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/raid1/www/Hosts/bankrupt/TCR_Public/020603.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 3, 2002, Vol. 6, No. 108 Headlines 360NETWORKS: Seeks 3rd Exclusivity Extension Until August 26 ADELPHIA COMMUNICATIONS: Nasdaq Delists Today & Triggers Default ALGOMA STEEL: Issues Revised 1st Quarter Report To Shareholders ARTHUR ANDERSEN: Eight Partners Join Navigant Consulting AT&T CANADA: Lashes At CRTC Ruling As Unfair to Local Services AKORN, INC.: Reports $26.1MM Working Capital Deficit at March 31 AMERICAN CLASSIC: Wants to Extend Exclusivity through July 30 ANALYTICAL SOFTWARE: Violates TSX Exchange Listing Requirements AREMISSOFT: Chapter 11 Plan Confirmation Hearing Set For June 28 BERRY PLASTICS: S&P Maintains Watch on B+ Corp. Credit Rating BETHLEHEM STEEL: Court Approves Amendment to PwC Retention Deal BIRMINGHAM STEEL: Signs $615 Million Asset Sale Pact With Nucor BURLINGTON: Court Okays Yantek as Executory Contract Consultant BURLINGTON: Wins Final Nod For Upholstery Fabrics Business Sale COMPLETEL: Voluntarily Delists Ordinary Shares From Nasdaq COMTREX SYSTEMS: Fails to Comply with Nasdaq Listing Criteria COSERV TELECOM: Secures $7.8 Million DIP Financing From CFC COVANTA: Court Issues Interim Approval to Hire Arnold & Porter ECOGEN: Certis USA Enters Pact to Acquire Bt Biopesticide Assets ENRON: Employee Committee Hires Crossroads as Financial Advisor ENRON: Gains Court Nod to Pay Pre-Petition Headquarters Taxes EXIDE TECH: Gets Court Okay to Hire Kirkland & Ellis as Counsel FARMLAND INDUSTRIES: Files for Chapter 11 Reorg. in Kansas City FARMLAND INDUSTRIES: Voluntary Chapter 11 Case Summary FEDERAL-MOGUL: Wishes to Employ Garden City as Claims Agent FORMICA: Committee Taps Dewey Ballantine as Bankruptcy Counsel GALEY & LORD: Seeks Court Nod to Tap Garden City as Claims Agent GRAHAM PACKAGING: S&P Places B Credit Rating on Watch Positive ICH CORPORATION: Secures Okay to Sign-Up BSI as Claims Agent INTERMET CORPORATION: S&P Assigns BB- Corporate Credit Rating INT'L FIBERCOM: Looks to PricewaterhouseCoopers for Fin'l Advice INTERVOICE-BRITE: Completes 3 Debt Restructuring Transactions IRON AGE: S&P Junks Rating Due to Weaker Operating Performance KAISER ALUMINUM: Retirees' Committee Retains Brobeck as Counsel KELLSTROM: Committee Wants Jefferies to Render Financial Advice KMART: Myrick Construction Seeks Stay Relief to Enforce Liens KMART CORP: Offering Free BlueLight Internet Access To Shoppers LANTRONIX: Fails To Comply With Nasdaq Listing Requirements METALS USA: U.S. Trustee Alters Unsecured Committee Membership NATIONAL STEEL: Signs-Up Ernst & Young as Consultants NATIONSRENT INC: Taps Ritchie Bros. as Equipment Appraisers OSE USA: Says Cash Balances Ample to Meet Working Capital Needs OWENS CORNING: Seeks Approval of Settlement Pact with Bank Group PHYCOR INC: Exclusive Period Remains Intact through July 30 PSINET INC: Wants to Sell TX Assets for 11MM+ at Public Auction QWEST COMMS: Expresses Disappointment over Moody's Downgrade RESIDENTIAL ACCREDIT: Fitch Places 2 Bonds on Rating Watch Neg. SAFETY-KLEEN: Clean Harbors Completes Due Diligence Process SECURITY ASSET: Pursuing Debt Financing to Maintain Operations SIMMONS: S&P Raises Corp. Credit & Secured Debt Ratings to BB- SMARTSERV: Asks For Review Of Nasdaq Delisting Determination TELEGLOBE: Seeking Authority to Pay Critical Vendors' Claims TIMCO AVIATION: March 31 Balance Sheet Upside-Down by $82 Mill. UNITED DEFENSE: Fitch Affirms Senior Secured Facilities at BB WASH DEPOT: Plan Confirmation Hearing Scheduled for July 31 WEBLINK WIRELESS: Ability to Continue Operations Still Uncertain WHEELING-PITTSBURGH: Tatum's Retention Not to Prejudice Others WHISPERING OAKS: Working Capital Deficit Tops $693K at Dec. 31 WKI HOLDING: Files for Chapter 11 Reorganization in Illinois WKI HOLDING: Case Summary & 50 Largest Unsecured Creditors * BOND PRICING: For the week of June 3 - 7, 2002 ********* 360NETWORKS: Seeks 3rd Exclusivity Extension Until August 26 ------------------------------------------------------------ For a third time -- 360networks inc. and its debtor-affiliates seek an extension of their exclusive periods to: (i) file a plan of reorganization through August 26, 2002; and (ii) solicit acceptances of that plan through October 28, 2002. Alan J. Lipkin, Esq., at Willkie Farr & Gallagher, in New York, says that the sheer size and complexity of these cases warrant an extension for the Debtors, reminding the Court that these cases include 23 Debtors, over $1,200,000,000 in pre-petition bank facilities, and thousands of creditors owed hundreds of millions of dollars. "The cases are further complicated by cross-border issues involving the Canadian Debtors," Mr. Lipkin adds. The facts and circumstances of these cases demonstrate that the requested extensions are appropriate and necessary to afford the debtors sufficient time to evaluate strategic and financial alternatives and negotiate distributions to creditors and parties in interest. The Debtors' initial 120 day exclusive period was dominated by their transition to Chapter 11 while the Debtors' first Exclusive Period extension was largely devoted to their ongoing efforts to develop and fine tune their business plan, explore third party interest, renegotiate key third party relationships and dispose of non-core assets. The second Exclusive Period extension has been devoted to similar matters as well as in developing a detailed plan term sheet that would form the basis of a reorganization plan. Accordingly, Mr. Lipkin reports that the Debtors have made a substantial progress in laying a foundation for confirmation of a plan. Nevertheless, substantial work remains to be done, including full evaluation of all claims filed in these cases, obtaining another extension for use of cash collateral and completion of the negotiation of a plan of reorganization. Termination of the Debtors' Exclusive Periods would adversely affect the Debtors' business operations and the progress of these cases. Mr. Lipkin states that if this Court were to deny the request for an extension, any party in interest then would be free to propose a plan of reorganization. Hence, a chaotic environment would develop with no central focus. "An extension of exclusivity would enable the Debtors to harmonize the diverse and competing interests that exist and attempt to resolve conflicts in a reasonable manner," Mr. Lipkin says. Judge Gropper will convene a hearing on the Debtors' request on June 4, 2002 and the Debtors' exclusive period is extended through the conclusion of that hearing. (360 Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMUNICATIONS: Nasdaq Delists Today & Triggers Default ---------------------------------------------------------------- The Nasdaq Stock Market, Inc. announced that it will delist the securities of Adelphia Communications Corporation (Nasdaq: ADLAE) based upon its failure to timely file its periodic reports with the Securities and Exchange Commission as required by Nasdaq rules and based upon public interest concerns. The delisting will be effective upon the open of business on Monday, June 3, 2002, in order to provide for an orderly transition of index components in the Nasdaq 100 Index. The Nasdaq's delisting action triggers an event of default under certain of Adelphia's public bond indentures. Adelphia now faces the obligation to buy-back some $1.4 billion of its bonds. Adelphia is already in technical default on $7 billion of bank debt for failing to timely deliver audited financial statements, and the banks are doling-out short-term waivers. Late Friday, talks with Charter Communications, Inc., broke down. Charter was reportedly offering $2,700 per subscriber for Adelphia's California cable operations and Adelphia wants $3,600 per subscriber. ALGOMA STEEL: Issues Revised 1st Quarter Report To Shareholders --------------------------------------------------------------- Algoma Steel Inc. (TSE:AGA.) reissued its First Quarter Report to Shareholders for the period ended March 31, 2002. The reissuance is necessary to comply with certain regulatory requirements to include comparative financial statements, excepting the statement of financial position, for periods prior to the Company's restructuring on January 29, 2002 and application of fresh start accounting at January 31, 2002. Results for the two-month post-restructuring period ended March 31, 2002 are unchanged. This report includes results for January 2002 and certain comparative financial information for the first quarter of 2001. The reissued First Quarter Report to Shareholders will be available on SEDAR and will be mailed to shareholders along with the Second Quarter Report. 2002 First Quarter Report To Shareholders (Unaudited) for the period ended March 31, 2002 Summary The first quarter results for 2002 are being reissued with certain comparative financial statements pursuant to regulatory requirements. The financial results for the two-month period ended March 31, 2002 are unchanged, but results for January, 2002 are being disclosed. The implementation of the restructuring plan on January 29, 2002 and related "fresh start accounting" resulted in a number of adjustments to the opening balance sheet of the restructured Company. Algoma is now positioned with a much improved capital structure resulting in lower interest and depreciation costs. The restructuring also resulted in reduced operating costs due mainly to lower wage and benefit costs. These factors contributed to positive operating income of $3.0 million for the two-month post-reorganization period ended March 31. A net loss of $4.4 million was incurred during these two months. The outlook for steel markets for the next six months is positive and is expected to result in improving financial results. Management's Discussion And Analysis Introduction The Company completed its restructuring on January 29, 2002 and has presented its financial results on the basis of "fresh start accounting" which requires assets and liabilities to be comprehensively revalued. The financial position of the Company at December 31, 2001 has not been exhibited because it is not considered comparable due to the significant changes resulting from the restructuring. The opening balance sheet as of January 31 includes various adjustments to reflect the reorganization transactions and the fresh start accounting. The reorganization adjustments reflect the new capital structure from the restructuring process. In applying the principles of fresh start accounting, the Company has restated all assets and liabilities at estimated fair values. The net result of these adjustments was that Algoma recorded $300 million of shareholders' equity at January 31, 2002. Comparative financial statements, excepting the statement of financial position, for periods prior to January 31, 2002 have been presented pursuant to regulatory requirements. In reviewing the comparative financial statements, readers are reminded that they do not reflect the effects of the financial reorganization or the application of fresh start accounting. Financial statements for 2001 have been restated to reflect the retroactive application of the change in accounting policy in respect of foreign currency translation as outlined in note 1. Financial and Operating Results The net loss for the two-month post-restructuring period was $4.4 million. A net loss of $30.5 million was incurred in the first quarter of 2002 compared with a loss of $136.7 million in 2001. The January, 2002 results include a $6.8 million loss on the disposal of the joint venture interest in the Tilden Mine and $3.3 million in reorganization expenses. The reclassification of the First Mortgage Notes as a current liability in March, 2001 resulted in $36.7 million of unamortized original issue discount and issue costs being charged to income as reorganization expenses. Operating income for the two-month post-restructuring period was $3.0 million. The loss from operations was $7.5 million in the quarter, an improvement of $45.5 million over the $53.0 million loss reported in 2001. An improvement in selling prices and lower unit costs resulted in inventory valuation adjustments which improved earnings by approximately $6 million in the two- month post-restructuring period. Operating costs declined significantly from 2001 due mainly to favourable inventory adjustments, lower natural gas prices and the effect of restructuring savings (particularly lower wage and benefit levels). Raw steel production was 591,000 tons in the quarter compared with 496,000 tons in 2001 and shipments increased to 544,000 tons from 490,000 tons in the previous year. Revenue was $241.9 million for the quarter with average selling prices of $445 per ton compared with revenue of $227.5 and average selling prices of $464 per ton in 2001. A price increase of $30 per ton was implemented on hot rolled sheet products in February, 2002. Financial expense for the quarter of $12.3 million was significantly lower than the restated $46.5 million in 2001 due mainly to a foreign exchange gain of $1.4 million compared with an exchange loss of $25.3 million in 2001 and reduced interest expense on the lower levels of long-term debt in the post- restructuring period. Liquidity Cash flow from operations before the effects of changes in operating working capital improved to negative $8.3 million in the quarter compared with negative $54.0 million in 2001 due to the improvement in operating results. There was a $32.7 million reduction in operating working capital, with $11.6 million resulting from the disposal of the Tilden joint venture interest and the remaining $21.1 million due primarily to reduced inventory levels. Capital expenditures were $3.2 million compared to $7.1 million in 2001. In addition, $50 million in proceeds from the new term loan contributed to a decrease in bank indebtedness of $71.2 million in the quarter. Unused availability at March 31 was $83 million. The restructuring provided the Company with new arrangements with the banking syndicate which expire on December 30, 2003. The Company has a revolving credit facility with availability limited to the lesser of $180 million and a borrowing base determined by the levels of accounts receivable and inventories, a federal loan guarantee, less certain reserves. The arrangement also provides the Company with a $50 million term loan to be repaid in $10 million quarterly installments commencing in September, 2002 and ending in September, 2003. A detailed description of the banking arrangements is included in note 2. Trade The global safeguard investigation in the United States against imports of many steel products (under Section 201 of the Trade Act of 1974) has been concluded. President Bush announced a range of remedies including varying rates of tariffs and quotas. All steel products from Canada have been excluded from the current remedies. In response to the Section 201 action by the U.S., other jurisdictions such as the European Union and Mexico have implemented similar safeguard actions. The Canadian industry is concerned that restrictions on the global importation of steel into the U.S. will cause diversion of that steel to Canada. In response to these concerns, the government of Canada, under international agreements and Canadian law, has commenced a safeguard investigation into the importation of steel into Canada, similar to that completed by the U.S. government. A public hearing before the Canadian International Trade Tribunal (CITT) will commence on June 10, 2002 with an injury determination due by July 4. On August 19, the CITT will issue their reasons for any determination and any recommendations regarding remedy. An anti-dumping order covering imports of certain hot rolled carbon steel plate originating in or exported from Mexico, the People's Republic of China, the Republic of South Africa and the Russian Federation is due to expire in late October, 2002. The CITT has initiated an expiry review to determine whether the order should be renewed. This process may not be concluded until late in the year. Outlook Current strong order intake levels are expected to continue through the second quarter. Price increases of $30 per ton have been announced for each of April, May and June for hot rolled sheet with further increases of $40 per ton for each of July and August. Similar price increases have been announced for cold rolled sheet, while increases of $130 per ton have been announced for carbon plate products during the same period. There are several projected cost increases with the most significant being higher natural gas prices. The cost of scrap and power is also projected to increase. The benefits from higher selling prices are expected to exceed the cost increases for natural gas, scrap and power resulting in improved financial results for the second quarter. Financial reorganization On April 23, 2001, Algoma Steel Inc. obtained protection under the Companies' Creditors Arrangement Act ("CCAA") in the Ontario Superior Court of Justice. The Court subsequently granted extensions of the CCAA protection until January 31, 2002. This allowed the Corporation to continue operating its business as it negotiated a restructuring plan with its stakeholders by preventing legal action being brought against the Corporation and by staying substantially all unsecured and under-secured claims as of the Filing Date. Additional financing was obtained providing for continuing operations through the anticipated restructuring period. On October 24, 2001, the Corporation filed an initial Plan of Arrangement and Reorganization with the Court. A second and third amended and restated Plan of Arrangement and Reorganization were filed on November 8, 2001 and December 10, 2001, respectively. The third amended and restated Plan of Arrangement and Reorganization was voted upon and approved by each Class of Affected Creditors on December 10 and December 17, 2001 and on December 19, 2001, the Court issued a Final Order sanctioning the Plan. The Corporation subsequently emerged from CCAA protection and the Plan was implemented on January 29, 2002. The significant provisions of the Plan are as follows: -- the cancellation of all currently outstanding common shares and employee voting shares for no consideration and the issuance of new common shares as set out below; -- the settlement of the First Mortgage Notes (U.S. $349.4 million) and related interest obligation (U.S. $47 million) in exchange for U.S. $125 million of 11% Notes maturing in 2009, U.S. $62.5 million of 1% convertible Notes maturing in 2030 and 15 million new common shares; -- a cash payment of $0.8 million and 1 million new common shares in satisfaction of all claims of the unsecured creditors; -- options for 4 million new common shares issued to employees for nominal consideration and new collective bargaining agreements which include wage and benefit reductions, reduced vacation, pension benefit changes and manning reductions. The pension obligations were restructured through the new collective bargaining agreements and an arrangement with the Superintendent of the Financial Services Commission of Ontario; -- new financing facilities and a $50 million loan guarantee provided by the Government of Canada; and -- a new Board of Directors comprised of 7 nominees of the holders of the First Mortgage Notes and 3 nominees of the United Steelworkers of America. Algoma Steel Inc., based in Sault Ste. Marie, Ontario, is Canada's third largest integrated steel producer. Revenues are derived primarily from the manufacture and sale of rolled steel products, including hot and cold rolled sheet and plate. DebtTraders reports that Algoma Steel Inc.'s 12.375% bonds due 2005 (ALGC05CAR1) are quoted between 25 and 30. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ALGC05CAR1 for real-time bond pricing. ARTHUR ANDERSEN: Eight Partners Join Navigant Consulting -------------------------------------------------------- Navigant Consulting, Inc. (NYSE: NCI) announced that it has acquired the practices of eight partners, together with 82 other client service professionals, from Arthur Andersen LLP. "The current consulting environment represents a unique opportunity to build an outstanding specialty consulting firm, and we are extremely pleased to have a strong group of Andersen professionals joining us," stated William M. Goodyear, Chairman and Chief Executive Officer of Navigant Consulting. "These teams fit directly within a core competency of our organization, enhance practice areas we feel are strategically important to our expansion plans, and confirm the attractive nature of our platform for growth." The teams joining Navigant Consulting come from five different Andersen practice areas, and will primarily integrate into the Company's Financial & Claims business unit, Peterson Consulting. The Financial Analytics practice, led by Tim Hart along with Mike Maloney, David Moes, Tony Creamer and Steve Stanton, will join current litigation support practices in Washington, D.C., Chicago and Philadelphia. Dan Williams, formerly the Central and West Region Managing Partner for Andersen's Corporate Finance practice, will be based in Chicago and will lead a team of professionals in launching a national restructuring practice. Tom Mulhare will be joining the Princeton, N.J. office to enhance the insurance, reinsurance and claims practice. In Nashville, Irene Torino, with a team of 12 client service professionals, will be joining to expand Navigant Consulting's healthcare practice, and in Los Angeles, Larry Oliva, formerly the Andersen partner in charge of its energy consulting group's Power Transmission consulting practice, will be joining to fill a key role in Navigant Consulting's Electric Generation and Transmission consulting practice. "The Andersen practices we are acquiring represent some of the leading experts in their respective fields, and their skill sets are an exceptionally strong complement to our existing practices," stated Doug Reichert, Executive Managing Director of Navigant Consulting's Financial & Claims practice. "We are excited about the experience the Andersen professionals bring to our practice, and we are looking forward to expanding our reach into new markets." "All of these Andersen teams have a record of high performance and strong profitability," stated Ben W. Perks, Executive Vice President and Chief Financial Officer. "Once integrated, we anticipate these practices will have a strong impact on our revenue and EBITDA generation." The transaction was effective as of May 24, 2002. Further terms were not announced. Navigant Consulting, Inc. -- http://www.navigantconsulting.com -- is a specialized consulting firm providing services to Fortune 500 companies, government agencies, law firms, and regulated and network industries. The Company is comprised of two business units - Financial & Claims and Energy & Water. The Financial & Claims practice, consisting of Peterson Consulting and PENTA Advisory Services, provides consultation to clients facing the challenges of dispute, litigation, bankruptcy, regulation and change in analyzing complex accounting, finance, economic, operations and information management issues. The Energy & Water practice provides consulting services to the energy and electric, gas, and water utility industries, focusing on M&A/divestiture financial advisory services, reliability regulatory and optimization reviews, electric generation and transmission assessments, including energy market assessments, and energy regulatory-related litigation support. "Navigant" is a service mark of Navigant International, Inc. Navigant Consulting, Inc. (NCI) is not affiliated, associated, or in any way connected with Navigant International, Inc. and NCI's use of "Navigant" is made under license from Navigant International, Inc. AT&T CANADA: Lashes At CRTC Ruling As Unfair to Local Services -------------------------------------------------------------- AT&T Canada Inc. (NASDAQ:ATTC),(TSE: TEL.B), Canada's largest facilities-based competitor, issued the following statement by Vice Chairman & CEO John McLennan in response to the ruling by the CRTC: "[Thurs]day's CRTC ruling fails to achieve the Federal government's stated policy goal of a competitive telecom industry. The regulator appears to have fundamentally misjudged the reality of the current state of competition in the Canadian telecom industry. This is a disappointing decision for competition. It is a disappointing decision for consumers and customers who would benefit from a more competitive environment in local service. And it is a disappointing decision for AT&T Canada, which is doing everything in its power to help establish a strong competitive position for itself and its customers. "From a business perspective, this ruling represents a marginal improvement over the status quo as it fails to adequately address the insurmountable cost advantage enjoyed by the former monopolies over new entrant competitors. By failing to achieve a level playing field, the CRTC's decision preserves an inequitable marketplace that denies Canadian telecom customers the full benefits of true competition. "Accordingly, we are reviewing the decision in detail and will explore all options available to us with respect to this decision, including a possible appeal. After undertaking a thorough evaluation of the ruling, as it now stands, we will determine its impact on our business plan. "As previously indicated, we will then assess our capital structure to ensure that it provides the necessary liquidity and flexibility for AT&T Canada to grow as a profitable and effective competitor. We expect to update all of our stakeholders on the results of this review by the time of our Annual General Meeting on June 18th." AT&T Canada is the country's largest national competitive broadband business services provider and competitive local exchange carrier, and a leader in Internet and E-Business Solutions. With over 18,700 route kilometers of local and long haul broadband fiber optic network, world class data, Internet, web hosting and e-business enabling capabilities, AT&T Canada provides a full range of integrated communications products and services to help Canadian businesses communicate locally, nationally and globally. AT&T Canada Inc. is a public company with its stock traded on the Toronto Stock Exchange under the symbol TEL.B and on the NASDAQ National Market System under the symbol ATTC. Visit AT&T Canada's web site, http://www.attcanada.comfor more information about the company. DebtTraders reports that AT&T Canada Inc.'s 10.750% bonds due 2007 (ATTC07CAR1) are trading between 8 and 12. