which will provide the company with required funding. Shenandoah's banker, which is its primary secured creditor, supports the restructuring efforts being undertaken by Shenandoah. Shenandoah's shares have been halted pending review of its tier maintenance requirements by the TSX Venture Exchange. Before re- instatement will occur, an additional press release will be issued. SPECIAL METALS: Secures New $60 Million DIP Credit Facility ----------------------------------------------------------- Special Metals Corporation (OTC: SMCXQ) announced that the Company and its U.S. subsidiaries have closed on a new $60 million debtor-in-possession revolving credit facility with Credit Lyonnais, as agent for a bank group. The new financing ensures that the Company will have sufficient liquidity to continue the normal operation of its businesses. As previously reported, the credit facility is subject to final court approval. The final hearing on the credit facility has been rescheduled from May 2, 2002 to May 10, 2002 to allow for review by the newly-formed creditors' committee and their advisors. Special Metals President T. Grant John said, "This is an important step forward in our reorganization process. Not only does the new facility provide the Company with additional financial resources to support normal day-to-day operations, it also enables us to focus our efforts on our goal of emerging from the reorganization as a stronger, financially stable organization." Special Metals is the world's largest and most-diversified producer of high-performance nickel-based alloys. Its specialty metals are used in some of the world's most technically demanding industries and applications, including: aerospace, power generation, chemical processing, and oil exploration. Through its 10 U.S. and European production facilities and a global distribution network, Special Metals supplies over 5,000 customers and every major world market for high-performance nickel-based alloys. STARWOOD HOTELS: Taps Robert Koren to Lead W Hotels Expansion ------------------------------------------------------------- An accomplished 19-year international hotel executive and expert in the art of service has been tapped by Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) to spearhead W Hotels global expansion efforts. On April 29, 2002, Starwood named Robert Koren as Vice President of Operations for W Hotels. Koren, who most recently managed Starwood's award-winning luxury properties in Costa Smeralda, will be responsible for the future global development of the W brand, as well as oversee the hotel operations of W's growing 16-property portfolio. "We are delighted to be able to attract such a uniquely talented candidate like Robert, who possesses exceptional experience with some of the most highly-rated hotels in the world, to lead W to new heights of innovation and success," said Barry S. Sternlicht, Chairman and CEO for Starwood. "Robert brings with him a wealth of international hotel experience after holding top operations positions that span across four continents, and his appointment marks Starwood's commitment to the progression and further global development of the W brand." In his new role, Koren will oversee the ongoing development and evolution of the brand, and will also lead the efforts in building a brand operations team dedicated to ensuring that W remains the industry leader and innovator through the modern design, style and superior service. One of the first projects Koren will oversee is the development of W's first property in Latin America, the 239-room W - Mexico City. Other openings in 2003 include the debut of the second W property in the Asia- Pacific region, the W Seoul - Walker Hill, and the W - San Diego in California. With more than 19-years of experience, Koren has extensive knowledge of the international and luxury hotel market, and most recently served as the Area Manager for Starwood's famed Costa Smeralda and Malta hotels, and as General Manager of the Hotel Cala di Volpe in Porto Cervo, Italy. Under his leadership, the Hotel Cala di Volpe was featured in Conde Nast Traveller's UK list of the Top Golf Resorts in 2000, as well as the magazine's Top 15 European Resorts 2000 List. In 1983, Koren joined Sheraton Hotels & Resorts, and held various operational positions in Asia, Africa, Europe and Australia. A graduate of the University of New South Wales in Sydney, Australia, Koren will be located at Starwood's corporate offices in White Plains. Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 740 properties in more than 80 countries and 110,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchiser of hotels and resorts including: St. Regis, The Luxury Collection, Sheraton, Westin, Four Points by Sheraton, W brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwood.com As previously reported, Fitch Ratings has assigned a 'BB+' rating to Starwood Hotels & Resorts Worldwide, Inc.'s (NYSE:HOT) $1.0 billion in senior notes issued under Rule 144A. The proposed senior notes was issued in two tranches, five-year senior notes due 2007 and 10-year senior notes due 2012. The proceeds from the issuance were used to repay $500 million in Increasing Rate Notes (IRNs) and a portion of HOT's senior credit facility. Revolver availability at Dec. 31, 2001, was approximately $440 million. The Rating Outlook is Negative. The following ratings have been affirmed: Starwood Hotels & Resorts Worldwide Inc.: --Implied senior unsecured rating at 'BB+'; --$1.1 billion revolving credit facility due 2003 at 'BB+'; --$775 million term loan due 2003 at 'BB+;' --$423 million term loan due 2003 at 'BB+'; --$507 million in series A & series B convertible notes due 2021 at 'BB+'. ITT Corporation: --$250 million 6.75% notes due 2003 at 'BB+'; --$450 million 6.75% notes due 2005 at 'BB+'; --$448 million 7.375% debentures due 2015 at 'BB+'; --$148 million 7.75% debentures due 2025 at 'BB+'. USG CORP: Enron Unit Wants to Terminate US Gypsum Swap Agreement ---------------------------------------------------------------- Enron North America Corporation asks Judge Gonzalez in the New York Bankruptcy Court to approve a settlement with United States Gypsum Company, a USG Corporation affiliate, and to authorize the rejection of their Agreements. Enron and USG are parties to an ISDA Master Agreement dated August 1, 2000, according to Enron attorney Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York. Under the Master Agreement, Ms. Gray says, Enron North America and USG entered into certain swaps and other financially-settled derivative transactions. To secure the performance of Enron North America's obligations under the Master Agreement, Ms. Gray relates that Enron Corp. executed a Guaranty, dated August 1, 2000, for the benefit of USG. Similarly, to secure the performance of USG's obligations under the Master Agreement, USG Corp. executed a Guaranty, dated as of August 1, 2000, for the benefit of Enron North America. Since the Petition Date, Ms. Gray informs Judge Gonzalez that Enron North America has conducted a review of its operation and has determined that the Agreements should be rejected pursuant to Section 365 of the Bankruptcy Code. "USG has likewise determined in the exercise of its business judgment that the Agreements should be terminated," Ms. Gray notes. Enron North America and USG have agreed to a settlement of matters relating to the Agreements, which provides for the rejection and termination of the Master Agreement, the Swap Transactions, the Enron Guaranty and the USG Guaranty. The Termination Agreement is summarized: (a) Within two business days after this Court approves of the Termination Agreement, USG will pay $2,100,000 to Enron North America; (b) The Agreements are rejected and will terminate immediately upon receipt by Enron North America of the Termination Consideration; and (c) USG and Enron North America will release and waive any and all claims against each other, Enron, or USG Corp. relating to or arising from the Agreements. Ms. Gray observes that the Termination Agreement enables Enron North America to reject the Agreements and receive a significant payment from USG, thereby benefiting its estate and its creditors, as well as extinguish any obligations related to the Enron Guaranty. Ms. Gray assures the Court that USG has represented and warranted to Enron that the USG Bankruptcy Court has already authorized USG to enter into and consummate the Termination Agreement. (USG Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. STEEL: Adjusted Net Loss Narrows to $96MM in First Quarter --------------------------------------------------------------- United States Steel Corporation (NYSE: X) reported a first quarter 2002 adjusted net loss of $96 million, compared with an adjusted net loss of $98 million, or $1.09 per share, in first quarter 2001. In first quarter 2002, U. S. Steel reported a net loss of $83 million, or 93 cents per share, including the net favorable after-tax effect of special items, which in total increased net income by $13 million. First quarter 2002 net income reflects a tax benefit for pre-tax losses at the estimated annual effective tax rate for 2002 of approximately 13 percent. In first quarter 2001, net income of $9 million included special items that had a net favorable after-tax effect of $107 million. Loss from operations before special items in the first quarter of 2002 was $81 million, improved from a loss from operations before special items of $97 million in the first quarter of 2001 and about half of the loss from operations before special items of $158 million recorded in the fourth quarter of 2001. U. S. Steel Chairman, CEO and President Thomas J. Usher said, "While continuing losses are disappointing, we demonstrated marked operating improvements from the fourth quarter. In addition, we believe that flat-rolled prices bottomed in the first quarter. Our flat-rolled steel shipments increased by 15 percent versus the fourth quarter 2001, and our domestic raw steel production increased to 92 percent of capability to support the higher steel order rate." Effective with the first quarter 2002, U. S. Steel established a new internal financial reporting structure, which has resulted in a change in reportable segments. In addition, the presentation of several items of income and expense applicable to reportable segments has been revised. Reported results for the first quarter of 2001 have been conformed to the current year presentation. U. S. Steel now has three reportable segments which are: Flat- rolled Products (Flat-rolled); Tubular Products (Tubular); and U. S. Steel Kosice (USSK). In addition, all other U. S. Steel businesses, including the domestic raw materials units, are reflected in Other Businesses. The Flat-rolled segment includes the operating results of U. S. Steel's domestic integrated steel mills and equity investees involved in the production of sheet, plate and tin mill products. Loss from operations for the Flat-rolled segment was $70 million, or $30 per ton, an improvement from the $63-per-ton and $71-per-ton losses recorded in the first and fourth quarters of 2001, respectively. On a constant mix basis, prices were flat versus the fourth quarter; however, average realized prices declined by $19 per ton, primarily reflecting the loss of high- value electrogalvanized shipments following the December fire at Double Eagle Steel Coating Company and the return to supplying lower