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/raid1/www/Hosts/bankrupt/TCR_Public/020607.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, June 7, 2002, Vol. 6, No. 112 Headlines 360NETWORKS: Bags Approval to Enter Purchase Agreement with Time AAi.FOSTERGRANT: Closes Workout with $52MM Debt-for-Equity Swap ABRAXAS PETROLEUM: Sells East White Point Field to PEP for $10M+ ADELPHIA BUSINESS: TSI Pushing for Prompt Decision on Contract ADVANCED REMOTE: Completes Recapitalization Deal with Housatonic AIRGATE PCS: Pursuing Talks on Possible Loan Covenant Amendment AMERICA WEST: Revenue Passenger Miles for May Slide-Up 0.3% AMERICAN ENERGY: Continued Restructuring Talks with Noteholder AMERICREDIT CORP: Commences Tender Offer for 9-1/4% Senior Notes AMERICREDIT: Proposes $300MM Private Sr. Unsecured Debt Offering AMERIGAS PARTNERS: Brings-In PwC to Replace Andersen as Auditors AMES DEPT: Retains Plan Filing Exclusivity Until Feb. 28, 2003 ARTHUR ANDERSEN: Milwaukee & NY Partners Join Grant Thornton AVISTA CORP: Obtains $225 Mill. New Credit Facility Arrangement B/E AEROSPACE: Releasing 1st Fiscal Quarter Results on June 18 BETHLEHEM STEEL: Arcelor Eyeing JV with Burns Harbor Plant BRIDGE INFO: Hearing on Tax Claims to Continue Until June 12 BURLINGTON: Court Okays Two Trademark License Pacts Assumption BURLINGTON: Firms-Up Future Structure & Restructuring Actions CPI AEROSTRUCTURES: Reaches Pact to Restructure Debt Facilities CELESTRON INT'L: Facing Meade's Second Patent Infringement Suit CELLPOINT INC: Completes Swedish Subsidiary's Reconstruction CHART INDUSTRIES: Names van Glabbeek as VP for Strategic Dev't COMDISCO INC: Court Approves KPMG's Engagement as Fin'l Advisors COVANTA ENERGY: Intends to Execute CPPI Restructuring Documents ENRON CORP: Gets Court's Nod to Enter Into Forbearance Agreement ENRON CORP: Court Appoints Neal Batson as Enron Corp. Examiner EXIDE: Court Okays Proposed Uniform Reclamation Claim Protocol FARMLAND INDUSTRIES: Gains Nod to Use $306 Million DIP Financing FIRST UNION: S&P Lowers Ratings on 3 Series 1997-C2 Classes FLOWSERVE CORP: Will Padlock 6 Facilities & Slash 450 Positions FOAMEX INT'L: Appoints Luis Echarte to Board of Directors FOSTER WHEELER: Agrees to Term Sheet on $290MM Loan Facilities FRIEDE GOLDMAN: Board Chair T. Jay Collins Assumes CEO Position GALEY & LORD: U.S. Trustee Amends Official Creditors' Committee GLOBAL CROSSING: First Creditors' Meeting to Convene on Sept. 17 HAYES LEMMERZ: Has Until Oct. 3 to Make Lease-Related Decisions IMPERIAL CREDIT: KPMG Expresses Going Concern Doubt KAISER ALUMINUM: Sen. Cantwell Calls for Investigation of Deal KELLSTROM: Committee Hires Sonnenschein as Bankruptcy Counsel KMART: US Trustee Balks At Dewey's Engagement as Board Counsel KNOWLEDGE HOUSE: Fails to Meet Annual Report Filing Deadline LTV CORP: Seeks Approval of USWA Retiree Benefits Modifications LAIDLAW INC: Wins Approval to Reinstate RTI's Lease Guaranty MARIETTA CORP: S&P Assigns B- Corp. Credit & Sr. Secured Ratings MED-EMERG INT'L: Completes Interim Financing with Breckenridge MERRY-GO-ROUND: Trustee Extends Office Lease for Another Year METALS USA: Signs-Up Colliers Bennett as Real Property Brokers METROCALL: Wants Court to Establish August 16 as Claims Bar Date METROMEDIA INT'L: Won't Distribute Preferred Stock Dividend MICROCELL: Nasdaq Nixes Request for Transfer to SmallCap Market MINOLTA CO.: Weak Performance Spurs S&P Downgrade to Singe-Bpi NII HOLDINGS: Gets Authority to Pay Critical Vendors' Claims NATIONAL STEEL: Seeking Stay Relief to Setoff Mitsui Steel Debts NATIONSRENT INC: Resolves Dispute over Leases with Citicorp NETIA HOLDINGS: Telekom Creditors' Meeting Set for June 24, 2002 ORDERPRO LOGISTICS: Working Cap. Deficit Tops $1.1MM at Dec. 31 PACIFIC GAS: Wants to Enclose Letter in Solicitation Package PACIFIC GAS: Revamps Utility Inspections with Better Technology PRESIDENT CASINOS: Continued Debt Workout Talks with Noteholders PURE WORLD: Begins Trading on SmallCap Market Effective June 6 RAINTREE RESORTS: S&P Cuts Rating to D Over Interest Nonpayment SAMSONITE CORP: Taps Berenson Minella to Help Evaluate Options TOWER AUTOMOTIVE: Revises Earnings Guidance for Second Quarter TRI-UNION: S&P Knocks Rating Down to D After Missed Payment VIRAL GENETICS: Auditors Doubt Ability to Continue Operations WESTERN INTEGRATED: Gets Court Okay to Sign-Up Pachulski Stang WILLIAMS COS.: Denies Engaging in Round-Trip Natural Gas Trades WINSTAR COMMS: Court Okays Kaye Scholer as Trustee's Counsel WORLDCOM INC: Wireless Unit Ends Contract with Third Millenium WORLDCOM INC: Intends to Exit Non-Core Wireless Resale Business * FTI Consulting Launches Strategic Settlement Services Practice * BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of Augsburg, 1459-1525 ********* 360NETWORKS: Bags Approval to Enter Purchase Agreement with Time ---------------------------------------------------------------- 360networks inc., and its debtor-affiliates obtained the Court's authority to enter into a Purchase Agreement with Time Warner Telecom of California. Shelley C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, relates that the Debtors and Time Warner executed a settlement agreement that resolved certain disputed issues with respect to the construction, marketing and maintenance of a fiber optic telecommunications system running from Portland, Oregon, to Sacramento, California. Ms. Chapman reminds Judge Gropper that this Court previously approved the Settlement Agreement. Ms. Chapman explains that under the Settlement Agreement, the Debtors and Time Warner Telecom of California, a subsidiary of Time Warner Telecom Holdings, have negotiated a Fiber Optic Purchase Agreement for the purchase of conduit and unactivated fiber. Under the Agreement, the Debtors would purchase: (i) 2 two-inch high-density polyethelene conduits; (ii) 72 fibers located in a 144-count cable installed in one side of the Timer Warner Telecom of California conduits; and (iii) associated rights and improvements, including the rights to use manholes, handholes and vaults associated with the Debtor's conduits and the right to use equipment and Space in collocation facilities associated with the 360 Fiber for $4,350,000. "The Debtors would pay the Purchase Price of the 360 System by utilizing the $4,350,000 credit available under the Settlement Agreement," Ms. Chapman states. The Debtors will be responsible for obtaining permits, approvals or authorizations necessary for the ownership, operation, maintenance and repair of the 360 Conduit and the 360 Fiber. "The agreements, permits and approvals that grant these Underlying Rights may be issued by or entered into with private, governmental or quasi-governmental entities," Ms. Chapman adds. The Purchase Agreement provides that: (i) Time Warner, California agrees to grant the Debtors a subeasement or sublicense in any rights of way, easements, or licenses granting Underlying Rights that were issued to it by a private party; (ii) Time Warner, California is obligated to partially assign any agreement granting Underlying Rights to the extent such assignment is permitted, issued by any governmental or other non-private party. The Debtors will procure any other agreements necessary to obtain Underlying Rights. According to Ms. Chapman, the transaction would provide the Debtors and their estates a substantial benefit. The Debtors are parties to sell to a third-party one conduit in California. However, the Debtors' network contains a gap of approximately 125 miles between Ontario, California and Mira Mesa, California, which the Debtors must fill to perform under the Sales Agreement. "The Debtors intend to fill this gap by purchasing the 360 System," Ms. Chapman adds. The Debtors have no viable, cost effective alternative to fill this gap other than the purchase of the 360 System under the Purchase Agreement. Thus, it is critical that the Debtors obtain authorization to enter into the Purchase Agreement. Moreover, the proceeds from the Sales Agreement exceed the total cost of the Purchase Agreement. Consequently, not only is the transaction by the Purchase Agreement a cash-flow positive transaction but after a transfer of a single conduit under the Sales Agreement, the Debtors will retain fiber in Southern California as well as amplification and regeneration space essentially at no cost. (360 Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) AAi.FOSTERGRANT: Closes Workout with $52MM Debt-for-Equity Swap --------------------------------------------------------------- AAi.FosterGrant, Inc., a leading marketer of branded optical products and costume jewelry, has successfully completed its turnaround by arranging a $52 million debt-for-equity swap and a $4 million equity investment. The transaction paves the way for the Company to accelerate the growth of the FosterGrant brand, an American icon. "This marks the rebirth of FosterGrant," said John Ranelli, the Company's President and CEO who was recently named Chairman. "The debt-for-equity swap and capital investment give the Company fresh resources to invest in the FosterGrant brand and to pursue growth. We will advance our industry-leading product development by providing consumers more fashion and features for their dollar, communicate our brand story to more people and expand our distribution in current and new markets." The debt-for-equity swap was the final stage in the Company's three-stage turnaround strategy. The first stage demonstrated the ability to earn a profit by focusing on the optical and jewelry businesses while eliminating other unprofitable businesses and reducing expenses. The second stage concentrated on enhancing customer credibility by increasing sell-through and on-time deliveries. The third stage focused on improving the balance sheet. The resulting operational and financial performances have been exceptionally effective in returning the Company to profitability. From 1999 to 2001, management improved EBITDA from a negative $1.6 million to a positive $9.2 million (before restructuring charges and one-time adjustments), reduced total debt from $88.9 million to $29 million and boosted gross margin from 28.5 percent to 34.5 percent. Operationally, the Company improved order accuracy from 88 percent to 98 percent and on-time delivery performance from 74 percent to 99 percent. The hallmark of the Company's new marketing efforts will be a contemporary version of the classic FosterGrant advertising campaign, "Who's that Behind Those FosterGrants?" The campaign, slated to begin later this month, will feature supermodel Cindy Crawford and four-time NASCAR Winston Cup Champion Jeff Gordon. "Who's That Behind Those FosterGrants?" one of the most successful advertising campaigns of all time, began in the 1960s and featured celebrities such as Elvis Presley and Sophia Loren. Aside from the advertising campaign, Ranelli said the Company "will excite consumers of sunglasses, reading glasses and jewelry by increasing features in our already value-packed products and excite retailers by generating incremental revenue and higher levels of product sell-through." "John Ranelli led a remarkable turnaround at FosterGrant," said Michael Cronin, managing partner and co-founder of Weston Presidio, a private equity firm which invested an additional $4 million in equity into the Company. "We have great confidence in the management team and anticipate an exceptional return on our investment." An overwhelming 99 percent of bondholders agreed to the debt- for-equity swap, allowing the Company to retire $51.53 million of its 10-3/4 percent senior notes due in 2006. Interest expense will be reduced by approximately $6 million annually, to $2 million. The transaction did not affect employees, customers and suppliers, which continued doing business as usual with FosterGrant since the Company announced negotiations toward a debt-for-equity swap in January. "Over the past three years, we proved AAi.FosterGrant could become a profitable company by focusing on our core businesses and executing with excellence," said Ranelli. "At the same time, we proved that we could meet, then exceed, our customers' expectations. Now that we have the industry's strongest balance sheet, look for us to prove the real strength of the FosterGrant brand and our jewelry products." AAi.FosterGrant, based in Smithfield, RI, owns one of the leading brands of sun and reading glasses in the United States and is also a leading designer of costume jewelry. The FosterGrant brand provides the consumer with eyewear representing exceptional styling, quality and features at competitive prices. ABRAXAS PETROLEUM: Sells East White Point Field to PEP for $10M+ ---------------------------------------------------------------- Abraxas Petroleum Corporation (AMEX:ABP) announced the closing of the sale of the Company's interests in the East White Point field in south Texas to Peoples Energy Production for approximately $10.5 million. The properties sold represent approximately 1.8 MMcfe per day of net production. This transaction is the first of several United States property sales anticipated to close this summer. Abraxas Petroleum Corporation is a San Antonio-based crude oil and natural gas exploitation and production company that also processes natural gas. The Company operates in Texas, Wyoming and western Canada. Please visit www.abraxaspetroleum.com for the most current and updated information. The Web site is updated daily to comply with the SEC Regulation FD (Fair Disclosure). At March 31, 2002, Abraxas Petroleum reported a total shareholders' equity deficit of close to $40 million. ADELPHIA BUSINESS: TSI Pushing for Prompt Decision on Contract -------------------------------------------------------------- TSI Telecommunication Services, Inc., asks the Court to compel Adelphia Business Solutions, Inc., and its debtor-affiliates to assume or reject the agreement entered into by and between TSI and the Debtors and compelling the payment of administrative expense for post-petition services rendered to the Debtors. Stephen H. Gross, Esq., at Robinson & Cole LLP in New York, New York, relates that prior to the Petition Date, on September 24, 1999, Hyperion Telecommunication, Inc. d/b/a Adelphia Business Solutions and TSI f/k/a GTE Telecommunication Services, Inc. executed an Information and Network Products and Services Agreement and the Access Revenue Management Solution Addendum. Pursuant to the Agreement, TSI provides a service known as Access Revenue Management Solution to the Debtors. Access Revenue Management Solution is a service that provides the billing capability necessary for a carrier to accurately capture revenue from long distance phone calls to that carrier's own customers from another long distance carrier's customers, and revenue from local phone calls to that carrier's own customers from customers of another phone company in that area. The service provides: A. pre-billing management of the records used to produce the bills Debtors send to their customers; B. bill generation and distribution and application of payments/adjustments to members' accounts; and C. information management, which includes a web-enabled warehouse which Debtor can access to view customer billing reports, such as total monthly revenue and total monthly usage. As a result of their receipt of these TSI services, Mr. Gross submits that the Debtors are able to bill their customers approximately $15,000,000 a month for their customers' use of the Debtors' network. The services TSI provides under the Agreement furnish the Debtors' infrastructure by enabling the Debtors' to capture, bill, and record its customers' use. Clearly, without this infrastructure, the Debtors could not function as a communications services provider. The Debtors' ability to bill and collect revenues from their clients is directly tied to uninterrupted utilization of these TSI services. Without TSI's provision of these services, the Debtors' ability to bill and collect revenue from its customers would be significantly harmed and the Debtors' cash flow negatively impacted. As of the Petition Date, pursuant to the Agreement, the Debtors owed TSI the following prepetition amounts: Date Amount February 1-28, 2002 $ 461,651.33 March 1-26, 2002 314,783.70 ------------ Total $ 776,435.03 In addition, the Debtors owe TSI $685,775.85 for postpetition services provided by TSI from the Petition Date through April 30, 2002. To date, Mr. Gross informs the Court that the Debtors have failed to pay any of its postpetition obligations to TSI. A payment of $89,381.48 for services rendered from the Petition Date through March 31, 2002 was due May 10, 2002. In addition, TSI sent an invoice to the Debtors on May 10, 2002 in the amount of $596,394.37 for postpetition services provided during the month of April, 2002. Such payment is due no later than June 10, 2002. Mr. Gross contends that the continuance of the services to be furnished to the Debtors under the Agreement is crucial for the Debtors' survival, no less a successful reorganization. The services TSI provides under the Agreement consistently enable the Debtors' to bill their customers approximately $15,000,000 on a monthly basis: the unqualified benefit to the estate is self-evident. Clearly, the Debtors do not need additional time to determine whether the Agreement is necessary for its reorganization. Furthermore, Mr. Gross points out that in addition to the $685,775.85 the Debtors owe TSI for postpetition services rendered, the Debtors owe TSI $776,435.03 in prepetition expenses. TSI is left in tine untenable position of providing crucial services to the Debtors without payment and without knowing whether the Debtor will elect to assume or reject the Agreement. For these reasons, the Court should issue an order compelling the Debtors to assume or reject the Agreement within a reasonable time not to exceed 60 days following the date of the order. (Adelphia Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADVANCED REMOTE: Completes Recapitalization Deal with Housatonic ---------------------------------------------------------------- Advanced Remote Communication Solutions Inc. (OTCBB:BTRK), announced completion of a re-capitalization transaction, including both an equity infusion as well as a renegotiation of the terms of the company's debt. Under this transaction, Housatonic Partners LLC, a private equity firm based in San Francisco and Boston, along with others, have provided an immediate capital infusion for continuing the growth of ARCOMS' business units and subsidiaries. Financial details of the transaction were not disclosed. Brandon Nixon, general partner of Housatonic Partners, has been appointed to serve as the new chairman and chief executive officer of ARCOMS. Nixon brings an impressive background of executive management experience throughout various telecom and technology industries and market sectors. "Housatonic Partners is excited to participate in this initiative and I personally look forward to working with the management and staff of ARCOMS," Nixon said. "It is our collective challenge to execute upon a plan that will stimulate the company and enhance value to all ARCOMS shareholders." Michael Silverman, outgoing chairman and chief executive officer, stated, "I am pleased that we have successfully completed this transaction and believe it will lead to increased shareholder value. Housatonic Partners provides an excellent partner for ARCOMS at this stage in its growth cycle. I am confident that Brandon Nixon has all of the outstanding qualities necessary to lead the company into this exciting phase in its development." Silverman will continue to serve as a member of the ARCOMS board of directors. Advanced Remote Communication Solutions Inc. (ARCOMS) is a global technology company delivering innovative and proprietary solutions to customers in specific markets for their remote information needs through its various business entities: Boatracs, Enerdyne Technologies Inc. and Innovative Communications Technologies Inc. ARCOMS' products and services include customized software applications; cost-effective satellite communications solutions; near real-time vessel tracking; bandwidth-efficient, multimedia satellite networks; e-mail technology; state-of-the-art, real- time video compression products; multiplexing equipment; and video monitoring services. ARCOMS' client base includes users within the government, transportation, military, marine, telecommunications, and commercial markets. With headquarters in San Diego, ARCOMS has offices in El Cajon, Calif.; Gulfport, Miss.; Gaithersburg, Md.; and Leiden, the Netherlands. For more information about ARCOMS and its business units, visit http://www.arcoms.com AIRGATE PCS: Pursuing Talks on Possible Loan Covenant Amendment --------------------------------------------------------------- AirGate PCS, Inc., (Nasdaq/NM: PCSA), a Sprint PCS Network Partner, indicated that, based on current market conditions, preliminary quarter-to-date trends and internal projections, it is revising expectations for net subscriber additions for the third fiscal quarter ended June 30, 2002. Due to a general slowdown in demand, the Company now expects to add 22,000 to 27,000 new subscribers in the current quarter. Commenting on the announcement, Thomas M. Dougherty, president and chief executive officer of AirGate PCS, said, "Results for the month of May proved to be lower than originally projected. Consequently, at this time we do not expect to meet our previously reported guidance of 35,000 to 40,000 net adds for the quarter ended June 30, 2002. While our business clearly has been affected by an overall industry decline in demand for new wireless services, we also have experienced a greater-than- expected reduction in the number of new sub-prime customers in our territory. As previously announced, we restored the $125 deposit requirement for new sub-prime credit quality customers on February 24, 2002 and this quarter represents the first full three months with this requirement in place. While we remain highly focused on sales execution and growing our subscriber base, we also recognize the critical importance of maintaining the quality of our customer base, reducing churn and minimizing bad debt expense. We believe this is the right business strategy for AirGate and will favorably position the Company to continue to achieve balanced growth in subscribers and operating earnings. We would expect higher levels of net additions during the second half of calendar 2002 as a result of both reduced churn and improved seasonality." Based on the revised guidance, the Company also indicated in the Midwest Region it will be challenged to meet the minimum subscriber covenant under the iPCS senior credit facility. As a result, the Company has implemented aggressive promotional offerings and increased advertising to stimulate sales in the Midwest Region. The Company is in discussions with the Administrative Agent for the iPCS senior credit facility regarding the potential need for amendment of this covenant. Finally, because of the reduction in net additions, the free cash flow date for iPCS may be extended by one quarter until September 2003, but the anticipated cash cushion at free cash flow is not lower than previously expected. The Company is issuing the following update to the guidance issued on April 30, 2002. Previous Guidance Revised Guidance April 30, 2002 as of June 5, 2002 ----------------- ------------------ Net Additions 35,000-40,000 22,000-27,000 ARPU $59-$61 $59-$61 Roaming Revenue $24 mill.-$26 mill. $25 mill.-$27 mill. Roaming Expense $21 mill.-$23 mill. $18 mill.