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC07CAR1 for some real-time bond pricing. AKORN, INC.: Reports $26.1MM Working Capital Deficit at March 31 ---------------------------------------------------------------- Akorn, Inc. operates in three separate segments: the ophthalmic segment manufactures, markets and distributes diagnostic and therapeutic pharmaceuticals and surgical instruments and related supplies; the injectable segment manufactures, markets and distributes injectable pharmaceuticals, primarily in niche markets; and the contract services segment provides manufacturing services to unaffiliated companies in the ophthalmic and injectable markets. Akorn, Inc.'s consolidated net sales increased 124% in the quarter ended March 31, 2002 compared to the same period in 2001 due to fact that the net sales for the first quarter 2001 were negatively impacted by several non-recurring charges related to chargebacks, rebates and returned goods. The allowance for chargebacks, rebates and returned goods are recorded as reductions to gross sales in computing net sales. Excluding these non-recurring charges, consolidated net sales for the first quarter of 2002 decreased by $1,193,000, or 8.1%. This decrease is mainly concentrated in the injectable line of business as anticipated due to abnormally high injectable sales in the first quarter of 2001 due to a product shortage, which did not reoccur in the first quarter of 2002. Ophthalmic segment sales increased primarily due to the non-recurring charges noted above as well as strong angiography and ointment product sales. Contract Services sales decreased by 11.4% due mainly to customer inventory issues as the Company has not lost any major customer's business. Consolidated gross margin was $6,499,000, or 47.8%, for the 2002 first quarter as compared to a gross margin loss of $5,783,000 in the same period a year ago. Excluding the non-recurring charges discussed above, the first quarter 2001 gross margin was $4,457,000, or 30.1%. The significant improvement in gross margin in the first quarter of 2002 was driven by the Company's continued focus on manufacturing costs, operational efficiencies as well as a shift in product mix to higher gross margin products in the angiography and ointment product lines. The Company reported a net income of $191,000 for the three months ended March 31, 2002, compared to a net loss of $12,977,000 for the comparable prior year quarter. Excluding the non-recurring charges discussed above, the net loss for the first quarter of 2001 would have been $1,276. Working capital at March 31, 2002 was a deficit $26.1 million compared to a deficit $26.7 million at December 31, 2001. Working capital is negative primarily due to the $44.8 million in long-term debt that is due within twelve months of the balance sheet reporting date of March 31, 2002. Future working capital needs will be highly dependent upon the Company's ability to control expenses and manage its accounts receivables. Management believes that existing cash and cash flow from operations will be sufficient to meet the cash needs of the business for the immediate future, but that additional financing will be needed to refund the current bank debt. If available funds and cash generated from operations are insufficient to meet immediate liquidity requirements, further financing and/or reductions of existing operations will be required. There are no guaranties that such financing will be available or available on acceptable terms. Further, such additional financing may require the granting of rights, preferences or privileges senior to those rights of the common stock and existing stockholders may experience substantial dilution of their ownership interests. The Company will need to refinance or extend the maturity of the bank credit agreement as it does not anticipate sufficient cash to make the June 30, 2002 scheduled payment. For the quarter ended March 31, 2002, the Company provided $389,000 in cash from operations to finance its working capital requirements, primarily from a decrease in accounts receivable balances. Investing activities, which primarily relate to purchase of equipment and in progress construction, required $974,000 in cash. Investment activities provided $138,000 in cash, primarily due to the exercise of stock options. Akorn, Inc.'s ophthalmic unit produces anesthetic and diagnostic products, as well as antibiotics, steroids, glaucoma treatments, and surgical and eye care products. Its injectable unit makes generic drugs and anesthetics for arthritis and pain management. Akorn provides contract manufacturing services to other drug and biotech firms; it also markets its own ophthalmic and injectable products, which are sold to physicians, optometrists, wholesalers, retailers, and pharmacies. AMERICAN CLASSIC: Wants to Extend Exclusivity through July 30 ------------------------------------------------------------- American Classic Voyages Co. is seeking approval from the U.S. Bankruptcy Court in Delaware for a 90-day extension of the company's exclusive right to file a plan and lobby creditors for support, reported Dow Jones. The company said it wants until July 30 to file a reorganization plan and up to September 28 to get creditor approval. A hearing on the extension is scheduled for June 21 with objections due on June 17. (ABI World, May 30, 2002) ANALYTICAL SOFTWARE: Violates TSX Exchange Listing Requirements --------------------------------------------------------------- Effective at the close of business May 31, 2002, the common shares of Analytical Software, Inc. ("AYL") were delisted from TSX Venture Exchange for failing to maintain Exchange Listing Requirements. The securities of the Company have been suspended in excess of twelve months. AREMISSOFT: Chapter 11 Plan Confirmation Hearing Set For June 28 ---------------------------------------------------------------- AremisSoft Corporation announced that the U.S. District Court for the District of New Jersey approved the disclosure statement in connection with its previously announced Plan of Reorganization. The disclosure statement was approved without objection, and AremisSoft may now begin soliciting acceptances for its proposed Plan of Reorganization. The confirmation hearing on the Plan of Reorganization is scheduled for June 28, 2002. AremisSoft also announced that the official equity committee and the representatives of the plaintiff class in the pending class- action litigation have expressed strong support for the Plan of Reorganization. Under the Plan of Reorganization, AremisSoft's shareholders at June 27, 2002 will receive 39.5% of the stock of SoftBrands, Inc., AremisSoft's wholly-owned operating subsidiary, and members of the plaintiff class will receive 60.5% of the stock of SoftBrands. The plaintiff class will also receive all of the interests in a liquidating trust being formed to pursue litigation claims on behalf of AremisSoft and to liquidate other non-operating assets of AremisSoft. SoftBrands will be entitled to 10% of the net proceeds from the liquidating trust. George Ellis, CEO of SoftBrands, indicated that, "We are pleased that this important step in the reorganization has been completed and that the confirmation date has been scheduled. We look forward to being able to operate SoftBrands as an independent entity and to generate value for our shareholders through what we believe is a solid business with a bright future." BERRY PLASTICS: S&P Maintains Watch on B+ Corp. Credit Rating ------------------------------------------------------------- Standard & Poor's said that its single-'B'-plus corporate credit rating on Berry Plastics Corp. remains on CreditWatch with developing implications following the announcement that First Atlantic Capital, JPMorgan Partners, and Aetna Life Insurance Co. signed a definitive agreement to sell Berry to GS Capital Partners 2000 L.P. for $837.5 million, including repayment of existing indebtedness. Developing means ratings could be raised, lowered, or affirmed. At the same time, the single-'B'-plus corporate credit rating on Berry's parent company, BPC Holding Corp., remains on CreditWatch with developing implications. Evansville Ind.-based Berry is a leading manufacturer and supplier of rigid thin-wall open top containers, plastic injection molded aerosol overcaps, closures, drinking cups, and housewares. The company had outstanding debt of about $493 million as at March 31, 2002. GS Capital Partners is a private equity investment fund managed by Goldman, Sachs & Co. The transaction, subject to customary closing conditions, is expected to close in the third quarter of 2002. "Although no details of the forthcoming transaction have been disclosed, a strengthened financial profile could result in higher ratings. Conversely, initiatives that would deteriorate the firm's financial profile could result in a downgrade," said Standard & Poor's analyst Liley Mehta. Standard & Poor's will meet with management to resolve the CreditWatch as more information is made available. In assessing the impact on the ratings, Standard & Poor's will examine the implications for the financial profile, and review the company's business and financial strategies. BETHLEHEM STEEL: Court Approves Amendment to PwC Retention Deal --------------------------------------------------------------- Pursuant to Section 327(a) of the Bankruptcy Code and Bankruptcy Rule 2014(a), Bethlehem Steel Corporation and its debtor- affiliates seek the Court's authority to amend the terms of the Retention Agreement with PricewaterhouseCoopers LLP as auditors, tax advisors, bankruptcy and reorganization consultants. Harvey R. Miller, Esq., at Weil, Gotshal & Manges, LLP, in New York, informs the Court that the Debtors wish to amend the services PwC will render to the Debtors, to include: (a) Audit of Schedule II: Valuation and Qualifying Accounts and Reserves, including in Bethlehem's 2002 Annual Report on Form 10-K; (b) Debt compliance letter required by the General Electric Capital Corporation Revolving Credit and Guaranty Agreement; (c) Audit of compensation and medical payments included in Form LS-513, Report of Payments, for the purpose of complying with the Longshore and Harbor Workers' Compensation Act; (d) Audit of the Debtors' profit sharing calculation as required by the 1999 Bethlehem/USWA agreement; (e) Audits the employee benefit plans for 2001: -- The Savings Plan for Salaried Employees of Bethlehem Steel Corporation and Subsidiary Companies, -- 401(k) Retirement Savings Plan of Bethlehem Steel Corporation and Subsidiary Companies, -- Bethlehem Steel Corporation Employee Stock Ownership Plan, -- Bethlehem Steel Corporation Special Profit Sharing Plan, -- Bethlehem Steel Corporation Special Profit Sharing Plan, -- The Pension Plan of Bethlehem Steel Corporation and Subsidiary Companies, -- Bethlehem Supplemental Unemployment Benefit Plan, -- Bethlehem Railroads Supplemental Unemployment Benefit Plan, -- Bethlehem Supplemental Unemployment Benefit Plan (short plan year), -- Bethlehem Railroads Supplemental Unemployment Benefit Plan (short plan year), -- The Social Insurance Plan of Bethlehem Steel Corporation and Subsidiary Companies, and -- Supplemental Unemployment Benefit Plan for Employees of Lukens, Inc. (hourly); and (e) from time to time, upon the Debtors' request, consulting services with respect to bankruptcy issues related to credit claims, voidable transactions, vendor relations, analysis of the business, operations and financial plans, and other bankruptcy and reorganization consulting as may be necessary. As compensation for the services, the Debtors will pay PwC a fixed fee of $925,000 to be paid on: Date Amount ---- ------ May 31, 2002 $185,700 June 30, 2002 77,700 July 31, 2002 105,000 August 31, 2002 85,000 September 30, 2002 85,000 October 31, 2002 148,500 November 30, 2002 75,000 December 31, 2002 20,000 January 31, 2003 143,100 Mr. Miller adds that PwC will also be reimbursed for its reasonable out-of-pocket expenses. * * * Judge Lifland approves the amendment to the Debtors' Retention Agreement with PricewaterhouseCoopers LLC. PriceWaterhouseCoopers will be entitled to seek periodic interim basis payment of 100% for professional services rendered in connection with the Fixed Fee Services and 80% for professional services rendered in connection with the Reorganization Services as well as reimbursement for its reasonable expenses. (Bethlehem Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1) are quoted between the prices 10 and 13.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1 BIRMINGHAM STEEL: Signs $615 Million Asset Sale Pact With Nucor --------------------------------------------------------------- Birmingham Steel Corporation (OTC BB:BIRS) announced it has signed a definitive agreement to sell substantially all of its assets to Nucor Corporation for $615 million. Previously, in a press release on May 24, the Company disclosed it would make a pre-arranged filing pursuant to the reorganization provisions of Chapter 11 of the U.S. Bankruptcy Code in order to effect the sale to Nucor. The Company also announced today that its secured lenders have signed binding agreements to support the sale to Nucor, and that Bank of America, N.A., as agent for the Company's bank group, has committed to provide $40 million of post-petition debtor in possession financing through closing of the transaction. Subject to the approval of the Delaware bankruptcy court, the agreements reached with secured lenders also provide for prompt and uninterrupted payments of all pre- petition payables to scrap suppliers, utility providers, freight carriers and other suppliers of essential goods and services. John D. Correnti, Chairman and Chief Executive Officer of Birmingham Steel, commented, "We are pleased to have completed definitive documentation with Nucor and our secured lenders. We believe the Nucor transaction provides the best value for our stakeholders, which include lenders, shareholders, customers, suppliers and employees. We believe the Birmingham Steel operations and workforce will be tremendous additions to the Nucor organization." Correnti continued, "With the support of our secured lenders, we expect to continue operations in the normal course while we work to close the sale to Nucor." Correnti said closing of the transaction will take place upon receipt of approvals from the bankruptcy court and necessary regulatory agencies. The Company said the closing was expected to occur late in calendar 2002. The Company noted that the $615 million purchase price is less than the full amount of the Company's secured debt. The Company said the secured lender group has agreed to distribute a portion of the proceeds from the transaction to unsecured creditors and $15 million, or approximately $0.47 per share, to shareholders. The assets to be acquired by Nucor include Birmingham Steel's four operating mills in Birmingham, Alabama; Kankakee, Illinois; Seattle, Washington; and its 85%-owned BSE facility in Jackson, Mississippi. The transaction also includes the corporate headquarters in Birmingham, Alabama; the idled melt shop in Memphis, Tennessee; the assets of Port Everglades Steel Corporation; the assets of the Klean Steel division; Birmingham Steel's interest in Richmond Steel Recycling Limited; and accounts receivable and inventory related to the acquired assets. Correnti concluded, "Our directors, management and employees will work diligently to support efforts to complete the transaction as soon as possible. We will also focus on supporting the needs of our customers and suppliers until the transaction closes." Birmingham Steel operates in the mini-mill sector of the steel industry and conducts operations at facilities located across the United States. The common stock of Birmingham Steel is traded on the over the counter bulletin board under the symbol "BIRS." BURLINGTON: Court Okays Yantek as Executory Contract Consultant --------------------------------------------------------------- The Court approves Burlington Industries, Inc.'s and its debtor- affiliates' application to retain Yantek Consulting Group Inc. as their Executory Contract Consultants, nunc pro tunc to March 19, 2002. As previously reported, the Debtors asked to retain and employ Yantek Consulting Group Inc. as their executory contract and unexpired lease consultants in the Chapter 11 cases. Specifically, the Debtors need Yantek's assistance in: (a) designing an executory contract database; (b) educating operational parties of Burlington; (c) collecting data; (d) assuming or rejecting priority contracts; (e) linking scheduled and claimed items to specific executory contracts; (f) reconciling cure payments and sending cure notices; (g) negotiating settlements with various creditors relating to executory contracts and leases; (h) analyzing and re-characterizing lease agreements; and (i) providing such other and further services as the Debtors may request in these cases. The Debtors need Yantek to: -- determine the appropriate treatment of numerous Contracts in these cases, -- minimize claims arising from the assumption and rejection of certain Contracts, and -- renegotiate certain of the Contracts on terms favorable to the Debtors. In return, Yantek intends to: (1) charge for its professional services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date services are rendered, and Yantek's current hourly rates are: $160 for services provided by Frank Yantek, and a maximum of $160 for services provided by all other professionals employed by Yantek. (2) seek reimbursement of actual and necessary out-of-pocket expenses. (Burlington Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Wins Final Nod For Upholstery Fabrics Business Sale --------------------------------------------------------------- As a part of the final reorganization activities of the Burlington House Division, Burlington Industries, Inc. (OTC Bulletin Board: BRLG) received Court approval to sell its residential upholstery fabric business to Tietex International Ltd. Under the terms of the agreement, Tietex will purchase the Sheffield facility in Rocky Mount, North Carolina as an on-going operation and lease a portion of the company's weave capacity at the Williamsburg facility in Matkins, North Carolina. Burlington will continue to operate the majority of the capacity at Williamsburg. Tietex expects to employ the majority of the employees at Sheffield and those associated with upholstery production at Williamsburg. The terms of the agreement also include inventories, intellectual properties and a license to use the Burlington House(R) name for upholstery fabrics. The sale is expected to close on June 28, 2002. "This is a very positive outcome for both Burlington and Tietex," said George W. Henderson, III, Chairman and Chief Executive Officer. "Tietex is a strong and growing market leader and we are confident in their ability to grow this business and represent the Burlington House name in the market. We are pleased that many of our upholstery employees will have continued employment with Tietex. We also look forward to our continued relationship with Tietex as we coordinate operations at Williamsburg and serve as a supply partner for Sheffield." Going forward, the Burlington House division will supply fabrics for mattress coverings, bedding and window products and high- performance commercial fabrics for hospitality and corporate customers. Burlington Industries, Inc. is one of the world's largest and most diversified manufacturer and marketer of softgoods for apparel and interior furnishings. Burlington Industries filed voluntary petitions for Chapter 11 under the U.S. Bankruptcy Code on November 15, 2001. Tietex International Ltd. is a leading manufacturer of engineered fabrics for different industrial and commercial applications, home furnishings, decorative applications and specialty products. Tietex is a privately held corporation headquartered in Spartanburg, SC with operations in the United States, Mexico, Australia and Thailand. DebtTraders report that Burlington Industries's 7.250% bond due 2027 (BRLG27USR1) are quoted at prices between 16 and 17.5. http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG27USR1 for real-time bond pricing. COMPLETEL: Voluntarily Delists Ordinary Shares From Nasdaq ---------------------------------------------------------- Completel announced it would voluntarily delist its Ordinary Shares from the Nasdaq National Market, effective at the start of trading on Friday, May 31, 2002. Completel reached this decision primarily as a result of the small number of record holders of the Ordinary Shares in the United States, the low trading volume of the Ordinary Shares on Nasdaq as compared to Euronext Paris, and the relatively high costs of continuing to be a reporting company under the U.S. securities laws. Completel intends to maintain its listing on Euronext Paris. Currently, Completel's Ordinary Shares trade on Nasdaq in the form of Ordinary Shares of New York Registry. Following the delisting date, Completel anticipates that there will be little or no public market for its New York Shares. Moreover, as soon as practicable after the delisting, and in any event in connection with its previously announced recapitalization, Completel intends to terminate its status as a reporting company under US securities laws. The Company, however, intends to continue to make public quarterly and annual financial statements and related information. Under the terms of the New York Shares, holders are entitled to convert their New York Shares into Ordinary Shares of Dutch Registry, the form in which trades in Completel's Ordinary Shares are settled on the French market. This conversion may be effected by presenting a written request for such exchange and surrendering the certificates representing the New York Shares at the offices of JPMorgan Chase Bank. As a courtesy to holders of Completel's New York Shares, the exchange fee for exchanging New York Shares into Ordinary Shares will be paid by Completel. Additional information regarding the exchange of New York Shares for Dutch Shares can be obtained by contacting JPMorgan Chase Bank at 1-781-575-4328 or visiting their ADR market website at http://www.adr.com Completel is a facilities-based provider of fiber optic local access telecommunications and Internet services to business end- users, carriers and ISPs with activities predominantly located in France. COMTREX SYSTEMS: Fails to Comply with Nasdaq Listing Criteria ------------------------------------------------------------- Comtrex Systems Corporation (Nasdaq: COMX) reported receipt of a Nasdaq Staff Determination letter on May 23, 2002, notifying the Company that it fails to comply with Marketplace Rule 4310(C)(7), the requirement to maintain a minimum market value of publicly held shares of $1,000,000. As a result, the Company's common stock will be delisted from the Nasdaq SmallCap Market at the opening of business on May 31, 2002. Jeffrey C. Rice, Comtrex President and CEO, stated "While the total number of outstanding shares of Comtrex common stock is 1,417,120, only approximately 804,000 shares are considered by Nasdaq as being publicly held. The Board of Directors of the Company has determined that, since the common stock of the Company has failed to satisfy not only Marketplace Rule 4310(C)(7), but also failed to regain compliance with such requirement during a subsequent ninety (90) calendar day period under Marketplace Rule 4310(C)(8)(B), there is insufficient basis to support a successful appeal of the Nasdaq Staff delisting determination. We remain extremely confident in the future business prospects for the Company, particularly in light of the forthcoming release of our next generation Windows point- of-sale product series, designed to work in conjunction with our Odyssey BackOffice Suite. We are anxious to begin the implementation of our sales and marketing plans for these world- class products." The Company also announced that it will seek to continue trading in its common stock in over-the-counter markets. The Company's common stock will, however, then be subject to the risk that it could become characterized as a low-priced or "penny stock," which characterization could have a material adverse effect on the market liquidity and price of the Company's common stock. However, no assurances can be given that the Company's common stock will be traded on any other exchange or in any other market at any time in the future. If the Company's common stock does not trade on any exchange or in any other market in the future, then stockholders of the Company may lose all or a portion of their investment in the Company. Comtrex Systems Corporation is a software developer, systems integrator and designer of point-of-sale (POS) electronic information systems for the restaurant and quickservice food industry. Company information can be obtained through the worldwide web by visiting http://www.comtrex.com COSERV TELECOM: Secures $7.8 Million DIP Financing From CFC ----------------------------------------------------------- CoServ Telecom Holdings, L.P. announced that a Debtor-in- Possession (DIP) financing commitment for $7.8 million has been secured from the National Rural Utilities Cooperative Finance Corporation that will fund its telephone and cable businesses into next year. The telephone and cable businesses of CoServ filed for Chapter 11 reorganization protection on November 30, 2001 while a buyer for these businesses was sought. On February 25, the company announced an agreement to negotiate a restructure of the telephone and cable companies, and the new financing agreement is the result of that negotiation process. "The DIP financing provides the resources for our operational needs as we emerge from the reorganization process and move forward serving our customers," said Jim Chism, Division President of CoServ Communications. "This financing is therefore an important part of providing our telephone and cable customers with continued high levels of service. Additionally, we continue to evaluate potential purchasers for these businesses, and we remain optimistic that we will complete in the near future our search for a buyer that meets our high standards of customer service." For nearly 65 years, CoServ Electric has provided dependable, affordable, electric power to thousands of homes. In 1998, CoServ Electric expanded both its service area and its service offerings to include a broad range of services, including telephone and cable. Further information on CoServ Electric is accessible at http://www.coserv.comand information on its telephone and cable companies can be found at http://www.coservcom.com COVANTA: Court Issues Interim Approval to Hire Arnold & Porter -------------------------------------------------------------- The Official Committee of Unsecured Creditors of the Chapter 11 cases of Covanta Energy Corporation and its debtor-affiliates asks the Court to allow them to retain Arnold & Porter as its attorneys, nunc pro tunc to April 8, 2002. Brad Tirpak, Chairman of the Official Committee of Unsecured Creditors, tells Judge Blackshear that Arnold & Porter has considerable experience and expertise in the debtor-creditor matters, particularly Chapter 11 bankruptcy cases. Arnold & Porter has also represented committees and other parties in a variety of Chapter 11 cases, including complex cases. Thus, the Committee believes, the retention of Arnold & Porter is in the best interest of the Debtors' unsecured creditors. Michael J. Canning, Esq., a partner at Arnold & Porter, in New York, reports that as attorneys, Arnold & Porter will render: (a) legal advice to the Committee with respect to its powers and duties; (b) legal advice to the Committee regarding the administration of the Debtors' estates; (c) legal advice concerning the Committee's investigation of the acts, conduct, assets and liabilities, and financial condition of the Debtors; (d) legal advice relating to transactions in the energy industry, tax, securities and corporate law issues that may arise in connection with these bankruptcy cases; (e) legal advice concerning the operation of the Debtors' businesses and the desirability and profitability of continuing and/or modifying such businesses; (f) legal advice to the Committee with respect to all matters relating to any proposed disposition of assets or any plan of reorganization, including negotiation of a plan and possible formulation and proposal of a plan; (g) assistance to the Committee in its negotiations with the Debtors and other creditors concerning any matter in this case, including the terms of any proposed plan; (h) assistance to the Committee in making reports to creditors regarding the progress of the cases; (i) legal advice to the Committee with respect to applications for relief sought by the Debtors and other parties-in-interest; (j) appearance on behalf of the Committee to support the Committee's position on various matters in the bankruptcy cases and any contested matters or adversary proceedings filed therein, including the preparation of all necessary applications, motions, answers, complaints, orders, reports and other legal papers and participation in discovery and other litigation activity where necessary or appropriate to protect the interests of unsecured creditors; (k) legal advice regarding any possible merger, acquisition or other transaction involving the Debtors; (l) coordination with the other professionals retained by the Committee with respect to those matters that require legal and economic, business, market or other related expertise; and (m) performance of all other appropriate legal services for the Committee. In exchange of the services to be rendered, Arnold and Porter will bill the Debtors based on the firm's hourly rates: Partners and of Counsels $355 - 650 Associates 195 - 375 Paraprofessionals 40 - 130 Arnold & Porter will also seek for a reimbursement of out-of- pocket expenses to include, but not limited to, long distance telephone charges, postage, overnight delivery charges, telecopy charges, messenger and courier charges, computerized legal research charges, mileage and travel expenses and court costs and disbursements. Mr. Canning assures the Court that Arnold & Porter will not be employed by any other entity having an adverse interest to the Debtors in connection with the Chapter 11 cases. Mr. Canning says that Arnold & Porter, nor any of its partners or associates have any connection with the Committee, the Debtors in the Chapter 11 cases, their creditors, any other party-in-interest, their attorneys and accountants, the United States Trustee, or any person employed in the office of the United States Trustee, except: (a) for Mark Stumpf, a partner of the firm, who has held stock in Broad Street Resources, Inc. since January 14, 1994. Mr. Stumpf will be actively involved in the Committee's representation, however, he will not trade his shares in Broad Street throughout the course of Arnold & Porter's engagement as counsel to the Committee; (b) representations to certain Pre-petition Lenders in various matters that are unrelated to the Debtors' bankruptcy cases, which includes: -- ABN AMRO Bank N.V., for which Arnold & Porter has an advance waiver that does not permit it to sue ABN; -- Bank of America, N.A., for which Arnold & Porter has obtained a waiver specific to its representation of the Committee; -- Credit Suisse First Boston, Arnold & Porter recently represented; -- the Industrial Bank of Japan, for which Arnold & Porter has an advance waiver; and -- SunTrust Bank, for which Arnold & Porter has obtained a waiver specific to its representation of the Committee that does not permit it to sue SunTrust Bank individually; (c) representation with the 30 largest unsecured creditors in various matters, again all of which are completely unrelated to the Debtors or to this bankruptcy case, including Citibank N.A. and Dravo Lime Company; (d) previously represented Broad Street, one of the 30 largest unsecured creditors, in various matters related to the Debtors prior to the commencement of these bankruptcy proceedings; (e) represents certain professionals in various matters all of which are completely unrelated to the Debtors or to this bankruptcy case, for which Arnold & Porter's annual billings in connection with each such representation are less than 0.6% of its annual gross fee income. Those professionals that we have been able to identify thus far include: Arthur Andersen, LeBoeuf, Lamb Greene & McRae, Deloitte & Touche, Hogan & Hartson and Ernst & Young; (f) Arnold & Porter represents certain potential Parties-in- Interest in various matters all of which are completely unrelated to the Debtors or to this bankruptcy case, for which Arnold & Porter's annual billings in connection with each such representation constitute less than 0.5% of its annual gross fee income. Those that we have been able to identify thus far include: Wells Fargo; Alfa Alfa S.A., Kendall Corporation, American Insurance Group and Bristol-Myers Squibb Company; and (g) Arnold & Porter represents certain potential Parties-in- Interest in various matters all of which are completely unrelated to the Debtors or to this bankruptcy case, for which Arnold & Porter's annual billings in connection with each such representation are in excess of 1% of its annual gross fee income. These are substantial clients for Arnold & Porter. In an abundance of caution, Arnold & Porter has obtained a waiver from each such Party-in- Interest. Those that we have been able to identify thus far include: -- General Electric Company, for which Arnold & Porter has obtained a waiver specific to its representation of the Committee that does not permit Arnold & Porter to sue General Electric; -- Phillip Morris Capital Corporation, for which Arnold & Porter has obtained a waiver specific to its representation of the Committee that does not permit Arnold & Porter to sue PM. In accordance with Section 504 of the Code, Mr. Canning says, Arnold & Porter has not entered into and will not enter into any agreements to share compensation for services rendered and reimbursement of expenses with any other person. Moreover, Mr. Canning adds, Arnold & Porter has made no undisclosed