valued hot-rolled bands to USS-POSCO, following the restart of USS-POSCO's cold mill, compared to the cold-rolled product supplied in the fourth quarter. The Tubular segment includes the operating results of U. S. Steel's domestic tubular production facilities and an equity investee. Tubular recorded income from operations of $2 million, or $11 per ton, a decline from the $88-per-ton and $44- per-ton income recorded in the first and fourth quarters of 2001, respectively. Shipments remained depressed and average realized prices declined by $41 per ton from the fourth quarter, due to a decline in North American oil and gas drilling activity and a continuing surge of imports of these products, which are not covered by the recent Section 201 action. On March 29, U. S. Steel joined other major producers of oil country tubular goods in filing trade actions against 14 countries. The composition of the USSK segment is unchanged from prior periods and includes the operating results of our integrated steel mill located in the Slovak Republic, a production facility in Germany, and equity investees, primarily located in Central Europe. USSK recorded a loss of $1 million, or $1 per ton, for the quarter as weak European economic conditions and delays in restarting operations following a blast furnace outage constrained shipments while the average realized steel price declined by $48 per ton and $6 per ton versus the first and fourth quarters of 2001, respectively. With all three blast furnaces operational beginning in late January, the raw steel operating rate increased to 73.5 percent of capability from 66.4 percent in the fourth quarter. Recent operating rates have been in excess of 90 percent in anticipation of increasing second quarter shipments. USSK recently commissioned a new vacuum degasser to improve its ability to serve value-added markets. In addition, USSK announced in March that it had entered into a conversion and tolling agreement and a facility management agreement with Sartid, a.d., an integrated steel company with facilities located in Smederevo and Sabac in the Republic of Serbia. The tolling agreement provides for the conversion of slabs into hot-roll bands and cold-roll full hard into tin- coated products. USSK will retain ownership of the materials to be converted and will market the products in its own distribution system. The facility management agreement permits USSK, or an affiliated company, to have management oversight of Sartid's tin processing facilities at Sabac. Also, USSK, the Government of the Republic of Serbia and Sartid have signed a letter of intent that provides USSK with the opportunity to explore possibilities for involvement in the restructuring of Sartid. Other Businesses, which do not individually constitute a reportable segment, are involved in the production and sale of coal, coke and taconite pellets; transportation services; steel mill products distribution (Straightline Source); the management of mineral resources and development of real estate; and engineering and consulting services. In total, these units recorded a loss from operations of $12 million, a substantial improvement from the $30-million and $24-million losses recorded in the first and fourth quarters of 2001, respectively. Versus last year's first quarter, iron ore operations improved significantly based on higher shipment levels and lower natural gas prices. On April 10, U. S. Steel announced that it had signed a letter of intent to sell coal and related assets associated with U. S. Steel Mining Company's West Virginia and Alabama mines. The sale, which involves cash consideration and is subject to several contingencies, is expected to result in a pre-tax gain, excluding the potential recognition of the present value of obligations related to a multi-employer health care benefit plan created by the Coal Industry Retiree Health Benefit Act of 1992, which were broadly estimated to be $76 million at December 31, 2001. Available sources of liquidity at quarter-end amounted to $496 million consisting of cash and amounts available under the Receivables Purchase Agreement, the Inventory Facility, and the USSK credit facilities. This quarter-end amount decreased from the year-end liquidity position of $705 million primarily due to the sale of $200 million of accounts receivable under the Receivables Purchase Agreement to support an increase in working capital as business activity increased and to pay the $54 million cash settlement to Marathon Oil Corporation related to the Separation. In the second quarter of 2002, shipments and average realized prices for Flat-rolled products are expected to increase, although plate markets continue to be weak. For full-year 2002, Flat-rolled shipments are expected to be approximately 9.8 million net tons. For Tubular, we expect continued weak markets with second quarter shipments and prices remaining about flat versus the first quarter results. Shipments for full-year 2002 are projected to be approximately 0.9 million net tons. USSK's average realized prices in second quarter 2002 are expected to improve slightly, with shipments increasing significantly. Shipments in 2002 are projected to be approximately 3.8 million net tons. Commenting on U. S. Steel's outlook, Usher said, "We are encouraged by improving economic conditions in both the U.S. and Europe. In addition, the removal of some domestic capacity and the 30 percent tariffs President Bush announced in March under his Section 201 remedy should provide relief for our Flat-rolled segment. Our domestic order rate for second quarter sheet product shipments has been strong and prices are improving. As a result, we're currently operating these facilities near capacity, which