-$20 mill. EBITDA $1 million loss- EBITDA positive $3 million loss Capital Expenditures Range of $17 million Range of $17 million Churn Consistent with Consistent with recent trends recent trends AirGate PCS, Inc., including its subsidiaries, is the Sprint PCS Network Partner with the exclusive right to sell wireless mobility communications network products and services under the Sprint brand in territories within seven states located in the southeastern and mid-western United States. The territories include over 14.6 million residents in key markets such as Grand Rapids, Michigan; Charleston, Columbia, and Greenville- Spartanburg, South Carolina; Augusta and Savannah, Georgia; Champaign-Urbana and Springfield, Illinois; and the Quad Cities areas of Illinois and Iowa. AirGate PCS is among the largest Sprint PCS Network Partners. As a Sprint PCS Network Partner, AirGate PCS operates its own local portion of Sprint's PCS network to exclusively provide 100% digital, 100% PCS products and services under the Sprint name in its territories. Sprint operates the nation's largest all-digital, all-PCS wireless network, already serving the majority of the nation's metropolitan areas including more than 4,000 cities and communities across the country. Sprint has licensed PCS coverage of more than 280 million people in all 50 states, Puerto Rico and the U.S. Virgin Islands. In mid-2002, Sprint plans to launch its 3G network nationwide and expects to deliver faster speeds and advanced applications on Sprint PCS 3G Phones and devices. For more information on products and services, visit www.sprint.com/mr. Sprint PCS is a wholly-owned tracking group of Sprint Corporation trading on the NYSE under the symbol "PCS." Sprint is a global communications company with more than 80,000 employees worldwide and $26 billion in annual revenues and is widely recognized for developing, engineering and deploying state-of-the-art network technologies. AMERICA WEST: Revenue Passenger Miles for May Slide-Up 0.3% ----------------------------------------------------------- America West Airlines (NYSE: AWA) reported traffic statistics for the month of May. Revenue passenger miles (RPMs) for May 2002 were a record 1.7 billion, up 0.3 percent from May 2001. The passenger load factor for the month of May was a record 75.5 percent, up 2.0 points from May 2001. Capacity for May 2002 decreased 2.4 percent from May 2001 to 2.3 billion available seat miles (ASMs). America West also recorded its sixth consecutive month of operating statistics at or near the top of the industry. For the month of May, America West's completion factor was 99.6 percent versus 98.0 percent in May 2001 and the airline's on- time arrival rate was 87.7 percent up from 77.0 percent in May 2001. Year-to-date load factor was also a record of 72.3 percent, up 1.1 points from 2001. Year-to-date revenue passenger miles were 7.6 billion, an 8.2 percent decrease from 2001. Available seat miles decreased 9.6 percent for the current year to 10.5 billion. America West also announced that, since implementing its new business-friendly pricing structure on March 24, 2002, its revenue per available seat mile (RASM) had improved versus the industry. America West's April RASM decline was well below the industry's reported domestic decline of 12.8 percent. Based on Wall Street analyst estimates of May RASM performance, America West believes its May RASM decline also will significantly outperform the industry average. This outperformance has occurred despite America West's capacity having been restored to within 2.4 percent of last year's levels while the industry's domestic capacity is still down approximately 10 percent year- over-year. "We are pleased to report record traffic and load factors," said W. Douglas Parker, chairman and chief executive officer. "Although the airline industry continues to struggle, America West's relative outperformance in traffic, load factor and revenue per available seat mile is encouraging. This outperformance is attributable to overwhelming consumer support of our new pricing structure and the hard work of our outstanding employees to produce record operating reliability." The following summarizes America West's May and year-to-date traffic results for 2002 and 2001: May 2002 May 2001 % Change -------- -------- -------- Revenue Passenger Miles (000) 1,717,591 1,712,466 0.3 Available Seat Miles (000) 2,275,903 2,330,756 (2.4) Load Factor (percent) 75.5 73.5 2.0 pts. YTD 2002 YTD 2001 % Change -------- -------- -------- Revenue Passenger Miles (000) 7,617,059 8,297,411 (8.2) Available Seat Miles (000) 10,542,307 11,660,908 (9.6) Load Factor (percent) 72.3 71.2 1.1 pts. America West Airlines, the nation's eighth-largest carrier, serves 88 destinations in the U.S., Canada and Mexico. America West Airlines is a wholly owned subsidiary of America West Holdings Corporation, an aviation and travel services company with 2001 sales of $2.1 billion. * * * As previously reported, Standard & Poor's raised its corporate credit ratings on America West Holdings Corp. and subsidiary America West Airlines Inc. to single-'B'-minus from triple-'C'- minus and removed them from CreditWatch, where they were placed September 13, 2001. Ratings on unsecured debt and various pass- through certificates were also raised. The outlook is negative. "Ratings have been raised due to the America West's improved liquidity after receipt of proceeds from a $429 million loan backed by the federal government, and expected improving financial performance as it benefits from over $600 million in concessions received in conjunction with the federal loan guarantee," said Standard & Poor's credit analyst Betsy Snyder. Although the company's liquidity has been enhanced, the company's fate will still depend on the expected recovery in the airline industry. If it is weaker than expected and/or another terrorist attack occurs, ratings could be lowered. Ratings on America West reflect risks relating to the adverse airline industry environment, a weak balance sheet, and limited financial flexibility, since it has no bank facilities and almost 90% of its assets are encumbered. These are offset somewhat by the company's relatively low operating costs, among the lowest in the industry. AMERICAN ENERGY: Continued Restructuring Talks with Noteholder -------------------------------------------------------------- The American Energy Group, Ltd., announced that its negotiations to date with the holder of the $1,500,000 note secured by the Company's Texas-based oil and gas leases, which matured on March 17, 2002, are continuing in an attempt to restructure the debt or to extend it until such time as the Company completes its ongoing efforts to achieve a capital infusion from investment and lending sources. The Company has negotiated an extension with the holder of the matured note, which postpones any potential sale of the collateral until July 2, 2002. In the event that the note is not paid by such date, there can be no assurance that continued negotiations with the holder of the matured note for further forbearance will be successful. The American Energy Group, Ltd. (OTC: AMEL) is an independent oil and gas exploration, drilling, and production company currently based in Houston, Texas, engaged in international exploration projects. AMERICREDIT CORP: Commences Tender Offer for 9-1/4% Senior Notes ---------------------------------------------------------------- AmeriCredit Corp. (NYSE:ACF) said it intends to commence a tender offer and consent solicitation for all of its outstanding 9-1/4% Senior Notes due 2004. AmeriCredit intends to fund the tender offer with the net proceeds from its proposed issuance of $300 million aggregate principal amount of notes. The tender offer is conditioned upon the consummation of the proposed sale of the notes and other general conditions. In connection with the tender offer, AmeriCredit will be soliciting consents to proposed amendments to the indentures governing the 9-1/4% Senior Notes due 2004. The proposed amendments would eliminate substantially all of the restrictive covenants and certain events of default from the indentures governing the notes. Holders that tender their notes will be required to consent to the proposed amendments, and holders that consent to the proposed amendments will be required to tender their notes. Tendering holders who validly tender their notes and deliver consents by the consent date, which is Wednesday, June 19, 2002, will receive total consideration of $1,023.13 per $1,000 principal amount of such notes. The total consideration includes a consent payment of $20.00 per $1,000 principal amount of 9-1/4% Senior Notes due 2004. Holders who validly tender their notes after the consent date will only receive tender consideration of $1,003.13 and will not receive the consent payment. The consent solicitation will expire at 5:00 P.M. New York City time, on Wednesday, June 19, 2002, and the tender offer will expire at 12:00 midnight, New York City time on Wednesday, July 3, 2002, in each case unless extended or earlier terminated by AmeriCredit. AmeriCredit currently plans to redeem, at a redemption price of $1,023.13 per $1,000 principal amount of such notes, all untendered 9-1/4% Senior Notes due 2004 in accordance with the terms and conditions of the indentures governing the notes. Copies of the tender offer and consent solicitation documents can be obtained by contacting D.F. King & Co., Inc., the Information Agent for the consent solicitation, at (800) 431- 9642. Bear, Stearns & Co. Inc. is acting as Dealer Manager for the tender offer and Solicitation Agent for the consent solicitation. Questions concerning the tender offer and the consent solicitation may be directed to Bear, Stearns & Co. Inc., Global Liability Management Group, at (877) 696-2327. AmeriCredit Corp. is the largest independent middle-market auto finance company in North America. Using its branch network and strategic alliances with auto groups and banks, the company purchases installment contracts made by auto dealers to consumers who are typically unable to obtain financing from traditional sources. AmeriCredit has more than one million customers throughout the United States and Canada and more than $13 billion in managed auto receivables. The company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit http://www.americredit.com AMERICREDIT: Proposes $300MM Private Sr. Unsecured Debt Offering ---------------------------------------------------------------- AmeriCredit Corp. (NYSE:ACF) is proposing a private offering of $300 million aggregate principal amount of senior notes to certain qualified institutional buyers. The purpose of the offering is to repurchase or redeem all of AmeriCredit's outstanding 9-1/4% Senior Notes due 2004 and for general corporate purposes, including using the proceeds of the offering to fund its growth; to increase the amount of automobile loans it can acquire, originate and hold for pooling and sale in the asset-backed securities market; to support securitization transactions; and for other working capital needs. The notes to be offered by AmeriCredit in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent such registration or an applicable exemption from the registration requirements. AmeriCredit Corp. is the largest independent middle-market auto finance company in North America. Using its branch network and strategic alliances with auto groups and banks, the company purchases installment contracts made by auto dealers to consumers who are typically unable to obtain financing from traditional sources. AmeriCredit has more than one million customers throughout the United States and Canada and more than $13 billion in managed auto receivables. The company was founded in 1992 and is headquartered in Fort Worth, Texas. For more information, visit http://www.americredit.com * * * As reported in the April 5, 2002 edition of Troubled Company Reporter, Fitch Ratings lowered the senior unsecured rating of AmeriCredit to 'BB' from 'BB+ '. The Rating Outlook has been revised to Stable from Negative. The rating action centers on concern regarding excessive growth well above internal capital formation, dependance on the secured markets for long-term financing, and volatility inherent in the company's short-term warehouse facilities due to the presence of rating triggers. The rating continues to reflect ACF's good performance to date, sophisticated risk management capabilities and a leading market position in subprime automobile finance. ACF's capitalization profile has continually declined following the company's secondary stock offering in August 1999. As of December 31, 2001, equity to managed assets has dropped to 8.99% from 10.50% at September 30, 1999. The primary driver behind the decline in capital ratios has been the company's robust receivable growth. ACF's managed auto receivables totaled $12.4 billion at December 31, 2001, an increase of 51% since December 31, 2000. The composition of ACF's capital structure remains weak. Securitization-based residual assets totaled $1.5 billion or 120% of total equity (equity does not include a deferred tax liability of approximately $140 million) at December 31, 2001. The value of these securitization-based residual assets is based on assumptions related to asset quality and prepayment speeds. Fitch assesses a significant risk-weight to these assets in its capitalization assessment. ACF has not supplemented its portfolio growth with additional common equity, further eroding its capital structure. The company remains heavily reliant on secured financing and securitization for funding growth over the intermediate term. Continued access to the securitization market remains vital to pay down warehouse lines. Fitch is concerned about the ultimate availability of warehouse funding that can occur in the event of a three-notch rating downgrade. AMERIGAS PARTNERS: Brings-In PwC to Replace Andersen as Auditors ---------------------------------------------------------------- On May 21, 2002, AmeriGas Propane, Inc., the general partner of AmeriGas Partners, L.P., determined to dismiss the Partnership's independent auditors, Arthur Andersen LLP, and to appoint PricewaterhouseCoopers LLP as the Partnership's new independent auditors. This determination followed AmeriGas' decision to seek proposals from independent accountants to audit the consolidated financial statements of the Partnership and was approved by AmeriGas' Board of Directors upon the recommendation of its Audit Committee. PWC will audit the consolidated financial statements of the Partnership for the fiscal year ending September 30, 2002. The company boosted its position as one of the top two US retail propane purveyors (rivaling Ferrellgas for the #1 slot) by buying the Columbia Energy Group propane businesses from NiSource in 2001. AmeriGas sells more than 1 billion retail gallons of propane annually. It serves residential, commercial, industrial, agricultural, motor fuel, and wholesale customers from more than 700 locations in all 50 states. AmeriGas also sells propane-related supplies and equipment and operates a prefilled portable tank service. As reported in the May 9, 2002 edition of Troubled Company Reporter, Fitch assigned a BB+ rating on Amerigas Partners' $40 million senior notes due 2011. AMES DEPT: Retains Plan Filing Exclusivity Until Feb. 28, 2003 -------------------------------------------------------------- Ames Department Stores, Inc. and its debtor-affiliates' Exclusive Period within which to propose and file a Plan of Reorganization is extended through February 28, 2003, and the Debtors' Exclusive Period during which to solicit acceptances of that plan is extended through April 29, 2003. (Ames Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARTHUR ANDERSEN: Milwaukee & NY Partners Join Grant Thornton ------------------------------------------------------------ Global accounting firm Grant Thornton LLP has acquired the Arthur Andersen Milwaukee middle market practice and additional middle market partners and staff from the Andersen New York office. This comes on the heels of the Monday acquisition of former Andersen offices in Charlotte (NC), Greensboro (NC) and Colombia (SC). A total of eight Arthur Andersen middle market partners and an additional 68 employees will join Grant Thornton in the deals. The former Andersen Milwaukee office will now operate under the Grant Thornton name, and will consist of three partners and 36 staff, all former Andersen employees. An additional five partners and 32 staff from the Andersen New York middle market practice will join the Grant Thornton New York office. Talks between Andersen and Grant Thornton will continue regarding possible additional office and professional additions that fit into the Grant Thornton middle market strategy. Grant Thornton is the leading global accounting, tax, and business advisory firm dedicated to serving the needs of middle- market companies. Founded in 1924, Grant Thornton serves public and private middle-market clients through 47 offices in the United States, and in more than 650 offices in 109 countries through Grant Thornton International. Grant Thornton's Web site address is http://www.GrantThornton.com AVISTA CORP: Obtains $225 Mill. New Credit Facility Arrangement --------------------------------------------------------------- Avista Corp. (NYSE: AVA) has entered into a $225 million committed line of credit, replacing an agreement that expired on May 29. The new, 364-day credit line represents a $5 million increase over the previous line. Avista also announced the extension of its accounts receivable program, which provides another form of cost-effective, short-term liquidity for the company. The new credit facility arrangement includes a group of banks, with the Bank of New York as lead arranger and administration agent and with Union Bank of California as the co-lead arranger and syndication agent. "Considering global events in the energy and utility markets and the continued tight credit available for energy companies in general, we are very pleased to be able to renew our credit facility at an increased level," said Jon E. Eliassen, senior vice president and chief financial officer for Avista Corp. "We believe this demonstrates recognition by our banks that we have strengthened our utility business, that we continue to build on positive relationships with state regulators, and that cash flows have improved significantly." Avista also renewed a receivables financing program for another year, through May 2003. Avista Receivables Corp. is a wholly owned, bankruptcy-remote subsidiary formed for the purpose of acquiring or purchasing interests in certain accounts receivable. Avista Receivables Corp. may sell, without recourse, up to $100 million of receivables on a revolving basis. This program, which was also increased from prior levels, provides Avista with cost-effective, short-term financing. Avista Corp. is an energy company involved in the production, transmission and distribution of energy as well as other energy- related businesses. Avista Utilities is a company operating division that provides electric and natural gas service to customers in four western states. Avista's non-regulated affiliates include Avista Advantage, Avista Labs and Avista Energy. Avista Corp.'s stock is traded under the ticker symbol "AVA" and its Internet address is http://www.avistacorp.com As reported in the March 13, 2002 edition of Troubled Company Reporter, Standard & Poor's affirmed Avista Corp.'s low-B ratings due to the company's weakening financial profile. B/E AEROSPACE: Releasing 1st Fiscal Quarter Results on June 18 -------------------------------------------------------------- B/E Aerospace, Inc. (Nasdaq:BEAV) will release its financial results for the first fiscal quarter prior to the opening of the Nasdaq Stock Market on Tuesday, June 18. The company will hold its regular quarterly conference call to discuss the results at 10:30 a.m. Eastern time on Tuesday, June 18. To listen live via the Internet, visit the Investors section of B/E's Web site at http://www.beaerospace.com B/E suggests that you check this link well in advance of the conference call to ensure that your computer is configured to receive the webcast. B/E Aerospace, Inc. is the world's leading manufacturer of aircraft cabin interior products, and a leading aftermarket distributor of aircraft component parts. With a global organization selling directly to the world's airlines, B/E designs, develops and manufactures a broad product line for both commercial aircraft and business jets and provides cabin interior design, reconfiguration and conversion services. Products for the existing aircraft fleet -- the aftermarket -- provide almost two-thirds of sales. For more information, visit B/E's Web site at http://www.beaerospace.com * * * As previously reported, Standard & Poor's has assigned a BB+ rating to B/E Aerospace's $150 million credit facility. However, the international rating agency revised its ratings outlook to negative following the September 11 terrorist attacks. BETHLEHEM STEEL: Arcelor Eyeing JV with Burns Harbor Plant ---------------------------------------------------------- The world's largest steelmaker, Arcelor SA, wants to get even bigger and says it has fixed its eyes set on Bethlehem Steel's Burns Harbor plant. Talks of a joint venture between Arcelor and Bethlehem Steel have been buzzing the past few weeks and have been reported in the Financial Times. Bethlehem Steel won't comment, except to say that Arcelor is one of several companies that have shown interest in Burns Harbor. The Burns Harbor plant manufactures automotive steel and is a business Arcelor knows well. Luxembourg-based Arcelor supplies automotive steel for one-third of all European cars. Bethlehem Steel earlier expressed their intention to exit from Chapter 11 by either forming a joint venture or through a sale. (Bethlehem Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1), DebtTraders reports, are quoted at a price of 10. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for real-time bond pricing. BRIDGE INFO: Hearing on Tax Claims to Continue Until June 12 ------------------------------------------------------------ The Court rules that the hearing on the objection to tax claims against Bridge Information Systems, Inc., and its debtor- affiliates will be continued until June 12, 2002 as it relates to the proofs of claim identified as: Creditor Claim # Claim Amount -------- ------- ------------ City of New York 566 $305,741 Department of Finance Attn: Nabil Iskander City of New York 422 $3,300 Department of Finance Attn: Nabil Iskander City of New York 504 $3,850 Department of Finance Attn: Nabil Iskander City of New York 547 $1,980 Department of Finance Attn: Nabil Iskander State of Tennessee 399 $357,762 Department of Revenue Attn: Wilbur E. Hooks State of Tennessee 400 $1,646,483 Department of Revenue Attn: Wilbur E. Hooks (Bridge Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Court Okays Two Trademark License Pacts Assumption -------------------------------------------------------------- Burlington Industries, Inc., and its debtor-affiliates obtained the Court's authority to assume: (1) a trademark license agreement dated September 1, 2001 with Arlington Socks GmbH & Co. KG and Kunert, AG; and (2) a trademark license agreement dated October 1, 2000 with Kayser-Roth Corporation. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger PA, in Wilmington, Delaware, relates that Burlington licenses the "BURLINGTON" trademark to Arlington. The Arlington Trademark Agreement, Mr. DeFranceschi explains, grants Arlington an exclusive license to use the BURLINGTON trademark in connection with: (a) Arlington's sale of socks and hosiery; and (b) certain men's apparel products and any other apparel product subsequently made subject to the Arlington Trademark Agreement by written amendment. According to Mr. DeFranceschi, the territory for the licenses granted under the Arlington Trademark Agreement includes countries in Europe, Asia and the Middle East. The initial term of the Arlington Trademark Agreement is: (a) eight years, expiring on December 31, 2009 with respect to the Hosiery Products Use; and (b) three years, expiring on December 31, 2004 with respect to the Apparel Products Use. Mr. DeFranceschi tells the Court that the scheduled royalties under the remaining term of the Arlington Trademark Agreement total approximately 3% of Net Sales per calendar quarter of each year. Pursuant to the Kayser Trademark Agreement, the Debtors also license the "BURLINGTON" and the "BURLINGTON CORPORATE WEAVE" trademarks to Kayser. Kayser is granted exclusive use of the trademarks in connection with its sale of socks and hosiery. The territory for the license includes the United States and all U.S. territories, possessions, military bases, and commissaries, Canada and Mexico. The term of the Kayser Trademark Agreement is approximately three years, expiring on December 31, 2003. "The scheduled annual royalties under the remaining term of the Kayser Trademark Agreement equal the greater of $1,000,000, payable in four quarterly installments, or 3% of Net Sales," Mr. DeFranceschi relates. (Burlington Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Firms-Up Future Structure & Restructuring Actions ------------------------------------------------------------- With the completion Friday of the sale of its bedding and window consumer products businesses and approval by the Court last week to sell its residential upholstery fabrics business, Burlington has established the future structure and the strategic direction for the company. "Only seven months into our reorganization and thanks to the hard work and efforts of many people, we have accomplished the strategic objectives of the company's reorganization as outlined in November," said George W. Henderson, III, Chairman and Chief Executive Officer. "We are moving aggressively to implement these actions and move forward as a stronger, more competitive company. Our actions remain focused on creating a solid base on which to grow our company and position us to effectively provide products that bring distinction and value to the market." The company's new structure, which is centered on elevating the company's ability to bring innovation and distinctive products to the market, includes the following businesses: Lees Carpets - Lees continues to be a market leader in commercial floorcovering with a reputation for innovation and performance. Burlington House - Going forward the Burlington House division will focus on fabrics for mattress coverings, bedding and window consumer products and high-performance commercial interior fabrics. Burlington WorldWide - Burlington WorldWide is the Hong Kong based, global marketing and product development organization to develop, source and distribute technology based fabrics worldwide. Burlington Apparel Fabrics - Burlington Apparel Fabrics is a leader in synthetics, wool and differentiated denim with plants in the United States and Mexico. Nano-Tex, LLC - Through our investment in and partnership with Nano-Tex, LLC, the company is providing technology, advanced performance and distinctive innovation across the diverse range of Burlington products. Henderson concluded, "We are pleased with the progress of our reorganization and our early results are very encouraging. Our plan is forward-looking and we are committed to transforming the company to be a leading global competitor. With the structure in place, our focus will be on implementing the necessary changes and moving forward as a new company." Burlington Industries, Inc. (OTC Bulletin Board: BRLG) 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. DebtTraders says that Burlington Industries' 7.25% bonds due 2005 (BRLG05USR1) are trading at about 16. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1 for real-time bond pricing. CPI AEROSTRUCTURES: Reaches Pact to Restructure Debt Facilities --------------------------------------------------------------- CPI Aerostructures, Inc. (Amex: CVU) said that it and its senior and subordinated lenders had reached agreement regarding the terms of a restructuring of its debt facilities, subject to the execution of definitive agreements to put them into effect. Under the new terms, one tranche of the senior bank loans, in a principal amount of $2,682,000, will be amortized at an amount beginning at $50,000 per month, increasing to $100,000 during the term, with a final payment of the balance due on June 30, 2003. A second tranche, for $734,000, the amount remaining from an equipment lease originally provided to CPI's Kolar subsidiary, will be amortized at $20,000 per month, with a final payment on June 30, 2003. The subordinated note issued in connection with the Kolar acquisition will mature ninety days after the maturity of the bank loans but not later than June 30, 2007. Until then, it will continue to accrue interest, which will be paid at maturity together with the principal amount. Terms of the existing mortgage for the Kolar buildings will remain in effect until the last two properties are sold. The sale of these buildings is expected to yield enough to extinguish the $280,000 mortgage debt, with any remaining proceeds to be applied against the first tranche of the term loans. "This restructuring will enable CPI to continue the growth trend that it has established over the past four years," stated CPI's President, Edward J. Fred. "Both the banks and the subordinated creditor have been extremely cooperative with the company, and have continued to work with us to get CPI on a solid financial footing. It is because of relationships like these that we look at the future of the company with great optimism," concluded Mr. Fred. Founded in 1980, CPI Aerostructures, Inc. is a sub-assembly manufacturer servicing the commercial and military sector of the aircraft industry. CELESTRON INT'L: Facing Meade's Second Patent Infringement Suit --------------------------------------------------------------- Meade Instruments Corp. (Nasdaq:MEAD) has filed a second lawsuit against Tasco Worldwide, Inc. and Celestron International, Inc., charging the two companies with infringement of Meade's newly issued telescope alignment patent, Patent No. 6,392,799, "Fully Automated Telescope System with Distributed Intelligence." The lawsuit also names as defendants any prospective purchasers of Tasco or Celestron assets (such as inventory, intellectual property or manufacturing facilities) who infringe Meade's newly-issued patent by making, selling, importing, or offering to sell infringing products. Meade took this step because of the liquidation proceedings reported last week, in which Tasco and Celestron have assigned their respective assets to an assignee. Such an assignment for the benefit of creditors can serve as an alternative to a voluntary Chapter 7 petition for bankruptcy. The lawsuit also names the assignee, James S. Feltman, as a defendant, alleging that he is infringing Meade's patent by manufacturing, selling, importing, or offering to sell infringing Celestron and Tasco models, including Celestron's NexStar 60 Series, NexStar 80 Series, NexStar 114 Series, NexStar 4, NexStar 5, NexStar 8, NexStar 8 GPS, NexStar 11 GPS, and Tasco's StarGuide ST-114000CT, ST-41325CT, ST-60700CC, ST- 60700CT, ST-80400CT, as well as possibly other products. As announced last week, Patent No. 6,392,799 covers Meade's revolutionary "level the telescope and point it North" or "level-North" telescope alignment procedure, invented by the Company in 1998, which allows a novice with no knowledge of the heavens to easily align a telescope's computer. It is one of Meade's fourteen issued U.S. patents or pending patent applications related to computerized telescopes. An earlier such patent (No. 6,304,376, also entitled "Fully Automated Telescope System with Distributed Intelligence") was the occasion for a pending lawsuit, filed in October, 2001, in which Meade has charged Tasco and Celestron with patent infringement and unfair competition. The second patent infringement lawsuit alleges that Tasco and Celestron intentionally copied Meade's proprietary telescope alignment technology and incorporated that technology into a wide range of their consumer telescope models. In addition to seeking compensation for damages incurred, the suit seeks to enjoin Tasco, Celestron and the other defendants from continuing to manufacture or sell products that infringe Meade's telescope alignment patent. John C. Diebel, Chairman and CEO of Meade, said: "Over the past several years Meade has expanded significantly the marketability of consumer telescopes by further developing automatic 'go-to' pointing capability and other advanced technical features, such as our revolutionary 'level-North' alignment technology. As we have stated previously, these inventions and the underlying intellectual property are significant assets of our company. We will continue to take all appropriate steps to protect these assets." Meade is a leading designer and manufacturer of optical products including telescopes and accessories for the beginning to serious amateur astronomer. Meade also offers a complete line of binoculars that address the needs of everyone from the casual viewer to the serious sporting or birding observer. The Company distributes its products worldwide through a network of specialty retailers, mass merchandisers and foreign distributors. Additional information on Meade is available at http://www.meade.com CELLPOINT INC: Completes Swedish Subsidiary's Reconstruction ------------------------------------------------------------ CellPoint Inc. (Nasdaq: CLPT), a global provider of mobile location software technology and platforms, has entered into a purchase agreement with the trustee for CellPoint's former Swedish subsidiary, CellPoint Systems AB. All assets will be purchased through the Company's new Swedish subsidiary, CellPoint AB. The Company formed a new wholly-owned subsidiary, hired the key personnel from its former subsidiary and is acquiring all assets from the bankruptcy trustee in an all cash deal. "The acquisition of our assets in conjunction with the retention of all key personnel ensures that CellPoint's customers and partners will continue to get the unparalleled technology solutions and customer service that CellPoint has always delivered," said Stephen Childs, President and CEO of CellPoint. CellPoint Inc. began negotiations with the trustee to complete the reconstruction of CellPoint Systems AB under the Swedish Bankruptcy Law instead of under the Swedish Reconstruction Act. After what the Company had termed to be a formal error by a court in Stockholm that put the subsidiary into bankruptcy, CellPoint was forced to forgo the formal composition it had entered into willingly. The end result proved to be more cost effective and allowed the Swedish subsidiary to emerge from bankruptcy more quickly and at a lower cost than through the formal composition the Company chose to pursue. With the bankruptcy matter solved, CellPoint will now proceed with the first tranches of funding through institutional investors in Switzerland and Sweden. The long-term funding plan is structured to allow CellPoint to receive funds as needed, in accordance with CellPoint's growth and strategic plan, with the goal to minimize stockholder dilution throughout this process. "This was the final stage of a comprehensive internal financial restructuring over the past year, and CellPoint emerges with a much-improved balance sheet that will allow us to continue our focus on commercial business opportunities and strategic partnerships," added Childs. The post-restructuring balance sheet shows a significant increase in equity since the quarter ended December 31, 2001 as a direct result of the Company's financial restructuring and litigation work during this calendar year. CellPoint Inc. (Nasdaq and Stockholmsborsen: CLPT) is a leading global provider of location determination technology, carrier- class middleware and applications enabling mobile network operators rapid deployment of revenue generating location-based services for consumer and business users and to address mobile E911/E112 security requirements. CellPoint's two core products, Mobile Location System and Mobile Location Broker, provide an open standard platform adapted for multi-vendor networks with secure integration of third-party applications and content. CellPoint's location platform has a seamless migration path to GPRS and 3G, supports 500,000 location requests per hour and can easily be scaled-up to handle increased traffic throughput. CellPoint's early entry and experience with European mobile operators has allowed the development of products and features that address key requirements such as active and idle mode positioning, international roaming, multiple location determination technologies and consumer privacy. CellPoint is a global company headquartered in Kista, Sweden. For more information, please visit http://www.cellpoint.com CHART INDUSTRIES: Names van Glabbeek as VP for Strategic Dev't -------------------------------------------------------------- Chart Industries, Inc. (NYSE:CTI) announced the appointment of G. Jan F. van Glabbeek to the newly created position of Vice President -- Strategic Development. In this position, Jan van Glabbeek will report directly to Arthur S. Holmes, Chairman and Chief Executive Officer, and be responsible for assisting Chart in its development and execution of plans for operational reorganization, consolidation, asset divestiture and other special projects. Mr. van Glabbeek previously was responsible for operational and development programs in India for Eaton Corporation, a global diversified industrial manufacturer headquartered in Cleveland, Ohio. He joined Eaton in 1991 to acquire and manage capital investments in eastern Germany, and was appointed in 1993 to manage the sales, marketing, product engineering, R&D and product supply functions for Eaton's Engine Components Division in Europe. Mr. van Glabbeek became Eaton's country manager for India in 1998. Prior to Eaton, he served in various executive positions both in the U.S. and overseas at TRW Inc., from 1984 to 1991, and at Gulf Oil, from 1970 to 1984. "Jan will play a significant role in Chart's ongoing operational reorganization activities," said Mr. Holmes. "He brings a wealth of experience, particularly in the areas of manufacturing operations, restructuring and development. I am confident that his skills and leadership will assist us in achieving our goals of consolidating operations, rationalizing costs and unlocking the value of non-core assets," Mr. Holmes concluded. Mr. van Glabbeek earned a B.S. in Mechanical Engineering from the School of Higher Technical Learning in Utrecht, The Netherlands, and later received a Graduate Certification in International Business from Nijenrode University in Breukelen, The Netherlands. He also has earned an MBA from Syracuse University and participated in executive and manufacturing programs at the University of Michigan. Chart Industries, Inc. manufactures standard and custom-built industrial process equipment primarily for low-temperature and cryogenic applications. Headquartered in Cleveland, Ohio, Chart has domestic operations located in 12 states and international operations located in Australia, China, the Czech Republic, Germany and the United Kingdom. * * * As previously reported, Chart Industries' Chairman and Chief Executive Officer Arthur S. Holmes commented on the company's first quarter results, saying that "[t]he first phase of [the company's] financial restructuring was completed in the first quarter of 2002." Additionally, Mr. Holmes stated that after securing bank amendments to the company's credit facilities, "[the company is] now able to focus on methods of paying down debt and reducing Chart's leverage, ultimately leading to improved shareholder value." "Going forward, we are finalizing a review of possible operational restructuring actions which could result in substantial future improvements in our earnings. When implemented, these initiatives could result in additional non- recurring charges to operations in future quarters, but are planned to result in rapid paybacks. We also continue to focus on potential sources of additional capital and are currently in discussions with several investor groups, including one group that is at an advanced stage of due diligence, regarding a potential investment in the Company. Finally, we are pursuing the sale of certain assets that are non-core." COMDISCO INC: Court Approves KPMG's Engagement as Fin'l Advisors ---------------------------------------------------------------- Comdisco, Inc., and its debtor-affiliates seek the Court's authority to employ and retain KPMG LLP as their financial advisors, nunc pro tunc to April 11, 2002. Robert E. T. Lackey, the Executive Vice President, Chief Legal Officer and Secretary of the Debtors, recounts that the Debtors entered into a Retainer Agreement with Arthur Andersen as their Financial Advisor. Due to the controversies of the Andersen firm, both partners and employees of Arthur Andersen have been leaving the firm to pursue other interests. "The impact of Andersen's current situation has directly affected the team that has been working on the Debtors' cases," Mr. Lackey states. Thomas J. Allison and Kevin A. Krakora, two of the most critical members of the Andersen team, have resigned from their positions at Andersen's. These two members along with the junior employees under them have been integral in the Debtors' cases including, their examination of the Debtors' assets in Europe, their analysis of the over 4,000 claims filed against the estates and the formulation of the liquidation analysis included in the Debtors' disclosure statement. "Despite the fact that Mr. Allison and Mr. Krakora have left Arthur Andersen, it is critical that the Debtors retain these individuals who have been working with their cases from the very beginning," Mr. Lackey adds. Mr. Krakora is now a Principal in KPMG's Corporate Recovery group. Mr. Lackey tells the Court that Mr. Krakora has been a restructuring advisor for over ten years and is qualified to act as a financial advisor to the Debtors' in these cases. Mr. Krakora has assisted the Debtors in addressing and resolving their pre-petition liquidity crisis, worked with the Debtors in business planning and advised the Debtors regarding their restructuring. In addition, Mr. Krakora has knowledge of the Debtors' accounting systems, business operations and the specific financial issues at the Debtors' cases. Most importantly, Mr. Krakora has extensive residual knowledge of the Debtors and their proceedings, which includes his critical role in the claims analysis and liquidation analysis. Mr. Lackey explains that in order to avoid incurring cost and delay associated with retaining a financial advisor devoid of the residual knowledge possessed by Mr. Krakora, the Debtors determine it is imperative to retain KPMG. The Debtors have also expressed an interest in retaining Huron Consulting Group as their financial advisor. Tom Allison, has joined Huron after leaving Arthur Andersen's firm. Mr. Lackey relates that the services to be provided by KPMG will not be duplicative of those to be provided by Huron and KPMG will accordingly coordinate with Huron or Arthur Andersen to avoid duplication of effort. The professional services that will be required of KPMG includes: (i) analyzing financial and other information as necessary to maintain an understanding of the Debtors' operations and financial position; (ii) assisting the Debtors in connection with financial reporting matters resulting from the bankruptcy and restructuring, and preparation of any reports required by the Court or the U.S. Trustee; (iii) analyzing and commenting on cash or other projections and submissions to the Court of reports and statements of receipts, disbursements and indebtedness; (iv) assisting the Debtors with formulating a plan of reorganization and preparation of an accompanying disclosure statement; (v) assisting the Debtors with issues relating to the confirmation of a plan of reorganization, including assistance with claims resolution; (vi) discussing with the Debtors' management and counsel in connection with other business matters relating to the activities of the Debtors; (vii) assisting the Debtors with the preparation of a liquidation analyses; (viii) providing litigation consulting services and expert witness testimony as required; (ix) assisting the Debtors in preparing communications to employees, customers, and creditors; (x) working with accountants and other financial consultants for the banks, committees and other creditor groups; and (xi) providing other financial and business advisory services as required by the Debtors and their legal counsel. Mr. Lackey states that KPMG's requested compensation for professional services rendered will be based upon the hours actually expended by the assigned professional's hourly billing rate. "The Debtors have agreed to compensate KPMG for professional services rendered at its normal and customary hourly rates," Mr. Lackey adds. In the normal course of business, KPMG revises its hourly rates every October 1 of each year. The normal and customary hourly rates for financial advisory services to be rendered are: Partners/Principals $510-$570 Managing Directors/Directors $420-$480 Senior Managers/Managers $330-$390 Senior/Staff Consultants $240-$300 Associate $150-$210 Paraprofessionals $120 Mr. Lackey further informs the Court that KPMG will also seek reimbursement for necessary expenses including travel, photocopying, delivery service, postage, vendor charges and other out-of-pocket expenses incurred in providing professional services. KPMG intends to apply to this Court for the allowance of compensation and reimbursement of expenses. Kevin A. Krakora, a Principal of KPMG LLP, asserts that KPMG does not hold or represent an interest adverse to the Debtors or their estates that would impair KPMG's ability to objectively perform the professional services expected of them. "While KPMG has provided tax and audit services to the Debtors since 1971, and will continue to do so, their disinterestedness is not affected," Mr. Krakora states. Although KPMG has in the past been retained by, and will still likely provide services for certain of the Debtors' creditors and other parties in interest, Mr. Krakora assures that it would be for matters totally unrelated to the Debtors' cases. Accordingly, KPMG is a "disinterested person" as defined by Section 101(14) of the Bankruptcy Code. * * * Judge Barliant approves the application to retain KPMG as the Debtors' Financial Advisors nunc pro tunc to April 11, 2002. (Comdisco Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVANTA ENERGY: Intends to Execute CPPI Restructuring Documents --------------------------------------------------------------- Two Debtors, Covanta Energy Corporation and Covanta Energy Americas, Inc., ask the Court to allow them to execute two documents relating to the restructuring of certain secured obligations of non-debtor affiliate, Covanta Power Pacific, Inc. Vincent E. Lazar, Esq., at Jenner & Brock, LLC, in Chicago, Illinois, reports that Covanta Power is a party to a pre- petition Loan Agreement dated April 10, 1998 with Bayerische Hypo-Und Vereinsbank, A.G. as Agent and Lender, and Landesbank Hessen-Thuringer Girozentrale, New York Branch as Lenders. To secure Covanta Power's obligations: (a) Covanta Power granted the Lenders liens and security interests on and in certain of its assets; (b) Covanta Energy Americas pledge its stock interests in Covanta Power to the Lenders; and (c) Covanta Energy Corp. agreed, through a Tax Credit Agreement with Covanta Power, to purchase certain tax credits from Covanta Power; and (d) a non-debtor Covanta Energy Group, Inc. agreed, through a Revolving Note Agreement, to repay to Covanta Power, in the event of certain cash deficiencies in the amounts necessary to service its holding company level debt, up to $10,000,000 that has been transferred upstream from Covanta Power to Covanta Energy Group. The Note is being held by the Lenders. Prior to the Petition Date, Mr. Lazar relates, Covanta Power and the Lenders agreed to restructure certain features of the Loan Agreement and related documents, particularly: (a) both the Tax Credit Agreement and the Revolving Note Agreement would be terminated; (b) the Loan Agreement and related documents would be modified to, among other things, eliminate the bankruptcy filing of Covanta Energy Americas and other Debtors as events of default under the applicable Covanta Power loan documents; (c) Covanta Power would be permitted to grant certain subordinated liens as adequate protection in connection with the Debtors' Chapter 11 cases; and (d) a $5,000,000 debt reserve would be created from Covanta Power's funds as further security for Covanta Power's obligations arising under the Loan Agreement. However, Mr. Lazar clarifies that the termination of the Tax Credit Agreement and the Revolving Note Agreements, and the consent of Covanta Energy Americas are conditions to the effectiveness of the restructuring. Accordingly, the Debtors ask the Court to approve the execution of: (a) a Termination of Tax Credit Agreement; and (b) a Parent Consent, to which Covanta Energy Americas would consent to Covanta Power's execution of the amendments to the Loan Agreement. Mr. Lazar contends that the Court should approve the motion because if the restructuring will not push through, the Lenders may be entitled to immediately setoff against more than $10,000,000 in Covanta Power's accounts over which they exercise control, thereby disrupting the flow of cash to the Debtors' Centralized Cash Management System. Moreover, execution of the Termination of Tax Credit Agreement and Parent Consent will maximize the value of Covanta Energy Americas' equity interest in Covanta Power and its affiliates by avoiding a default or the necessity for a potentially costly and unpredictable Chapter 11 proceeding for Covanta Power and its subsidiaries. The two agreements would also prevent the exposure of the Debtors' estates to any new or additional liability, Mr. Lazar concludes. (Covanta Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Gets Court's Nod to Enter Into Forbearance Agreement ---------------------------------------------------------------- Enron Corporation and its debtor-affiliates obtained the Court's authority to enter into a Forbearance Agreement as well as approval of the terms of the settlement, resolving disputes regarding a Sublease under a Land and Facilities Lease Agreement date April 8, 1997 between Brazos Office Holdings, L.P. and Enron Leasing Partners, L.P. -- a non-debtor affiliate. The property subject to