agreement for compensation with any entity and will apply to the Court for compensation of services rendered and reimbursement of actual and necessary expenses consistent with the requirements of the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the Local Rules of the Court. * * * Judge Blackshear issues an interim order approving Arnold & Porter's retention. The interim order shall become final if no objection is filed by June 5, 2002. (Covanta Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ECOGEN: Certis USA Enters Pact to Acquire Bt Biopesticide Assets ---------------------------------------------------------------- Certis USA, LLC, a subsidiary of Mitsui & Co., Ltd., entered into an agreement to purchase certain assets of the Bt biopesticide and insecticidal nematode businesses owned by Ecogen, Inc. of Langhorne, PA. Certis USA, one of the world's leading producers of biological pesticides, will add CryMax(R), Lepinox(R), Condor(R) and other Bt biological insecticides to its Integrated Pest Management (IPM) product line. Under a business transition arrangement between Certis USA and Ecogen, Certis USA will immediately begin manufacturing and selling certain of the Ecogen Bt products. Certis USA expects volume quantities of the products will be available to the growers of high-value crops as soon as July. In addition to the biological insecticides, Certis USA will also purchase Ecogen's rights in Bt strain libraries for use for microbial applications, and its related product registrations, trademarks, patents or licenses and certain fixed assets. Dennis Banasiak, president and CEO of Certis USA, said, "Certis USA will be purchasing some of the most potent strains of Bacillus thuringiensis (Bt). We'll apply our formulation know- how to these strains and be able to offer growers an ever- expanding product line of improved Bt products in the near future." Bt bioinsecticides are the most widely used biological pesticides. Bt products are characteristically low in risk to humans, animals and the environment, yet they are highly lethal to Lepidopteran (caterpillar) pests, the primary insect threat to crop production. Certis USA was established by Mitsui in April 2001. Its products were previously sold under the name of Thermo Trilogy Corporation. Mitsui & Co., Japan's largest trading company, markets and distributes crop protection products and services directly and through its Certis marketing subsidiaries in Europe, Japan, Africa and the U.S. Global crop protection sales exceed $400 million annually. Headquartered in Columbia, MD, Certis USA manufactures environmentally friendly crop protection products for vegetable, tree fruit, nut, grape, citrus and mushroom crops grown both conventionally and organically. Certis USA product brands include: Agree(R), Deliver(R), Javelin(R), Teknar(R) and Thuricide(R) bioinsecticides; Azatin(R) and Neemix(R) botanical insect growth regulators; Trilogy(R) botanical fungicide/miticide; BioVector(R) insecticidal nematode, and GemStar(R) and Spod-X(R) insecticidal virus products. Ecogen Inc. is a biotechnology company specializing in the development and marketing of environmentally compatible products for the control of pests in agricultural and related markets. * * * As reported in the May 29, 2002 issue of the Troubled Company Reporter, Ecogen Inc. has not yet achieved profitable operations for any of its fiscal years and there is no assurance that profitable operations, if achieved, could be sustained on a continuing basis. Further, the Company's future operations are dependent, among other things, on the success of the Company's commercialization efforts and market acceptance of the Company's products. The Company has reported net losses allocable to common stockholders of $2.5 million and $4.0 million for the six-month periods ended April 30, 2001, and 2000, respectively. The loss from inception in 1983 to April 30, 2001 amounted to $135.6 million. Further, the Company has a working capital deficit, a stockholders' deficit and limited liquid resources. These factors raise substantial doubt about the Company's ability to continue as a going concern. Net product sales were $1.6 million and $3.5 million for the first six months of fiscal 2001 and 2000, respectively, representing a decrease of 54%. Sales of the Company's Bt product line, representing 92% of Company's product sales in the first six months of fiscal 2001, decreased 49%. Biofungicide product sales, which represented 9% of product sales in fiscal 2001, decreased $.2 million from the year-ago period. Other product sales, representing 9% of Company's product sales, decreased $.2 million in the first half of fiscal 2001 when compared to the comparable quarter in fiscal 2000. The decrease in product sales were primarily the result of the Company's limited ability to fund production and the purchase of finished goods from Dow AgroSciences LLC. due to the Company's limited liquid resources. Contract research revenues increased $.2 million due to grants funded in fiscal 2001. Net loss allocable to common stockholders for the six months ended April 30, 2001 were $2.5 million, compared to a net loss allocable to common stockholders of $4.0 million for the same period in fiscal 2000 substantially as a result of lower expenses. The Company's continued operations will depend on its ability to raise additional funds. The Company has financed its working capital needs primarily through private and public offerings of equity and debt securities, revenues from research and development alliances and product sales. In addition, the Company has a working capital line of credit, which originally expired in August 2000 but was extended to June 29, 2001, a term loan of $1.5 million and promissory notes aggregating $1.0 million that are due on June 23, 2002. However, in the event that the Company receives net proceeds in excess of $50 thousand from non-operating activity prior to June 23, 2002, the holders of the term loan and the promissory notes may elect to require a prepayment of the balance due on the loan and/or the notes. The Company currently is not in compliance with the covenants of its working capital line of credit. This line of credit had a balance of $.2 million as of April 30, 2001 and a balance of $29 thousand at June 14, 2001. As a result of the Company's non- compliance with the covenants, the working capital lender has discontinued making loans and may, at its option, liquidate the collateral including inventory and accounts receivable. ENRON: Employee Committee Hires Crossroads as Financial Advisor --------------------------------------------------------------- The Official Employment-Related Issues Committee of the Chapter 11 cases of Enron Corporation and its debtor-affiliates seeks the Court's authority to retain and employ Crossroads LLC, nunc pro tunc to April 18, 2002, as their financial advisors. Michael P. Moran, Co-Chair of the Employee Committee, relates of all the financial advisors they interviewed, Crossroads has the experience and knowledge to best advise the Employee Committee on the bankruptcy and employee issues likely to arise in these Chapter 11 cases. Dennis I. Simon, Managing Principal of Crossroads, further tells the Court that their firm has worked for a number of creditors' committees in significant reorganizations under chapter 11 of the Bankruptcy Code. Mr. Simon relates that Crossroads has advised official creditors' committees in numerous Chapter 11 cases throughout the country including: Learnout & Hauspie Speech Products N.V. (Dictaphone Corporation), Delaware; Medpartners Provider Network, Inc., California; Einstein/Noah Bagel Corp., Arizona; At Home Corporation (Excite @ Home), California; PSINET Consulting Solutions Holdings, Inc., New York; Edwards Theatres Circuit, Inc., California; etc. Mr. Simon asserts that Crossroads has the expertise and experience that will enable the Employee Committee to function immediately and effectively. The professional services Crossroads will render are: a. Analyzing and developing potential areas and opportunities of recovery for the Employee Committee and the Employee Committee's various employee constituencies; b. Assisting in the proper, fair and acceptable value recovery process available for the Employee Committee's various employee constituencies; c. Advising the Employee Committee on certain proposed asset sales and divestitures that effect the various employee constituencies; d. Assisting in negotiations; e. Investigating claims; f. Preparing litigation support and expert witness testimony, all in accordance with direction from the Employee Committee or its counsel; g. Attending the meetings of the Employee Committee to receive and communicate information concerning the interests of the Employee Committee in these cases; h. Conferring with the Debtors' management and counsel and the Official Committee of Unsecured Creditors and various employee groups regarding severance and other related issues; i. Reviewing the Debtors' activities and motions and third party filings and advising the Employee Committee as to the ramifications regarding employee-related activities and motions; j. Conferring with third party fiduciaries and governmental entities regarding employee-related issues; k. Reviewing benefit plans and the Debtors' oversight and compliance; and l. Performing such other financial advice for the Employee Committee as may be necessary or proper in these proceedings. Crossroads intends to apply to the Court for payment of compensation and reimbursement of expenses in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, the guidelines promulgated by the office of the U.S. Trustee and the local rules and orders of the Court, and pursuant to any additional procedures that may be or have been established by the Court in these cases. According to Mr. Moran, Crossroads will be compensated at its standard hourly rates for certain professionals and discounted rates for other of its professionals, which rates are based on the professionals' level of experience. At present, Mr. Moran says, the hourly rates range from $550 for certain principals to $100 for certain analysts. "These hourly rates are subject to periodic firm-wide adjustments in the ordinary course of Crossroads' business, but will not be adjusted prior to January 1, 2003," Mr. Moran explains. Specifically, the Crossroads professionals who will be working with the Employee Committee and their hourly rates are: Principals: Ruth E. Ford Lawrence D. Morriss, Jr. Dennis I. Simon Joel M. Simon Independent Contractors: DeFrain, Mayer, a division of Palmer & Cay Roland G. Simpson Principals, Managing Directors & Directors $300 - $550 Senior Consultants, Consultants & Actuaries $175 - $350 Associates & Accountants $100 - $150 Financial & Actuarial Analysts $100 - $150 Administrators $90 Mr. Simon also relates that it is the firm's policy to charge its clients for all disbursements and expenses incurred in the rendition of services. These disbursements and expenses include, among other things, long distance telephone and outgoing facsimile charges, photocopying, travel, business meals, computerized research, messengers, couriers, postage, witness fees and other fees related to trials and hearings, which are charged at cost or based on formulas that approximate actual cost where the actual cost is not readily ascertainable. According to Mr. Simon, the members and associates of Crossroads do not have any connection with the Debtors, its creditors, or any other party in interest, their respective attorneys and accountants. But, Mr. Simon says, Crossroads is currently working on some unrelated matters for some parties in interest. Mr. Simon assures Judge Gonzalez that Crossroads do not represent any other entity having an adverse interest in connection with these cases. However, Mr. Simon admits that the firm is unable to state with certainty whether one of its clients or an affiliated entity holds a claim or is a party in interest in these Chapter 11 cases. "If Crossroads discovers any information that is contrary to these disclosures, the firm will immediately provide such information to the Court, the U.S. Trustee, the Fee examiner, the Employee Committee and its legal counsel, and the Creditors' Committee," Mr. Simon says. (Enron Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON: Gains Court Nod to Pay Pre-Petition Headquarters Taxes ------------------------------------------------------------- Enron Corporation and its debtor-affiliates sought and obtained the Court's authority to pay the Year 2001 property taxes -- $3,862,132 -- assessed against its corporate headquarters at 1400 Smith Street in Houston, Texas. JPMorgan Chase, as agent for a syndicate of lenders (which includes JPMorgan Chase), is a lender in connection with that certain Land and Facilities Lease Agreement, dated as of April 8, 1997, between Brazos Office Holdings, L.P. and Enron Leasing Partners, L.P. Subsequent to the execution of the Lease, Enron Leasing entered into a sublease with Enron Corporation, which subsequently assigned its interest in the Lease to Enron Property & Services Corp. According to Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, Enron and Enron Property are Debtors in these Chapter 11 cases, but not Enron Leasing. The property subject to the Lease is the Debtors' corporate headquarters. Mr. Rosen relates that Section 3.02(b) of the Lease provides that the Lease is to be characterized for all purposes of Federal, state, and local law as a financing transaction and not a lease. "JPMC has taken the position that the Lease contains adequate provisions to permit JPMC to exercise non-judicial remedies including non-judicial foreclosure of Enron Leasing's interest in the Property, including termination of the Lease," Mr. Rosen tells the Court. However, Enron, Enron Property, and Enron Leasing dispute this position and have asserted that JPMC's remedies as a lender are limited to those permitted to be exercised by a mortgagor of real property, which include judicial foreclosure of Brazos' interest in the Property and, if properly drafted, non-judicial foreclosure, but not termination of the leases. Moreover, Mr. Rosen continues, although the Lease grants JPMC a security interest, Enron, Enron Property and Enron Leasing assert that the Lease does not contain provisions adequate to grant JPMC the power to conduct a non-judicial foreclosure sale. Year 2001 property taxes assessed against the Property total approximately $3,862,132. The taxes were payable without penalty or interest until January 31, 2002, and accrues interest until satisfied in full. Mr. Rosen points out that the claims of the various taxing authorities in respect of unpaid property taxes are secured by the Property. "The statutory liens in respect of such claims are senior to any contractual lien," Mr. Rosen notes. Under the Lease, Mr. Rosen says, Enron Leasing, Enron and Enron Property are obligated to pay the property taxes. In light of the uncertainties of litigation over the positions advanced by JPMC, Enron Leasing, Enron, and Enron Property, Mr. Rosen informs Judge Gonzalez that the Parties have been negotiating the terms of a Standstill Agreement that would include forbearance agreement from JPMC in exchange for certain payments by the Debtors. Pending finalization of the Standstill Agreement, the Debtors sought authority to pay the 2001 property taxes against the Property in exchange for JPMC not sending a notice of intent to commence non-judicial foreclosure that would have asserted the Property could be subject to non-judicial foreclosure as early as April 2, 2002, and that would have compelled the Debtors to commence litigation of this issue. (Enron Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXIDE TECH: Gets Court Okay to Hire Kirkland & Ellis as Counsel --------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained court approval to employ and retain the law firm of Kirkland & Ellis in Chicago, Illinois, as their lead counsel to file prosecute these Chapter 11 Cases and all related matters, effective as of the Petition Date. The Debtors will look to Kirkland & Ellis to, among other things: A. advise the Debtors with respect to their powers and duties as Debtors In Possession in the continued management and operation of their businesses and properties; B. attend meetings and negotiate with representatives of creditors and other parties in interest; C. take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on the Debtors' behalf, the defense of any action commenced against the Debtors, and objections to claims filed against the estates; D. prepare on behalf of the Debtors all motions, applications, answers, orders, reports, and papers necessary to the administration of the estates; E. negotiate and prepare on the Debtors' behalf a plan of reorganization, disclosure statement, and all related agreements and/or documents, and also take any necessary action on behalf of the Debtors to obtain confirmation of such plan; F. represent the Debtors in connection with obtaining post- petition loans; G. advise the Debtors in connection with any potential sale of assets; H. appear before this Court, any appellate courts, and the United States Trustee and protect the interests of the Debtors' estates before these Courts and the United States Trustee; I. advise the Debtors regarding the maximization of value of the estates for their creditors; and J. perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with the Chapter 11 Cases. K&E will bill for services on an hourly basis, and expect reimbursement of actual, necessary expenses and other charges that the Firm incurs. Information on K&E's professionals' hourly rates was not provided. (Exide Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) FARMLAND INDUSTRIES: Files for Chapter 11 Reorg. in Kansas City --------------------------------------------------------------- Spurred by continued adverse market conditions in the nitrogen fertilizer business and recent increases in cash demands, Farmland Industries, Inc., has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Farmland will maintain its current business operations while it continues ongoing efforts to reposition the company to support its core businesses. Meanwhile, the company plans to continue to grow its successful foods businesses; pursue the sale of non- strategic assets; further reduce debt; and seek additional ways to cut costs. The company will reduce its workforce as it reorganizes and repositions assets. Farmland President and CEO Bob Terry said, "This was a difficult decision for us. Our farmer-owned roots run deep, making Farmland a company with an independent streak and a strong work ethic. We fought to pull ourselves through this time of tight liquidity. Regrettably, we were unable to overcome one significant challenge-aggressive early redemption demands from our subordinated debt holders. This activity drained our cash liquidity and was expected to continue indefinitely. Our banks were hesitant to continue lending in the face of ongoing redemption payments to subordinate creditors." Farmland has secured a debtor-in-possession financing facility from a group of leading financial institutions led by Deutsche Bank. This financing will be used to supplement the company's existing cash flow during the reorganization process and ensures post-petition payment of payroll and benefits, payments to vendors and producers, as well as other normal operating costs. Terry said Farmland will continue business operations, including buying hogs from its producer-owners and supplying Farmland Foods retail and foodservice customers with high-quality, wholesome meat products. Farmland's Refrigerated Foods businesses have reported strong performance, with earnings in the first half of fiscal 2002 more than double the same period last year, while its fertilizer business has continued to struggle. "We are processing and selling more branded meat products than ever before, as Farmland Foods continues to make gains in both market share and earnings. Consumers will continue to see Farmlandr branded products in their grocer's meat case and on restaurant menus. We value their support in choosing the Farmland brand today more than ever," Terry added. While Farmland reduced its debt by more than $500 million in the last 18 months, a high debt-to-equity ratio incurred in a period of expansion in the 1990s has been difficult to overcome. Continued losses in the company's Crop Production businesses, coupled with planned maintenance on its Coffeyville, Kansas, refinery, significantly hampered cash flow through the spring season, leading the company to state in its quarterly filing with the Securities and Exchange Commission that seeking protection from creditors was an option if conditions did not improve. This led to increased cash demands, including demands for early redemptions of subordinated debt, which the company was unable to satisfy. Farmland's subordinated debt program, a steady source of financing for the company since 1948, currently provides $570 million in debt financing to the company. The bonds are held by approximately 20,000 individuals who purchased the securities through licensed dealers. Because the company currently is unable to sell new subordinated debt, the early redemption activity greatly aggravated Farmland's liquidity issues. Farmland Industries holds an ownership position in several business entities that are not included in this action because their operations and financing are handled separately. They include: Farmland National Beef Packing Company L.P., the nation's fourth largest beef packer; Agriliance, a fertilizer marketing joint venture with CHS Cooperatives and Land O'Lakes; Land O'Lakes Farmland Feed, an animal feed joint venture with Land O'Lakes. ADM-Farmland, a grain marketing company formed one year ago, is also a separate company not included in this action. Terry said Farmland's strong brand equity and leadership in the meat business, coupled with its $2 billion asset base and the support of 600,000 farmer-owners, are strengths that will help ensure Farmland emerges as a stronger company. "Farmland has overcome a number of obstacles in our 73-year history. This step will enable us to meet today's challenges as well, as we structure a long-term strategy that addresses our financial obligations and sets the course for a stronger Farmland," Terry said. Farmland has also named company veteran Steve Rhodes as Executive Vice President and Chief Financial Officer. Rhodes, 48, has been with Farmland and the cooperative system since 1979, most recently serving as Farmland Industries Vice President and Controller. Rhodes earned a bachelor's degree in accounting from Northwest Missouri State University, Maryville, Missouri, and a master's degree in business administration from Rockhurst College, Kansas City, Missouri Rhodes replaces John F. Berardi who has left the company. The company filed its voluntary petition in the U.S. Bankruptcy Court in the Western District of Missouri, located in Kansas City, Missouri. Farmland Industries, Inc., Kansas City, Missouri, -- http://www.farmland.com-- is a diversified farmer-owned cooperative with an asset base of more than $2 billion. Focused on meeting the needs of its local cooperative- and farmer- owners, Farmland and its joint venture partners supply local cooperatives with agricultural inputs, such as crop nutrients, crop protection products, and animal feeds. As part of its farm- to-table mission, Farmland adds value to its farmer- owners' grain and livestock by processing and marketing high-quality grain, pork, beef, and catfish products throughout the United States and around the world. FARMLAND INDUSTRIES: Voluntary Chapter 11 Case Summary ------------------------------------------------------ Lead Debtor: Farmland Industries, Inc. 12200 N. Ambassador Drive Kansas City, Missouri 64163 800-822-8263 ext 5053 dba Livestock Services Division dba Farmland Livestock Services dba Honor Pet Products Co. dba Premier Farmtech dba Marco Polo Salame Company dba Souza's Sausage Company Bankruptcy Case No.: 02-50557 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Farmland Foods, Inc. 02-50561 Farmland Transportation, Inc. 02-50564 Farmland Pipe Line Company 02-50565 SFA, Inc. 02-50562 Type of Business: Farmland Industries, Inc., a Kansas corporation headquartered in Kansas City, Missouri, is organized and operated as a cooperative system of agricultural and food related businesses. Farmland, in conjunction with the other debtor subsidiaries and others, as well as through joint venture relationships, manufactures and markets fertilizer, operates a petroleum refinery, and operates an integrated food and food processing business. Farmland, in conjunction with the other debtor subsidiaries, also engages in the wholesale and retail farm supply business and transportation brokerage business. Chapter 11 Petition Date: May 31, 2002 Court: Western District of Missouri (St. Joseph) Judge: Jerry W. Venters Debtors' Counsel: Laurence M. Frazen, Esq. Bryan Cave LLP 1200 Main St, Suite 3500 Kansas City, Missouri 64105 816-855-3903 Fax : 816-374-3300 Total Assets: $2.7 Billion Total Debts: $1.9 Billion FEDERAL-MOGUL: Wishes to Employ Garden City as Claims Agent ----------------------------------------------------------- Federal-Mogul Corporation ask the Court to approve their appointment of The Garden City Group, Inc. to perform claims and noticing functions as the official claims agent of the Clerk of Court with respect to the Debtors' Chapter 11 cases. By employing Garden City Group, the Clerk's Office is thereby relieved of the administrative burden of processing the claims that will be filed. David M. Sherbin, Vice President and Deputy General Counsel and Secretary of Federal-Mogul Corporation, foresees that hundreds of thousands of claimants and other parties-in-interest involved in the Debtors' Chapter 11 cases may impose heavy administrative and other burdens on this Court and the Clerk's Office. This may be especially true in light of the burden already imposed upon the Clerk's Office by the large number of cases pending in the District of Delaware. The most effective and efficient manner by which to facilitate the process of receiving, docketing, photocopying, and transmitting proofs of claim in these cases is to engage Garden City Group, an independent third party, to act as a claims agent of the Court. Mr. Sherbin accords that the Court is empowered to utilize outside agents and facilities for these purposes, provided that the cost of such services are paid by the Debtors' estates. Furthermore, the appointment of a Claims agent is customary in Chapter 11 cases of this magnitude and is contemplated by the local rules of this Court. As described in the Bankruptcy Administration Agreement and subject to court approval, the Claims Agent will provide these services: a. provide notice of any and all bar dates established by the Court; b. maintain copies of all proofs of claim and proofs of interest filed in these cases; c. maintain an official claims register in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information: 1. the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; 2. the date the proof of claim or proof of interest was received by Garden City Group and, if applicable, the Court; 3. the claim number assigned to the proof of claim or interest; 4. the asserted amount and classification of the claim; and, 5. the applicable Debtors against which the claim or interest is asserted; d. implement necessary security measures to ensure the completeness and integrity of the claims registers; e. transmit to the Clerk's Office a copy of the claims registers on a weekly basis unless requested by the Clerk's Office on a more or less frequent basis; f. maintain an up-to-date mailing list of all entities that have filed proofs of claim and proofs of interest in these cases and make the list available upon request to the Clerk's Office or at the expense of any party in interest; g. provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; h. record all transfers of claims and provide notice of such transfers to the extent required by Bankruptcy Rule 3001(e); i. promptly comply with such further condition and requirements as the Clerk's Office or the Court may at any time prescribe; j. provide such other claims processing and related administrative services as may be required from time to time by the Debtors; and, k. assist the Debtors, among other things, the reconciliation of claims and technical support in connection with the foregoing. Mr. Sherbin indicates that the Debtors agree to compensate Garden City Group for its services in accordance with the terms of their Bankruptcy Administration Agreement with a 10% discount on Garden City Group's standard hourly rates. The firm's current hourly rates are: Professionals Hourly Rates ------------------------------------- ------------ Supervisor $88.50 Quality Assurance $72.00-112.50 Senior Supervisor/Bankruptcy paralegal $112.50 Senior Project Manager $135 Systems Management $148.50-202.50 Senior VP Systems & Managing Director $225 U.S. Trustee Sees Too Many Hats Frank J. Perch, III, Esq., in Wilmington, Delaware, argues that Garden City Group's simultaneous adversarial and ministerial duties create a conflict. The U.S. Trustee is not aware of any case in which a professional acting as a consultant for one party in a case on any issue, let alone claims related issues, has simultaneously acted as the impartial claims agent. The U.S. Trustee submits that acting in such dual capacities constitutes an actual conflict as well as creating an appearance of impropriety. Creditors may question the integrity of the system if a party appointed to assist the court in performing ministerial functions is also the hired hand of the creditors' adversary, the debtor. Therefore, at most, only one of the Applications can be approved. Garden City Group can act as consultant or as claims agent, but not both. Mr. Perch reminds the Court that that a claims agent provides assistance to the Court by performing functions that would otherwise need to be performed by the Clerk of the Court. The Clerk is, of course, a non-adversarial and impartial party. The Clerk does not take sides in favor of one party or the other in any contested matter. The function of docketing proofs of claim and maintaining a database of filed claims is a ministerial