should continue to have a major effect in lowering our per-unit operating costs. In summary, we currently anticipate that we will be profitable for 2002." For more information on U. S. Steel, visit our Web site at http://www.ussteel.com * * * As previously reported, Fitch currently rates the senior unsecured debt of U.S. Steel 'BB', with stable outlook. U.S. STEEL: Selling 8M Shares of Common Stock in Public Offering ---------------------------------------------------------------- United States Steel Corporation (NYSE: X) announced that it intends to sell 8 million shares of its common stock in a public offering. The company also anticipates that it will grant the underwriters a customary over allotment option of up to 1.2 million additional shares. The managing underwriters for the offering, which is expected to commence next week, are Credit Suisse First Boston and J.P. Morgan Securities, Inc. United States Steel Corporation is engaged in the production, sale and transportation of sheet, plate, tin mill and tubular steel mill products, coke, taconite pellets and coal; the management of mineral resources; real estate development; and engineering and consulting services in the United States and the production and sale of steel products in Central Europe. Sales will be made only pursuant to a prospectus which may be obtained from Office of the Secretary, United States Steel Corporation, 600 Grant St., Pittsburgh, PA 15219-2800. A copy of the prospectus may also be obtained from Credit Suisse First Boston Corporation, Prospectus Department, Eleven Madison Avenue, New York, NY 10010-3629 (Telephone Number 212-325-2580) or from J.P. Morgan Securities Inc., Prospectus Library, 277 Park Avenue, 11th Floor, New York, NY 10172 (Telephone Number 212-622-5219). WARNACO GROUP: Has Until July 31 to Decide on Mills Corp. Leases ---------------------------------------------------------------- To give The Warnaco Group, Inc. and its debtor-affiliates more time to evaluate the necessity of the two Mills Leases, the Debtors and Mills Corporation agree through a Stipulation to extend the period for which the Debtors may assume or reject the two Leases. Judge Bohanon approves these terms: (a) The Debtors' time to assume or reject the Leases is further extended through and including July 31, 2002 subject to the terms set forth herein, without prejudice to the rights of the Debtors to seek further extensions or for Mills to object to same; (b) The Debtors must provide Mills at least 30 days prior written notice of rejection for each of the Leases prior to the later of: (i) the date of the entry of the order approving each rejection, and (ii) the rejection effective date set forth in the order approving each rejection; (c) The Debtors agree to continue to perform their obligations as Lessee pursuant to the terms of the Leases through the term of this extension, and in the event that one or more of the stores subject to the Leases "goes dark" or otherwise operates in violation of the terms of the Leases prior to July 31, 2002, Mills may present an order to this Court rejecting the Lease for the particular store that has "gone dark" in violation of the terms of the Lease, after providing five business days' notice to: (i) counsel to the Debtors, Sidley Austin Brown & Wood LLP, (ii) counsel to the Debtors' Post-petition Secured Lenders, Weil, Gotshal & Manges LLP, (iii) counsel to the Debt Coordinators for the Debtors' Pre-petition Banks, Shearman & Sterling, (iv) the Office of the United States Trustee for this District, and (v) counsel to the Official Committee of Unsecured Creditors, Otterbourg, Steindler, Houston & Rosen, P.C. (Warnaco Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS COMMS: Chapter 11 Cases Reassigned to Judge Bernstein -------------------------------------------------------------- Vito Genna, Chief Deputy Clerk of the Bankruptcy Court for the Southern District of New York, reassigns Williams Communications Group, Inc., and its debtor-affiliates' cases from Judge Allan L. Gropper to Chief Judge Stuart M. Bernstein due to an unspecified conflict of interest. (Williams Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORKGROUP TECHNOLOGY: Taps Covington to Seek Strategic Options -------------------------------------------------------------- Workgroup Technology Corporation (NASDAQ: WKGP), a leading provider of Web-enabled, extended enterprise collaborative product data management software solutions, today announced that it has retained Covington Associates, a Boston, MA based technology investment banking firm, to render financial advisory and investment banking services in connection with its ongoing exploration of strategic alternatives. WTC develops, markets and supports WTC ProductCenter(TM), a Web- enabled, extended enterprise collaborative Product Data Management (PDM) solution that provides document management, design integration, configuration control, change management, and enterprise integration for optimizing product development. Based in Burlington, Massachusetts, the Company differentiates itself on the basis of its controlled and secure accessibility, enterprise integration, and quick adaptability of its software. Thousands of users at mid-sized and global companies are in production and benefit from WTC products, including ABB Flexible Automation; Baker Oil Tools; Eaton Corporation; General Electric Company; Goodrich Turbine Fuel Technologies; Honeywell; Millipore Corporation; Siemens Energy & Automation, Inc.; U.S. Army; and Whirlpool Corporation. The Company's Web site is located at http://www.workgroup.com * Meetings, Conferences and Seminars ------------------------------------ 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 ***