the Lease is the Enron Corporation's and its debtor-affiliates' corporate headquarters located at 1400 Smith Street, Houston, Texas. The terms of a Forbearance Agreement that provides: -- From the date certain conditions precedent are met, through March 31, 2003, subject to the early termination provisions of the Forbearance Agreement, the Agent and the Banks will not commence any legal proceeding or take any other action against any of the Enron Parties to collect the Basic Rent, Additional Rent or other amounts due under the Facilities Lease or other Credit Documents or to foreclose its or the Borrower's Liens on the Property or to enforce against any of the Enron Parties any of its or the Borrower's other rights and remedies under the Facilities Lease or other Credit Documents. -- Enron will make an Initial Payment from Enron to the Agent, for the benefit of the Banks and for the account of ELP, on the date for payment specified in a written notice from the Agent to Enron given not less than one Business Day prior to the specified payment date, in the amount of the sum of: (A) $4,172,000; and (B) a per diem, in the applicable per diem amount set forth in the Forbearance Agreement, for each day after April 29, 2002 and through and including the specified payment date. -- On the first day of each month during the Forbearance Period, following the payment of the Initial Payment, Enron will pay to the Agent, for the benefit of the Banks, an amount equal to the product of the applicable per diem amount set forth in the Forbearance Agreement multiplied by the number of days since the last such payment was due. -- As a condition precedent to the commencement of the forbearance, the Bankruptcy Court will have entered an order approving Enron's payment of all pre-petition taxes due and owing with respect to the Property, and Enron must pay such taxes or cause them to be paid in full. -- Enron must pay or cause to be paid all taxes in full when due and owing with respect to the Property for the tax year that commenced January 1, 2002. -- The Debtors cannot lease or sublease the Property, grant any other rights of occupancy or use of the Property, or assign or consent to the assignment of any lease, sublease or other rights, without the prior written consent of the Agent and the Majority Banks, except that, without consent, Enron may assign its rights under the Sublease to any direct or indirect wholly owned subsidiary of Enron, so long as such assignment does not release any of the Enron Parties from any of their respective obligations under the Facilities Lease, the Sublease, the Consent and Agreement, or the Subordination Agreement. -- The Debtors will not create or permit any Lien to be on the Property except: (A) the Liens of the Agent for the benefit of the Banks, (B) the Liens of the Borrower under the Credit Documents, (C) the Liens disclosed on Schedule A to the extent junior to the Liens described in clauses (A) and (B), and (D) other mechanics' and materialmen's liens created after the date hereof in respect of work performed or materials delivered prior to December 2, 2001, none of which secures individually an obligation in excess of $250,000, and which are junior to the Liens described in clauses (A) and (B). -- The Agent, the Banks and the Borrower will have an allowed administrative claim in any case of the Enron Parties under the United States Bankruptcy Code for all unpaid amounts that become due and payable from any Enron Party under the Forbearance Agreement. (Enron Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Court Appoints Neal Batson as Enron Corp. Examiner -------------------------------------------------------------- Judge Gonzalez approves the appointment of Neal Batson as the Examiner for Enron Corporation. "All professionals retained by Mr. Batson as the Examiner of Enron Corp. shall be pursuant to the standards of Section 327(a) of the Bankruptcy Code, and all fees of the Examiner and his professionals shall be pursuant to fee applications under the standards of Section 330 and 331," Judge Gonzalez rules. (Enron Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003 (ENRON2) are quoted at a price of 12.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2for real-time bond pricing. EXIDE: Court Okays Proposed Uniform Reclamation Claim Protocol -------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained Court approval of its proposed uniform procedures for processing and treatment of reclamation claims: A. Any vendor asserting a claim for reclamation must satisfy all requirements entitling it to have a right of reclamation under applicable state law and Bankruptcy Code Section 546(c)(1); B. After receipt of all reclamation demands and an opportunity to review such demands, the Debtors will file a Notice, and serve the Reclamation Notice on parties in interest, listing those reclamation claims and amounts, if any, which it deems to be valid pursuant to the Order requested herein; C. Absent further order of the Court, the Reclamation Notice Must be filed by the Debtors within 90 days of the Court's ruling upon this Motion; D. If the Debtors fail to file the Reclamation Notice within the required period of time, any holder of a reclamation claim may bring a motion on its own behalf, but may not bring such a motion earlier than 90 days after the Court's ruling on this Motion; E. All parties in interest have the right and opportunity to object to the inclusion or omission of any asserted reclamation claim in the Reclamation Notice as set forth therein; F. Any reclamation claim that is included in the Reclamation Notice and is not the subject of an objection within 20 days after service, will be deemed a valid reclamation claim allowed by the Court; and G. All valid reclamation claims pursuant to the above-described procedure will be deemed administrative expenses of the Debtors' estates, subject to the requirements of applicable law. (Exide Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) FARMLAND INDUSTRIES: Gains Nod to Use $306 Million DIP Financing ---------------------------------------------------------------- Farmland Industries, Inc. has received approval from the U. S. Bankruptcy Court for its first day pleadings under a voluntary petition for Chapter 11 bankruptcy protection. The approvals include allowing Farmland to begin using $306 million of debtor- in-possession financing it secured to continue its business operations while working its way through the bankruptcy process. On May 31, 2002, Farmland Industries filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. At the time of the filing, Farmland had arranged the DIP financing through a group of leading financial institutions led by Deutsche Bank, Farmland's primary lender. "This is an important first step in regaining our financial stability as we begin our restructuring," said Bob Terry, chief executive officer of Farmland Industries. "Approval of this financing allows us to maintain our regular business activities while reassuring our stakeholders that Farmland will continue to meet our post-petition financial commitments in a timely way." In other actions, the court approved a motion to apply DIP financing to ongoing costs of normal business operations, including payments to vendors and suppliers for goods and services received post-petition. In addition, the court authorized the payment of wages, salaries, reimbursable employee expenses, and medical and other employee benefits incurred prior to and after the bankruptcy filing. In addition, the court approved Farmland's motion to continue to honor its obligations under the Packers and Stockyard Act, namely payments to livestock producers in order to ensure a continuous, reliable product supply for its food business. Farmland also received court approval to appoint Bankruptcy Management Corporation (BMC) to help with the administration of creditor claims. BMC will serve as Farmland's agent, providing notices, claims processing, balloting and other support services. Creditors are encouraged to visit http://www.bmccorp.netfor more information concerning filing a claim, accessing copies of pleadings or receiving notices of upcoming hearings and other court actions. The approval of Farmland's motions followed a meeting of unsecured creditors and a bankruptcy court hearing late yesterday. Farmland Industries, Inc., Kansas City, Missouri, -- http://www.farmland.com-- is a diversified farmer-owned cooperative 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 in more than 30 countries. FIRST UNION: S&P Lowers Ratings on 3 Series 1997-C2 Classes ----------------------------------------------------------- Standard & Poor's lowered its ratings on three classes of First Union-Lehman Brothers Commercial Mortgage Trust's commercial mortgage pass-through certificates series 1997-C2. Concurrently, ratings are affirmed on the remaining 10 classes of the same series. The rating actions reflect the fact that the mortgage loan pool includes 18 delinquent loans ($64.6 million, or 3.2% of the pool balance), and a number of watchlist loans that are a concern. These negatives are offset by increased credit enhancement levels and stable financial performance since issuance. Standard & Poor's calculated the weighted average debt service coverage for the remaining loan pool (based on 73.1% of the loan pool reporting interim or year-end 2001, and excluding 65 credit tenant leases totaling 10.8%) to be 1.42 times, an increase from 1.37x at issuance. In addition, Rite Aid Corp.'s credit tenant leases total $40.6 million, or 1.8% of the loan pool. Since the issuance of this transaction, Standard & Poor's has lowered its corporate credit rating on Rite Aid Corp. to single-'B' from triple-'B'-plus. Nine of the 90-day delinquent loans, which are credit tenant leases, have the same borrower and are secured by Revco drugstores (acquired by CVS Corp.; Standard & Poor's single-'A' rating). The special servicer, CRIIMI MAE Services L.P. (CRIIMI), advised Standard & Poor's that the Revco stores are performing well, the tenants are making lease payments, and that the outstanding issues are with the borrower, who diverted the payments. A lockbox is now in place for all nine stores. CRIIMI stated that the borrower has agreed to make up the delinquent principal payments, but has not agreed to pay default interest and late fees. Of the remaining nine loans, CRIIMI anticipates losses of about $8.4 million on six of the delinquent loans and is awaiting receipt of updated appraisals on the other three to determine potential losses, or appraisal reductions. Standard & Poor's is concerned about three delinquent loans that have large potential losses. One, a $13.5 million loan, is secured by a retail center in Brandon, Fla., where the three anchors have vacated and occupancy has declined to 37%. CRIIMI has serviced this loan since July 2001 and anticipates a loss of about $2.2 million, based on an October 2001 appraisal. The second is a $9.9 million loan that is secured by an industrial building located in Farmingdale, N.J. that has environmental issues. CRIIMI initiated a lawsuit against the originator in October 2001 to repurchase this loan due to pre-existing environmental conditions. The litigation is ongoing, which means that the potential loss is not known at this time. Lastly, a $17.6 million loan secured by a Sheraton Hotel located in Maitland, Fla. reported 49% occupancy for March 2002 and 42% in April 2002, with average-daily-rates in the low $80s. In addition, the borrower diverted funds from the lockbox and filed bankruptcy in February 2002. CRIIMI is awaiting the findings of the hotel's financials from a forensic accountant; therefore, the potential loss is unknown at this time. As of May 2002, the trust had incurred a realized loss of $1.25 million. CRIIMI placed 107 loans (24.2% of the loan pool) on its watchlist as of May 2002. The number of watchlist loans is relatively high due to the expanded guidelines of the Commercial Mortgage Securities Association. Ninety loans are on the watchlist primarily because of occupancy changes and significant lease expirations. However, these loans did report year-end 2001 DSC ratios of more than 1.10x. Standard & Poor's does not view these loans as immediate concerns. Of greatest concern are the 17 loans on the watchlist because their DSC ratios have declined below 1.0x. These 17 loans were stressed, together with all of the delinquent loans in the loss analysis. Given the conversations with the servicers and the resulting credit support levels, Standard & Poor's believes that the rating actions on this transaction is adequate. As of May 2002, the mortgage pool balance decreased to $1.9 billion with 402 loans from $2.203 billion, with 422 loans at issuance. Retail, multifamily, and office are the three most common property types representing 38%, 31%, and 12% of the outstanding pool balance, respectively. The properties are located in 31 states with Florida (14.4%), New York (11.9%), and Texas (10.2%) exceeding a 10% concentration. The top 10 loans represent 15.3% of the mortgage pool, and recent property inspection reports revealed that all of the properties are in good condition. Ratings Lowered First Union-Lehman Brothers Commercial Mortgage Trust Commercial mortgage pass-thru certs series 1997-C2 Rating Class To From Credit Support (%) ----- -- ---- ------------------ J B- B 3.25 K CCC+ B- 2.15 L CCC- CCC 0.77 Ratings Affirmed First Union-Lehman Brothers Commercial Mortgage Trust Commercial mortgage pass-thru certs series 1997-C2 Class Rating Credit Support (%) ----- ------ ------------------ A-1 AAA 30.82 A-2 AAA 30.82 A-3 AAA 30.82 B AA 25.31 C A 19.79 D BBB 13.73 E BBB- 12.07 F BB+ 8.77 G BB 6.28 H BB- 5.46 FLOWSERVE CORP: Will Padlock 6 Facilities & Slash 450 Positions --------------------------------------------------------------- Following Flowserve Corporation's (NYSE:FLS) acquisition of the Invensys Flow Control division, which was finalized on May 2, 2002, the company announced initiatives to help realize the previously announced $10-to-15 million in estimated annual synergies expected by December 2003. The company said it would close six facilities and reduce related employment by approximately 450 positions. The majority of these reductions are planned to occur before March 2003. The company expects to complete all consolidation actions by December 2003. "The acquisition of IFC was primarily a complementary transaction that significantly broadened our offering of valve products and service, simultaneously propelling Flowserve into position as the world's second largest valve producer," said C. Scott Greer, chairman, president and chief executive officer of Flowserve Corporation. "To help us meet our announced plan to our shareholders to reduce costs and grow our business, we must leverage and optimize the resources of the combined companies. While it is never pleasant, we've had to make some difficult decisions regarding facilities and personnel." Steps announced by the company today include: -- The closure of the Jeffersonville, Indiana, site, affecting 201 people. -- Production from this facility will be moved to Sulphur Springs, Texas. -- The closure of the Marlborough, Massachusetts, site, affecting 49 people; Olive Branch, Mississippi, affecting 66 people; Liberty, North Carolina, affecting 66 people; and Scarborough, Ontario, affecting 25 people. Production from these facilities will be moved to Cookeville, Tennessee. -- The closure of the Provo, Utah site, affecting 50 people. Production from this facility will be split between Springville, Utah and Lynchburg, Va. "Because I recognize decisions like these create a very difficult time for the employees and their families, we will offer the affected people severance pay and transition assistance. However, these actions are a necessary part of the company's strategy to capture synergies and achieve significant cost savings by reducing overcapacity and eliminating overlap between the two companies," Greer said. The announced moves could increase employment at the receiving sites. Greer said the total number of new jobs created depends upon two variables: the number of people who elect to accept an offer to relocate and the staffing needs of the receiving sites as the relocated manufacturing lines become operational. Flowserve Corp. is one of the world's leading providers of industrial flow management services. Operating in 34 countries, with pro forma 2001 sales of $2.4 billion and more than 14,000 employees, the company produces engineered pumps for the process industries, precision mechanical seals, automated and manual quarter-turn valves, control valves and valve actuators, and provides a range of related flow management services. More information about Flowserve Corp. can be obtained by visiting the company's Web site at http://www.flowserve.com As reported in the March 28, 2002 edition of Troubled Company Reporter, Standard & Poor's affirmed Flowserve's BB- rating due to the company's higher financial risks. FOAMEX INT'L: Appoints Luis Echarte to Board of Directors --------------------------------------------------------- Foamex International Inc. (NASDAQ: FMXI), the leading manufacturer of flexible polyurethane and advanced polymer foam products, told investors at its annual shareholders meeting that, effective July 1, 2002, it will raise prices by 16%. Other foam manufacturers have recently announced similar price increases. The Company is also informing affected customers of the increase. The increases will be put in place across all Foamex product divisions except the Company's Carpet Cushion Group, which previously announced an increase of 8% effective June 3, 2002. The increases are intended to offset substantial increases in the price of raw materials from major chemical suppliers. Foamex also told shareholders it will record an adjustment to its deferred income taxes in the quarter ending June 30, 2002. The adjustment will reverse approximately $99 million of a previously recorded valuation allowance in accordance with Statement of Financial Accounting Standards No. 109. The adjustment is based on a review by the Company in which it was determined, based on the weight of available evidence, that Foamex is now more likely than not to realize its net deferred tax assets. As a result, Foamex's net income for the current quarter will increase by approximately $75.8 million, or approximately $2.83 per diluted share. The remainder of the adjustment will decrease goodwill and other comprehensive loss on the balance sheet at June 30, 2002. Separately, following the annual meeting, Foamex announced the election of Luis J. Echarte, a senior executive with extensive international experience, to the Foamex Board of Directors. Echarte, 57, will also serve on the Board's Audit and Compensation Committees. The addition of Echarte increases the size of the Board to 10 directors. Echarte has had a distinguished career of more than 30 years in global finance. He has held increasingly senior level positions in companies such as Bacardi Imports, Inc., Grupo Elektra (a NYSE-traded, leading Latin American retailer and consumer finance company), and Grupo Salinas (one of Mexico's five largest corporate groups). Currently, Echarte is President and Chief Executive Officer of Azteca America Network, TV Azteca's wholly owned Spanish language broadcasting network for the US Hispanic market. Marshall S. Cogan, chairman and founder of Foamex, said, "As we continue to grow the Company, we are pleased to have Luis join our Board of Directors and help us take Foamex to the next level. His extensive international management experience and financial expertise with prominent US and Latin American publicly-traded companies will be a strategic advantage to Foamex as we execute on our goal of marketing quality flexible polyurethane and advanced polymer foam products in industrial and consumer markets throughout the world." Luis Echarte said, "I am delighted to be joining the Foamex Board at a time of exciting growth opportunities for the company. As evidenced in the past year, Foamex is succeeding in its efforts to increase shareholder value, and I look forward to assisting in that goal." Echarte serves on the Boards of Directors of TV Azteca and the Actinver Fund. He is also a member of the Chief Executives Organization, the Mexican Institute of Finance Executives, and the World Presidents Organization. Foamex, headquartered in Linwood, PA, is the world's leading producer of comfort cushioning for bedding, furniture, carpet cushion and automotive markets. The Company also manufactures high-performance polymers for diverse applications in the industrial, aerospace, defense, electronics and computer industries as well as filtration and acoustical applications for the home. For more information visit the Foamex Web site at http://www.foamex.com Foamex's December 31, 2001 balance sheet shows a total shareholders' equity deficit of about $108 million. FOSTER WHEELER: Agrees to Term Sheet on $290MM Loan Facilities -------------------------------------------------------------- Foster Wheeler Ltd. (NYSE:FWC) has signed a term sheet with its bank group, led by Bank of America, N.A., for a $289.9 million bank credit facility. On May 31, 2002, the company announced that it had obtained further extensions through June 30, 2002 of both its waiver under its current revolving credit facility and the forbearance of remedies for its lease financing facility. These extensions were necessary in order to finalize the terms of a definitive agreement. "I am extremely pleased that we have reached preliminary agreement on the terms of a new credit facility for the company," said Raymond J. Milchovich, chairman, president and chief executive officer. "Achievement of this milestone is excellent news for all Foster Wheeler stakeholders." Under the terms and conditions agreed to by the parties, the new facility, which will mature in 2005, includes a term loan, a revolving credit facility and a letter of credit facility. It will be secured by a first-priority lien on Foster Wheeler's domestic assets. This lien will be shared with holders of Foster Wheeler's senior notes to the extent required by the senior note indenture. Finalization of this senior credit facility is subject to meeting a number of conditions, including the refinancing or replacement of Foster Wheeler's existing sale/leaseback facility for a portion of its corporate headquarters, the replacement of its recently terminated receivables securitization facility, and to documentation acceptable to lenders. Milchovich also said, "We are highly confident that the progress toward obtaining a new credit facility and the financial foundation this will provide, combined with the significant improvements we are making in project operations and reducing costs, will dramatically improve our ability to create value for our worldwide customer base in the future." Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, plant operation and environmental services. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit our World-Wide Web site at http://www.fwc.com Foster Wheeler Corporation's 6.75% bonds due 2005 (FWC) are quoted at a price of 48, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FWCfor real- time bond pricing. FRIEDE GOLDMAN: Board Chair T. Jay Collins Assumes CEO Position --------------------------------------------------------------- The Board of Directors of Friede Goldman Halter (OTCBB:FGHLQ) have added the title of Chief Executive Officer to Mr. T. Jay Collins who presently serves as Chairman of FGH. Mr. Collins is overseeing the final stages of the bankruptcy process from the Board level, while continuing his full-time position as President of Oceaneering International, Inc. Mr. Jack Stone, who served as interim CEO, will continue his focus as the Chief Restructuring Advisor to FGH. Mr. Stone is a principal of Glass & Associates, Inc., a nationally prominent management-consulting firm, has been advising the Board of Directors since October 2001 on restructuring matters. In accepting the position, Mr. Collins stated, "As we move this restructuring to its conclusion the Reorganization Committee and the Board of Directors of Friede Goldman will continue to work diligently with the Creditors Committee to maximize the value of the estate for both the secured and unsecured creditors." Friede Goldman Halter is a leader in the design and manufacture of equipment for the maritime and offshore energy industries. Its core operating units are Friede Goldman Offshore (construction, upgrade and repair of drilling units, mobile production units and offshore construction equipment) and Halter Marine, Inc. (a significant domestic and international designer and builder of small and medium sized vessels for the government, commercial, and energy markets). GALEY & LORD: U.S. Trustee Amends Official Creditors' Committee --------------------------------------------------------------- The U.S. Trustee amends the membership of the Official Committee of Unsecured Creditors appointed in the chapter 11 cases involving Galey & Lord, Inc. The UST names these unsecured creditors to serve on the Committee: 1) Barclays Capital 22 Broadway New York, NY 10038 Attn: Mike Econn, CFA Tel. No. 212 412-7689 2) Weil Brothers-Cotton,Inc. PO Box 20100 Montgomery, AL 36120 Attn: Robert Weil, II Tel. No. 334 244-1800 3) Clariant Corporation 400 Monroe Road Charlotte, NC 28205 Attn: Walter B. Fowlkes, Treasurer Tel. No. 704 331-7057 4) Ciba Specialty Chemicals Corp. 540 White Plains Road Tarrytown, NY 10591 Attn: John M. Sullivan, Group Credit Manager Tel. No. 914 785-2000 5) Merrill Lynch Investment Managers 800 Scudder Mill Road Plainsboro, NJ 08536 Attn: Philip Brendel Tel. No. 609 282-0143 6) Wells Fargo Bank Minnesota, N.A., as Successor Indenture Trustee Sixth & Marquette, N9303-120 Minneapolis, MN 55479 Attn: Nick Tally Tel. No. 612 667-3961 or Weil Gotshal & Manges LLP 767 Fifth Avenue New York, NY 10153 Attn: Richard Krasnow, esq. Tel. No. 212 310-8000 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. DebtTraders says that Galey & Lord Inc.'s 9.125% bonds due 2008 (GNL1) are trading at about 14. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=GNL1 GLOBAL CROSSING: First Creditors' Meeting to Convene on Sept. 17 ---------------------------------------------------------------- The United States Trustee will convene a meeting of Global Crossing's creditors pursuant to 11 U.S.C. Section 341(a), on September 17, 2002 at 10:00 a.m. (EDT). The Meeting will be held at the Office of the U.S. Trustee, 80 Broad Street, Second Floor in Manhattan. (Global Crossing Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) HAYES LEMMERZ: Has Until Oct. 3 to Make Lease-Related Decisions --------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates sought and obtained a second extension of the time within which they must decide to assume, assume and assign, or reject their unexpired nonresidential real property leases. The extension is through and including the earlier of October 3, 2002 or the date of confirmation of a plan of reorganization, subject to the right of each lessor to request, after appropriate notice and motion, that the Court shorten the Extension Period and specify a period of time in which the Debtors must make their decision. Grenville R. Day, Esq., at Skadden Arps Slate Meagher & Flom LLP in Wilmington, Delaware, informs the Court that the Debtors are lessees of several unexpired leases of nonresidential real property. The Unexpired Leases are used by the Debtors for the operation of their corporate and manufacturing facilities, and are assets of the Debtors' estates. The Unexpired Leases thus are integral to the Debtors' continued operations as they seek to reorganize. Though the Debtors may ask the Court's permission to reject some of the Unexpired Leases prior to the conclusion of the Chapter 11 cases, they, at this time, believe that most of the Unexpired Leases will prove to be desirable, or necessary, to the continued operation of the Debtors' business. Mr. Day submits that the Debtors may assume and assign the Unexpired Leases to third parties if they are not necessary to the Debtors' ongoing business operations, but have a "below market" rate. The Debtors have made progress in evaluating their real estate assets throughout these cases and are currently assessing the value and marketability of all of the Unexpired Leases and whether there is sufficient value to merit assumption and assignment rather than rejection. Ultimately, Mr. Day maintains that the Debtors' decision whether to assume, assign or reject particular Unexpired Leases, as well as the timing of the assumption, assignment or rejection, depends in large part on the Debtors' business plans for the future. This dependence is whether the leased premises will play a role in the Debtors' strategic operating plans going forward. At this juncture, it is not yet possible for the Debtors to determine whether or not each of the locations covered by the Unexpired Leases will play a part in the Debtors' business going forward. The Debtors submit that it is undisputed that their cases are large and complex. Moreover, because the Unexpired Leases are used to support the Debtors' corporate and manufacturing operations, Mr. Day believes that many of the Unexpired Leases are and may remain vital to the Debtors' reorganization efforts and an integral component of the Debtors' strategic business plan. Even if a particular leased premise is ultimately slated for closure, the Unexpired Lease for that location may contain favorable terms that would allow the Debtors to assume and assign the lease for value. According to Mr. Day, the Debtors have already rejected several real property leases and are in the process of assessing the value and marketability of all of the Unexpired Leases. They are also trying to determine whether there is sufficient value to the Debtors to merit assumption and assignment of certain Unexpired Leases rather than rejection. The decision to assume, assign or reject an Unexpired Lease is necessarily tied to the Debtors' business plan for the future. The Debtors are currently formulating a business plan, and they believe that it is not yet possible for them to determine whether or not each of the remaining locations covered by the Unexpired Leases will play a part in their long-term business strategy. Mr. Day assures the Court that the Debtors remain current on all of their post-petition lease obligations, and will remain current going forward. Thus, the relief requested will not prejudice landlords of the Unexpired Leases. Indeed, through the operation of Section 365(d)(3) of the Bankruptcy Code, the landlords enjoy a preferred position that belies any notion that they could be prejudiced. Thus, landlords receive formidable protection under Section 365(d)(3). Given this protection, the potential for prejudice to any landlord by an extension of the Debtors' time to assume or reject the Unexpired Leases is remote. In contrast, if the Extension Period is not extended, Mr. Day fears that the Debtors will be compelled prematurely to assume substantial, long-term liabilities under the Unexpired Leases (potentially creating administrative expense claims) or forfeit benefits associated with some leases. This would be to the detriment of the Debtors' ability to operate and preserve the going-concern value of their business for the benefit of their creditors and other parties-in-interest. To prevent the Debtors from being forced to prematurely make this difficult choice, the Second Circuit has suggested that bankruptcy courts exercise their discretion in appropriate cases to extend the Section 365(d)(4) deadline until confirmation. The Debtors believe that the extension will allow them sufficient time to formulate their long-term business plan and their reorganization strategy. Given the importance of this process, however, the present request is without prejudice to the Debtors right to seek a further extension of the Section 365(d)(9) Deadline if circumstances so warrant. (Hayes Lemmerz Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) Hayes Lemmerz Intl Inc.'s 11.875% bonds due 2006 (HAYES1), DebtTraders says, are trading at about 87. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HAYES1for real-time bond pricing. IMPERIAL CREDIT: KPMG Expresses Going Concern Doubt --------------------------------------------------- KPMG LLP, independent auditors for Imperial Credit Industries, Inc. have expressed the opinion that based on the financial condition of Imperial Credit Industries, Inc. and the risk of conservatorship or receivership for the Bank, among other matters, there is uncertainty as to whether the Company can continue as a going concern. Imperial Credit Industries, Inc. is a Torrance, California based industrial bank holding company that was incorporated in 1991 in the State of California. Its business activities are conducted primarily through its wholly owned subsidiary Southern Pacific Bank. SPB offers its customers a wide variety of deposit and commercial loan products. SPB was considered undercapitalized at March 31, 2002, and is currently subject to regulatory orders issued by the California Department of Financial Institutions and the Federal Deposit Insurance Corporation. The Company also conducts limited operations through one other wholly owned subsidiary: Imperial Business Credit Inc. In the first quarter of 2002, the Company sold its entire interest in another wholly- owned subsidiary, Imperial Credit Asset Management, Inc. for $925,000. The Company received cash proceeds of approximately $40,000 at the close of the sale. The sale resulted in a deferred gain of approximately $462,000. The sale of ICAM is anticipated to result in annual reductions in revenues of $3.1 million, noninterest expenses of $2.5 million, and income before income taxes of $600,000 in future years. Imperial Credit Industries, Inc. was informed by Nasdaq on February 14, 2002 that its common stock would be delisted from The Nasdaq National Market for failure to maintain the required minimum closing bid price per share over the prior 30 consecutive trading days as required by NASD Rule 4450 unless the Company meets the requirements for continued listing under the Nasdaq Rule within ninety days of the date of notification, or May 15, 2002. The Company has been unable to meet the requirement within the time permitted by Nasdaq. On May 16, 2002, it received notice from Nasdaq staff that its common stock would be delisted from The Nasdaq National Market at the opening of business on May 24, 2002. Upon delisting from Nasdaq, the Company believes that its common stock could trade on the "Over- the-Counter Bulletin Board" and it expects to make all reasonable efforts to permit such trading. Financial Position At March 31, 2002, the Company's total assets were $1.4 billion as compared to $1.5 billion at December 31, 2001. At March 31, 2002, total net loans were $1.1 billion as compared to $1.2 billion at December 31, 2001. The outstanding assets and loans decreased due to the implementation of its capital restoration plan which includes the reduction of SPB's loans. On a consolidated basis, cash and interest-bearing deposits increased to $172.6 million at March 31, 2002 as compared to $133.3 million at December 31, 2001. Cash available to ICII, including cash and interest-bearing deposits was $6.9 million at March 31, 2002 as compared to $16.3 million at December 31, 2001. At March 31, 2002, deposits at SPB were $1.18 billion as compared to $1.24 billion at December 31, 2001. The outstanding principal balance of its secured and senior debt decreased to $175.3 million at March 31, 2002 as compared to $176.9 million at December 31, 2001. The decrease was attributable to the execution of a debt restructuring agreement with the holder of its Convertible Notes. At March 31, 2002 the shareholders' deficit increased to $97.3 million as compared to $77.9 million at December 31, 2001. The increase in shareholders' deficit was primarily the result of a loss from operations due to continued high levels of provisions for loan losses. By July 15, 2002 ICII will require approximately $28.4 million to both 1) repay the amount of principal owed to the Senior Secured note holders and 2) make the scheduled interest payments on its other notes. At March 31, 2002, cash and interest-bearing deposits available to ICII totaled $6.9 million. The Company's ability to generate the funds required by July 15, 2002 is solely dependent on asset sales. If the Company is not able to generate sufficient liquidity to meet these obligations, either from asset sales or from operations, its creditors may force ICII into involuntary bankruptcy or ICII may file for protection under the Bankruptcy Code. There can be no assurance ICII will be able to service its outstanding indebtedness during 2002. There can also be no assurance that ICII will regain efficient access to the capital markets in the future or that financing will be available to satisfy ICII's operating and debt service requirements or to fund its future growth. KAISER ALUMINUM: Sen. Cantwell Calls for Investigation of Deal -------------------------------------------------------------- U.S. Senator Maria Cantwell formally requested an independent investigation of whether Kaiser Aluminum fulfilled the letter and intent of its power remarketing contract with the Bonneville Power Administration (BPA). Under the terms of the contract, Kaiser was to sell power back to BPA and invest its profits in strengthening its Northwest operations and paying its workforce. Neither has happened, and Kaiser has refused to detail how it has spent its proceeds. "This is a story of promises made and promises broken," Cantwell said. "Whether Kaiser broke its contract is an important question that deserves a public answer from an independent investigation. Hundreds of jobs and hundreds of millions of dollars are at stake." Cantwell made the request for an independent investigation in a letter today to Gregory Friedman, Inspector General of the Department of Energy (DOE). Earlier this year, Cantwell requested the Department of Energy to conduct a public investigation into whether Kaiser met its obligations under its contract. That investigation is ongoing and Kaiser has stymied efforts to make information uncovered public. Cantwell's request would launch an independent investigation with new teeth. Several factors make the DOE Inspector General uniquely positioned to conduct independent investigations under federal law: First, the DOE Inspector General can only be removed by the President, who must communicate his reasons for doing so to Congress. Friedman, the current Inspector General, was appointed in 1998 during the Clinton Administration. Second, the Inspector General serves under the "general supervision" of Energy Secretary Spencer Abraham. Neither the Secretary nor any of his subordinates "shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena during the course of any audit or investigation." Third, the Inspector General's budget is separate from DOE's budget and is protected from any attempts by the Department to influence investigations through budget chicanery. The text of the letter follows: May 28, 2002 Mr. Gregory Friedman Inspector General Department of Energy 1000 Independence Ave., SW Washington DC 20585 Dear Mr. Friedman, I write to request that the Department of Energy's Office of Inspector General undertake an investigation of the Kaiser Aluminum and Chemical Company, and whether it has fulfilled the letter and intent of the 16(k) provision of its Bonneville Power Administration (BPA) power contract by allocating funds to its Gramercy, Louisiana, refinery. I have consistently maintained that Kaiser should be held to the intended requirements of the 16(k) provision, and act to mitigate the impacts on Pacific Northwest workers who were laid off last year due to rising energy costs in the West. The 16(k) contract provision was intended to protect Northwest workers and communities during periods when it was more profitable for companies to remarket their power than produce aluminum. The provision was clearly intended to ensure that, to the extent possible, the Pacific Northwest retain a qualified aluminum workforce and modern aluminum production capacity at times when production has been curtailed. That this was the intent behind the provision is clear based on the actions of other companies with the 16(k) language in their contracts. As you may know, many other Northwest aluminum companies shared 25 percent to 30 percent of their remarketing profits with BPA to help lower electricity rates in the region during the Western energy crisis. These companies also continued to compensate or employ virtually all their affected employees at full wages during the curtailment period. And, most importantly, many of these companies had the foresight to use a substantial amount of their profits to make investments that would help ensure continued production. Kaiser, on the other hand, left more than a third of the workforce at its Mead and Tacoma plants without any compensation whatsoever and only provided the 70 percent benefits to senior workers required under the existing collective bargaining agreement between Kaiser and the workforce. Kaiser has, to my knowledge, also refused to commit any portion of its profits toward the future viability of its Northwest facilities-either to increase efficiency, or to invest in future power purchases. Kaiser has to date refused to disclose to Northwest ratepayers how it has spent the $485 million in remarketing proceeds. In fact, Kaiser's lack of cooperation was part of an ongoing dispute in BPA's negotiations with the company over additional curtailments during the current rate period. The company is now claiming it has spent portions of the money rebuilding its Gramercy plant after an explosion. While it is not yet clear that this actually occurred-given that Kaiser's own quarterly financial statements state that the company has already received over $300 million in insurance funds and a settlement agreement for the Gramercy rebuild-I am also concerned that this expenditure does not meet the letter and spirit of the BPA contract's 16(k) provision. In particular, I am aware that former DOE Deputy Secretary Frank Blake sent a Sept. 28, 2001 letter to Kaiser stating that "the funds used by Kaiser to recover production at its Gramercy, Louisiana, facility will also be considered an acceptable use of remarketing proceeds under Section 16(k)." In subsequent correspondence, I asked Deputy Secretary Blake for the legal analysis underlying this conclusion, as well as a formal DOE audit of Kaiser's books. In a March 8, 2002 letter, he replied that the legal rationale was that "a fundamental purpose of Section 16(k) was to encourage Kaiser to use its remarketing revenues to preserve aluminum workers' jobs by positioning the company for renewed operations. In Kaiser's case, we concluded that the survivability of its Northwest plants and Northwest steelworker jobs was affected by the health of Kaiser's broader domestic smelter related operations." I remain unconvinced that this represents compliance with the letter and intent of the 16(k) contract provision-particularly given the fact Kaiser has, to my knowledge, failed to disclose any long term strategy to invest in its Northwest operations, or articulate how investment in Gramercy would have a positive impact on "the survivability of its Northwest plants." In response to my request for an audit, Deputy Secretary Blake informed me that "Bonneville has asked Kaiser for an accounting of its use of the remarketing revenues to assure that use is consistent with the contract. If Kaiser supplies the information within the requested time frame, Bonneville expects to have completed its review by mid-April. Bonneville has informed Kaiser that it expects to make the results of the review public." This audit has not yet been completed, and I understand Kaiser has thus far refused to make public any information stemming from DOE's review. For all of these reasons, I ask that you undertake an independent investigation of whether Kaiser has met its obligations under Section 16(k) of its BPA power contract, whether DOE has erred in its interpretation of this contract provision, and the factors contributing to this specific interpretation. Thank you for your consideration. I look forward to your response. Sincerely, [Original signed] Maria Cantwell U.S. Senator (Kaiser Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kaiser Aluminum & Chemicals' 12.75% bonds due 2003 (KAISER2) are quoted at about 21. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KAISER2for real-time bond pricing. KELLSTROM: Committee Hires Sonnenschein as Bankruptcy Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the chapter 11 cases concerning Kellstrom Industries, Inc., obtained authority from the U.S. Bankruptcy Court for the District of Delaware to employ Sonnenschein Nath Rosenthal as its counsel. The Creditors' Committee selected Sonnenschein based on the firm's expertise in complex bankruptcy matters. In addition, Sonnenschein has extensive insurance, finance, litigation, corporate, environmental, real estate and tax practices, among others. Sonnenschein will bill for legal services on an hourly basis in accordance with its ordinary and customary rates, and submits that its rates are reasonable: Partners and Counsel $325 to $600 Associates $217 to 389 Paralegals $138 to 183 These rates are set at a level designed to fairly compensate the firm for the work of its attorneys and paralegals and to cover fixed and routine overhead expenses. As Counsel, Sonnenschein will: a) give legal advice with respect to the Creditors Committee's powers and duties in the context of the Debtors' chapter 11 cases; b) assist, advise and represent the Creditors Committee in any investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and their affiliates, the operation of the Debtors' businesses, and any other matter relevant to the case or to the formulation of a plan of reorganization; d) prepare on behalf of the Creditors Committee necessary applications, motions, answers, orders, reports and other legal papers in connection with the administration of the estates in these cases; e) review and respond on behalf of the Creditors Committee to motion, application, complaints and other documents served by the Debtors or other parties in interest on the Creditors Committee in this case; and f) participate with the Creditors Committee in the formulation of a plan of reorganization; and g) perform any other legal services for the Creditors Committee in connection with these chapter 11 cases. The Committee also seeks to employ The Bayard Firm as Delaware Counsel. The Committee assures the Court that the two firms will avoid any unnecessary duplication of services. 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: US Trustee Balks At Dewey's Engagement as Board Counsel -------------------------------------------------------------- Ira Bodenstein, United States Trustee for the Northern District of Illinois, contends that Dewey Ballantine will represent an interest adverse to Kmart Corporation and its debtor-affiliates. This is even admitted by the Debtors in their motion. Trial attorney Kathryn Gleason notes that the Debtors fail to explain how Dewey Ballantine's representation of the Independent Directors in matters adverse to the Debtors is in the best interest of these estates. Ms. Gleason suggests that if the proposed retention is to permit the indemnification of expenses incurred by the Independent Directors in the performance of their duties, then the appropriate procedure may be for the Independent Directors to file a claim for expense indemnification -- not to employ Dewey Ballantine as Special Counsel. For these reasons, the U.S. Trustee asks the Court to deny the Debtors' application. (Kmart Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kmart Corp.'s 9.875% bonds due 2008 (KMART18A), an issue in default, are trading at about 45. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART18Afor real-time bond pricing. KNOWLEDGE HOUSE: Fails to Meet Annual Report Filing Deadline ------------------------------------------------------------ Knowledge House Inc. (TSX VEN:KHI) advises that it remains in default of filing its annual Audited Financial Statements for the period ended December 31, 2001 which were to have been filed on or before May 21, 2002 pursuant to relevant securities laws because of a requirement to change auditors. Mr. Daniel F. Potter, Chairman of the Board and the Chief Executive Officer of Knowledge House advised on May 22, 2002 that the Company was unable to meet its deadline due to a change in auditors of the Company, given that the current auditors will be taking shares of the Company pursuant to its proposal to creditors, discussed below. As a result of the delay in the completion and filing of the annual Audited Financial Statements, the Company was also late in filing its Interim Financial Statements for the first quarter ended March 31, 2002 which were due to be filed on or before May 30, 2002. Discussions are underway with an auditing firm and the Company expects to file the Audited Financial Statements and the Interim Financial Statements on or before July 21, 2002. Mr. Potter also advises that the board of directors is being reduced in size given that the Company is currently inactive. On May 22, 2002, the Company obtained from the Nova Scotia Securities Commission a management cease trade order pursuant to Section 134 of the Securities Act and CSA Staff Notice 57-301 with respect to securities of the Company and issued a Notice of Default in relation thereto. The order places restrictions on the trading of the Company's securities by certain persons who have been directors, officers or insiders of the Company since the Company's most recent financial statements were filed in accordance with prescribed filing requirements. CSA Staff Notice 57-301 requires the filing and dissemination of a Default Status Report on a biweekly basis disclosing, among other things, whether or not there has been a material change in the information contained in the Notice of Default. Since May 22, 2002, there have been no changes in the affairs of the Company or in the information contained in the Notice of Default which are required to be disclosed pursuant to CSA Staff Notice 57- 301. Should the Company fail to file its financial statements on or before July 21, 2002, the Nova Scotia Securities Commission and other securities commissions or regulators may impose an issuer cease trade order that all trading in securities of the Company cease for such period as specified in the order. The Company intends to issue a Default Status Report on a bi- weekly basis for as long as it remains subject to the management cease trade order or in default of prescribed filing requirements. An issuer cease trade order may be imposed sooner if KHI fails to file its Default Status Report on time. As noted in material change reports and press releases issued by the Company, on November 26, 2001, KHI's unsecured creditors approved its proposal filed on October 26, 2001, under the Bankruptcy and Insolvency Act (Canada). The proposal has not yet been approved by the Supreme Court of Nova Scotia and remains subject to court, shareholder and other required regulatory approvals. The Company will file material change reports containing the same information it provides to creditors at the same time the information is provided to creditors throughout the period it remains in default. LTV CORP: Seeks Approval of USWA Retiree Benefits Modifications --------------------------------------------------------------- The LTV Corporation and its debtor-affiliates ask Judge Bodoh for his stamp of approval on their proposed further modification of retiree benefits for certain United Mineworkers of America retirees. Specifically, the Debtors are seeking authority to modify or terminate two retiree benefit plans covering the USWA retirees: (1) the medical plans administered by Highmark Blue Cross and Blue Shield and Highmark Services Company, and (2) the life insurance plan administered by Metropolitan Life Insurance Company. The Debtors say this relief is necessary to permit their reorganization and assure that all creditors, the Debtors, and other affected parties are "treated fairly and equitably." The Debtors also ask Judge Bodoh to let them discontinue the Individual Employer Plans, or IEPs, as soon as possible because this relief is necessary to prevent irreparable harm to the Debtors' estates. First, Leah J. Sellers, Esq., at Jones Day Reavis & Pogue, tells Judge Bodoh that the APP was approved due to severe liquidity restrains and the Debtors' inability to obtain sufficient additional working capital to continue operations. The APP does not provide funds to pay for the IEPs after May 31, 2002. None of the proceeds obtained from the sale of the integrated steel business are available to provide benefits under the IEPs. Because all of the cash generated by the integrated steel sale constitutes collateral for the DIP Lenders and other secured creditors, the Debtors have no unencumbered assets available to provide benefits under the IEPs after May 31, 2002. Requiring the Debtors to pay benefits under these plans would improperly siphon limited assets that are needed to complete the APP process and represented collateral for the DIP Lenders and others, Ms. Sellers asserts. Ms. Sellers reminds Judge Bodoh that he has already authorized the termination of retiree benefits for non-USWA retirees. In December 2001, Judge Bodoh approved an agreement between the Debtors and the USWA which, among other things, authorized the Debtors to discontinue retiree benefits for retirees previously represented by the USWA once funds deposited by the Debtors into a collectively bargained Voluntary Employees' Beneficiary Association Trust Fund were exhausted. Based on this agreement, on March 31, 2002, medical and life insurance benefits for USWA retirees were terminated. In January 2002, Judge Bodoh had approved another agreement between the Debtors and the authorized representatives of certain union and nonunion retirees authorizing the Debtors to terminate the medical and life insurance benefits of all nonunion and certain union retirees of the Debtors' integrated steel business after February 28, 2002. At this time, the USWA retirees are the only retirees of the Debtors' integrated steel business that are still receiving medical and life insurance benefits that are directly provided by the Debtors. The Debtors provide the IEPs for the benefit of approximately 540 of the USWA retirees. These medical IEPs provide comprehensive medical and hospitalization benefits in accordance with the provisions of the Coal Industry Health Benefit Act. Highmark Blue Cross and Highmark Services administer the medical IEPs. The Life IEP is insured and administered by Metropolitan Life, and costs the Debtors roughly $2,000,000 per year to provide coverage under the IEPs. The IEPs impose significant financial obligations and a cash drain on the Debtors' estates. In the absence of the relief now requested, the USWA retirees will continue to accrue claims to the detriment of other creditors and the Debtors' ability to complete the APP will be jeopardized. On the other hand, if Judge Bodoh grants this Motion, no USWA retiree or dependent will suffer a loss in medical insurance coverage. Under the Coal Act, in the event that the Debtors terminate the IEPs, the USWA Retirees will become eligible for substantially equivalent health benefits from the 1992 USWA Benefit Fund established under the Coal Act. Furthermore, the Debtors believe that the USWA Retirees will become eligible for a life insurance benefit under the USWA's 1974 Benefit Plan if the Life IEP is discontinued. On April 26, 2002, the Debtors sent a letter to the USWA proposing that: (1) The Debtors will maintain the IEPs through and including May 31, 2002, but that effective at 11:59 p.m. Eastern Time on that date the IEPs will be terminated. (2) The Debtors will promptly notify the Executive Director of the USWA Health and Retirement Funds of the termination of the IEPs and cooperate in facilitating the transition of the USWA Retirees' health care coverage from the IEPs to the 1992 USWA Plan. (3) The Debtors will notify each known USWA Retiree receiving coverage under the IEPs of the termination of the IEPs and the transition of health care coverage to the 1992 USWA Plan. In its April proposal, the Debtors notified the Director and each known USWA Retiree of their intentions and informed the USWA of their willingness to provide the USWA with any information necessary to evaluate this proposal and to meet with the USWA at reasonable times to discuss it. To date, the USWA has neither requested any information nor contacted the Debtors to schedule a meeting. Ms. Sellers says that the Debtors' proposed modification to the USWA Retirees' benefits is fair and equitable because it (a) treats the IEPs in a manner consistent with the other retiree benefit plans of the Debtors' integrated steel business, (b) preserves the Debtors' limited resources consistent with the APP budget, and (c) gives all creditors an opportunity to share in the distribution of the Debtors' limited assets. (LTV Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-00900) LTV Corporation's 11.75% bonds due 2009 (LTV2), an issue in default, are quoted at a price of 0.5, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LTV2for real-time bond pricing. LAIDLAW INC: Wins Approval to Reinstate RTI's Lease Guaranty ------------------------------------------------------------ Pursuant to Sections 363 and 364 of the Bankruptcy Code, Laidlaw Inc., and its debtor-affiliates sought and obtained the Court's authority to reinstate the Guaranty of a Lease between Reimbursement Technologies, Inc., as tenant, and River Park Office Associates, LP, as landlord, dated October 9, 1998. The payments due under the Guarantee are considered administrative expense priority pursuant to Section 503(b) of the Bankruptcy Code. Furthermore, Judge Kaplan authorizes the Debtors to issue, in the event the DIP Facility falls below $50,000,000, a letter of credit to River Park in an amount sufficient to cover 18 months of rent, which is approximately $4,500,000, under the Lease. Joseph M. Witalec, Esq. at Jones, Day, Reavis & Pogue, in Columbus, Ohio, relates that Reimbursement Technologies is an indirect non-debtor subsidiary of Laidlaw, Inc. and part of the Laidlaw Companies' emergency department management business. Reimbursement Technologies lease the office building in Montgomery County, Pennsylvania as its administrative office. The monthly rent is $246,000 and increases to $259,333 starting on the fifth year. Although, the lease is for an area of 160,000 square feet, Reimbursement Technologies subleased to third parties about 80,000 square feet of the leased premises. Mr. Witalec reports that the Guaranty is a requirement of River Park in entering the Lease. Another provision of the Lease is the acceleration of the remaining rent if Laidlaw, Inc. files for Bankruptcy. Accordingly, River Park informs Reimbursement Technologies of the acceleration of the rent in the amount of $16,677,236 on October 9, 2001 due to the Debtors' filing of Chapter 11 cases. The amount represents the entire rent for the duration of the Lease. The Debtors immediately negotiated with River Park for alternative solutions. The parties were able to reach an agreement that River Park will retract the Default Notice if Laidlaw Inc. will reinstate the Guaranty and the issuance of a Letter of Credit if the DIP Facility falls below $50,000,000. The Letter of Credit will be returned to Laidlaw Inc. on the effective date of a plan of reorganization. Mr. Witalec assures the Court that the reinstatement of the Guaranty and the contingent obligation to provide the Letter of Credit do not require any current outlay of funds by Laidlaw Inc. or in the future. The assurance is supported by the fact that the Debtors have not yet drawn any amount from the DIP Facility and have no plans of making draws sufficient to trigger the Letter of Credit. In any case, Mr. Witalec adds, the issuance of a Letter of Credit is considered an ordinary course transaction that does not need the Court's authorization. Therefore, Mr. Witalec asserts, it is advantageous to the Debtors' estate to reinstate the Guarantee because it eliminates the Accelerated Rent Obligation. (Laidlaw Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) MARIETTA CORP: S&P Assigns B- Corp. Credit & Sr. Secured Ratings ---------------------------------------------------------------- Standard & Poor's assigned its single-'B'-minus corporate credit rating to Marietta Corp., a leading U.S. personal care guest amenities supplier to the hotel industry. Standard & Poor's also assigned its single-'B'-minus rating to the New York-based company's proposed $75 million senior secured notes due 2009. The senior secured debt rating is based on preliminary terms and conditions and is subject to review once full documentation is received. The outlook is stable. The note offering by Marietta (privately owned by BFMA Holding Corp.) will be used to refinance existing debt and to partially fund the acquisition of a largely U.S.-based restaurant chain. Upon closing of the acquisition, the restaurant chain will be accounted for as an unrestricted subsidiary of Marietta, and therefore will not benefit from financial support or a guarantee from its parent under this proposed structure. Should the company not complete the acquisition on or before Aug. 31, 2003, Marietta will be required to purchase up to $20 million of the notes, plus accrued interest. "The stable outlook incorporates Standard & Poor's expectation that Marietta will maintain its good market position in U.S. guest amenities, which should enable the company to generate credit measures appropriate for the rating category," said Standard & Poor's credit analyst Lori Harris. The ratings are based on Marietta's high debt leverage and weak credit ratios pro forma for the note offering, seasonal nature of sales, dependence on the performance of the lodging sector, and participation in the highly competitive personal care industry. Furthermore, the company's proposed acquisition could affect Marietta's performance given the diversion of management's focus and the unrelated nature of the restaurant business. These factors are partially offset by Marietta's good market position in the U.S. guest amenities business, which accounted for 67% of fiscal 2001 (ended September 30, 2001) revenues. Marietta estimates that its market share in U.S. guest amenities is about 25%. The balance of sales is comprised of the lower operating margin international guest amenities business and contract manufacturing business for U.S.-based companies in the branded personal care, cosmetics, household goods, and food industries. Standard & Poor's expects that fiscal 2002 credit protection measures (pro forma for the note offering) will be in line with the rating with EBITDA interest coverage of about 2 times and debt to EBITDA between 4x-5x. Standard & Poor's anticipates that credit ratios will strengthen over time, given management's focus on sales growth and improving the company's cost structure. MED-EMERG INT'L: Completes Interim Financing with Breckenridge -------------------------------------------------------------- Med-Emerg International Inc. (OTC BB: MDER-MDERW) has completed a financing arrangement with Breckenridge Fund LLC. The financing instrument is a Series 2002A debenture with a face value of US $720,000 and a maturity date of June 2003. The debenture is convertible into common stock at a fixed price of $1.00 per share, a 42% premium to the bid price of the common stock on the day of closing. Funds were used to make a scheduled interim payment of US $ 490,000 to the HSBC Bank of Canada under a forbearance agreement. This payment satisfies certain interim obligations to HSBC. The balance will be used for general corporate purposes. Dr. Ramesh Zacharias CEO said, "We are pleased to announce the completion of this financing arrangement and our relationship with the Breckenridge Fund. This is the first phase of our comprehensive financial plan to improve our balance sheet and it should allow us to continue the significant growth we have been experiencing. It is refreshing that the Company was able to obtain a traditional investment deal in the current environment." As reported in the May 10, 2002 edition of Troubled Company Reporter, HSBC Bank Canada has granted the Med-Emerg International an extension of its forbearance agreement. Subject to certain terms and conditions, the bank will continue to work with the company through June 28, 2002. MERRY-GO-ROUND: Trustee Extends Office Lease for Another Year ------------------------------------------------------------- Deborah H. Devan, the Chapter 7 Trustee for Merry-Go-Round Enterprises, Inc., and its debtor-affiliates, tells the U.S. Bankruptcy Court for the District of Maryland that she "hopes to complete the administration of the estate prior to July, 2003," -- meaning money might finally flow to unsecured creditors from this high-profile 1994 retail bankruptcy case. Until all "pending preference law suits, claims objections and other matters" can be wrapped-up, Ms. Devan says she'll need to continue renting her office in the Sterling Bank & Trust Building at 111 Water Street in Baltimore. METALS USA: Signs-Up Colliers Bennett as Real Property Brokers -------------------------------------------------------------- Metals USA, Inc., and its debtor-affiliates move for the entry of an Order under Section 327(a) of the Bankruptcy Code, authorizing their employment and retention of real estate brokerage firm Colliers, Bennett & Kahnweiler, Inc., to assist in marketing non-residential real property located in Butler, Indiana. The Butler Property is a production facility owned by Debtor Metals USA Flat Rolled Central Inc. At the Petition Date, the Debtor leased the facility to a company known as Paragon. Paragon had wanted to purchase the property from the Debtors. However, Paragon is no longer a viable purchaser and has vacated the property. R. Andrew Black, Esq., at Fulbright & Jaworski LLP in Houston, Texas, tells the Court the Debtors want to list the property for sale, with Colliers acting as broker, because it has no further operational use for the Debtors. The Debtors also seek to hire Colliers, pursuant to Section 327(a) of the Bankruptcy Code, to list the Butler Property for sale and to perform marketing services for the Debtors in these Chapter 11 cases. The Debtors seek to compensate Colliers for its brokerage services by paying from the proceeds of the sale of the property a commission of 6% of the first $500,000 of the sales price and 5% of the sales price in excess of $500,000, without the necessity of further application or authority from the Court. Mr. Black submits that the Debtors are familiar with the professional standing and reputation of Colliers as an experienced realty-marketing firm associated with the Society of Industrial and Office Realtors. It is thus well qualified to market industrial facilities like the Butler Property. Mr. Black submits that to the best of the Debtors' knowledge, and by its own declaration, the professionals at Colliers are disinterested persons and do not represent or hold any interest adverse to the Debtors or to the estate with respect to the matters in which they are to be employed. In addition, Colliers has no connections with the Debtors, the creditors or any other party-in-interest. (Metals USA Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) METROCALL: Wants Court to Establish August 16 as Claims Bar Date ---------------------------------------------------------------- Metrocall, Inc. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to establish August 16, 2002 as the deadline by which all creditors, including governmental units, must file their proofs of claims against the Debtors or be forever barred from asserting that claim. The Debtors assert that the establishment of the Bar Date will help to ensure that the Company's chapter 11 Cases continue to proceed in a timely and efficient manner, and that the plan of reorganization can be implemented fairly to all creditors. The proposed Bar Date will also afford the creditors with ample time within which to prepare and file proofs of claims or interests. Pursuant to the Debtors' Plan, on a quarterly basis, all unrestricted cash in excess of $10,000,000 is swept to reduce indebtedness to the secured lenders. Thus, if a claim or interest is not liquidated, or estimated for distribution purposes, the creditor or interest holder could be prejudiced. The Debtors explain that holders of government unit claims will not be prejudiced by the shortened Bar Date. By filing their claims within the time period proposed, the governmental unit claims holders will be protected as they will have either liquidated claims, to be treated under the Plan, or there will be reserves to adequately protect their claims. If its not possible for the governmental units to file Proofs of Claim within the time period proposed, the Debtors note they could file claims on their behalf and estimate claims for distribution purposes. The Debtors intend to publish notice of the Bar Date in the national editions if the New York Times and Wall Street Journal no later than June 17, 2002. Metrocall, Inc. is a nationwide provider of one-way and two-way paging and advanced wireless data and messaging services. The Company filed for chapter 11 protection on June 3, 2002. Laura Davis Jones, Esq. at Pachulski Stang Ziehl Young & Jones represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $189,297,000 in total assets and $936,980,000 in total debts. Metrocall Inc.'s 10.375% bonds due 2007 (MCALL2), DebtTraders says, are quoted at a price of 4. See http://www.debttraders.com/price.cfm?dt_sec_ticker=MCALL2for real-time bond pricing. METROMEDIA INT'L: Won't Distribute Preferred Stock Dividend ----------------------------------------------------------- Metromedia International Group, Inc. (AMEX:MMG), the owner of various interests in communications business ventures in Eastern Europe, the Commonwealth of Independent States and other emerging markets, announced that to facilitate any potential future restructuring of the Company, the Company has elected to not declare a dividend on its 7-1/4% cumulative convertible preferred stock for the quarterly dividend period ending on June 15, 2002. Metromedia International Group, Inc. is a global communications and media company. Through its wholly owned subsidiaries and its business ventures, the Company owns and operates communications and media businesses in Eastern Europe, the Commonwealth of Independent States, China and other emerging markets. These include a variety of telephony businesses including cellular operators, providers of local, long distance and international services over fiber-optic and satellite-based networks, international toll calling, fixed wireless local loop, wireless and wired cable television networks and broadband networks, FM radio stations, and e-commerce. For more information about the company, visit http://www.metromedia-group.com MICROCELL: Nasdaq Nixes Request for Transfer to SmallCap Market --------------------------------------------------------------- Microcell Telecommunications Inc. (Nasdaq:MICT) (TSX:MTI.B) announced that the Staff of the Nasdaq Stock Market, Inc. has determined that the Company is ineligible to transfer its Class B Non-Voting Shares from the Nasdaq National Market to the Nasdaq SmallCap Market for failing to meet the minimum market capitalization requirement for listing on the Nasdaq SmallCap Market. The Company had applied for this transfer in light of the recent declines in prices at which its Class B Non-Voting Shares (Nasdaq:MICT) have been trading on the Nasdaq National Market, which are not sufficient to maintain a listing under the Nasdaq's listing standards. As a result of the Nasdaq Staff's determination, the Company's shares are subject to delisting from the Nasdaq National Market beginning on June 6, 2002 due to the Company's failure to meet the minimum bid price requirement of $3 US pursuant to Nasdaq market rule 4450 (b(iv)). In addition, the Company is not currently eligible for listing on the Nasdaq SmallCap Market. The Company will be requesting a hearing before the Nasdaq Listing Qualifications Panel to review the Nasdaq Staff's determination. This request will automatically stay the delisting of the Company's Class B Non-Voting Shares from the Nasdaq National Market until the Panel rules. There is no assurance that the Panel will grant the Company's request for continued listing. Microcell's Class B non-voting shares will continue to be listed on the Toronto Stock Exchange (TSX) under the trading symbol "MTI.B". Microcell Telecommunications Inc., a national wireless telecommunications operator, is a member of the TSX 300, TSX 200 and S&P/TSX Canadian SmallCap indices. Microcell Telecommunications Inc. has several operating subsidiaries, including: Microcell Solutions Inc., which operates the Company's network and markets Personal Communications Services (PCS) under the Fido(R) brand name on a retail basis; and Inukshuk Internet Inc., which intends to deploy a cross-Canada high-speed fixed wireless access network based on Internet Protocol. The Company employs more than 1,900 people across Canada. For more information, please visit http://www.microcell.caor http://www.fido.ca MINOLTA CO.: Weak Performance Spurs S&P Downgrade to Singe-Bpi -------------------------------------------------------------- Standard & Poor's today lowered its 'pi' rating on Japan-based Minolta Co. Ltd. to single-'Bpi' from single-'B'-plus-pi, reflecting a deterioration in the company's credit protection measures as a result of its weak operating performance in its mainstay businesses. The downgrade is also based on uncertainty over Minolta's ability to achieve a sustainable improvement in its earnings base over the longer term, despite some recovery in its profitability and cash flows in the second half of fiscal 