one. A claims agent makes no value judgments regarding the validity of any claim or the adequacy of documentation submitted in support of a claim. Indeed, a claims agent does not even make a value judgment as to the timeliness of a claim. Claims received after a filing deadline are docketed, not thrown away. The debtor is the party that seeks an order disallowing the late claims. On the other hand, Mr. Perch continues, a noticing consultant is rendering professional advice to one party (in this case, the debtor) on how to design a bar date notification program. This is a contested matter in many cases and particularly in mass tort cases. Creditors typically want broader and more detailed notice than debtors propose to give. These disputes are sometimes resolved by negotiation, but sometimes they are litigated. Even if they are negotiated, Garden City Group will be acting on behalf of the Debtors adversely to the representatives of the creditors for whose claims Garden City Group is supposed to be the impartial repository. Mr. Perch contends that Debtors have already retained a noticing agent, the R.R. Donnelley & Sons Co. Although Debtors aver that Garden City Group, acting as claims agent, and Donnelley will avoid duplicating their services, the U.S. Trustee does not understand how that is reasonably possible. Donnelley has already been providing noticing services since the beginning of the case. Therefore, Donnelley must already be using and maintaining a database of creditors. Garden City Group proposes to create its own database. Thus, it appears that the debtor will be paying for two databases instead of one. Even if Garden City Group and Donnelley seek to combine or share their databases, the costs of the combination and communication process are extra costs that would not be incurred if one party handled both tasks. Further, any discrepancies between the databases may create issues as to the adequacy of notice. The Debtors' allegation that there will be no duplication does not satisfy their burden to explain why two parties should be retained to perform the work of one. (Federal-Mogul Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) FORMICA: Committee Taps Dewey Ballantine as Bankruptcy Counsel -------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in Formica Corp.'s chapter 11 cases sought and obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to retain and employ Dewey Ballantine LLP as counsel. Dewey Ballantine will: a) assist, advise and represent the Committee with respect to the administration of these cases, as well as issues arising from or impacting the Debtors, the Creditors or these chapter 11 cases; b) provide all necessary legal advice with respect to the Committee's powers and duties; c) assist the Committee in maximizing the value of the Debtors' assets for the benefit of all creditors; d) pursue confirmation of a plan of reorganization; e) investigate, as the Committee deems appropriate, among other things, the assets, liabilities, financial condition and operations of the Debtors; f) commence and prosecute necessary and appropriate actions/proceedings on behalf of the Committee that may be relevant to these cases; g) review, analyze or prepare, on behalf of the Committee, all necessary applications, motions, answers, orders, reports, schedules and other legal papers; h) communicate with the Committee's constituents and others as the Committee may consider desirable in furtherance of its responsibilities; i) appear in Court to represent the interest of the Committee; j) confer with professional advisors retained by the Committee so as to more properly advise the Committee; k) advise the Committee with respect to local practices and procedures as well as the rules of the Southern District of New York; and l) perform all other legal services for the Committee that are appropriate and necessary in these chapter 11 cases. Dewey Ballantine will seek compensation from the Debtors' estates at its regular hourly rates: Members $485 to $720 per hour Counsel and associates $260 to $505 per hour Paraprofessionals $140 to $225 per hour 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 reorts that Formica Corp.'s 10.875% bonds due 2009 (FORMICA1) are traded between 18.5 and 22.5 . See http://www.debttraders.com/price.cfm?dt_sec_ticker=FORMICA1for some real-time bond pricing. GALEY & LORD: Seeks Court Nod to Tap Garden City as Claims Agent ---------------------------------------------------------------- Galey & Lord, Inc. and its debtor-affiliates obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to employ The Garden City Group, Inc. as their claims agent. As claims Agent, Garden City will: a) if requested, handle the docketing of claims filed with the Court and/or coordinate the receipt of filed claims; b) prepare a register of claims; c) provide assistance, as requested, to compare the schedules of liabilities and the claims register and reconcile discrepancies; d) prepare periodic updates of the register of claims to reflect claim amendments, stipulations, and rulings; e) prepare any exhibits to objections to claims, as requested; f) testify at hearings on claims objections regarding administrative matters, as required; and g) respond to creditors' non-legal questions about their claims or the claims process. Garden City is aware that the Debtors have already retained the Altman Group as their noticing and balloting agent. The Debtors assure the Court that Garden City will work efficiently and effectively with Altman to avoid task duplication. The Consulting and General Project Management fees to be charged by Garden City are: Project Supervisor $95 per hour Senior Project Manager $125 per hour Senior VP Systems and Managing Director $250 per hour G&L, a leading global manufacturer of textiles for sportswear, including cotton casuals, denim, and corduroy, and is a major international manufacturer of workwear fabrics, filed for chapter 11 protection on February 19, 2002 together with its affiliates. When the Company filed for protection from its creditors, it listed $694,362,000 in total assets and $715,093,000 in total debts. GRAHAM PACKAGING: S&P Places B Credit Rating on Watch Positive -------------------------------------------------------------- Standard & Poor's placed its single-'B' corporate credit ratings on Graham Packaging Holdings Co., its 100%-owned operating subsidiary, Graham Packaging Co., and related entities on CreditWatch with positive implications following the company's filing for an initial public offering of common stock. York, Pennsylvania-based Graham is a leading manufacturer of customized, blow-molded plastic containers. Debt outstanding as at March 31, 2002, was about $1.08 billion. "The CreditWatch placement reflects the potential for a modest upgrade if the stock offering is successfully completed because Graham has stated that expected net proceeds of around $200 million will be used to repay debt. In addition to the expected improvement to credit protection measures, the proposed debt refinancing will significantly extend Graham's debt maturities and improve liquidity," said Standard & Poor's credit analyst Liley Mehta. Under its proposed debt refinancing, Graham plans to issue $100 million senior subordinated notes due 2008, $550 million term loans due 2009 and a $150 million revolving credit facility due 2007, which will be fully available at closing of the transaction. Proceeds will be used to repay existing bank debt and $155 million in outstanding senior discount notes. Pro forma for the proposed plan, key credit measures are expected to improve. Coverage ratios are also expected to benefit from a combination of continuing EBITDA growth (driven by continued conversion to rigid plastic packaging in the food and beverage segments, and the benefits of European restructuring actions), and following the IPO, lower debt- servicing costs. Standard & Poor's will resolve the CreditWatch listings prior to the closing of the transaction expected in the second half of 2002, following further discussions with management, and review of additional information. ICH CORPORATION: Secures Okay to Sign-Up BSI as Claims Agent ------------------------------------------------------------ By order of the U.S. Bankruptcy Court for the Southern District of New York, ICH Corporation and its debtor-affiliates obtained authority to hire Bankruptcy Services LLC as official claims and noticing agent of the Court. As Claims and Noticing Agent, BSI will: A. provide notice, subject to review and approval of the Clerk of the Court, to all parties in interest of the commencement of these chapter 11 cases and provide Certificate of Mailing; B. provide notice, subject to review and approval of the Clerk of the Court, to all creditors of the i) first meeting of creditors pursuant to section 341 of the Bankruptcy Code; ii) of the bar date to be established in these chapter 11 cases pursuant to Bankruptcy Rule 3003(c) (3); iii) the existence and amount of their respective claims, as established by the Debtors' records; and iv) provide appropriate Certificates of Service; C. assist with the preparation of the Debtors' schedules of liabilities as required by Federal Rule of Bankruptcy Procedure ("Bankruptcy Rule") 1007(a); D. coordinate receipt of all claims received by the Clerk's Office and provide copies of claims register on a frequency basis as determined by the Court; E. provide secure storage for all proofs of claim; F. ensure that the claims register shall specify for each claim docketed G. facilitate the claims resolution process including i) matching scheduled liabilities to filed claims; ii) identifying duplicative or amended claims; iii) categorizing claims into plan classes; and iv) coding claims and preparing exhibits for omnibus claims motions. H. provide balloting services, including, among other things, solicitation, calculation of votes and distribution as required in furtherance of confirmation of a plan of reorganization, including establishment of a toll free number for questions if needed; I. upon confirmation of a plan of reorganization, calculation of disbursement amounts, development of customized disbursement reports and processing of payment to allowed claim holders. BSI will also comply with any further conditions and requirements as the Clerk's Office may prescribe and provide other administrative services that the Debtors may request. The Debtors agree to compensate BSI with its customary hourly rates, which are: Kathy Gerber $195 per hour Senior consultants $175 per hour Programmer $125 - $150 per hour Associate $125 per hour Data Entry/Clerical $40 - 60 per hour 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 05, 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. INTERMET CORPORATION: S&P Assigns BB- Corporate Credit Rating ------------------------------------------------------------- Standard & Poor's assigned its double-'B'-minus corporate credit rating to Troy, Michigan-based Intermet Corp., the largest independent automotive casting company in North America. In addition, Standard & Poor's assigned its double-'B'-minus rating to the company's $300 million senior secured bank facility due 2004, and a single-'B'-plus rating to the company's $175 million senior unsecured notes due 2009. The outlook is stable. Proceeds from the debt offering are expected to be used to pay down bank debt. "The ratings reflect the company's leading niche business positions within the highly fragmented and cyclical automotive casting market, combined with a somewhat aggressive financial profile," said Standard & Poor's analyst Eric Ballantine. Intermet provides both original equipment manufacturers and Tier 1 suppliers with specialized castings. In addition, the company provides a wide range of capabilities including design, engineering, and product evaluation. Intermet's product breadth, technology, and good customer relationships are considered competitive advantages. However, Intermet's limited geographic diversity and heavy customer concentration are business risks. Intermet has a somewhat aggressive financial profile, total debt to EBITDA in the 3.7 times and EBITDA to interest coverage of about 3.0x. The company continues to focus on improving its cost structure through workforce reductions and operating efficiency improvements. Intermet is expected to produce a fair amount of free cash flow, which will most likely be used for debt reduction. Nevertheless, over time, debt-financed acquisitions may occur. Intermet's liquidity is modest with about $60 million in available capacity under its $300 million credit facility. Highly cyclical end markets, a relatively aggressive financial profile, and the potential for debt-financed acquisitions limits ratings upside. Leading niche market positions, an improving cost structure, and modest cash generation limit downside ratings risk. INT'L FIBERCOM: Looks to PricewaterhouseCoopers for Fin'l Advice ---------------------------------------------------------------- International Fibercom, Inc. and its affiliated debtors sought and obtained permission to hire PricewaterhouseCoopers to perform certain financial advisory and accounting services from the U.S. Bankruptcy Court for the District of Arizona. PricewaterhouseCoopers will: i) assist the Debtors in preparing cash collateral budgets, projections and feasibility analyses, and participating in all related meetings; ii) assist the Debtors in preparing financial information and reports reasonably required by lenders and any creditors' committees, and participating in all related meetings; iii) assist the Debtors in the preparation of financial information for distribution to creditors and other parties in interest, including cash receipts and disbursements analysis, legal entity financial statements, and analysis of various asset and liability accounts; iv) assist the Debtors in analyzing creditor claims by type and entity; v) assist in the formulation of any Chapter 11 plan proposed by any of the Debtors, including feasibility and liquidation analysis necessary to support disclosure statement approval and confirmation of such plan(s); vi) litigation consultation services and expert witness testimony as requested by the Debtors; vii) advice regarding corporate issues related to restructuring; viii) assist the Debtors in preparing all reports and filings as required by the Court or the Office of the United States Trustee, including any monthly operating reports, Schedules of Assets and Liabilities, and Statements of Financial Affairs and Executory Contracts of the Debtors; ix) participation in meetings focused on coordinating the various professionals and resources necessary to the Debtors' restructuring efforts; and x) any other financial advisory services that may be required by the Debtors. PricewaterhouseCoopers' customary hourly rates for Phoenix personnel are: Partners $370 per hour Directors $295 per hour Managers $275 per hour Senior Associates $215 per hour Associates $170 per hour In the event that personnel from PricewaterhouseCoopers' national practice are required to be involved at the Debtors' request, the national rates are: Partners $500-$595 Managers/Directors $350-$495 Associates/Senior Associates $175-$325 International Fibercom, Inc. resells used, refurbished communications equipment, including fiber-optic cables. The Company filed for chapter 11 protection on February 13, 2002. Robert J. Miller, Esq. at Bryan Cave, LLP represents the Debtors in their restructuring efforts. INTERVOICE-BRITE: Completes 3 Debt Restructuring Transactions ------------------------------------------------------------- InterVoice-Brite (Nasdaq: INTV) announced three concurrent financing transactions resulting in a significant restructuring of its total indebtedness. "I'm pleased with these transactions," said David Brandenburg, the Company's Chairman and CEO. "We believe we will have a capital structure which will allow us the flexibility and access to working capital we need to achieve our objectives." First, the Company has entered into a three year mortgage on its Dallas facilities for $14 million. Interest is payable monthly under the mortgage and will be computed at the greater of the prime interest rate plus 2 percent or 10.5 percent. The entire principal amount is payable at the end of the mortgage term. Second, the Company has agreed to issue $10 million in convertible notes in a private placement. The notes have a term of 13 months and carry a coupon rate of 6 percent, and payment of principal and interest under the notes commence September 1, 2002. The Company, at its option, may meet its payment obligations in either cash or common stock, provided certain conditions are met. The Company has the right under certain circumstances to make voluntary prepayments of any portion or all of the outstanding principal under the notes. The investors have the right at any time to convert the notes into shares of the Company's common stock at a conversion price of 200 percent over the volume weighted average price of the Company's common stock at closing. Also, as part of the placement, the investors will receive warrants with a term of three years to purchase 621,303 shares of the Company's common stock at a price per share of $4.0238. Third, the Company has agreed to use the proceeds from the mortgage and convertible notes to extinguish its $22.5 million term loan and to pay down a portion of its borrowings under its revolving credit facility, reducing its bank debt to approximately $6 million. The Company's lender group has agreed to waive a breach of a financial covenant by the Company under its credit agreement with the lender group and has agreed to continue to provide the Company with a $12 million revolving credit line, against which the Company has drawn the earlier discussed $6 million. The amount at any point in time the Company may borrow under the revolving credit line will be determined by a borrowing base based on the Company's U.S. receivables plus the Company's U.S. raw materials inventory. In addition to these three financing transactions, the Company believes it will close and fund the sale of its Wichita, Kansas facility as soon as May 31, 2002, the proceeds of which will be used to further reduce the Company's bank debt. Rob Graham, the Company's CFO, stated, "We are pleased to have put financing concerns to rest. We can now focus on improving our core business. We appreciate the efforts of everyone involved." InterVoice-Brite is a leading global provider of voice-enabled information solutions, collaboration and e-business applications and outsourcing services for enterprises and network service providers. The Company operates in two global divisions, each focusing on a separate marketplace. iVB Network Solutions provides prepaid services, voicemail, unified messaging, short messaging services (SMS), service platforms and speech-enabled applications for network operators marketed under the OmviaT product name. iVB Enterprise Solutions' OneVoicer product family offers speech-enabled IVRs, multimedia portals, interactive alerts and wireless application gateways that enable enterprises to provide valued information to partners, customers and employees. Both divisions also provide their products and services on an outsourcing basis as an Application Service Provider. For more information, visit http://www.intervoice- brite.com IRON AGE: S&P Junks Rating Due to Weaker Operating Performance -------------------------------------------------------------- Standard & Poor's lowered its corporate credit ratings on safety shoe distributor Iron Age Holdings Inc. and its subsidiary Iron Age Corp. to triple-'C'-plus from single-'B'-minus based on the company's continued deterioration in operating performance, high debt service burden, and constrained liquidity. The outlook is negative. Pittsburgh, Pennsylvania-based Iron Age has total debt outstanding of about $137 million. "Operating results came under significant pressure in recent quarters due to declining demand for Iron Age's safety shoes, stemming from plant closings and employee layoffs, overall weakness in the U.S economy, and increased competitive pressure from nationally branded shoe products," Standard & Poor's credit analyst Ana Lai said. "Sales declined 11% to $105.5 million while EBITDA slipped 32% to $13 million for the year ended January 2002. We expect operating conditions to remain difficult due to the uncertain economic outlook." Standard & Poor's said Iron Age's poor operating performance, coupled with high debt levels, resulted in extremely weak credit protection measures, with total debt to EBITDA of about 10.0 times and EBITDA interest coverage of about 1.0x for the year ended Jan. 26, 2002. Financial flexibility is very limited, with about $10 million available under its $20 million revolving credit facility. The rating agency said liquidity will remain constrained because of the company's relatively high debt service burden, comprised of about $8.5 million in cash interest expense and quarterly amortization of about $1.6 million under its acquisition term loan. Standard & Poor's said ratings could be lowered if operational pressures further reduce the company's already constrained liquidity. KAISER ALUMINUM: Retirees' Committee Retains Brobeck as Counsel --------------------------------------------------------------- The Official Committee of Retired Employees in the Chapter 11 cases of Kaiser Aluminum Corporation and its debtor-affiliates asks the Court to approve its employment and retention of Brobeck, Phleger & Harrison LLP as their primary counsel, nunc pro tunc to February 28, 2002. Specifically, Brobeck will render: A. research, analysis, and advice to the Retirees' Committee relative to the February 8, 2002 letter from James E. McAuliffee, Jr. vice President of Corporate & Fabricated Products Human Resources for Kaiser Aluminum & Chemical Corporation, to the "Kaiser Aluminum Retiree/ Surviving Spouse" and all attachments contained in the letter; B. research, analysis, and advice to the Retirees' Committee relative to the March 27, 2002 letter from Kaiser Aluminum & Chemical Corporation as Plan Administrator to "Salaried Retiree/ Surviving Spouse and covered spouse/dependents, if any" and all attachments contained in the letter; and, C. any and all services authorized by the Court. The Chairman for the Retirees' Committee, John E. Daniel, informs the Court that the committee chose Brobeck as its counsel because of the firm's considerable experience and knowledge in the field of bankruptcy. Brobeck has particular experience representing committees of retired employees in Chapter 11 cases. In addition, Brobeck has experience with issues relating specifically to retirement benefits. Moreover, the retention of Brobeck is geographically desirable because Frederick D. Holden, Jr., the attorney who will be primarily responsible for representing the Retirees' Committee in these cases, works out of the San Francisco office of Brobeck. Accordingly, Mr. Daniel believes that Brobeck is well qualified to represent them in these cases in an efficient and timely manner. Mr. Daniel proposes that Brobeck will be paid its customary hourly rates for services rendered that are in effect from time to time. The committee also intends to reimburse Brobeck of its actual and necessary expenses. The attorneys presently anticipated to be the persons primarily involved in representing the committee and their current standard hourly rates are: Attorney Position Rate ------------------------ -------------------- ------ Frederick D. Holden, Jr. bankruptcy partner $470 Barbara P. Pletcher benefits partner 470 Jennifer S. Yount bankruptcy associate 325 Frederick D. Holden, Jr., Esq., a member of the firm Brobeck, Phleger & Harrison LLP, understands that, pursuant to an April 18, 2002 budget submitted by Brobeck to the Court, the Retirees' Committee and its counsel are subject to a $95,000 fee cap -- unless the Court increases that limit. Additionally, Mr. Holden ascertains that the firm and its professionals have no connection with the Debtors or with their major creditors and with other parties-in-interest to these cases. Brobeck represents no adverse interest to the Retirees' Committee in the matters in which it is to be engaged. (Kaiser Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) KELLSTROM: Committee Wants Jefferies to Render Financial Advice --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases involving Kellstrom Industries, Inc., asks permission from the U.S. Bankruptcy Court from District of Delaware to retain Jefferies & Company, Inc. as its financial advisor, effective as of March 15, 2002. The Committee asserts that the services of a financial advisor are necessary and appropriate to enable it to evaluate the complex financial and economic issues raised by the Debtors' reorganization proceedings and to effectively fulfill its statutory duties. The Committee selected Jefferies because of its expertise in providing financial advisory services to debtors and creditors in bankrupt and distressed situations. It is expected that Jefferies' services will include assisting, advising and representing the Committee in these matters: a. become familiar, to the extent Jefferies deems appropriate, with and analyze the business, operations, properties, financial condition and prospects of the Debtors; b. advise the Committee on the current state of the "restructuring market"; c. assist and advise the Committee in developing a general strategy for accomplishing a Restructuring; d. assist and advise the Committee in implementing a plan of Restructuring with the Debtors; e. assist and advise the Committee on developing a strategy with respect to recapitalization possibilities for the Debtors; f. assist and advise the Committee in evaluating and analyzing a Restructuring including the value of the securities, if any, that may be issued under any Restructuring plan; g. assist the Committee and counsel in identifying potential financing sources for a recapitalization, and h. render such other financial advisory services as may from time to time be agreed upon by the Committee and Jefferies. Pursuant to an Engagement Letter, Jefferies is entitled to a $100,000 monthly fee for a period of not less than 4 months. In the event the Debtors consummate a Restructuring of the outstanding indebtedness during the term of the engagement, the Debtors will pay Jefferies a Success Fee in an amount mutually agreeable between the Company, the Committee and Jefferies equal to the sum of; i) 2.5% of the Total Consideration received by the unsecured creditors in any Restructuring in an amount less than or equal to $5,000,000 received by the unsecured creditors in any Restructuring, plus; ii) 5% of the Total Consideration in an amount greater than $5,000,000 and less than or equal to $10,000,000, plus; iii) 10% of the Total Consideration in an amount greater than $10,000,000 received by the unsecured creditors in any Restructuring. The Committee has been advised by Jefferies that it is not the general practice of investment banking firms to keep detailed time records similar to those customarily kept by attorneys. The Committee seeks to waive the information requirements imposed by Del. Bankr. LR 2016-2 as it relates to Jefferies. Kellstrom Industries, Inc., a leader in the aviation inventory management industry filed for chapter 11 protection on February 20, 2002. Domenic E. Pacitti, Esq. at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $371,249,106 in total assets and $402,400,477 in total debts. KMART: Myrick Construction Seeks Stay Relief to Enforce Liens ------------------------------------------------------------- Myrick Construction Inc. and Central Carolina Air Conditioning Company seek relief from the automatic stay to enforce their lien rights on certain parcels of real property comprising the Kmart Distribution Center No. 8288. The Property is located at 300 Penry Road in Greensboro, North Carolina. John S. Delnero, Esq., at Bell, Boyd & Lloyd, in Chicago, Illinois, tells the Court that Myrick furnished materials, labor and equipment necessary to complete all site work (including curbs and gutters, asphalt paving, storm drainage, keystone walls, site lighting, concrete dolly pads, landscaping and seeding) at the Property within the period of May 7 to December 21, 2001. Mr. Delnero asserts that Kmart owes Myrick at least $1,135,561. According to Mr. Delnero, Central Carolina also furnished materials, labor and equipment necessary: (1) to complete numerous repairs to existing equipment (including repairs to the remaining exhaust fans, the motorized intake louvers, the Air Rotation Units, the systems listed in the Battery/Maintenance area and the systems listed in the storage area); (2) to install a new 4-ton gaspack on the roof, and (3) to rezone the breakroom. All these work was done by Central Carolina from the period of September 11, 2001 to November 26, 2001. Mr. Delnero contends that Kmart is indebted to Central Carolina in a sum not less than $59,000. Mr. Delnero informs Judge Sonderby that the North Carolina General Statutes provide for mechanics', laborers' and materialmen's liens secured by an interest in real property: "Any person who performs or furnishes labor or professional design or surveying services or furnishes materials or furnishes rental equipment pursuant to a contract, either express or implied, with owner of the real property for the making of an improvement shall, upon complying with the provisions of this Article, have a lien on the real property to secure payment of all debts owing for labor done or professional design or surveying services or material furnished or equipment rented pursuant to the contract." So in accordance with the North Carolina General Statutes, the Claimants filed claims of lien within 120 days of the last day upon which labor or materials were furnished. To enforce their respective liens, Mr. Delnero explains that the Claimants must commence civil actions no later than 180 days after the last furnishing of labor or materials at the Property. Mr. Delnero clarifies that the Claimants only seek to name the Debtors as a necessary party in a certain mechanic's lien foreclosure proceeding to be filed against non-debtor third parties. "If the relief is granted, Claimants will not require any of the Debtors to answer or otherwise appear in the foreclosure proceeding," Mr. Delnero says. Claimants will enforce their claims through the claims process established by the Court. Debtors Object There is no reason to lift the automatic stay, Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, argues. Mr. McDermott asserts that the Claimants are adequately protected and their security interest is not in jeopardy. Mr. McDermott emphasizes that the automatic stay applies only to actions against the Debtors. "The Claimants are free to file a lien enforcement action against non-debtor third parties without leave of this Court," Mr. McDermott says. Furthermore, Mr. McDermott notes, the Claimants do not allege nor cite to any authority to the effect that the Debtors are necessary and indispensable parties to the lien enforcement proceeding, without whom the proceeding cannot go forward. "If the Claimants are concerned that the Debtors' participation in discovery related to a lien enforcement proceeding against non- debtor third parties will be necessary, these discovery requests are not stayed by Section 362(a)(1) of the Bankruptcy Code," Mr. McDermott asserts. In addition, Mr. McDermott explains that the Claimants are adequately protected by Section 108(c) of the Bankruptcy Code because "if applicable non-bankruptcy law...fixes a period for commencing or continuing a civil action in a court other than a bankruptcy court on a claim against the debtor...then the period does not expire until the later of: (1) the end of the period . . . or (2) 30 days after notice of the termination or expiration of the stay under Section 62." (Kmart Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392- 0900) KMART CORP: Offering Free BlueLight Internet Access To Shoppers --------------------------------------------------------------- BlueLight.com and Kmart are thanking loyal on- and offline shoppers for their continued support with a special Internet access deal. BlueLight Unlimited Internet Service, the lowest- priced major Internet service in the country, is offering one month of free online access to new subscribers who sign up for the service during Kmart's Customer Appreciation Days. The offer, which is available on http://www.bluelight.com from May 31 - June 8th, is one of the many special savings and events planned by Kmart's more than 220,000 associates nationwide as their way of saying "thank you" to shoppers for standing by the retailer during its current restructuring. BlueLight Unlimited is the lowest-priced major Internet service in the country at $8.95 a month for unlimited access. The service recently added additional email storage space (10 MB) and a POP3 email-forwarding system for customers free of charge. The enhancements to BlueLight Unlimited come at a time when many Internet services have begun cutting back or charging for added features. BlueLight Unlimited also continues to add dial-up numbers to its coverage area -- more than 6,500 nationwide -- boasting more than twice as many dial-up numbers as AOL. BlueLight Unlimited answers at least 80% of all customer calls in one minute or less and resolves more than 90% of customer problems in the first call. "BlueLight Unlimited Internet offers the value and service that Kmart customers demand and deserve," said Richard Blunck, CEO of BlueLight.com and SVP of Kmart Corporation. "Both Kmart and BlueLight.com have made some exciting improvements over the past few months. The Customer Appreciation Days and our free month of Internet service are our way of saying 'thank you' to on- and offline shoppers who continue to make us their discount retailer of choice." Full details on BlueLight Unlimited's one-free-month promotion can be found online at http://www.bluelight.com Kmart Customer Appreciation Days are June 1 through June 8. During this celebration, Kmart will unveil special deals on some of its most popular merchandise, both in the stores and online, along with a variety of promotional events and celebrity appearances In addition, customers will be treated to cleaner, less-cluttered stores, following a massive chain-wide "spring cleaning." Based in San Francisco, BlueLight.com is a wholly owned subsidiary of Kmart Corporation. BlueLight.com represents Kmart on the Internet through the BlueLight.com online shopping site, featuring nationally recognized products at unprecedented values. The BlueLight Unlimited Internet Service is the lowest- priced major ISP in the U.S. today. For more information, visit http://www.bluelight.com LANTRONIX: Fails To Comply With Nasdaq Listing Requirements ----------------------------------------------------------- Lantronix, Inc. (Nasdaq: LTRXE) announced that, based on the results of the voluntary internal review by the company's audit committee, assisted by Ernst & Young, the company has determined that it will amend certain of its previously issued financial reports. The restatement is currently expected to result in net revenue reductions of less than 15 percent for both fiscal 2001 and 2002. The company also currently anticipates that it will record a charge of approximately $1.0 to $2.0 million for the third quarter of fiscal 2002, principally for excess and obsolete inventory, which will reduce the third- quarter earnings announced on May 1, 2002. The company anticipates filing amendments to its previously issued financial reports with the Securities and Exchange Commission after discussion with the SEC. The Lantronix Board of Directors announced the appointment of Marc Nussbaum as interim chief executive officer and president, succeeding Fred Thiel, who will assume the role of chief technology and strategy officer. The company also announced that Thiel and Bernhard Bruscha have resigned from the Board of Directors. H.K. Desai, a current member of the company's Board of Directors, was elected chairman. "Marc Nussbaum has more than twenty years experience in the computer industry. Marc served as senior vice president and chief technical officer for Western Digital for seventeen years where he helped build the LSI controller board and drive business to $4.0 billion in revenue," Chairman Desai stated. "Our focus is to complete the internal review and necessary filings that will enable us to move on and pursue Lantronix's objective of being the premier provider of networking technologies." "I believe that this transition is in the best interest of the company and its stockholders," said Thiel. "I continue to firmly believe and remain committed to Lantronix's vision of delivering the best products and solutions that enable network connectivity for our customers now and in the future. I look forward to working with Marc and the rest of the management team to help define and contribute towards Lantronix's long-term success." Lantronix also announced that it received notification from Nasdaq on May 23, 2002 that it does not meet the filing requirements for continued listing on the Nasdaq National Market and is therefore subject to delisting. Lantronix has requested a hearing before a Nasdaq listing qualifications panel to review the Staff Determination. There can be no assurance the Panel will grant the company's request for continued listing. The notice from NASDAQ was sent as a result of the company's current non-compliance with Marketplace Rule 4310(C)(14), which requires timely filing of the company's quarterly report on Form 10-Q. The company intends to file its quarterly report promptly upon the completion of the internal review. Lantronix also announced that it has signed a new intellectual property agreement with Gordian Corporation, Lantronix's long- time provider of product designs and engineering services. The agreement gives Lantonix joint ownership of the Gordian intellectual property that is embodied in the products Gordian has designed for Lantronix since 1989. The agreement provides that Lantronix will be able to use the intellectual property to support, maintain and enhance its products. The agreement extinguishes Lantronix's obligations to pay royalties for each unit of a Gordian-designed product that it sells. Lantronix will pay Gordian $6.0 million to acquire an interest in the Gordian intellectual property, which will be paid in three installments. The company paid $3.0 million concurrent with the signing of the agreement and is obligated to pay $2.0 million on July 1, 2002 and $1.0 million on July 1, 2003. Lantronix will also purchase $1.5 million for engineering and support services from Gordian over the next 18 months. Lantronix, Inc. (Nasdaq: LTRXE) is a provider of hardware and software solutions ranging from systems that allow users to remotely manage network infrastructure equipment to technologies that network-enable devices and appliances. Lantronix was established in 1989, and its worldwide headquarters are in Irvine, Calif. For more information, visit the company on the Internet at http://www.lantronix.com LODGENET ENTERTAINMENT: S&P Rates $225MM Rule 415 Shelf at B- ------------------------------------------------------------- Standard & Poor's assigned its preliminary single-'B' senior unsecured and preliminary single-'B'-minus subordinated ratings to LodgeNet Entertainment Corp.'s $225 million Rule 415 shelf registration. A preferred stock issue would be rated at the time of drawdown, based on its terms. In addition, the single-'B'-plus corporate credit rating was affirmed. The outlook remains stable. Sioux Falls, San Diego- based LodgeNet is one of two dominant providers of interactive television to the lodging industry in the U.S. and Canada. The company had a total of $332 million in debt as of March 31, 2002. "LodgeNet generated higher revenue and EBITDA in the first quarter of 2002 despite a 3.0% drop in occupancy rates which contributed to a 3.5% decline in average revenue per room," said Standard & Poor's analyst Steve Wilkinson. He added, "This reflects the company's growing room base and cost control measures. Profit growth will remain constrained by lower occupancy rates which will further weigh on the company's negative discretionary cash flow." The company is expected to continue to modestly increase both its room base and industry- leading U.S. market share as a result of its contracts with Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide Inc. Drawdowns may be in the form of common or preferred equity or senior or subordinated debt. The preliminary ratings assume that any drawdowns of debt will be used for refinancing, and will not impair LodgeNet's current credit profile. Ratings stability depends on the company's ability to modestly improve its credit statistics to comply with tightening financial covenants. METALS USA: U.S. Trustee Alters Unsecured Committee Membership -------------------------------------------------------------- CFSB Global Opportunities Advisers LLC, Zurich Scudder Investments, Inc., and TXI Caparral Steel tendered their resignation from the Joint Committee of Unsecured Bondholders and Creditors in the Bankruptcy cases of Metals USA, Inc. and its debtor-affiliates. The Office of the United States Trustee appoints Merrill Lynch Corporate Bond High Income Fund, Deutsche Investment Management Americas Inc. and Alcoa to replace them. The nine current Committee members are: A. The Bank of New York Corporate Trust - Default Administration Indentured Trustee for the 8 5/8% Senior Subordinated Notes Due 2008 Attn: Gary Bush, Vice-President New York, NY 10001 Phone: (212) 896-7260 Fax: (212) 328-7302 B. Merrill Lynch Corporate Bond High Income Fund Attn: Mike Brown Plainsboro, New Jersey 08536 Phone: (609)282-3001 Fax: (609) 282-2940 C. ING-Ghent Asset Management LLC Attn: Robert Farnham New York, NY 10169 Phone: (212) 309-5973 Fax: (212) 309-6514 D. Deutsche Investment Management Americas Inc. Attn: James Capezzuto New York, NY 10154 Phone: (212) 336-1673 Fax: (212) 223-3127 E. Triton Partners LLC Attn: Daniel Arbess New York, NY 10017 Phone: (201) 792-2175 Fax: (212) 792-2174 F. Nucor Attn: Jim Frias Charlotte, NC 28211 Phone: (704) 365-1321 Fax: (704) 362-4208 G. National Steel Corporation Attn: Brian C. Brown Mishawaka, IN 46545 Phone: (219) 273-7418 Fax: (219) 273-7493 H. Alcoa Inc. Attn: Michael J. Fry Norcross, GA 30092 Phone: (770) 582-7302 Fax: (770) 582-7325 I. AK Steel Corporation Attn: J. N. (Sonny) Bach Middletown, OH 45043 Phone: (513) 425-2741 Fax: (513) 425-5958 (Metals USA Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONAL STEEL: Signs-Up Ernst & Young as Consultants ----------------------------------------------------- National Steel Corporation and its debtor-affiliates seek the Court's authority to employ and retain Ernst & Young LLP as their Audit, Tax and Human Resources Advisors, nunc pro tunc to the Petition Date. David A. Missner, Esq., at Piper Rudnick, in Chicago, Illinois, explains that the Debtors chose E&Y LLP because they believe the firm is uniquely qualified for the task. E&Y LLP is a firm of independent public accountants and is one of the five largest accounting, auditing, and tax consulting firms in the United States. E&Y LLP also has significant experience providing human resource advisory services to debtors and creditors during the course of Chapter 11 cases. The professionals at E&Y LLP with primary responsibility for rendering services to the Debtors include: For Audit: James A. Pease Partner Timothy R. Cash Partner Kevin K. Kilmara Senior Manager Jon J. McCoy Manager For Tax: Mitch Stauffer Partner Dan Carsaro Partner Rich Liebman Partner Marie Powell Tax Consulting Manager For Human Resources: Donald Kalfen Partner Mr. Missner adds that other professionals at E&Y LLP may render services to the Debtors, on an as-needed basis. Furthermore, Mr. Missner continues, the Debtors may terminate the Engagement Letters at any time while E&Y LLP may terminate the Audit Engagement Letters at any time and may terminate the HR Engagement Letter on 10 days prior written notice. Mr. Missner relates that the provision of the Audit Engagement Letters concerning "alternative dispute resolution" and the provisions in the HR Engagement Letter concerning "Other Issues" shall remain in effect regardless of any termination of the Engagement Letters. E&Y LLP has agreed to perform these services: (1) Audit Services -- audit and report on the financial statements of the Company for the year ending December 31, 2002; -- review of each of the Company's unaudited quarterly financial statements before the Company files its Form 10-Q; and -- audit and report on the financial statements and supplemental schedules of the Company's 20 benefit plans for the year ended December 31, 2001, which are to be included in the Plans' Form 5500 filings with the Department of Labor's Pension and Welfare Benefits Administration. (2) Tax Services -- assist and advise the Company in its bankruptcy restructuring objective and post-bankruptcy operations by determining the tax effects of alternative restructuring and operating plans, including, as needed, research and analysis of Internal Revenue Code sections, treasury regulations, case law and other relevant tax authority which could be applied to business valuation and restructuring models; -- analyze the availability, limitations, preservation and maximization of tax attributes, like net operating losses and alternative minimum tax credits, minimize tax costs in connection with stock or asset sales, if any, assist with tax issues arising in the ordinary course of business while in bankruptcy, like the ongoing assistance with a federal IRS examination and related issues raised by the IRS agent and the mitigation of officer liability issues, and, as needed, research and analyze federal and state income and franchise tax issues arising during the bankruptcy period; -- assist with settling tax claims against the Company and obtaining refunds of reduced claims previously paid by the Company for various taxes, including, but not limited to, federal and state income, franchise, payroll, sales and use, property, excise an business license; -- assist in assessing the validity of tax claims, including working with bankruptcy counsel to reclassify tax claims as non-priority; -- analyze legal and other professional fees incurred during the bankruptcy period for purposes of determining future deductibility of the costs; -- documenting, as appropriate or necessary, of tax analysis, opinions, recommendations, conclusions and correspondence for any proposed restructuring alternative, bankruptcy tax issue or other tax matter; and -- additional tax consulting services requested by the Company. (3) Human Resources Services -- assist in developing a business case for enhancements to the Company's compensation and benefits programs; -- assist in the design and development of cash retention compensation programs; -- assist in analyzing the financial affect of proposed retention compensation programs and revisions, if any, to existing compensation and benefit programs; -- assist in evaluating the adequacy of existing executive employment contracts and provide suggested revisions; -- assist in evaluating adequacy of existing change-in-control arrangements and provide suggested revisions; -- assist in benchmarking existing and proposed compensation and benefit programs; -- advise the Company with respect to tax and accounting issues relative to newly designed or modified compensation, benefit and HR programs; -- prepare summary and other materials regarding the programs, contracts and arrangements for presentation to the Company's board of directors and any committee and, if requested by the Company, present the materials at a meeting or meetings of the board of directors and any committee; and -- perform other services as may be requested in writing from time to time by the Company or its counsel and agreed to by E&Y LLP. Mr. Missner assures the Court that the services rendered by E&Y LLP will neither overlap nor duplicate the services rendered by any other professionals employed by the Debtors in these Chapter 11 cases. "E&Y LLP will coordinate its services, as appropriate, with the services of other professionals retained in these cases in order to avoid unnecessary duplication of effort," Mr. Missner says. Under the terms of an Engagement Letter, National Steel will pay E&Y LLP: (A) Audit Service -- E&Y LLP will receive $900,000 (including expenses) for the completion of the Company's consolidated audit for the year ending December 31, 2002, payable in six installments of $150,000 beginning in June 2002 and ending in February 2003; -- E&Y LLP will receive $55,000 (including expenses) for each quarterly review (March 31, 2002, June 30, 2002 and September 30, 2002); and -- E&Y LLP will receive $194,000 (including expenses) for the audits of the Company's 20 benefit plans for the year ended December 31, 2002 payable in two installments of $97,000 in June 2002 and August 2002. (B) Tax Services -- E&Y LLP's fees for tax-related services will be based on actual time incurred at these hourly rates: Partners and Principals $475-700 Senior Manager 330-545 Manager 300-440 Senior 180-320 Staff 165-225 -- E&Y LLP will be reimbursed for actual expenses related to tax services; and -- E&Y LLP will be reimbursed for fees (including any time or reasonable expenses of legal counsel) for time spend considering or responding to discovery requests or participating as a witness or otherwise in any legal, regulatory, or other proceeding as a result of our performance of the tax services. (C) Human Resources Services -- E&Y LLP's fees for human resources-related services will be based on actual time incurred at these hourly rates: Partners and Principals $475-650 Senior Manager 390-460 Manager 325-400 Senior 200-320 Staff 165-195 -- E&Y LLP will be reimbursed for reasonable documented out-of-pocket expenses incurred in connection with providing the human resources services including, but not limited to, travel costs, lodging, meals, research, and overnight mail and courier service; and -- In the event E&Y LLP is requested or authorized by the Company or is required by government regulation, subpoena or other legal process to produce our documents or its personnel as witnesses with respect to the human resources services provided to the Company, the Company will, so long as E&Y LLP is not a party to the proceeding in which information is sought, reimburse E&Y LLP for its professional time and expenses, as well as the reasonable documented fees and expenses of its counsel, incurred in responding to the requests. The Debtors believe these Fee Structures are both fair and reasonable under the standards in Section 328(a) in light of the types of services being provided. Accordingly, the Debtors ask the Court to approve the proposed compensation arrangement. Mr. Missner relates that E&Y LLP will file interim and final applications for allowance of its fees and expenses in respect of its services. Donald G. Kalfen, a partner at Ernst & Young LLP, tells the Court that the firm is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code and as required by Section 327(a) of the Bankruptcy Code. Mr. Kalfen emphasizes that E&Y LLP does not represent any interest adverse to the Debtors and will not represent any entity other than the Debtors in connection with these Chapter 11 cases. "Since the Debtors have many creditors and other parties-in-interest, E&Y LLP may have rendered in the past, and may render presently, or may render in the future, accounting, tax and consulting services to certain of these parties-in-interest," Mr. Kalfen admits. But Mr. Kalfen asserts that the firm will not accept any engagement that would require the firm to represent an interest materially adverse to the Debtors in any way relating to the matters in connection with which E&Y LLP is to be engaged in these Chapter 11 cases. "Despite the efforts exerted to identify and disclose E&Y LLP's connections, the firm is unable to state with certainty that every client representation or connection is disclosed to the Court," Mr. Kalfen says. Thus, E&Y LLP promises to file supplemental affidavits with the Court if it discovers additional information that requires disclosure. (National Steel Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONSRENT INC: Taps Ritchie Bros. as Equipment Appraisers ----------------------------------------------------------- NationsRent Inc. and its debtor-affiliates ask the Court to authorize their employment and retention of Ritchie Bros. Auctioneers (America) Inc., as equipment appraisers in these Chapter 11 cases in accordance with an engagement letter dated as of April 19, 2002. The Debtors are reviewing all of their equipment leases and Ritchie Bros. will assist in determining the fair market value of the Leased Equipment. In particular, Ritchie Bros. will: a. assist the Debtors select an appropriate sample population of its Leased Equipment in preparation of an appraisal of the equipment; b. assist the Debtors review the selected sample of Leased Equipment to ensure that the sample satisfies certain criteria; c. conduct an appraisal of the selected Leased Equipment by undertaking, among other things, the following activities: 1. physically inspecting the selected equipment; 2. recording and verifying pertinent information, including the equipment's year, make, model, identification number and condition; 3. taking photographs of the equipment; and, 4. assigning an estimated fair market value to the equipment; d. assist the Debtors to extrapolate the values of Leased Equipment that was not inspected from the values attributed to the same type of inspected Leased Equipment; e. assist the Debtors in identifying the residual values for each class of Leased Equipment for both a one-year or three- year horizon; and, f. assist the Debtors develop a report summarizing the appraisal results. The Debtors anticipate that Ritchie Bros. will complete these appraisals within the next 45 days or so. Rebecca L. Booth, Esq., at Richards, Layton & Finger P.A. in Wilmington, Delaware, contends that Ritchie Bros. are particularly well-suited to serve as the Debtors' equipment appraisers because of its significant experience in the appraisal of transportation, construction, agricultural, mining, pipeline and forestry equipment and has conducted tens of thousands of appraisals for all types of companies. During 2001, Ritchie Bros. completed over 3,200 appraisals representing a total appraised value in excess of $4,000,000,000. In addition, Ritchie Bros. is an industry leader in the appraisal of equipment with an excellent reputation for the appraisal services that it has rendered to its clients. Ritchie Bros. is also familiar with the Debtors' businesses. Prior to the petition date, Ms. Booth relates that Ritchie Bros. assisted the Debtors with selling certain equipment at public auction and, as a result, its professionals have worked closely with the Debtors' staff and have become well acquainted with the Debtors' affairs. Accordingly, Ritchie Bros. has developed relevant experiences and expertise that will assist it in providing effective and efficient services in these Chapter 11 cases. Subject to the Court's approval and pursuant to the terms and conditions of the Engagement Letter, Ritchie Bros. intends to charge for its professional services rendered to the Debtors in these Chapter 11 cases based on this Fee Structure: a. the Debtors will pay Ritchie Bros. an initial $30,000 retainer; b. upon completion of 75% of the field work and before completion of administrative work and delivery of a final report, Ritchie Bros. will receive a second $30,000 retainer; and, c. Ritchie Bros. intends to charge $2,000 per field appraisal day per man plus reasonable expenses for its professional services provided to the Debtors and upon completion and delivery of a final report regarding the appraisal, Ritchie Bros. intends to seek allowance and payment of its professional fees and related expenses. Ritchie Bros. will apply the Retainers in satisfaction of the first $60,000 of its allowed professional fees and related expenses; d. Ritchie Bros. estimates that the total cost to complete the services required will be approximately $95,000. To the extent authorized by the Debtors, Ritchie Bros. intends to charge $2,000 per field appraisal day per man plus reasonable expenses for any additional services in excess of the fee and expense cap. Pursuant to the Engagement Letter, the fee and expense cap for professional services rendered cannot exceed $110,000 without the prior written consent of the Debtors; and, e. to the extent the Debtors request Ritchie Bros. to perform additional services beyond that which is contemplated by the initial engagement, Ritchie Bros. will charge the Debtors on a basis comparable to the Fee Structure; provided, however, the Debtors will not provide Ritchie Bros. with any additional retainers. Ms. Booth claims that the Fee Structure is fair and reasonable as it appropriately reflects the nature of the services to be provided by Ritchie Bros. and the fee structures typically utilized by equipment appraisal companies. Peter Blake, Vice President of Finance of Ritchie Bros. Auctioneers (America) Inc., informs the Court that, prior to the Petition Date, the Debtors retained Ritchie Bros. to sell certain of the Debtors' equipment at unreserved public auctions. Ritchie Bros. conducted approximately 50 these auctions during the year immediately preceding the Petition Date, and the Debtors made no direct payments to Ritchie Bros. on account of the services rendered by Ritchie Bros. in connection with these auctions. Pursuant to the terms of its engagement, however, Ritchie Bros. deducted a percentage of the funds generated from the sale of the Debtors' equipment at these auctions to satisfy commissions and authorized expenses before remitting the auction proceeds to the Debtors. Ritchie Bros. based its commission fee on a certain percentage of the auction proceeds. Mr. Blake tells the Court that Ritchie Bros. have previously held liens against certain assets that the firm has sold at public auction. In connection with the sale of these assets, Ritchie Bros. may have remitted a portion of the funds generated from the sale of these assets to the Debtors' major equipment lessors and certain Licensors, including American Finance Group, Inc. d/b/a Guaranty Capital Corp., Associates Leasing Ltd., Bane One Leasing Corp., Case New Holland Credit Company, Caterpillar Financial Services, Fleet Capital Corporation, General Electric Capital Corp., GTE Capital/Verizon Credit, Inc., General Electric Capital Corp., Genie Financial Services, JCB Finance, John Deere Credit, Key Corporate Capital Inc., LaSalle National Leasing Corp., BB&T Leasing Corporation, Bombardier Capital, Inc., The CIT Group/Equipment Financing, Inc., Citizens Leasing Corporation, Debis Financial Services, Inc., Heller Financial Leasing Inc., ICX Corporation, NationsBanc Leasing Corporation/Bank of America, Southtrust Bank, N.A., StarBank, N.A./US Bancorp Equipment Finance, Inc., TCF Leasing, Inc., TransAmerica Business Credit Corp., Zions Bank, N.A., Case New Holland Credit, Paccar Financial, Textron Financial Corporation; Mr. Blake adds that Ritchie Bros. has retained the law firm of Blank, Rome, Comisky & McCauley LLP -- counsel to parties to certain litigation with the Debtors -- to provide legal services on matters unrelated to these Chapter 11 cases. (NationsRent Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) OSE USA: Says Cash Balances Ample to Meet Working Capital Needs --------------------------------------------------------------- OSE USA Inc.'s manufacturing operating segment generally recognizes revenues upon shipment of its products. The distribution segment earns revenue through a distributor agreement with OSE where revenues are derived from fees received on the sales of OSE's and OSEP's semiconductor assembly and test services to customers headquartered in North America and revenues are recognized on a net commission basis. Revenues decreased 31% to $2.5 million for the three-month period ended March 31, 2002 from $3.6 million for the three- month period ended April 1, 2001. Revenues for the three month period ended March 31, 2002 for the manufacturing segment were $1.5 million compared with $2.5 million for the comparable period in the prior fiscal year. The decrease in revenues for the manufacturing segment are primarily due to decreased orders as a result of the general slowdown in the semiconductor industry, partially offset by higher average selling prices due to a change in product mix. Revenues