2001 (ended March 2002). Minolta's profitability in its mainstay photocopier, printer, and camera businesses has been low, amid intensifying competition from leading industry players. The company aims to boost its profit-generating ability by implementing cost-cutting measures, tightening its focus on mid-to-high end digital cameras, and introducing color and digital features to its printers and copiers. However, the leading industry players are also focusing on these markets, and sizable investments will be required for Minolta to strengthen its competitiveness. As a result, it will be very challenging for the company to both improve its competitiveness and maintain improvement in its profitability. Although the company's profitability is expected to rise in fiscal 2002 as a result of its cost reduction efforts, longer-term improvement in its earning base is not assured. Minolta's profitability and funds from operations (FFO) deteriorated significantly in fiscal 2001. EBIT interest coverage fell to less than 1.0 times (x) from 1.4x the previous year, while FFO to total debt weakened to 2% from 12%. Minolta's capital structure also deteriorated considerably as a result of a 35% erosion of its equity base caused by a sizable net loss in fiscal 2001, with total debt to capital climbing to 84%. In fiscal 2002, JPY15 billion of Minolta's corporate bonds will mature: * JPY5 billion -- US$40 million -- due on May 23, 2002; and * JPY10 billion -- US$80 million -- due October 31, 2002. The company plans to repay this debt using liquidity at hand raised during fiscal 2001. At March 31, 2002, Minolta's financial statements show an increasing strain on liquidity -- JPY159 billion in current assets available to pay JPY161 billion in current liabilities. "Minolta's credit quality could deteriorate further if the company is unable to achieve a sufficient recovery in earnings and cash flow in the first half of fiscal 2002 to prevent deterioration in its liquidity," said Fusako Nagao, a credit analyst at Standard & Poor's in Tokyo. "We will continue to assess Minolta's ability to recover its earnings and cash flows through its business reform measures, and to strengthen its competitiveness and earning base over the longer term," she added. As a pioneer of the auto-focus single lens reflex camera, Minolta maintains a relatively sound position in this market globally, together with Canon Inc. and Nikon Corp. However, the company's presence in the growing digital camera market remains limited. In addition, its market position and competitiveness in the copier and printer businesses--its largest revenue contributors--are relatively weak, although the company is making strong efforts to improve its performance in the color copier segment. NII HOLDINGS: Gets Authority to Pay Critical Vendors' Claims ------------------------------------------------------------ NII Hildings, Inc. and its debtor-affiliate sought and obtained authority to pay prepetition critical vendor claims associated with debtors' secured handset financing facility. Several international subsidiaries of NII are parties to handset financing agreements with Motorola. Under those agreements, each NII subsidiary agrees to purchase Motorola handsets. Motorola is the only source for handsets that are compatible with the Debtors' operating networks. However, for NII's Argentina operations, Debtor NII, and not the Argentina operating subsidiary is the Purchaser under the agreements. As of September 30, 2001, there was approximately $28.1 million outstanding under these agreements. NII secured court approval to pay the three payments due on the Argentina Handset Agreement on June 1, June 3, and June 8, 2002, in the amounts of approximately $638,061 (due to Bank of Boston), $46,282 (due directly to Motorola) and $1,000,000 (due to Bank of Boston). The Court determined that any disruption in the flow of handsets to the non-debtor operating subsidiaries will cripple the Debtors' business operations, as the sole source of such handsets is Motorola. NII Holdings, Inc., along with its wholly-owned non-debtor subsidiaries, provides wireless communication services targeted at meeting the needs of business customers in selected international markets, including, inter alia, Mexico, Brazil, Argentina and Peru. The Company filed for chapter 11 bankruptcy protection on May 24, 2002. Daniel J. DeFranceschi, Esq., Michael Joseph Merchant, Esq. and Paul Noble Heath, Esq. at Richards, Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,244,420,000 in total assets and $3,266,570,000 in total debts. NATIONAL STEEL: Seeking Stay Relief to Setoff Mitsui Steel Debts ---------------------------------------------------------------- Prior to the Petition Date, National Steel Corporation and Mitsui Steel Development Co, Inc. entered into a series of agreements wherein Mitsui supplied the Debtors with aluminum products and steel slab and the Debtors supplied Mitsui with steel products. As of the Petition date, Mitsui owed approximately $5,400,000 to the Debtors and the Debtors in turn owed Mitsui $1,500,000. In a proposed stipulation, the parties agree that: (i) the pre-petition claims of the Debtors are approximately $5,400,000; (ii) the pre-petition claims of Mitsui are approximately $1,500,000; (iii) the post-petition claims of the Debtors exceed $6,000,000; (iv) the post-petition claims of Mitsui are approximately $5,000,000; (v) effective upon the execution of this stipulation, the automatic stay is modified for the limited purpose of permitting Mitsui to effectuate the setoff. As a result of this setoff, Mitsui is obligated and indebted to the Debtors in the pre-petition amount of $3,900,000 or higher pending the final reconciliation process; (vi) within five business days of full execution of this stipulation, Mitsui shall pay the Debtors the Mitsui debt; and (vii) to the extent that Court approval is necessary, the parties are authorized to effectuate a setoff of the post- petition claims of Mitsui against the post-petition claims of the Debtors, rendering Mitsui's post-petition debt in excess of $1,000,000. (National Steel Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392- 0900) NATIONSRENT INC: Resolves Dispute over Leases with Citicorp ----------------------------------------------------------- NationsRent Inc., and its debtor-affiliates obtained the Court's approval to enter into a stipulation with Citicorp Del-Lease, Inc., to resolve disputes about the Debtors' remittance to Citicorp of post-petition lease payments. The terms of the stipulation are: A. Development, Collecting And Sharing of Information: The Debtors will continue to provide Equipment information to Citicorp on or before May 31, 2002 subject to these confidentiality protections as parties may agree; B. Equipment Evaluation: To the extent an appraisal or audit authorized by the Agreement is conducted by the Debtors on the Equipment at any time during the term of this Stipulation, the Debtors shall immediately provide a copy to Citicorp. Citicorp may conduct an audit of the Equipment at its own expense after 48 hours advance written notice to the Debtors but not more than once per calendar quarter; C. Confidentiality: If and when the parties enter into a separate Confidentiality Agreement, that new agreement shall be deemed incorporated herein by references. D. Process for Equipment Evaluation: The Debtors will review the Equipment Information and determine the Equipment that is subject to the Agreement to be assumed, rejected, re- characterized as secured indebtedness, or in certain cases restructured with Citicorp. To the extent the Debtors wish to continue to use the Equipment in their fleet, the he Debtors will provide Citicorp with their proposal with respect to each Schedule by June 30, 2002 or on other dates as may be mutually agreed upon by the Debtors and Citicorp. Both parties will engage in discussions to reach a settlement with respect to each Schedule; E. Payment: a. Beginning May 20, 2002 until the expiration of this Stipulation, the Debtors agree to pay Citicorp adequate protection payments equal to $158,000 with respect to its Equipment covered by the Agreement for the period April 1, 2002 through April 30, 2002 and thereafter on the first day of each subsequent month for the prior monthly period; b. The Payments shall be applied on a pro rata basis based on the original cost of the Equipment; c. All Payments will be credited against the Debtors' obligations to Citicorp pursuant to the agreements; provided, however, that the parties reserve all rights concerning the ultimate characterization and application of Payments based, among other things, the valuation of the Equipment serving as the collateral for the Agreements; F. No Disgorgement of Payments: The Debtors will not seek to recover or otherwise disgorge any Payments made to Citicorp pursuant to this Stipulation, other than to the extent Payments made as adequate protection on account of the Debtors' use of the Equipment Collateral exceed the value of Citicorp's interest in the Equipment Collateral in the aggregate and Payments made with respect to Equipment that is not Equipment Collateral; G. Reporting and Maintenance: The Debtors shall continue to perform all of their obligations with respect to the maintenance, upkeep and reporting of the Equipment as set forth in the agreement; H. Cash Collateral: Citicorp reserves the right to assert claim: a. that any revenues from the Agreement obtained by the Debtors through the rental of the Equipment constitute cash collateral in which Citicorp holds a first priority perfected security interest and lien with priority over other lien of any other creditor; and, b. Citicorp is entitled to adequate protection of its interests in these rents, revenues, income, profits and proceeds; I. Term of the Stipulation: This Stipulation shall remain effective with respect to each Schedule until the earlier of: a. the entry of an order providing for the assumption and assignment of the Agreement or of a Schedule and, if that Schedule is rejected, the actual physical return to Citicorp of an item of Equipment; b. an agreement of the parties providing for a termination of this Stipulation; c. entry of an order on motion or otherwise terminating this Stipulation; d. confirmation of a plan of reorganization; e. conversion of this case to one under Chapter 7 of the Bankruptcy Code or dismissal of this case; or, f. December 31, 2002, provided that either party has provided written notice of its intent to terminate this Agreement no later than November 30, 2002. If that prior notice is not timely given and if none of the other conditions have occurred that would terminate this Agreement, then this Agreement shall automatically renew on a month to month basis thereafter and, in that event, either party may terminate on 30 days prior written notice. (NationsRent Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETIA HOLDINGS: Telekom Creditors' Meeting Set for June 24, 2002 ---------------------------------------------------------------- Netia Holdings S.A. (Nasdaq:NTIAQ)(WSE:NET), Poland's largest alternative fixed-line telecommunications services provider, announced that the Polish court has convened a Creditors' Meeting of Netia Telekom S.A., one of its subsidiaries, to be held on June 24, 2002 in Warsaw, for the purpose of voting on the approval of the arrangement proceedings of Netia Telekom S.A. As previously announced, arrangement proceedings were opened in Poland for Netia Holdings S.A. and two of its subsidiaries, Netia Telekom S.A. and Netia South Sp. z o.o., all in connection with the Company's ongoing restructuring. NETIA HOLDINGS: Inks Framework Cooperation Pact with Two Telcos --------------------------------------------------------------- Netia Holdings S.A. (Nasdaq: NTIAQ, WSE: NET), Poland's largest alternative fixed-line telecommunications services provider, has signed a framework co-operation agreement with Telefonia Dialog S.A. and Elektrim Telekomunikacja Sp. z o.o., two other Polish telecommunications companies. In this agreement, the parties expressed an interest in mutual co-operation in the use of owned infrastructure, development of telecom services and the improvement of the Polish telecom regulatory environment. In order to implement the agreed upon co-operation, Netia, Telefonia Dialog S.A. and Elektrim Telekomunikacja Sp. z o.o. will enter into additional detailed agreements. The framework agreement signed Wednesday complements the steps taken previously by Netia and these two companies furthering the development of the Polish telecom market. In February 2002, the parties established the Telecom Operators Section at the National Economic Chamber of Electronics and Telecommunications as a platform for conducting coordinated actions. Netia Holdings SA's 13.5% bonds due 2009 (NETH09PON2), DebtTraders reports, are quoted at a price of 18. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NETH09PON2 for real-time bond pricing. ORDERPRO LOGISTICS: Working Cap. Deficit Tops $1.1MM at Dec. 31 --------------------------------------------------------------- OrderPro Logistics, Inc. was incorporated in the state of Arizona on May 12, 2000. The Company had no operations until July 2000. On September 29, 2000 OrderPro Logistics, Inc. completed a reverse merger with FifthCAI, Inc., a Nevada corporation. FifthCAI changed its name to OrderPro Logistics, Inc. The Company's primary objective is to utilize OPLI's proprietary software to combine the functional elements of third-party logistic services with Internet based communication and carrier/shipper load matching. Part of its objective is to establish a presence on the Internet with a database of information relevant to the shipment, costing, and control of freight. The Company anticipates that its services will actually create a new niche in the transportation industry. This niche will provide small to medium sized manufacturers an opportunity to become more competitive with larger manufacturers by not just reducing freight cost but by turning freight activity into a profit center. The mid and long term objective is to expand the existing largely regional customer base nationally and internationally to Mexico and Canada. OPLI continued to have limited operations for the year ended December 31, 2001 with revenue of $895,020 and a loss of $550,565. It had had limited operations in 2000, had losses of $296,639 on revenues of $809,872 for the period from inception through December 31, 2000, and has limited working capital reserves. OPLI expects to face many operating and industry challenges and will be doing business in a highly competitive industry. Capital reserves at December 31, 2001 were essentially depleted. Management hopes to increase working capital through the sale of stock and debentures as well as seek strategic mergers or acquisitions in the industry to increase revenue and cash flow. If OPLI is unable to increase sales as expected, and/or raise additional interim capital to fully implement its business plan, it may jeopardize its ability to continue as a going concern. OPLI had a net working capital deficit of $1,192,000 at December 31, 2001. The Company has a revolving loan agreement with a credit lender under which it can borrow a percentage of the accounts receivable outstanding. This note is due and payable in October, 2002 and is secured by the pledge of trade accounts receivable. The Company is attempting to raise additional debt or equity capital to allow it to expand the current level of operations. It raised approximately $496,675, for working capital through the issuance of convertible debentures for cash and services during 2001 and is presently negotiating with sources for additional equity capital to allow it to expand the current level of operations. There is no assurances that OPLI will be successful in obtaining such capital. Net of the overdrafts, cash used by operations was $375,442 for the period ended December 31, 2001. OrderPro Logistics has a working deficit capital (current assets less current liabilities) of $1,192,000 as of December 31, 2001. The audited financial statements, for the periods ending December 31, 2001 and 2000 have been prepared assuming that OrderPro Logistics will continue as a going concern. Operations commenced in 2000 with losses of $296,639 for the period ended December 31, 2000, and losses of $550,656 for the year ended December 31, 2001 and has limited working capital reserves. These factors raise substantial doubt about OrderPro Logistic's ability to continue as a going concern. PACIFIC GAS: Wants to Enclose Letter in Solicitation Package ------------------------------------------------------------ Pacific Gas and Electric Company asks the Court to authorize it to include a letter in the solicitation package to be sent to creditors and equity security holders entitled to vote on the Plans. The Debtor makes its Application on an ex parte basis because the Letter has been approved by the California Public Utilities Commission and the Official Committee of Unsecured Creditors. In essence, the Letter tells creditors and equity security holders that these materials are included in the Solicitation Package: (1) The Disclosure Statement for the Plan of Reorganization for Pacific Gas and Electric Company (PG&E) [Dated April 19, 2002], filed by PG&E and PG&E Corporation. Exhibit A of this Disclosure Statement is the Plan of Reorganization filed by the PG&E Proponents. (2) The Disclosure Statement for the California Public Utilities Commission's Plan of Reorganization [Dated May 17, 2002], filed by the Commission. Exhibit A of this Disclosure Statement is the Plan of Reorganization for PG&E filed by the Commission. (3) The Report and Recommendations of the Official Committee of Unsecured Creditors Regarding Competing Plans of Reorganization for Pacific Gas and Electric Company. (4) The Notice of Hearing before the Bankruptcy Court to consider confirmation of the two plans. (5) A Ballot, which includes instructions on how to complete and return such Ballot. (6) A postage-paid, pre-addressed envelope addressed to Innisfree M&A Incorporated, or to the recipient's brokerage firm, bank or other nominee (if applicable) for the creditors or equity interest holders to return the completed Ballot. According to the letter, Ballots to be returned to Innisfree M&A Incorporated may also be forwarded to the following address: Innisfree M&A Incorporated, Attn: In re PG&E, 501 Madison Avenue, 20th Floor, New York, NY 10022; but beneficial owners of securities who received a return envelope addressed to their brokerage firm, bank or other nominee must return their Ballots in the envelope provided, or, if the envelope has been lost, seek further guidance from their brokerage firm, bank or other nominee, or Innisfree M&A Incorporated. The Letter warns that Ballots received after 5:00 p.m. Eastern Time on August 12, 2002 will not be counted. (Pacific Gas Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Revamps Utility Inspections with Better Technology --------------------------------------------------------------- Pacific Gas and Electric Company is in the second phase of revamping the utility's inspection program to take advantage of improved processes and emergent technology. The goal is to continually improve on the inspections at every level for thousands of miles of power lines and millions of pieces of equipment found throughout the utility's northern and central California service area. The company is now assembling inspectors, whose job will be dedicated to inspections, rather than inspections as well as maintenance and construction. "A newly created team - drawn from the ranks of experienced utility workers -- will be intensely trained in refined methodology and emergent inspection technology," said Lynn Liikala-Seymore, director of electric transmission and distribution maintenance at the utility. "We will also have more data to help us better identify and prioritize maintenance to ensure better safety and reliability." Phase one of the effort got underway last year, when Pacific Gas and Electric Company mapped out a redesign of its inspection process and data analysis. Advances in methodology and technology call for the task to be handled by a dedicated team, the hiring of which is the principal goal of phase two. These 150 personnel will be devoted solely to finding, identifying and prioritizing maintenance conditions, as well as training and supervising staff. The third phase will focus on implementing emergent technology. Testing of new technologies will start this year. This includes evaluating new diagnostic tools for determining the condition of underground cables and wooden poles. "As one of the nation's largest and oldest public utilities, Pacific Gas and Electric Company has long been on the leading edge of implementing new technology, improved methods, and safety practices," said Liikala-Seymore. "We are now evaluating new diagnostic tools for determining the condition of underground cables and wooden poles. Along with these, new planning and maintenance scheduling technology enables us to better analyze data to identify and track reliability trends." The company is also expanding its overhead infrared inspection program to better identify "hot spots" that may indicate stress on wires and equipment, which could lead to a power failure. "The improved optics of binoculars are allowing crews inspecting high-up transmission lines to better identify weather damage that could lead to a failure," said Liikala-Seymore. "And global position systems (GPS) technology helps us quickly locate our remote facilities." Some examples of facilities that undergo regular inspection include wooden utility poles, automated switches, signage, power lines and overhead and underground transformers. In 2000, PG&E introduced improved software to track maintenance work, and this year is implementing new planning and scheduling technology. In 1994, the company began a comprehensive program of testing, treating and appropriately replacing poles. This program tests the utility's 2.3 million poles on a 10-year cycle. In 1995, the company rolled out an improved inspection program covering all of its electric facilities, focusing on identifying conditions that may affect safety and reliability of its 3 million pieces of electric distribution equipment. PRESIDENT CASINOS: Continued Debt Workout Talks with Noteholders ---------------------------------------------------------------- President Casinos, Inc. continues to experience difficulty generating sufficient cash flow to meet its debt obligations and sustain its operations. During fiscal 2000, as a result of the Company's relatively high degree of leverage and the need for significant capital expenditures at its St. Louis property, management determined that, pending a restructuring of its indebtedness, the Company was unable to pay the regularly scheduled interest payments on its $75.0 million 13.0% Senior Exchange Notes and the $25.0 million 12% Secured Notes. Accordingly, the Company was unable to pay the regularly scheduled interest payments of $6.4 million that were each due and payable March 15, and September 15, 2000. Under the indenture pursuant to which the Senior Exchange Notes and Secured Notes were issued, an Event of Default occurred on April 15, 2000, and is continuing as of this date. Additionally, the Company was unable to pay the $25.0 million principal payment due September 15, 2000 on the Senior Exchange Notes. The holders of at least 25% of the Senior Exchange Notes and the Secured Notes were notified of the defaults and instructed the Indenture Trustee to accelerate the Senior Exchange Notes and the Secured Notes and declare the unpaid principal and interest to be due and payable. On October 10, 2000, the Company sold the assets of its Davenport operations for aggregate consideration of $58.2 million in cash. On November 22, 2000, the Company entered into an agreement with a majority of the holders of the Senior Exchange Notes and a majority of the holders of the Secured Notes. The agreement provided for a proposed restructuring of the Company's debt obligations under the Notes and the application of certain of the proceeds received by the Company from the sale of the Company's Davenport, Iowa assets. Approximately $43.0 million of the proceeds from the sale were deposited with a trustee. Of this amount, $12.8 million was used to pay missed interest payments due March 15, 2000 and September 15, 2000 on the Senior Exchange Notes and the Secured Notes; $25.0 million was used to partially redeem the Senior Exchange Notes and the Secured Notes; and $5.2 million was used to pay interest due March 15, 2001 on the Senior Exchange Notes and the Secured Notes. Subsequently, the Company was unable to make the principal and interest