for the three month period ended March 31, 2002 for the distribution segment were $1.0 million compared with $1.1 million for the comparable period in the prior fiscal year. Gross loss for the three-month period ended March 31, 2002 was $0.3 million compared with a gross profit of $0.1 million for the comparable period in the prior fiscal year. Gross loss as a percentage of revenues was 13% for the three-month period ended March 31, 2002, compared to gross profit as a percentage of revenues of 3.3% for the comparable periods in the prior fiscal year. This decrease in gross profit for the three-month period ended March 31, 2002 was primarily the result of lower revenue for the manufacturing segment of $1.0 million. This was due to lower unit shipments, partially offset by higher average selling prices as a result of a change in product mix. The Company believes that existing cash balances, together with the renewal of existing bank lines, will be sufficient to meet its projected working capital and other cash requirements through 2002. On March 27, 2002, the Company entered into an amended line of credit agreement with two banks that provides for advances up to the lesser of $15.0 million (committed revolving credit line) or the advance rate against qualified accounts receivable. Over advances under this agreement are immediately payable to the lender. At March 31, 2002, borrowings of $10.4 million were less than the advance rate against qualified accounts receivable by $0.2 million. This under advance was available to the Company for borrowing as of March 31, 2002. The Company believes that its existing bank line of credit of $15.0 million, which expires August 15, 2002, will be further extended because it is guaranteed by the Company's principal stockholder, OSE. There can be no assurances, however, that the bank line will be renewed or that lower than expected revenues, increased expenses, increased costs associated with the purchase or maintenance of capital equipment, or other events will not cause the Company to seek more capital, or capital sooner than currently expected. There can be no assurance that such additional financing will be available when needed or, if available, will be available on satisfactory terms. OSE USA (formerly Integrated Packaging Assembly Corporation) receives wafers from its customers, cuts the wafers into individual chips, adds wire leads, and encases each chip in protective plastic, ready for installation into such products as PCs, cars, cameras, and telecommunications equipment. OWENS CORNING: Seeks Approval of Settlement Pact with Bank Group ---------------------------------------------------------------- Owens Corning and its debtor-affiliates move the Court to approve a Settlement Agreement between Owens Corning and the Bank Group comprised of Credit Suisse First Boston (CFSB), as agent, and other banks that are parties to the Standstill Agreement. The Debtors also ask to modify the automatic stay for the limited purpose of permitting the Bank Group to exercise setoff rights against funds frozen in certain bank accounts. J. Kate Stickles, Esq., at Saul Ewing LLP in Wilmington, Delaware, tells the Court the Settlement Agreement was reached after extensive negotiations between the Debtors and the Bank Group. Te Debtors and the Bank Group opted for the Settlement since the issues raised in CFSB's Setoff Motion and in the Debtors' objection are very complex, and the outcome of the litigation, if left to the Court to determine, would be difficult to predict. CFSB had previously filed the Setoff Motion on February 15, 2002 to request relief from the automatic stay to exercise setoff rights against 22 bank accounts of certain Debtors and non-Debtors, totaling approximately $35,000,000, on which the Banks placed an administrative freeze after the commencement of the Debtors' bankruptcy cases. Ms. Stickles anticipates minor, non-material changes to the Settlement Agreement, including possible changes to the precise amounts of the Frozen Accounts, which would result in corresponding changes to the amounts of the Debtors' portion and the Banks' portion. The settlement agreement, nonetheless, will be executed in the near future. The basic terms of the Settlement Agreement include: A) Within five days after the entry of a final Order of the Court, or other court of competent jurisdiction, approving The Settlement Agreement, each bank must wire transfer to CSFB all Frozen Funds (together with all accrued interest thereon) held by such bank from the Petition Date to the date of the entry of the Order net of Frozen Funds held by each such Bank that are subject to a Bilateral Setoff Claim; provided, however, that the rights of CSFB, on behalf of the Banks, with respect to any Frozen Funds withheld pursuant to a Bilateral Setoff Claim are expressly reserved. B) No later than two business days after CSFB receives from the Banks at least $19,000,000, which is the Minimum Bank Transfer Amount, CSFB must wire transfer to Owens Corning the sum of $18,952,893 plus 51.532% of any and all interest accrued on the Frozen Accounts from October 5, 2000 through the date of the entry of the Order. This will constitute the Debtors' Portion. After Owens Corning receives the Debtors' Portion, Owens Corning will distribute the Debtors' Portion among the entities that own the Frozen Accounts and the denominator being the total amount of the Frozen Funds, provided, however, that: (a) the pro rated amount attributable to the Barclays account in the name of Owens Corning Alcopor UK Ltd., the amount of $3,575,3535 will be distributed to IPM, Inc.; and (b) the entire amount of the Wells Fargo-Fibreboard Account will be distributed to Fibreboard Corporation, subject to the claims of the insurance companies described below. The Debtors' Portion of the Frozen Accounts will be free of all claims and interests of the Banks and other parties, provided, however, that the Debtors' Portion will be deemed to include the sum of $1,588,158 from the Wells Fargo Bank, N.A. account of Fibreboard Corporation, #6250018439 (the Wells Fargo-Fibreboard Account), and that part of the Debtors' Portion attributable to such account shall remain subject to the claims of certain insurance companies which have asserted claims, disputed by the Debtors, to receive payments from the Wells Fargo- Fibreboard Account under a prepetition Settlement Agreement with Fibreboard Corporation. Wells Fargo will have no liability to the insurance companies for the claims or for transferring funds to CSFB in accordance with the Settlement Agreement or any order approving this motion. C) In the event that CSFB is unable to wire transfer to the Debtors the Debtors' Portion on or before the close of business on the date seven business days after the Approval Date, due to the fact that CSFB has not received from the Banks collectively the Minimum Bank Transfer Amount, CSFB must immediately notify the Debtors. The Debtors' remedy for the Banks' failure to timely pay the Debtors' Portion will be: (a) The Debtors will be entitled, immediately after the Final Payment Date (as defined in the Settlement Agreement), to file a motion with the Bankruptcy Court to compel each of the Defaulting Banks to comply with the terms of this Agreement, and to hold each such Defaulting Bank to be in contempt of Court for its breach of this Agreement and failure to comply with the Order. (b) The Debtors will be entitled to recover from each of the defaulting Banks the reasonable attorneys' fees and costs incurred by the Debtors in enforcing the Order and the Settlement Agreement. E) Immediately after the entry of an Order and confirmation of Owens Corning's receipt of CSFB's wire transfer of the Debtors' Portion, CSFB, on behalf of the Banks, may exercise the Banks' rights of setoff with respect to the balance of the Frozen Accounts, which in any event will not exceed in the aggregate the sum of $17,825,988 plus 48.468% of all interest accrued on the Frozen Accounts as of the date of the Order. This shall constitute the Banks' Portion. The Banks' Portion will be free and clear of the Debtors' claims and interests and will be subject to the individual setoff claims of any Banks arising under any claim of setoff right under any note, credit facility or other agreement other than under the Credit Agreement or otherwise arising under applicable law, and will be deemed to include the sum of $1,397,548 from these Frozen Accounts: (a) Wells Fargo Bank, N.A. account of Exterior Systems, d/b/a Norandex, #4496801770, in the amount of $479,288.35; (b) Bank One, National Association (Chicago) account of Owens Corning #55-22269, in the amount of $918,259; All bilateral setoff claims, including without limitation the bilateral setoff claims of Wells Fargo and Bank One, National Association (Chicago) against the Frozen Accounts described above, will be deemed to be asserted only against the Banks' Portion and not the Debtors' Portion, and the Debtors' Portion will be free and clear of all such Bilateral Setoff Claims. F) Upon entry of the Order, the Motion of Debtors for Order to Compel Credit Suisse First Boston, as Agent, and Banks to Respond to Information Requests Relevant to and Necessary for Determination of Motion of Credit Suisse Boston, as Agent, for an Order Modifying the Automatic Stay to Permit Setoff of Frozen Funds, will be withdrawn. Ms. Stickles urges the Court to grant the Debtors permission to execute the Settlement Agreement since it is favorable to the Debtors' estates on these grounds: A) It resolves in full CSFB's Motion for an Order Modifying the Automatic Stay to Permit Setoff of Frozen Funds, without the inherent risk of getting a less favorable outcome as a result of litigation; B) The Debtors' estates will be enhanced through the release of the Frozen Funds free of the Banks' setoff claims; C) The terms of the Settlement Agreement are fair and equitable; and D) The issues presented by the Setoff Motion are complex and, absent consensual agreement, would likely cause the Debtors to incur substantial additional legal fees, costs and other expenses, without the benefit of certainty as to the outcome. (Owens Corning Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHYCOR INC: Exclusive Period Remains Intact through July 30 ----------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Southern District of New York, PhyCor, Inc. and its debtor-affiliates sought and obtained an extension of their exclusive periods. The Court gives the Debtors, until July 30, 2002, the continued exclusive right to propose and file their plan of reorganization and, until September 30, 2002, the exclusive right to solicit acceptances of that Plan. PhyCor is a medical network management company that develops and manages independent practice associations of physicians, manages physician hospital organizations, provides contract management services to physician networks owned by health systems, and consulting services to independent medical organizations. The Company filed for chapter 11 protection on January 31, 2002. Kayalyn A. Marafioti, Esq. at Skadden, Arps, Slate, Meagher & Flom LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $28,851,499 and total debts of $338,443,734. PSINET INC: Wants to Sell TX Assets for 11MM+ at Public Auction --------------------------------------------------------------- Stream Realty Acquisition, L.L.C., entered into a Purchase Agreement with Debtor PSINet Realty, Inc. to purchase real property at 1333 Crestside Drive in Coppell, Texas, and then informed the Debtors that it did not intend to proceed on the original terms of the Agreement. Realty subsequently terminated the $10,500,000 Purchase Agreement and the Debtors. Another prospective buyer emerged -- The Depository Trust & Clearing Corporation. Accordingly, the Debtors amend their motion to substitute the DTC for Stream Realty and increase the purchase price to $11,000,000. The Debtors ask the Court to enter two orders relating to the proposed sale to The Depository Trust & Clearing Corporation: * First, the Debtors seek entry of an order approving the payment of a 3% breakup fee to the Buyer as well as other bid protection procedures in advance of the consummation of such sale (the Sale Procedures Order). * Second, the Debtors seek entry of an order approving the sale of the Property to the Buyer under the terms of the Real Property Purchase and Sale Agreement between PSINet Realty Inc. (the Seller) and the Buyer, dated May 21, 2002 (the Purchase Agreement), free and clear of all liens, claims, encumbrances, rights and interests (other than Permitted Exceptions) or to the highest and best bidder (the Sale Order). Pursuant to the Purchase Agreement, the Seller agrees to sell all of its right, title and interest in and to the Property to the Buyer for $11,000,000 subject to certain usual and customary adjustments as specified in the Purchase Agreement. The Sale is also subject to the Buyer being satisfied with the results of its due diligence review. As previously reported, the Property consists of a building of approximately 80,000 square feet of rentable space improved with raised flooring, suppplementai HVAC and redundant fiber network and power to make it suitable for use as a hosting center (the Building), together with approximately 6.527 acres of land, located at 1333 Crestside Drive, Coppell, Texas. The Buyer has placed into escrow cash in the amount of $1,000,000 as the deposit. The material provisions of the Purchase Agreement provide that if the Buyer is satisfied with its due diligence (after a twenty day period that commenced on May 21, 2002), then the entire deposit will be paid to the Seller if the Buyer breaches the Purchase Agreement. If the Court approves the sale of the Property to the Buyer pursuant to Section 363 of the Bankruptcy Code free and clear of all liens, claims, encumbrances, rights and interests (other than Permitted Exceptions) and the closing occurs, then the deposit will be credited against the Purchase Price on the Closing Date. If the Buyer notifies the Seller prior to the conclusion of the due diligence period that it declines to proceed to closing based on its due diligence review because of an environmental report that is not satisfactory to the Buyer, a structural defect in the Building, defects in the infrastructure facilities serving the Building which would cost more than $200,000 to cure or liens or encumbrances on the Property other than Permitted Exceptions or encumbrances of which the Property would be conveyed free and clear by the Sale Order, then the escrow agent will return the entire deposit to the Buyer. If the Buyer notifies the Seller prior to the conclusion of the due diligence period that it declines to proceed to closing for any reason other than those set forth in the preceding sentence, then the escrow agent will return the deposit, less the sum of $200,000, to the Buyer and will disburse $200,000 to the Seller. The Seller will only make minimal, customary representations and warranties, which are set forth in the Purchase Agreement. Sale Procedures To obtain the greatest value for the Property, the Debtors intend to expose the Property to sale at a public auction. For this purpose, the Debtors request entry of a Sale Procedures Order: (a) authorizing and scheduling a bidding deadline (set for June 11, 2002, at 4:00 p.m. prevailing Eastern time) and an Auction to be held on June 12, 2002, at 10:00 a.m. Eastern time if one or more Competing Bids made in compliance with the Bidding Procedures are received; (b) scheduling a Sale Hearing to be held on or about June 13, 2002, at 9:45 a.m.. Eastern time (depending on the Court's availability) to consider the Sale Order; (c) approving the Bidding Procedures, including a breakup fee; and (d) approving the manner of notice of the Sale, the bidding deadline, the Auction, the Bidding Procedures and the Sale Hearing. To help solicit higher and better offers, the Debtors have retained The Staubach Company - Northeast to help them, among other things, actively market for sale certain of the Debtors' real property assets, including the Property. At the Sale Hearing, the Debtors will request the Court to enter the Sale Order either (i) authorizing the Debtors, if no Qualified Competing Bids have been submitted, to consummate the Purchase Agreement with the Buyer, or (ii) confirming the results of the Auction and approving the sale of the Property to the bidder who has made the highest and best offer, and granting related relief. Bidding Procedures * Qualified Competing Bid The Debtors will consider only Competing Bids that are made in compliance with the Bidding Procedures. To be qualified, a Competing Bid must: (a) be submitted (with a copy to the Committee and the Buyer) on or before the Bidding Deadline; (b) be for the purchase of the entire Property; (c) be in writing in the form of the Purchase Agreement marked to show all changes thereto; and (d) provide for the payment to the Debtors of at least $11,380,000 in cash (the Minimum Overbid) (which reflects the sum of the Buyer's Purchase Price of $11,000,000, plus the Breakup Fee of $330,000, plus an overbid of $50,000). * Auction If a Qualified Competing Bid is submitted prior to the Bidding Deadline, the Debtors will commence the Auction on June 12, 2002, at 10:00 a.m. Eastern time at the offices of Wilmer, Cutler & Pickering, 1600 Tysons Boulevard, 10th Floor, Tysons Corner, Virginia. Only the Buyer and any prospective buyer who has timely submitted a Qualified Competing Bid will be entitled to participate in the Auction. The Buyer will be entitled to make an overbid and to credit bid the amount of the Breakup Fee against any such overbid. At the Auction, bidding will begin with the highest Qualified Competing Bid timely submitted on or before the Bidding Deadline. All subsequent overbids must include additional consideration of at least $50,000 more than the previous bid. The Auction will not conclude until each participating bidder has had the opportunity to submit any additional overbid with full knowledge of the existing highest bid. The Debtors will determine in good faith whether a submitted Competing Bid complies with the Bidding Procedures and whether the Purchase Agreement or a submitted Qualified Competing Bid constitutes the most favorable transaction for the Debtors' estates. The most favorable bid as determined by the Debtors will be submitted to the Court for review and approval at the Sale Hearing. * Breakup Fee. Pursuant to the Bidding Procedures, the Seller shall pay to the Buyer the Breakup Fee in an amount equal to $330,000, which constitutes 3% of the Purchase Price if: (1) the Seller sells the Property to another bidder at or following the Auction pursuant to a Qualified Competing Bid, and (2) the Buyer was not, as of the date set by the Bankruptcy Court for the Auction, itself in breach of any material provision of the Purchase Agreement as to entitle the Debtors not to proceed to closing, and (3) the Buyer's right to terminate the Purchase Agreement has expired or been waived by the Buyer and the Buyer had not, on or prior to the date set by the Bankruptcy Court for the Auction, terminated the Purchase Agreement. Such amount shall be payable within 5 business days of the closing of a sale to the bidder submitting such Qualified Competing Bid. Although the Debtors seek approval of the Breakup Fee at a time when the Buyer is still conducting due diligence, the Buyer will not be entitled to the Breakup Fee unless its due diligence condition has expired or been waived. The Debtors submit that the Breakup Fee is the result of extended, good faith, arm's-length bargaining between the Debtors and the Buyer. The Debtors agreed to the Breakup Fee because, in their considered business judgment, the Debtors believed that the availability of this payment provides a net benefit to the Debtors' estates and that a transaction as favorable could not have been reached without it. The Buyer has indicated that it is unwilling to proceed with the Purchase Agreement unless the Breakup Fee is approved. The Breakup Fee is fair and reasonable, particularly in view of the Buyer's efforts to date to market the Property and the stalking horse risk to which public dissemination of its valuation now exposes it, the Debtors represent. The Buyer's $11,000,000 Purchase Price, once the due diligence conditions are waived or expire, will establish a floor against which other bidders can base their bids without conducting their own expensive due diligence. The Debtors believe that other bidders interested in the Property will be more inclined to bid, and to bid higher than they otherwise would. * Notice The Debtors propose to serve the Motion, the Purchase Agreement, the proposed Sale Order and the Sale Procedures Order on or before June 4, 2002, by overnight courier and/or first-class mail, postage prepaid, upon (i) the Office of the United States Trustee for the Southern District of New York; (ii) counsel for the Buyer; (iii) counsel for the Committee; (iv) all entities (or their counsel) known to have asserted any lien, claim, right of refusal, encumbrance or other interest of any kind whatsoever in or upon the Property; (v) all federal, state and local regulatory or taxing authorities or recording offices which have a reasonably known interest in the relief requested by the Motion; (vi) all parties known to have expressed a bona fide interest in acquiring the Property; (vii) the Internal Revenue Service; (viii) all entities who have filed a notice of appearance and request for service of papers in the Debtors' cases; and (ix) each indenture trustee of the Debtors. The Debtors submit that such notice constitutes good and sufficient notice under the circumstances. The Debtors further propose, pursuant to Bankruptcy Rule 9014, that objections, if any, to the Sale of the Property must be filed with the Court so as to be received on or before 4:00 p.m. on June 11, 2002 by (i) counsel to the Debtors; (ii) counsel to the Buyer; (iii) counsel for the Committee; and (iv) the Office of the United States Trustee. The Debtors submit that their decision to sell the Property pursuant to the Purchase Agreement is an exercise of reasonable business judgment and in the best interests of the Debtors' estates and creditors. The Property is currently used as a hosting center for the Debtors. The Debtors have determined, in their business judgment, that the Purchase Price exceeds the value to be realized if the Debtors were to continue operating this facility as a hosting center. The Debtors believe that a sale of the Property is necessary for their reorganization. The Debtors believe the Bidding Procedures will promote active bidding that will result in the highest and best offer the marketplace can offer. The Debtors believe that the proposed schedule balances the goal of providing ample opportunity for prospective bidders to formulate their highest and best bids, with the counterweighing goal of selling the Property expeditiously to maximize the value obtained for the benefit of the Debtors' estates and their creditors. Moreover, the schedule conforms with the timeframes negotiated in the Bidding Procedures and Purchase Agreement, under which, among other things, 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 Debtors submit that the conduct of the Sale is also consistent with the timetable for confirmation and effectiveness of the Debtors' plan of reorganization. Pursuant to Rule 6004(g) of the Bankruptcy Rules, unless the court orders otherwise, all orders authorizing the sale of property pursuant to Section 363 of the Bankruptcy Code are automatically stayed for ten days after entry of the order. The purpose of Rule 6004(g) is to provide sufficient time for an objecting party to request a stay pending appeal before the order can be implemented. Because the Debtors believe that a prompt sale will aid in minimizing administrative expenses of the estates, and they need to close this Sale as soon as possible after all closing conditions have been met or waived, the Debtors request that the Court eliminate the 10-day stay period under Bankruptcy Rule 6004(g) or, in the alternative, if an objection to the Sale is filed, reduce the stay period to the minimum amount of time needed by the objecting party to file its appeal in order to permit the sale to close as provided under the Agreement. (PSINet Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) QWEST COMMS: Expresses Disappointment over Moody's Downgrade ------------------------------------------------------------ Qwest Communications International Inc. said it was disappointed by Moody's decision to lower the company's long-term corporate credit rating. Qwest executive vice president and CFO, Robin R. Szeliga said, "Although we are disappointed with the actions taken by Moody's and S&P, these firms traditionally tend to follow one another on ratings adjustments. We are concerned that the adjustment by Moody's, as with S&P, is not based on any new information. However, unlike S&P, Moody's has recognized the strength and stability of our core local services business with a Baa3 rating, which is still investment grade." Given Qwest's current debt structure, the company believes this downgrade will have no substantial impact on its operations. Qwest has stable cash flows from its local service operations, which contribute nearly 80 percent of revenue and more than 90 percent of adjusted EBITDA. The company also said that the downgrade does not result in a default of the syndicated credit facility or any other indentures. The entire long-distance sector has been severely impacted by challenging economic and market conditions over the last 12 months. To better address these current market challenges, the company is taking steps to bring operational costs more in line with current demand for these types of services and to increase its focus on the enterprise market. On a conference call last week, the company confirmed that it expects to be cash flow positive for the second quarter and the remainder of 2002 and that it continues to make progress in its efforts to reduce its debt, including the sale of some of its non-strategic assets. Qwest Communications International Inc. (NYSE: Q) is a leader in reliable, scalable and secure broadband data, voice and image communications for businesses and consumers. The Qwest Macro Capacity(R) Fiber Network, designed with the newest optical networking equipment for speed and efficiency, spans more than 190,000 miles globally. For more information, please visit the Qwest Web site at http://www.qwest.com RESIDENTIAL ACCREDIT: Fitch Places 2 Bonds on Rating Watch Neg. --------------------------------------------------------------- Fitch Ratings places the following Residential Accredit Loans Inc. (RALI) mortgage pass-through certificates on Rating Watch Negative: --Series 1999-QS15 class B-2 'B'; --Series 2000-QS6 class B-2 'B'. These actions are taken due to the high level of delinquencies in relation to the applicable credit support levels as of the May 25, 2002 distribution. RIVERWOOD INT'L: Commences Cash Tender Offers For Senior Notes -------------------------------------------------------------- Riverwood International Corporation announced it has commenced cash tender offers to purchase any and all of its outstanding 10-7/8% Senior Subordinated Notes due 2008 (CUSIP No. 769507AJ3), 10-5/8% Senior Notes due 2007 issued in July 1997 (CUSIP No. 769507AM6) and 10-5/8% Senior Notes due 2007 issued in June 2001 (CUSIP No. 769507AQ7). In conjunction with the offers, Riverwood is soliciting consents to proposed amendments to the indentures governing each issue of the Notes. The proposed amendments to each indenture would eliminate substantially all of the restrictive covenants, certain repurchase rights and certain events of default and related provisions contained in such indenture. Holders who tender Notes pursuant to an offer on or prior to the applicable consent expiration date are obligated to consent to the related proposed amendments. Holders that consent to the proposed amendments with respect to an issue of notes are required to tender their Notes in the related offer and may not revoke such consent without withdrawing the previously tendered Notes to which such consent relates. The tender offer consideration to be paid for each validly tendered Note will be equal to (i) with respect to the Senior Subordinated Notes, $1,040.78 per $1,000 principal amount of the Senior Subordinated Notes and (ii) with respect to each issue of the Senior Notes, $1,053.13 per $1,000 principal amount of the Senior Notes, plus, in each case, accrued and unpaid interest up to, but not including, the relevant date of payment for Notes accepted for purchase. Each holder of Notes who validly consents to the proposed amendments with respect to such issue of Notes on or prior to the consent expiration date for such Notes will be entitled to a consent payment in the amount of $2.50 per $1,000 principal amount of Notes with respect to which consents are delivered. Each offer will expire at 12:00 midnight, New York City time, on Wednesday, June 26, 2002, unless extended. Each solicitation will expire at 5:00 P.M., New York City time, on Friday, June 14, 2002, unless extended, if at least one day prior to such date Riverwood has made a public announcement that it has received the requisite consents with respect to such issue of Notes, or on the first date thereafter at least one day prior to which Riverwood has received such consents and has made a public announcement regarding such receipt. Holders who tender their Notes after the applicable consent expiration date will not be entitled to receive the consent payment. Tendered Notes may be withdrawn and related consents may be revoked at any time on or prior to the consent expiration date for the related offer, but not thereafter. Riverwood is making a separate offer with respect to each issue of Notes, and no offer is conditioned on the consummation of any other offer. Consummation of each offer is subject to certain conditions, including (1) the consummation of the proposed initial public offering of common stock by Riverwood's parent, Riverwood Holding, Inc., and the consummation of certain other anticipated financing transactions, in each case on terms satisfactory to Riverwood, and (2) the receipt of the requisite consents with respect to the applicable proposed amendments and the execution of the related supplemental indenture to the indenture governing the relevant issue of Notes. Subject to applicable law, Riverwood may, in its sole discretion, waive or amend any condition to any offer or solicitation, or extend, terminate or otherwise amend any offer or solicitation. Deutsche Bank Securities Inc. and J.P. Morgan Securities Inc. are the dealer managers for the offers and solicitation agents for the solicitations. MacKenzie Partners, Inc. is the information agent and State Street Bank and Trust Company is the depositary in connection with the offers and solicitations. The offers and solicitations are being made pursuant to an Offer to Purchase and Consent Solicitation Statement, dated May 30, 2002, and the related Consent and Letter of Transmittal, which together set forth the complete terms of the offers and solicitations. Copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be obtained from MacKenzie Partners, Inc. at (800) 322-2885. Additional information concerning the terms of the offers and the solicitations may be obtained by contacting Deutsche Bank at (212) 469-7772 or JPMorgan at (800) 831-2035. Riverwood, headquartered in Atlanta, Georgia, is a leading provider of paperboard packaging solutions and paperboard to multinational beverage and consumer products companies. As previously reported, Standard & Poor's affirmed its B rating on Riverwood International's Credit Rating due to the company's increased indebtedness. SAFETY-KLEEN: Clean Harbors Completes Due Diligence Process ----------------------------------------------------------- Clean Harbors, Inc. (Nasdaq: CLHB), a leading provider of environmental services throughout the United States and Puerto Rico, has received commitments from various financial entities to finance the proposed acquisition of the Chemical Services Division of Safety-Kleen. In accordance with its February 2002 definitive agreement with Safety-Kleen, Clean Harbors has successfully completed all of the steps required to move forward as a "Qualified Bidder" including remitting a $3 million deposit. The agreement remains subject to U.S. Bankruptcy Court and final regulatory approvals. Based upon a thorough due diligence review, Clean Harbors reaffirmed that it remains comfortable with its bid to acquire CSD/SK for $46.3 million in cash and the assumption of environmental liabilities valued at approximately $265 million. In addition, Clean Harbors has secured a financial assurance program from a major insurance company to cover the permitted facilities being acquired from CSD/SK. A number of states and the U.S. EPA require that an acceptable form of financial assurance be in place before any facility permits can be transferred. Clean Harbors has notified each state where a CSD facility will be acquired that it is requesting a permit transfer, effective on the date when the transaction is closed. On April 30, 2002, Clean Harbors announced that the U.S. Justice Department completed its review of the Company's proposed acquisition under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and allowed the waiting period to expire without further action. Based in Columbia, South Carolina, Safety-Kleen is one of the nation's largest environmental services companies, and is operating under Chapter 11 protection in U.S. Bankruptcy Court for the District of Delaware. On May 15, 2002, a Clean Harbors' competitor, Onyx North America Corp., a subsidiary of Vivendi Environnement, filed a motion with the Bankruptcy Court objecting to the proposed sale of CSD's assets to Clean Harbors and sought a delay in the bidding deadline. The Court did not act upon the petition to delay the bid deadline and set June 10, 2002 as the date when it would hold a hearing on the objection by Onyx. On May 23, 2002, Safety-Kleen filed its reply with the Court asking the Court to deny the Onyx petition in its entirety. The timeline established by the Court in its March 8, 2002 Bidding Procedures Order and in response to the Onyx objection is as follows: -- May 30, 2002: Deadline for qualified bidders to submit bids. -- June 3 through June 11, 2002: If there are qualified bids, in addition to the existing bid of Clean Harbors, Safety- Kleen will hold an auction during this period. -- June 10, 2002: Bankruptcy Court scheduled to hear the objections of Onyx to the sale process. -- June 13, 2002: Bankruptcy Court scheduled to hold a sale hearing to determine the winning bid. Clean Harbors, Inc. through its subsidiaries provides a wide range of environmental and waste management services to a diversified customer base including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous governmental agencies. Within its national footprint, the Company currently has service and sales offices located in 26 states and Puerto Rico, and operates 11 waste management facilities strategically located throughout the country. For more information, visit our Web site at http://www.cleanharbors.com SECURITY ASSET: Pursuing Debt Financing to Maintain Operations -------------------------------------------------------------- Results of operations of Security Asset Capital Corporation for the three months ended March 31, 2002 and 2001 show revenue for the three months ended March 31, 2001 was $11,146 as compared to $120,135 for 2001. The decrease in revenues resulted from the sale of SAP, the slowdown within the United State's economy, in particular collections following the events of September 11, 2001, the decrease in Loan Portfolio sales due to management's emphasis on development of the Debt Registry and fund raising efforts. Net loss for the three months ended March 31, 2002 was $527,953 as compared to 941,877 for 2001, a decrease of $413,924 when compared to the first three month of 2001. This decrease is primarily due to the decline in general and administrative expenses resulting from the issuance of common stock for services, and the decrease in interest expense. The Company plans to continue funding its operations and proceeds from additional debt and equity capital offerings. There is no assurance that management will be successful in these endeavors. Security Asset Capital Corporation operates through its wholly owned subsidiaries. Security Asset Management, Inc. acquires, manages, collects and markets distressed consumer credit portfolios for their own account and third parties. Security Asset Properties, Inc. owns and operates 14 income producing residential properties in San Diego County, California. Broadband Technologies, Inc. was capitalized by the contribution from the Company of a patent and certain patents pending and licensing for direct online full screen video technology. TheDebtTrader.com holds certain technology and rights related to an online market place for buyers and sellers of distressed debt portfolios, internally known as theDebtTrader.com. The Debt Registry, uses the acquired broadband technology, develops it further and applies it to the registration and tracking of individual debt accounts sold by lending institutions to third parties. SIMMONS: S&P Raises Corp. Credit & Secured Debt Ratings to BB- -------------------------------------------------------------- Standard & Poor's raised its corporate credit and secured debt ratings on U.S. bedding manufacturer Simmons Co. to double-'B'- minus from single-'B'-plus, as a result of improved operating performance. At the same time, the subordinated debt rating was raised to single-'B' from single-'B'-minus. The outlook for Atlanta, Georgia-based Simmons is stable. About $288 million in total debt was outstanding as of March 30, 2002. "The upgrade reflects improved operating performance from stronger pricing, market share gains, and reduced debt," said Standard & Poor's credit analyst Martin Kounitz. "Simmons' good business position and stable cash flow should result in credit measures consistent with the rating," he added. The revised ratings are based on Simmons's leveraged financial profile, partially offset by its favorable position in the stable, but highly competitive, bedding market and its stable cash flow generation. The company's good business position stems from its well recognized brand names, strong relationships with retailers, and broad distribution. Revenues have grown over the past couple of years due to increased marketing efforts and the solid acceptance of Simmons' brands, particularly the Beautyrest line of no-flip mattresses. Management's strategy is to continue to gain market share by emphasizing premium and new products on which it can increase prices, improving profitability. The company regards manufacturing as a means to gain competitive advantage. Through its Zero Waste Initiative, Simmons has improved profitability despite a weak retail environment. Simmons is the second-largest U.S. bedding manufacturer, with over a 15% market share. SMARTSERV: Asks For Review Of Nasdaq Delisting Determination ------------------------------------------------------------ Smartserv Online, Inc. (Nasdaq: SSOL) announced that on May 23, 2002, it received a Nasdaq Staff Determination indicating that the Company fails to comply with the Net Tangible Assets requirements for continuing listing set forth in Marketplace Rule 4450(a)(3) of the NASD. Therefore, its securities are subject to delisting from The Nasdaq National Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. A date for this hearing has not yet been established, and the Company has been advised that NASDAQ will not take any action to delist its common stock pending the results of the hearing. There can be no assurance the Panel will grant the Company's request for continued listing. SmartServ recently announced that is has signed an agreement to provide the Company with an initial round of equity financing, consisting of the sale of common stock and warrants to purchase additional common stock. The parties expect to close and complete the financing upon receipt of Nasdaq approval and the satisfaction of customary closing conditions. This financing is the first of several contemplated financings that in the aggregate should move SmartServ back into compliance with Nasdaq National Market listing requirements. There is no assurance, however, that the Company will be able to complete all or any of the contemplated financings or that the net proceeds of such financings will be sufficient to comply with Nasdaq National Market listing requirements. SmartServ (Nasdaq: SSOL), founded in 1993, is a B2B wireless technology leader with a focus on providing financial institutions and network service providers with potent, real- time financial applications and transaction routing systems for virtually any portable device, such as PDAs, RIM and mobile handsets, over any wireless network, including GSM, CDMA and the future 3G. SmartServ's products include sophisticated engines capable of routing high-volume transactions, alerts, real-time global market quotes, and news to multiple destinations; proprietary W2W Middleware(TM) that configures content and applications for a wide array of devices and networks; and a suite of applications designed so that businesses and their customers can access real-time or streaming information in order to make critical financial decisions. Visit SmartServ at http://www.smartserv.com TECSTAR: Creditors' Committee Taps Young Conaway as Attorneys ------------------------------------------------------------- The Statutory Committee of Unsecured Creditors in the chapter 11 cases of Tecstar, Inc. and Tecstar Power Systems, Inc., sought and obtained permission from the U.S. Bankruptcy Court for the District of Delaware to employ Young Conaway Stargatt & Taylor, LLP as their counsel, effective February 19, 2002. As Counsel, Young Conaway is expected to: a) consult with the Committee, the Debtors, and the U.S. trustee concerning the administration of these chapter 11 cases; b) review, analyze and respond to pleadings filed with this Court by the Debtors and to participate in hearings on such pleadings; c) investigate the acts, conduct, assets, liabilities, and financial condition of the Debtors, the operation of the Debtors' businesses, and any matters relevant to these chapter 11 cases in the event, and to the extent, required by the Committee; d) take all necessary actions to protect the rights and interests of the Committee, including negotiations and preparation of documents relating to any plan of reorganization and disclosure statement; e) represent the Committee in connection with the with the exercise of its powers and duties under the Bankruptcy Code and in connection with these chapter 11 cases; f) perform all other necessary legal services in connection with these chapter 11 cases. The professionals presently designated to represent the Committee and their current standard hourly rates are: a) Robert Brady $400 per hour b) Brendan Linehan Shannon $380 per hour c) Maribeth L. Minella $220 per hour d) David M. Saxman $120 per hour (paralegal) Tecstar, Inc. manufactures high-efficiency solar cells that are primarily used in the construction of spacecraft and satellite. The Company filed for chapter 11 protection on February 07, 2002. Tobey M. Daluz, Esq. at Reed Smith LLP and Jeffrey M. Reisner at Irell & Manella LLP represent the Debtors in their restructuring efforts. When the company filed for protection from its creditors, it listed assets of over $10 million and debts of over $50 million. TELEGLOBE: Seeking Authority to Pay Critical Vendors' Claims ------------------------------------------------------------ Teleglobe Communications Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware for an authority to pay, in their sole discretion, the prepetition claims of certain critical vendors and service providers in the ordinary course of the Debtors' businesses. Network Provider Claims In connection with the day-to-day operation of their businesses, the Debtors rely on a number of network providers to: a) permit the Debtors access to and use of Indefeasible Right of Use and leased telecommunications circuits that form the basis of the Debtors' worldwide network; b) repair and maintain terrestrial and subsea cable system and satellite capacity provided to the Debtors; and c) provide and service certain crucial network equipment necessary to operate these circuits. If the Debtors fail to pay the Network Providers Claim, the Debtors believe that many Network Providers may stop providing their essential goods and services to the Debtors for their international network facilities. This would cause a substantial disruption to the Debtors' telecommunications network, cutting service to entire areas and damaging the Debtors' reputation. Customers would then lose their confidence on the Debtors, undermining their ability to generate ongoing operating revenue. The Debtors also point out that no other provider can supply the goods or services provided by the Network Providers. More importantly, the equipment/specifications on each system is proprietary. Even if viable alternative network providers were available for some goods and services, the time and cost necessary to identify these replacement network providers and migrate the Debtors' network would cause a significant disruption to their operation. The Debtors estimate that as of the Petition Date, the aggregate amount of the Network Provider Claims is approximately $20 million. Specialized Software Companies The Debtors have retained certain specialized software companies to develop and maintain software systems that allow the Debtors to monitor and operate their network and keep track of traffic for billing purposes. The Debtors could not retain other software companies with equal understanding of their system, nor could they retain alternative vendors without incurring substantial expense and delay. Without these systems, the Debtors ability to track the performance of their network and provide their customers and vendors with accurate information would be severely hampered. As of the Petition Date, the aggregate amount of Specialized Software Company does not exceed $1.5 million. International Vendors To effectively operate their international communications network, the Debtors purchase a variety of critical goods and services from international vendors and service providers. If these International Vendor Claims are not paid, there is a significant risk that certain of the International Vendors will cease providing the services necessary to maintain operation of the Debtors' international network, thereby: -- disrupting the Debtors' worldwide and data businesses, and -- damaging the Debtors' relationships with their largely international customer base. More importantly, it is likely that International Vendors may attempt to seize the Debtors assets located outside of Canada or the United Kingdom, since it is difficult for the United States Court to enforce the automatic stay against entity outside the United States. The Debtors aggregate amount of the International Vendor Claims is pegged at $2.3 million. The Debtors further claim that they have sufficient cash reserves, together with anticipated access to sufficient DIP financing to pay all Critical Vendor Claims, as they become due in the ordinary course of their businesses. Teleglobe Communications Corporation is a wholly-owned indirect subsidiary of Teleglobe Inc., a Canadian Corporation. Teleglobe currently provides services in more than 220 countries via a fully integrated network of terrestrial, submarine and satellite capacity. During the calendar year 2001, the Teleglobe Companies generated consolidated gross revenues of approximately $1.3 billion. As of December 31, 2001, the Teleglobe Companies has approximately $7.5 billion in assets and approximately 44.1 billion in liabilities on a consolidated book basis. The Debtors filed for chapter 11 protection on May 28, 2002. Mark D. Collins, Esq., Patrick Michael Leathem, Esq., Daniel J. DeFranceschi, Esq. at Richards Layton & Finger, PA represent the Debtors in their restructuring efforts. TELIGENT: Seeks to Extend Exclusivity & Lease Decision Periods -------------------------------------------------------------- Teligent Inc. and its debtor-affiliates seek extensions of their exclusive periods and their lease decision period. The Debtors want to retain the exclusive right to file a plan of reorganization plan through June 15, 2002, and the exclusive right solicit acceptances of that plan through August 15, 2002. The Debtors also seek to stretch their time period to determine which unexpired leases must be assumed, assumed and assigned, or rejected through August 15, 2002. The Exclusive Periods The Debtors assert that that there is sufficient cause to grant the requested extension of the Exclusivity Periods because the Debtors have continued to make substantial progress in these chapter 11 cases. The Debtors remind the Court that they have been engaged in concerted discussions over the last several months with their major constituents on the terms and structure of a liquidating chapter 11 plan of reorganization. While the Debtors already filed their Joint Plan, they seek a brief extension of their Exclusive Periods out of an abundance of caution. The Lease Decision Period The Debtors tell the Court that they have made substantial progress with respect to their Unexpired Leases since the Last Extension, but need additional time to determine which Unexpired Leases will be part of their restructuring. As part of the continued reconfiguration of their businesses, the Debtors have made substantial progress in resolving the remaining Unexpired Leases. Since the last extension, the Debtors have identified and rejected approximately 100 Unexpired Leases pursuant to the expedited lease rejection procedure approved by this Court. There still remain approximately 137 undetermined Unexpired Leases. Majority of these Unexpired Leases is directly related to and necessary for the Debtors' fixed wireless operations. As a result, the Debtors will need additional time to determine whether these remaining Unexpired Leases will be assumed or rejected, with any determination likely to be made in conjunction with the Debtors' ultimate resolution of these cases. Teligent, Inc., a provider of broadband communication services offering business customers local, long distance, high-speed data and dedicated Internet services over its digital SmartWave local networks in major markets throughout the United States, filed for chapter 11 protection on May 21, 2001. James H.M. Sprayregen, Esq., Matthew N. Kleiman, Esq. and Lena Mandel, Esq. at Kirkland & Ellis represent the Debtors in their restructuring effort. When the Company filed for protection from its creditors, it listed $1,209,476,000 in assets and $1,649,403,000 debts. TIMCO AVIATION: March 31 Balance Sheet Upside-Down by $82 Mill. --------------------------------------------------------------- TIMCO Aviation Services, Inc., formerly known as Aviation Sales Company, is a Delaware corporation that, through its subsidiaries, provides aircraft maintenance, repair and overhaul services to commercial passenger airlines, air cargo carriers, aircraft leasing companies, maintenance and repair facilities and aircraft parts redistributors throughout the world. During 2001, the Company sold one of its MR&O operations. On February 28, 2002, the Company completed a significant restructuring of its capital and equity, including a note exchange and rights offering. Concurrent with the completion of the note exchange and rights offering, the Company changed its capitalization by increasing the number of its authorized shares of common stock from 30.0 million shares to 500.0 million shares and by reducing the number of its issued and outstanding shares of common stock by converting every ten shares of its issued and outstanding common stock into one share. Additionally, the Company changed it corporate name from "Aviation Sales Company" to "TIMCO Aviation Services, Inc." On May 6, 2002 the Company entered into an agreement to settle a securities class action lawsuit previously filed against it and certain of its former directors and officers in the United States District Court for the Southern District of Florida. Three Months Ended March 31, 2002 and 2001 Operating revenue for the three months ended March 31, 2002 decreased $24.1 million, or 29.5%, to $57.5 million, from $81.6 million for the three months ended March 31, 2001. Operating revenue for the first quarter of 2001 included $21.4 million from facilities and operations that were closed or sold in 2001. Without the revenue from these facilities and operations, comparative 2001 three-month revenue would have been $60.2 million. The decrease in revenue is primarily attributable to decreased revenue from the Company's heavy airframe maintenance operations. This decrease was generally caused by a reduction in market opportunities due to adverse market conditions, which have caused many of the Company's customers to delay maintenance on their aircraft or park older aircraft maintained by it due to rising fuel prices and general economic conditions. In addition, revenue decreased due to the sale of the Caribe MR&O operation in the second quarter of 2001, the consolidation of TIMCO's Winston Salem, North Carolina heavy airframe maintenance facility into its Greensboro, North Carolina operations and the closure of its Oscoda operations. It was also impacted by competitive conditions in the marketplace, which experienced substantial overcapacity throughout 2001, causing TIMCO to increasingly use fixed pricing on many of its MR&O contracts. Gross profit increased $6.8 million to $6.2 million for the three months ended March 31, 2002, compared with a gross loss of $0.6 million for the three months ended March 31, 2001. This increase is due primarily to improved operating efficiencies, resulting in a higher revenue realization per labor hour, and cost reductions achieved through consolidation of operations in addition to company-wide salary and benefit reductions in April 2001. Gross profit as a percentage of operating revenues increased to 10.9% for the three months ended March 31, 2002, from a loss of 0.7% for the three months ended March, 2001. Loss from continuing operations for the three months ended March 31, 2002 was $6.7 million, compared to a loss of $15.5 million for the three months ended March 31, 2001. As of March 31, 2002, the Company had outstanding indebtedness of approximately $183.3 million (excluding outstanding letters of credit of $12.1 million), of which $47.2 million was senior debt that matures in July and August 2002, including amounts due under the TROL financing, which is now characterized as a capital lease, and the remainder of which was other indebtedness. TIMCO indicates that it does not anticipate that it will be able to pay its senior debt when it matures and, accordingly, is actively negotiating to refinance all of its currently outstanding senior debt. Its ability to make payments of principal and interest on outstanding debt will depend upon future operating performance, which will be subject to economic, financial, competitive and other factors beyond the Company's control. While TIMCO had a negative net worth of $86.2 million at March 31, 2002, it includes as a liability $115.8 million in New Notes. While the Company has the right, but not the obligation to redeem the New Notes for cash and equity, other than in connection with a change in control, it will never be obligated to make any cash payments to the holders of the New Notes. As such, had its New Notes been converted into common stock as of March 31, 2002, its pro-forma stockholders' equity would have been $29.6 million. UNITED DEFENSE: Fitch Affirms Senior Secured Facilities at BB ------------------------------------------------------------- Fitch Ratings has affirmed its 'BB' rating on United Defense Industries' senior secured credit facilities, and has revised the Rating Outlook to Stable from Positive. On May 28th, United Defense announced the acquisition of U.S. Marine Repair for $316 million, to be financed with $300 million in bank debt and $16 million in cash. UDI bought USMR from The Carlyle Group, which is also the largest shareholder of UDI. Fitch's actions consider the impact of both the USMR acquisition and the likely cancellation of the U.S. Army's Crusader mobile artillery program. UDI's ratings are supported by the benefits of the USMR acquisition, strong free cash flow, a track record of debt reduction, adequate post-acquisition credit protection measures and solid competitive positions in several defense markets. Fitch also notes UDI's improved financial flexibility resulting from the IPO last December. Concerns center on the potential for additional acquisitions, the uncertainty surrounding the Crusader program, higher debt levels post-acquisition, and the uncertainty of UDI's position in the U.S. Army's transformation plans. Fitch also notes UDI's exposure to interest rate changes as a result of its floating rate debt, which should total approximately $723 million after the USMR transaction closes. This interest rate exposure is partially mitigated by $250 million in interest rate swaps and loan pricing reductions as debt is lowered. The revised Outlook is based on higher debt levels and the uncertainty surrounding the likely cancellation of the Crusader program. While UDI's credit statistics should steadily improve after the acquisition as debt is reduced with free cash flow, the improvement will not be as strong as Fitch estimated before discounting the contribution from Crusader. USMR is the leading private-sector provider of ship repair, maintenance and modernization services to the U.S. Navy (USN), and a leading provider of these services to other U.S. defense- related agencies and commercial customers. USMR provides a range of services from standard topside ship repair to full dry-dock services at six strategically located ship repair facilities in the largest USN homeports. USMR's cash flow is stable, with growth prospects tied to the aging of the USN fleet and continued high operating tempo. Last twelve month sales and EBITDA at USMR were $432 million and $48 million, respectively. The USMR acquisition complements and expands UDI's existing Naval business, which generated sales of approximately $320 million in 2001. The acquisition will allow UDI to service its customers' vessels over the full ship life cycle. Fitch believes that integration risks are minimal given little overlap in the two businesses, retention of USMR's management team, and some overlap on the Board of Directors. The transaction also improves UDI's revenue mix, with pro forma naval-related revenues accounting for more revenues than pro forma Army-related revenues, even including Crusader revenues. UDI estimates pro forma leverage (debt to EBITDA) post- acquisition will be 3.3x, declining to 2.1x by the end of 2003. UDI's projections do not rely on cost savings or synergies. Fitch has evaluated the combined company under a more conservative set of assumptions than those used by UDI, including a significant reduction in Crusader contributions and much lower debt reduction. With these conservative assumptions, Fitch estimates that UDI will have credit protection measures within the 'BB' category, and credit quality should improve as debt is reduced. Fitch notes that UDI has consistently repaid debt ahead of schedule since the 1997 LBO. Acquisitions are a part of UDI's strategic plan, and future transactions could negatively affect credit quality. However, Fitch believes the company will digest the USMR acquisition before taking on another target, and the potential for secondary equity offerings partially mitigates the risk of higher acquisition-related debt levels. However, additional debt- financed transactions within the next 6-12 months will require Fitch to review its rating of UDI. The Bush Administration has announced plans to cancel the Crusader mobile artillery system, which accounts for more than 20% of UDI's revenues. Although some support for Crusader remains in Congress, it looks increasingly likely that the program will be terminated. Although cancellation of the Crusader program would significantly alter UDI's business portfolio, compensation from the DOD to UDI, and the potential to apply Crusader technology to other Army programs, including the Future Combat System, could mitigate a cancellation. The DOD has already spent approximately $2 billion in development costs on the Crusader. As with the rest of the DOD, the U.S. Army is in the process of transforming itself into a lighter, more mobile force utilizing advanced communications, IT, and precision weapons. UDI's loss in the Interim Armored Vehicle competition and the Crusader cancellation increase the uncertainty of where UDI fits in the Army's transformation plans. WASH DEPOT: Plan Confirmation Hearing Scheduled for July 31 ----------------------------------------------------------- Wash Depot Holdings Inc. and its affiliates received approval from the U.S. Bankruptcy Court in Delaware on May 23 in for its reorganization plan's disclosure statement, reported Dow Jones. According to the newswire, Wash Depot has until June 5 to mail solicitation packages containing the disclosure statement to creditors. A plan confirmation hearing is set for July 31; objections are due by July 17. The Saugus, Massachusetts-based company listed assets and debts of more than $100 million each in its October 1, 2001, chapter 11 bankruptcy petition. (ABI World, May 30, 2002) WEBLINK WIRELESS: Ability to Continue Operations Still Uncertain ---------------------------------------------------------------- The predecessor corporation of WebLink Wireless, Inc. was incorporated as a Delaware corporation on May 8, 1989, to provide wireless messaging products and services, under the name PageMart, Inc. In January 1995, PageMart effected a corporate reorganization pursuant to which PageMart Nationwide, Inc., a Delaware corporation, became the holding company parent of PageMart. In December 1995, the name of PageMart Nationwide, Inc. was changed to PageMart Wireless, Inc. On January 28, 1998, PageMart was merged into Wireless with Wireless as the surviving corporation. On December 1, 1999, the name of Wireless was changed to WebLink Wireless, Inc. The consolidated financial statements of the Company include the accounts of PageMart PCS, Inc., PageMart II, Inc., PageMart Operations, Inc., PageMart International, Inc. and other subsidiaries of WebLink. Each of these companies is a wholly-owned subsidiary of WebLink. PageMart PCS, Inc. holds certain narrowband personal communications services licenses. PageMart II, Inc. holds certain Federal Communications Commission licenses. Other than these licenses, the subsidiaries of WebLink have no significant assets or liabilities. Chapter 11 Filing On May 23, 2001, WebLink and its subsidiaries, PageMart PCS, Inc. and PageMart II, Inc., filed voluntary petitions for relief under Chapter 11 of title 11 of the United States Bankruptcy Code, and are presently operating their businesses as debtors- in-possession subject to the jurisdiction of the United States Bankruptcy Court for the Northern District of Texas, Dallas Division. The Chapter 11 cases are being jointly administered for procedural purposes only before the Bankruptcy Court under Case No. 01-34275-SAF-11. WebLink and it's subsidiaries, as debtors-in-possession, have continued to manage and operate their assets and businesses pending the confirmation of a reorganization plan and subject to the supervision and orders of the Bankruptcy Court. On April 15, 2002 the Company entered into a non-binding letter of intent with its secured lenders on the material terms of a plan of reorganization. The plan is expected to allow the Company to emerge from the Chapter 11 proceeding. This new plan of reorganization was filed with the Bankruptcy Court on April 23, 2002 and superseded the plan that was filed on January 31, 2002, which was based on a transaction described in the Company's previously announced letter of intent with Sun Capital Acquisition Corp. The Sun Capital letter of intent has expired, and the Company is no longer pursuing the transaction. The letter of intent with the secured lenders provides that the Company would issue $40 million of new senior secured notes and 92.5% of the common stock of the reorganized entity to its secured creditors, and 7.5% of the common stock of the reorganized entity to its unsecured creditors upon the effective date of the plan of reorganization. The common stock to be issued to creditors would be subject to dilution by a management equity plan. The new senior secured notes would be issued in two tranches, $30.0 million of which would have interest paid currently in cash with a four-year principal amortization schedule and $10.0 million of which would have interest paid in kind with a four-year maturity date. The Company's excess cash at the effective date of the plan of reorganization would be paid to the secured creditors, with the amount of excess cash above $3.0 million being applied to pay the principal of the new notes. Up to 15% of the common stock of the Company would be reserved for issuance to management. WebLink does not expect its current equity holders to receive any property, securities or cash in exchange for their equity holding in a restructuring. The Company expects the equity holders' stock will be cancelled at the time a plan of reorganization becomes effective. On April 26, 2002, the Official Committee of Unsecured Creditors filed a competing plan of reorganization with the Bankruptcy Court. The competing plan provides, among other things, that 450,000 shares of common stock of the reorganized entity would be issued to unsecured creditors, 300,000 shares would be issued to management of the Company, and 1,949,100 shares would be issued to the secured creditors. In addition, warrants to purchase 17,000,000 shares of common stock of the reorganized entity at an exercise price of $7.00 per share would be issued to unsecured creditors and management of the Company. The competing plan also provides for the issuance of notes to the secured creditors equal in principal amount to the Company's plan, but on somewhat more favorable terms to the Company. The Company's secured creditors have informed the Company that they will vote against the competing plan of the Official Committee of Unsecured Creditors. Confirmation of any plan of reorganization is subject to conditions imposed by the Bankruptcy Code, including the approval of the Bankruptcy Court, and approval of the FCC of the change in control of the Company's FCC licenses. Management can provide no assurance that any plan of reorganization will be approved or that additional plans may be presented to the court. The Company reported operating losses for each of the three years in the period ended December 31, 2001 and the first quarter 2002, has incurred substantial net losses since inception and has a significant working capital deficit and stockholders' deficit at March 31, 2002. The Company's financial condition, results of operations, lack of liquidity and inability to obtain additional debt or equity financing, raise substantial doubt about the Company's ability to continue as a going concern. Revenues for the three months ended March 31, 2001 were $63.4 million compared to $45.4 million and for the three months ended March 31, 2002. Recurring revenues for wireless data for the same periods were $16.4 million and $18.1 million, respectively. Recurring revenues for traditional paging for the same periods were $39.1 million and $23.2 million, respectively. Revenues from equipment sales for the same periods were $7.1 million and $3.3 million, respectively. Network revenues, comprised of: (1) non-recurring engineering fees; (2) construction revenues related to the installation of transmitting and receiving equipment; and (3) non-airtime service revenues, for the same periods, were $0.9 million and $0.8 million, respectively. ARPU for wireless data was $13.17 for the three months ended March 31, 2001 compared to $11.68 for the same period in 2002. ARPU for traditional paging for the three months ended March 31, 2001 was $7.49 compared to $8.11 for the same period in 2002. Management expects wireless data's and traditional paging's ARPU will decline in 2002. The Company sustained losses before extraordinary item of $39.3 million for the three months ended March 31, 2001. The Company sustained losses before bankruptcy reorganization items and extraordinary items for the three months ended March 31, 2002 of $8.3 million. Bankruptcy reorganization items were $1.3 million for the three months ended March 31, 2002. Bankruptcy reorganization items consisted principally of legal and professional fees. An extraordinary gain of $0.3 million was recognized in the first quarter of 2002 for the forgiveness of debt. Including the bankruptcy reorganization items and the extraordinary gain, the Company's net losses for the three months ended March 31, 2002 were $9.4 million. The decrease in losses was primarily due to decreases in operating expenses associated with the operations of the Company. WebLink Wireless, Inc. is a leader in the wireless data industry, providing wireless email, wireless instant messaging, information on demand and traditional paging services throughout the United States. The company filed for Chapter 11 protection on May 23, 2001. Michael A. McConnell, Esq. at Winstead, Sechrest & Minick is helping the Debtor in its restructuring efforts. WHEELING-PITTSBURGH: Tatum's Retention Not to Prejudice Others -------------------------------------------------------------- Judge Bodoh grants Wheeling-Pittsburgh Steel Corp.'s and its debtor-affiliates' Application to employ Tatum CFO Partners LLP for short-term consulting, but directs that nothing in his Order will prejudice the rights of the United States Trustee, the Official Committee of Unsecured Noteholders, the Official Committee of Unsecured Trade Creditors, or any other creditor as to any objection to the reasonableness of the fees requested in any fee application filed by Tatum. Further, if the Debtors wish to further expand Tatum's services not otherwise described in the Retention Agreement approved by Judge Bodoh, they must first apply for judicial permission to employ Tatum to perform any additional services, and for approval of any fees to be paid in compensation for additional services, with appropriate notice. * * * As previously reported in the May 14, 2002 issue of the Troubled Company Reporter, the Debtors asked Judge Bodoh for authority to further employ Tatum CFO Partners, LLP, a second time, to provide short-term financial consulting services to WPC and WPSC relating to WPC's equity investment in Ohio Coatings Company and WPSC's supply agreement with OCC. The Debtors sought and obtained Judge Bodoh's approval for the retention of Tatum to provide short-term financial consulting services to WPC and WPSC with respect to WPC's 50% equity investment in OCC and WPSC's supply agreement with OCC. OCC is a company that produces tin plate. OCC's current senior financing is maturing and OCC is actively looking for alternative sources of financing. The interests of OCC are intertwined with those of WPC and WPSC to the extent that, if OCC were to be unable to sustain operations, it would have a negative impact on the financial condition and operations of the Debtors. In the original Application, the Debtors said they anticipated that the services to be provided by Tatum to WPC and WPSC would be completed no later than the end of April 2002 and probably sooner. Although Tatum has made substantial progress in its attempt to obtain alternative sources of financing for OCC and in its negotiations with Dong Yang Tin Plate of Korea, the remaining 50% shareholders of OCC, to restructure WPC's ownership interest in OCC, additional time is needed for Tatum to complete its services to WPC and WPSC. The Debtors now anticipate that the services to be provided by Tatum to WPC and WPSC should be completed no later than the end of June 2002. The Tatum Order stated that, if the Debtors wish to have Tatum perform additional services not otherwise described in the Tatum Agreement, the Debtors will first apply to Judge Bodoh for permission to further employ Tatum and for approval of any fees to be paid to Tatum for additional services. Tatum, by and through Mr. James R. Duncan, Jr., will continue to provide specific services for WPC, WPSC and the Debtors as the Debtors deem appropriate and feasible in order to advise the Debtors with respect to their interests in OCC, including: (1) continuing to assist WPC in the development of a recapitalization strategy for WPC's substantial equity interest in OCC; (2) continuing to assist WPC with respect to enhancing the value of WPC's equity interest in OCC; (3) continuing to assist WPC in the development of a strategy for the disposition of some or a part of WPC's equity interest in OCC; (4) continuing to assist WPC and the Debtors with any negotiations involving Dong ^Yang Tin Plate of Korea relating to these services; (5) continuing to assist the Debtors in considering the OCC banking relationships and acting as a liaison for the Debtors with OCC's current lenders in responding to any information requests received by the Debtors from OCC's lenders; (6) continuing to assist WPSC in maintaining its favorable supply agreement with OCC relating to the sale of tin plate; and (7) continuing to provide such other necessary services as are requested by the Debtors in these connections. The Debtors proposed that Tatum be compensated for these services at its ordinary billing rate of $150 per hour, but not to exceed $1,350.00 in any one day, in accordance with its customary billing practices regarding charges and expenses. As disclosed in the original Application, Tatum received a retainer from the Debtors in the amount of $20,000. In Tatum's first application for allowance of interim compensation and expense reimbursement, Tatum agreed to apply the retainer, in part, against the $6,981 professional fee holdback. The original Application provided that the retainer would be applied to time charges and expenses specific to Tatum's last application for payment for its engagement. In this second Application, Tatum and the Debtors have agreed that Tatum will apply the retainer against the 20% professional fee holdback in connection with its First Fee Application and future fee applications. Tatum's agreement to apply the retainer against the 20% professional fee holdback as of the ate that Judge Bodoh approves its First Fee Application represents a more favorable result to the Debtors and their estates. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHISPERING OAKS: Working Capital Deficit Tops $693K at Dec. 31 -------------------------------------------------------------- Whispering Oaks International, Inc. was incorporated in December 1997. Prior to February 20, 2001 the Company was engaged in the acquisition and sale of thoroughbred racing horses. As of December 31, 2000 the Company owned one thoroughbred horse. In February 2001 the Company ceased its business activities relating to the acquisition and sale of thoroughbred race horses. On February 21, 2001, the Company issued 150,000 (1,950,000 post split) shares of its common stock to acquire all of the issued and outstanding shares of Lagostar Trading S.A. At the time of this acquisition, Lagostar Trading owned certain technology and patents which relate to the early detection of cancer. On March 1, 2001 the Company's Board of Directors declared a 13:1 forward stock split. On March 25, 2001 the Company acquired the following assets from Curex Technologies Inc. in consideration for the assumption by the Company of promissory notes in the amount of $2,326,869 which were payable by Curex to various third parties. Patents $ 204,815 Property Technology 993,022 Goodwill 871,715 Cash 129,032 51% interest in BioLargo Technologies, Inc. 128,285 ------------ Total: $ 2,326,869 =========== In May 2001, the Company issued 1,544,404 shares of its common stock in payment of the notes, plus accrued interest, which the Company assumed in connection with the acquisition of assets from Curex Technologies. Cancer Detection Kit As a result of the Company's acquisition of technology in February and March 2001 the Company owns the patents and intellectual properties relating to certain technology which can be used to detect cancer. The cancer diagnostics market is presently estimated at $4 billion per year. A principal goal of cancer research is to differentiate cancer cells from healthy cells. One way to achieve this goal is to detect molecules (markers) that are present on cancer cells but not on healthy cells. The Company's technology relates to the RECAF(TM) marker, which can be used in blood and tissue tests to determine if a patient has cancer. These tests can also be used on a regular basis for the early detection of recurring cancer, thereby allowing a more effective treatment of cancer patients. The RECAF(TM) marker has been found in all tissues studied, including breast, lung, stomach and prostate. Whispering Oaks International has incurred a loss from operations, has a negative cash flow from operations, and a working capital deficiency which raises substantial doubt about its ability to continue as a going concern. The Company does not have sufficient cash, nor does it have an established source of revenue to cover its ongoing operating costs and allow it to continue as a going concern. These factors raise substantial doubt about the Company's ability to continue. As of December 31, 2001, the Company had a working capital deficiency of $693,408 and incurred a loss for the year ended December 31, 2001 totaling $1,372,806. WKI HOLDING: Files for Chapter 11 Reorganization in Illinois ------------------------------------------------------------ WKI Holding Company, Inc., which operates principally through its subsidiary World Kitchen, Inc., has reached agreement on the terms of a financial restructuring with the steering committee for its bank group and a group of affiliated parties that is comprised of the Company's primary shareholder as well as its largest bondholder, which holds approximately 40% of the outstanding senior subordinated bonds. By reducing WKI's funded debt by approximately $440 million, from $812 million to $373 million, the debt restructuring will provide the Company with more financial flexibility to implement its business strategy. To pursue the financial restructuring, WKI and all of its direct and indirect wholly-owned U.S. subsidiaries have filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Illinois. Given that the proposed financial restructuring has the support of parties representing more than 80% of the Company's funded debt, the Company hopes to emerge from the chapter 11 process on an expedited timeline. WKI expects to file a proposed plan of reorganization in the near future, and will work expeditiously with its stakeholders to finalize, obtain court approval for and implement the plan. WKI intends to maintain normal business operations on a global basis during the chapter 11 process, including at its non-U.S. subsidiaries, which are not included in the chapter 11 proceedings. The Company will continue delivering all of its customer orders on time and in full. It also will make timely payment for goods and services provided on or after the filing date in the normal course of business and in accordance with the terms of existing supplier agreements. It is anticipated that employees will be paid in the normal manner and all health and welfare benefit plans will continue. The Company plans to fund operations during the chapter 11 process with existing cash, cash flow from operations and up to $75 million in a new debtor- in-possession financing package that has been committed by a bank group led by JPMorgan Chase Bank. The terms of the proposed financial restructuring include the conversion by the bank group of $189 million of its debt into equity, conversion by an affiliated lender of 100% of its separate $25 million credit facility claims into equity, and the conversion of $200 million of senior subordinated bondholders' claims into equity. WKI's proposed financial restructuring represents a milestone in the Company's turnaround, which began in early 2001, and initially focused on improving the quality of its operations. During the chapter 11 process, WKI intends to continue to make operational improvements while also increasing new product and marketing initiatives geared toward enhancing its portfolio of well-known housewares brands. Steven G. Lamb, President and Chief Executive Officer of WKI, said: "When I joined World Kitchen early last year, it was a company with considerable potential -- one with the finest brand portfolio in its industry -- but in need of considerable change in order to maximize the value of its industry-leading assets. We have accomplished a lot during the past year by increasing supply chain efficiency, improving our working capital management and enhancing customer service. These initiatives have begun to bear fruit, as evidenced by the positive response of our customers and improved financial results. "This Company simply has too much debt to fully execute its business strategy. The development of our proposed financial restructuring is an important accomplishment and its implementation will give us financial flexibility to operate our business more efficiently. Equally important, the support we have received from our stakeholders in developing this plan illustrates their confidence in World Kitchen's future prospects." Mr. Lamb concluded: "While we regret the impact that our chapter 11 filing might have on some of our constituencies, it is the right course of action to establish a capital structure that will enable us to realize our full potential. We are confident that we will be able to maintain business as usual during this process, including payment for goods and services provided to us on or after the filing date, full and timely deliveries of all customer orders, and normal salary and benefits for our employees. Our objective is to complete the chapter 11 process as quickly as possible so that we can focus on executing our business strategy, delighting our customers and creating value for all of our stakeholders." Patrick Daniello, a Managing Director of JPMorgan Chase Bank, which serves as administrative agent for WKI's secured credit facility and as a member of the bank steering committee, said: "The proposed financial restructuring being contemplated with World Kitchen and the other parties is an effective step towards positioning the Company to realize its full potential. We have considerable confidence in what the Company's strong management team can achieve once its debt has been reduced." WKI and its U.S subsidiaries have filed a number of first-day motions with the Bankruptcy Court in order to accomplish a smooth transition to chapter 11 without business disruption. The Company expects that these motions, which are consistent with those made in other chapter 11 filings, will be addressed promptly by the Bankruptcy Court. The motions include requests to pay employee wages and benefits, honor pre-petition customer obligations and take other steps to preserve business as usual to the maximum extent possible. Suppliers with questions about the restructuring may call 800/721-9884 (in the U.S.) or +852-2610-2323 (outside of the U.S.) or send an e-mail to suppliers@worldkitchen.com World Kitchen's principal products are glass, glass ceramic and metal cookware, bakeware, tabletop products and cutlery sold under well-known brands including CorningWare, Pyrex, Corelle, Visions, Revere, EKCO, Baker's Secret, Chicago Cutlery, Regent Sheffield, OXO and Grilla Gear. World Kitchen has been an affiliate of Borden, Inc. and a member of the Borden Family of Companies since April 1998. The Company currently employs approximately 3,200 people and has major manufacturing and distribution operations in the United States, Canada, South America and Asia-Pacific regions. WKI HOLDING: Case Summary & 50 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: WKI Holding Company Inc. 77 West Wacker Suite 3500 Chicago, Illinois 60601 Bankruptcy Case No.: 02-21258 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- World Kitchen Inc. 02-21257 Chicago Cutlery Inc. 02-21259 CSC of Tennessee Inc. 02-21260 Ekco Cleaning Inc. 02-21261 Ekco Group Inc. 02-21263 Ekco Distribution of Illinois Inc. 02-21262 Ekco Housewares Inc. 02-21264 Ekco Manufacturing of Ohio Inc. 02-21265 WB of Ohio Inc. 02-21266 World Kitchen Ghc Inc. 02-21268 WKI Latin America Holding LLC 02-21267 Type of Business: WKI Holding Company, Inc. is a holding company, which owns operating companies engaged in the manufacturing of housewares, including bakeware, dinnerware, rangetop cookware, kitchen and household products, cuttlery and precision cutting tools. Chapter 11 Petition Date: May 31, 2002 Court: Northern District of Illinois Judge: Jack B. Schmetterer Debtors' Counsel: Michelle Harner, Esq. Ilana N. Glazier, Esq. Jones, Day, Reavis & Pogue 77 West Wacker Chicago, Illinois 60606 312-782-3939 and Richard M. Cieri, Esq. Jeffrey Ellman, Esq. Jones, Day, Reavis & Pogue North Point 901 Lakeside Avenue Cleveland, Ohio 44114-1190 Tel: 216-586-3939 Total Assets: $728,012,000 Total Debts: $1,029,208,000 Debtor's 50 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ HSBC Bank USA Unsecured Note $200,000,000 Indenture Trustee for the 9.625% Senior Sub. Notes Due 2008 Frank J. Gondino 10 East 40th Street New York, New York 10016 Phone: 212-525-1316 Fax: 212-525-1300 State Street Bank & Trust Unsecured Note $2,877,000 Indenture Trustee for 9.25% Senior Notes Michael Hopkins 801 State Street Quincy, Illinois 62303 Phone: 217-223-6480 Fax: 217-223-8770 Wings Trading Company Trade Debt $2,861,345 Mr. Benson Pau Block B, 1/F 342 Kwien Tong Road Kowloon, KLN Phone: 852-2755-3221 Fax: 852-2796-1331 Shanghai Xing Xin Trade Debt $1,700,781 Cookware Co. Ltd. Terri Zhu Room 1701 Trade Mansion No. 800 Qu-Yangrd Shanghai 20 Phone: 8231-6553-9212 Fax: 8621-6553-9211 PT Maspion Trade Debt $1,443,322 Lily Go Maspion I Desa Sawotratap, Gedangan Sidcarjo 61252, Indonesia Phone: 6231-853-1531 Fax: 6231-853-2812 H & K International LTd. Trade Debt $711,826 Hanson Chan Unit 605, Juke Tower 8 Tai Chung Road Tsuen Wan, N.T. Hong Kong Phone: 852-2411-3289 Fax: 852-2489-5109 Chuco International Trade Debt $684,634 Co., Ltd. Philip Chu Roo 209 Kowloon Centre 29 Ashley Road Tsimshatsui, Hong Kong Phone: 852-2461-3911 Fax: 852-2456-3279 Re/Max Int'l. Relocation Trade Debt $659,771 Services, Inc. Linda Wood 8390 East Crescent Parkway Suite 500 Greenwood Village, CO 80111 Phone: 303-796-3600 Fax: 303-796-3599 Schneider Logistics, Trade Debt $655,841 Inc. Rail Bill Van-Beek PO Box 2660 Greenbay, WI 54306 Phone: 920-592-3215 Fax: 920-592-3891 MTI/Luana Marketing Trade Debt $532,874 Michael Lu Room 1, 16th Floor No. 204, Sec 5 Min Sheng E. Road Taipei, Taiwan Phone: 8862-2753-1600 Fax: 8862-2753-1921 Hongbao Trade Debt $424,147 Ming Gao Daxin Town Zhangjiagang City 100 Phone: 86520-876-0337 Fax: 86520-876-0535 PCA Trade Debt $417,488 Diana Patterson PO Box 905197 Charlotte, NC 28290-5197 Phone: 301-497-9090 Fax: 301-497-7115 Pedone & Partners, Inc. Trade Debt $392,759 Mike Pedone 100 Fifth Avenue New York, NY 10011-6903 Phone: 212-627-3300 Fax: 212-627-3966 Crown Ceramics Trade Debt $378,779 Kovit Tharerantanavibool Chimpee Taling Chan 33/33 MOO 14 Bardatajehonanee Road Bangkok, Thailand 10170 Phone: 662-887-6707 Fax: 662-687-6701 Jensen Industrial Limited Trade Debt $329,910 Jeff Bailey 11/02 Wanchai Comm. Ctr. 194-204 Johnson Road Wanchai, H.K. Phone: 852-2574-7487 Fax: 852-2574-7665 Chef Pro International Trade Debt $329,585 Ltd. Hanson Chan Unit 605 Juko Tower 8 Tai Chung Road Tsuen Wan, NT Phone: 852-2411-3289 Fax: 852-2498-5109 Will Partners LLC Trade Debt $304,498 Kevin Shield 5800 Industrial Drive Monee, IL 60449 Phone: 310-546-4578 Fax: 310-546-7550 Wai Shing Ind. (HK) Ltd. Trade Debt $300,671 Hong Kong & Shanghai BK Corp. LTd. Unit 9, 21/F CCT Telecom Bldg. 110 Wo Shing Street Folan Shatia, NT Hong Kong Phone: 852-2607-2000 Fax: 852-2609-3311 Booz-Allen & Hamilton Trade Debt $291,600 Inc. Pat Houston Suite 1700 225 West Wacker Drive Chicago, IL 60606 Phone: 312-346-1900 Fax: 312-578-4664 Weirton Steel Corp. Trade Debt $289,658 Micah Daugherty 400 Three Springs Drive Weirton, W VA 26062 Phone: 304-797-2000 Fax: 304-797-2782 NYSEG Trade Debt $283,522 Thomas K. Stanz PO Box 3287 Ithaca, NY 14852-3287 Phone: 800-572-1111 Fax: 607-347-2760 Davis Staffing, Inc. Trade Debt $237,478 Howell Packaging Trade Debt $222,625 Wellbase Industrial Ltd. Trade Debt $214,922 Samuel Shapiro & Co. Trade Debt $213,281 Patrice Tanaka & Company, Inc. Trade Debt $183,939 Flower City Printing, Inc. Trade Debt $181,665 Hayco Manufacturing Ltd. Trade Debt $171,518 Chong Woo Metal Trade Debt $164,919 Modern Marketing Concepts, Inc. Trade Debt $150,834 Internet University, Inc., Trade Debt $141,197 dba iMC2 Baltrans USA, Inc. Trade Debt $139,236 Ashland Distributing Trade Debt $137,876 Company Cheung Woo Industrial Trade Debt $137,381 Mfg., Ltd. World Commerce Services Inc. Trade Debt $137,034 Conestoga-Rovers & Trade Debt $124,116 Associates, Inc. Ferro Corporation Trade Debt $122,879 Acme International LLC Trade Debt $118,838 APV Engineered Coatings Trade Debt $111,309 Interstate Paper Supply Trade Debt $103,594 Co., Inc. Majestic Trade Debt $102,823 ARC International North Trade Debt $102,257 America Bind View Trade Debt $100,817 Red Star Industries Ltd. Trade Debt $100,762 Sun Life Insurance, Co. Trade Debt $95,956 Yue Wing Cheong Trade Debt $93,784 Manufacturing, Ltd. Yue Wing Cheong Trade Debt $93,645 Manufacturing, Ltd. Hwa Sung Stainless Trade Debt $91,784 Indust. Co., Ltd. Graphics Universal, Inc. Trade Debt $85,409 Herald Houseware Ltd. Trade Debt $85,044 Chapman Corporation Trade Debt $84,685 * BOND PRICING: For the week of June 3 - 7, 2002 ------------------------------------------------ Following are indicated prices for selected issues: Amresco 9 7/8 '05 23 - 25(f) AES 9 1/2 '09 77 - 79 AMR 9 '12 96 - 97 Asia Pulp & Paper 11 3/4 '05 25 - 26(f) Bethlehem Steel 10 3/8 '03 11 - 12(f) Enron 9 5/8 '03 11 - 12(f) Global Crossing 9 1/8 '04 2 - 3(f) Level III 9 1/8 '04 46 - 48 Kmart 9 3/8 '06 50 - 52(f) NWA 8.70 '07 90 - 92 Owens Corning 7 1/2 '05 40 - 41(f) Revlon 8 5/8 '08 44 - 46 Trump AC 11 1/4 '07 75 - 77 USG 9 1/4 '01 80 - 82(f) Westpoint Stevens 7 3/4 '05 55 - 57 Xerox 7.15 '04 94 - 95 ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, 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. 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