payments due September 15, 2001 and its interest payment due March 15, 2002, on its Senior and Secured Notes. As of February 28, 2002, principal due on the Senior and Secured Notes was $56.2 million and $18.8 million, respectively. To date, the proposed restructuring has not been implemented and the Company is continuing discussions with the Noteholders. In November 2001, the majority of the holders of both the Senior Exchange Notes and the Secured Notes expressed increasing concern over the inability to reach a consensual agreement with the Company. The Company has informed the Noteholders that the Company intends to continue with the sale of certain properties and the pursuit of refinancing opportunities as primary sources of retiring debt obligations. In July 2001, the Company completed the sale of its non-gaming cruise operations in St. Louis, Missouri for $1.7 million. The Company is continuing its efforts to identify purchasers for other assets for sale. Management is unable to predict whether the heretofore given notice to accelerate the Senior Exchange Notes and Secured Notes will result in any further action by the Noteholders or whether the Notes can be restructured or refinanced under terms satisfactory to the Company and the Noteholders. On March 29, 2001, the Company executed an installment sale agreement for the M/V "Surfside Princess" (formerly, the "New Yorker"). On October 3, 2001, as a result of the purchasing party's inability to comply with the terms of the agreement, the Company terminated the agreement and repossessed the vessel. Management intends to continue to seek another buyer or find other uses for the vessel. Until the Company is able to do so, the Company will continue to incur legal fees, insurance and maintenance costs on the vessel. In addition to the foregoing, President Broadwater Hotel, LLC, a limited liability company in which a wholly-owned subsidiary of the Company has a Class A ownership interest, is in default under a $30.0 million promissory note and associated $7.0 million loan fee incurred in connection with the July 1997 purchase by PBLLC of the real estate and improvements utilized in the Company's operations in Biloxi, Mississippi. On April 19, 2001, PBLLC filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Mississippi in Biloxi, Mississippi. PBLLC continues its possession and use of its assets as a debtor in possession and has entered into an agreement with its lender approved by the Bankruptcy Court which allows PBLLC use of its cash collateral. On October 31, 2001, PBLLC filed a Debtors' Plan of Reorganization which will permit PBLLC to restructure its debt obligations in a manner which will permit it to continue as a going concern. The Bankruptcy Court has set September 30, 2002 for commencement of the hearing on confirmation of the Plan. The Plan provides that, following the confirmation of the Plan, PBLLC and the Company will enter into a loan agreement under which the Company will be obligated to loan to PBLLC such amounts as shall be necessary for PBLLC to make certain payments due under the Plan. Additionally, if the Plan is confirmed the Class B membership interest of PBLLC held by JECA (an entity controlled by John E. Connelly, the Company's Chairman and Chief Executive Officer) will, in respect of its payment right against PBLLC of approximately $14.6 million, be entitled to receive in satisfaction thereof a cash payment of $1.5 million and a one- year interest bearing promissory note from PBLLC in the principal amount of $1.5 million. The Company would be required to loan such amounts to PBLLC to the extent that PBLLC is unable to fund such amounts. There can be no assurance that PBLLC will be able to restructure its debt obligations and emerge from bankruptcy or continue as a going concern. Due to certain debt covenants and cross default provisions associated with other debt agreements, the Company is also currently in default under its $2.2 million M/V "President Casino-Mississippi" note. Management believes that unless the holders of the Company's various debt obligations take further action with respect to the Company's defaults, the Company's liquidity and capital resources will be sufficient to maintain its normal operations at current levels and does not anticipate any adverse impact on its operations, customers or employees. However, costs previously incurred and which will be incurred in the future in connection with restructuring the Company's debt obligations have been and will continue to be substantial and, in any event, there can be no assurance that the Company will be able to restructure successfully its indebtedness or that its liquidity and capital resources will be sufficient to maintain its normal operations during the restructuring period. The Company's ability to continue as a going concern is dependent on its ability to restructure successfully, including refinancing its debts, selling or chartering its assets on a timely basis under acceptable terms and conditions, and the ability of the Company to generate sufficient cash to fund future operations. There can be no assurance in this regard. Management believes that the long-term viability of the Company is dependent on either the lifting or eliminating of loss limits in Missouri and/or the obtaining of required environmental permits and securing of new financing for the Biloxi destination resort. The 2002 Missouri legislature adjourned before voting on proposed legislation to repeal loss limits. No assurance is possible that any subsequent legislative session will vote favorably to lift such limits nor can there be assurance that the Company will be able to obtain regulatory approvals or the requisite financing for the Biloxi destination resort. The Company generated consolidated operating revenues of $129.2 million during fiscal 2002 compared to $152.1 million during fiscal 2001, a decrease of $22.9 million. The St. Louis casino operations experienced an increase in revenue of $17.7 million and the Biloxi combined operations experienced a decrease in revenue of $0.1 million. Excluding the Davenport and Gateway operations, revenues increased $17.6 million, or 15.9%. Gaming revenues in the Company's St. Louis operations increased $18.7 million, or 31.4%, during fiscal 2002, compared to fiscal 2001. The St. Louis operations experienced an increase in market share to approximately 10.1% in fiscal 2002 from approximately 8.6% for the prior year. Management believes this increase is primarily attributable to the relocation of the "Admiral" and an improved slot product which takes advantage of the August 2000 change in the Missouri gaming regulations, improving the ease of playing multiple coin slot machines. Additionally, the St. Louis casino operations increased staffing levels, focusing on providing a heightened level of quality guest service. Gaming revenues at the Company's Biloxi operations increased $0.1 million, or less than 1.0%, during 2002 compared to prior year. The Company's revenues from food and beverage, hotel, retail and other were $25.5 million during fiscal 2002, compared to $31.3 million during fiscal 2001, a decrease of $5.8 million, or 18.5%. Excluding the Davenport and Gateway operations, revenues from food and beverage, hotel, retail and other increased $2.1 million, or 9.2%. The increase was primarily attributable to an increase of food and beverage, retail and other revenue of approximately $1.0 million in St. Louis as a result of the increase in the number of guests as a result of the "Admiral" relocation and improved slot product, and an increase of $1.1 million in Biloxi primarily as a result of an increase in the number of patrons resulting from increased promotions. Promotional allowances were $22.6 million during fiscal 2002 compared to $27.0 million during fiscal 2001. Excluding the Davenport operations, promotional allowances were $22.6 million during fiscal 2002 compared to $19.4 million during fiscal 2001, an increase of $3.2 million, or 16.5%. Promotional allowances in St. Louis and Biloxi increased $2.0 million and $1.2 million, respectively, in fiscal 2002 primarily as a result of (i) increased cash back and coupon promotions in both locations, (ii) an increase in valet and buffet complementaries in St. Louis and (iii) an increase in room and food and beverage complementaries in Biloxi. The Company had an operating loss of $4.7 million during fiscal 2002, compared to an operating loss of $12.2 million during fiscal 2001. The Company incurred a net loss of $20.7 million during fiscal 2002, compared to a net loss of $0.2 million during fiscal 2001. PURE WORLD: Begins Trading on SmallCap Market Effective June 6 -------------------------------------------------------------- Pure World, Inc. (PURW - NASDAQ) announced that the Nasdaq Stock Market has approved the Company's request to transfer its common stock to the Nasdaq SmallCap Market from the Nasdaq National Market effective June 6, 2002. Pure World's stock will continue to trade under the symbol "PURW." The Company requested the transfer to the Nasdaq SmallCap Market because it was unable to meet the Minimum Market Value of Publicly Held Shares and the Minimum Bid Price requirements for continued listing on the Nasdaq National Market as set forth in Marketplace Rules 4450(e)(1) and 4450(e)(2), respectively. The Nasdaq SmallCap Market has the same Minimum Bid Price requirement, but the Company has until August 13, 2002 to demonstrate compliance. If Pure World has not demonstrated compliance by August 13, 2002 the Company may be eligible for an additional grace period of 180 days in which to demonstrate compliance because Pure World's stockholders' equity currently exceeds the amount required for initial inclusion on the Nasdaq SmallCap Market. Pure World has 7,573,634 shares issued and outstanding. RAINTREE RESORTS: S&P Cuts Rating to D Over Interest Nonpayment --------------------------------------------------------------- Standard & Poor's lowered its long-term corporate credit rating on Raintree Resorts International Inc. to 'D' (default) from triple-'C'. The rating action follows the company's failure to pay a US$6.1 million coupon due June 1, 2002, on its US$94.5 million outstanding senior notes maturing 2004. Although the company is negotiating with Leisure Industries Corp. the sale of the Whisky Jack Resorts Ltd. and Teton Club Jackson Hole resorts, and an interest on the Cimarr�n Golf Resort, to obtain the funds to make the interest payments, Standard & Poor's does not have sufficient evidence that the payment can be made soon as the timing for these sales is still uncertain. Raintree is a developer, marketer, and operator of luxury vacation ownership resorts in North America with resorts in Mexico, the U.S., and Canada. SAMSONITE CORP: Taps Berenson Minella to Help Evaluate Options -------------------------------------------------------------- Samsonite Corporation (OTC Bulletin Board: SAMC) reported revenue of $160.5 million, operating income of $2.5 million and net loss to common stockholders of $22.3 million for the quarter ended April 30, 2002. These results compare to revenue of $192.1 million, operating income of $8.1 million and net loss to common stockholders of $13.9 million for the first quarter of the prior year. Operating income for the quarter ended April 30, 2002 reflects an asset impairment charge of $0.3 million, a charge of $2.2 million for restructuring the Company's Mexico City facility and restructuring expenses of $2.6 million associated with the Company's restructuring activities. The accrual of undeclared preferred stock dividends of $10.2 million for the quarter is also reflected in the net loss to common stockholders. Adjusted EBITDA (earnings before interest expense, taxes, depreciation, amortization, and minority interest, adjusted for certain items management believes should be excluded in order to reflect recurring operating performance including restructuring charges and expenses), a measure of core business cash flow, was $12.3 million for the first quarter compared to $19.6 million for the first quarter of the prior year. Chief Executive Officer, Luc Van Nevel, stated: "The Company's financial results for the quarter reflect the beginning of the recovery in our core business operations from the impacts of the horrific events of last September. Although lower than the prior year, sales in our United States and Asian operations slightly exceeded our expectations for the quarter, and sales in our European operations were slightly lower than our expectations; in combination, consolidated sales achieved our expectations for the quarter. Absent another economic event, we believe current conditions are indicative of a return to a more normal business environment by the end of this fiscal year. The improvement in our worldwide business operations is reflective of the increase in worldwide air travel over the past few months. "Our recent announcement relating to the retention of Berenson, Minella & Company as financial advisor and the formation of a special Board committee to evaluate alternatives to improve our capital structure was another very important event during the quarter. Management and the Board of Directors are hopeful that this process will result in a capital structure that will establish a permanent foundation that will permit future growth in stakeholder value." Chief Financial Officer, Richard H. Wiley, also commented on the first quarter performance: "In addition to the substantial improvement in operating results from the fourth quarter of last year, we continue to make progress in streamlining inventories and to make more efficient use of our working capital investment. As a result of improved operating cash flow and reducing working capital investment, the Company continues to maintain an adequate liquidity position enabling it to meet its current operational and debt service requirements." Samsonite is one of the world's largest manufacturers and distributors of luggage and markets luggage, casual bags, business cases and travel-related products under brands such as Samsonite(R), American Tourister(R), Lark(R), Hedgren(R), Lacoste(R) And Samsonite(R) Black Label. At January 31, 2002, Samsonite Corp. had a total shareholders' equity deficit of about $124 million. TOWER AUTOMOTIVE: Revises Earnings Guidance for Second Quarter -------------------------------------------------------------- Tower Automotive, Inc. (NYSE:TWR) provided revised guidance for its second quarter, reflecting the combined effects of better than expected operating results along with the interest expense savings and increased shares outstanding resulting from the recently completed stock offering of 17.25 million shares. The company expects net earnings for the second quarter ending June 30, 2002 to be in the range of $.36 to $.40 per diluted share, on estimated second quarter revenues of approximately $710 million to $725 million. Tower previously provided second quarter guidance of $.33 to $.38 per diluted share (adjusted for its recent stock offering and related interest expense savings and equivalent to $.37 to $.42 on a pre-offering basis) on sales of $695 million to $715 million. The company previously announced that it had completed a follow- on stock offering of 17.25 million shares (after exercise of the underwriters' overallotment option) on May 13, 2002. Net proceeds from the offering of approximately $222.5 million were used to repay borrowings under the company's senior credit facility. Tower Automotive, Inc., is a global designer and producer of structural components and assemblies used by every major automotive original equipment manufacturer, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Hyundai/Kia, BMW, and Volkswagen Group. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company is based in Grand Rapids, Mich. * * * On May 13, 2002, Standard & Poor's affirmed its double-'B' corporate credit rating on Tower Automotive Inc., a supplier of automotive structural components and assemblies. The outlook, however, has been revised to stable from negative. The rating actions follow Tower's completion of the sale of $222 million of common equity. Proceeds from the sale were used to reduce borrowings on the company's bank credit facilities. The equity offering improved Tower's financial flexibility by increasing borrowing availability under the company's revolving credit facility and strengthening its credit statistics, which should permit the company to remain comfortably within its bank financial covenant requirements. Ratings List Tower Automotive Inc. * Corporate credit rating BB * Senior unsecured debt rating BB * Subordinated debt rating B+ R.J. Tower Corp. * Senior unsecured debt rating BB (gtd. by Tower Automotive Inc.) Tower Automotive Capital Trust * Preferred stock rating B (gtd. by Tower Automotive Inc.) TRI-UNION: S&P Knocks Rating Down to D After Missed Payment ----------------------------------------------------------- Standard & Poor's lowered its corporate credit and senior secured debt ratings on independent oil company Tri-Union Developing Corp. to 'D' and removed the ratings from CreditWatch with developing implications. Houston, Texas-based Tri-Union has about $130 million in outstanding debt. The rating action follows the company's announcement that it did not make its June 01, 2002, $8.1 million interest payment on its senior secured notes due 2006. Tri-Union did, however, make a $20 million debt amortization payment also due June 1. The company has stated that it intends to make the interest payment within the 30-day grace period provided under the notes indenture. "If Tri-Union makes the interest payment within the grace period, Standard & Poor's would re-evaluate its ratings and outlook on the company at that time," said credit analyst Paul Harvey. VIRAL GENETICS: Auditors Doubt Ability to Continue Operations ------------------------------------------------------------- Viral Genetics Inc. was incorporated in California on July 11, 1995 and is in the development stage. The Company was organized for the purpose of manufacturing and marketing a pharmaceutical product named Thymus Nuclear Protein (the current formulation of which is now known as and hereinafter referred to as "TNP"). This product, TNP, is used in a drug being developed to treat AIDS. Sales of this product have been limited, primarily for research purposes. The success of the Company will be based upon obtaining certain regulatory approval for its pharmaceutical product TNP to commence commercial operations. On October 1, 2001, the Company was acquired by 5 Starliving Online, Inc. Until Viral Genetics receives outside financing to fund its capital commitments, its operations will be limited to those that can be effected through its officers, directors and consultants. Haig Keledjian, its President, has served without compensation and without any agreement or arrangement for compensation. Viral Genetics expects that it will negotiate a compensation package for Mr. Keledjian covering past and future service at such time that Viral Genetics has sufficient working capital to do so. From 1995 through 2000, certain directors of Viral Genetics have made loans and other advances to fund operations. At March 31, 2002, the Company owed Haig Keledjian, an officer and director, $801,632 of principal and accrued interest, Hampar Karageozian, a director, $748,854 of principal and interest, Dr. Harry Zhabilov, a director, $643,841 of principal and accrued interest, Arthur Keledjian, a director, $1,129 of principal and accrued interest, and Eileen Hayward (the mother of Paul Hayward, an officer and director) $184,628 of principal and accrued interest. All of these loans bear interest at the rate of five percent per annum, except the loan of Eileen Hayward, which bears interest at 10 percent. Viral Genetics does not expect to be able to repay any of these obligations unless it obtains additional outside financing or is able to generate substantial revenue from sale of its products in the future, of which there is no assurance. At December 31, 2001, the Company had no meaningful current assets, current liabilities of $2,330,037, and long-term liabilities of $7,404,033. In April 2002, it raised $150,000 in cash from the sale of 215,000 shares of common stock in a private transaction effected in reliance on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933. No broker was involved in the transaction and no commissions were paid to any person. These funds will be used for working capital needs to fund general and administrative costs and ongoing laboratory work. Viral Genetics also entered into an agreement to convert approximately $1,200,000 of debt to equity through the issuance of up to 1,500,000 units, each unit consisting of one share of common stock and one-half warrant to purchase one-half share at $0.50, which increases to $0.625, 45 days following the date TNP is licensed for sale in Mexico. This transaction was scheduled to close on April 10, 2002, but has not closed yet and it cannot be predicted when or whether the transaction will close. Through its subsidiary the Company is a party to an Assignment of Patent agreement dated August 1, 1995, under which Therapeutic Genetics, Inc., a California corporation, assigned all of its rights in the patent pertaining to TNP to the Company's subsidiary for a note in the principal amount of $5,000,000 and a continuing royalty equal to five percent of gross sales of products using the patented technology. At March 31, 2002, the principal and accrued interest on the note was $6,644,531. Viral Genetics does not expect to be able to pay this obligation unless it obtains additional outside financing or is able to generate substantial revenue from sale of its products in the future, of which there is no assurance. The Company estimates that it will need approximately a million dollars of additional capital in 2002 to fund approximately $500,000 of research and development costs, $50,000 of patent work, and $450,000 of administrative expenses and product manufacturing costs. It has raised $150,000 thus far, and has no meaningful agreements or arrangements in place to raise the additional capital. These factors, together with its existing liabilities, raise substantial doubt about Viral Genetics ability to continue as a going concern. WESTERN INTEGRATED: Gets Court Okay to Sign-Up Pachulski Stang -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Colorado gives its stamp of approval and allows the Official Committee of Unsecured Creditors appointed in Western Integrated Networks, LLC's chapter 11 case to employ Pachulski, Stang, Ziehl, Young & Jones, P.C. as its attorneys. As Counsel to the Committee, Pachulski Stang will be: a) advising the Committee of its rights, powers and duties; b) assisting the Committee in consulting with the Debtors and their counsel concerning the administration of these cases and the Debtors' estates; c) investigating and analyzing the claimed liens, security interests and other asserted rights of alleged secured creditors and any claims, defenses or offsets related thereto; d) assisting the Committee in its investigation of the acts, conduct, assets, liabilities and the desirability of the continuance of such business and any other matter relevant to the case or to the formulation of a chapter 11 plan; e) advising and participating with the Committee in performing the services relating to the formulation of a chapter 11 plan; f) advising the Committee regarding Debtors' request for post-petition financing and use of cash collateral; g) assisting the Committee in requesting the appointment of a trustee or examiner should the Committee decide that such action is necessary; and h) performing such other services as are in the interest of Debtors unsecured creditors. Pachulski Stang will bill for legal services at its customary hourly rates: Attorneys $595 to $215 per hour Paralegals $160 to $85 per hour Law Clerks/Clerks $60 to $40 per hour Western Integrated Networks, LLC is a single source facilities based provider of broadband services to residential and small business customers in certain targeted markets. The Company filed for chapter 11 protection on March 11, 2002. Douglas W. Jessop, Esq. at Jessop & Company, P.C. assists the Debtors in their restructuring efforts. WILLIAMS COS.: Denies Engaging in Round-Trip Natural Gas Trades --------------------------------------------------------------- In response to the Federal Energy Regulatory Commission's order of May 22, Williams (NYSE: WMB) denied it engaged in so-called "round-trip" or "wash trades" of natural gas to increase reported revenues. "As we continue to cooperate with the FERC, Williams reiterates our legal and ethical trading practices in natural gas, as well as power and other energy commodities," said Steve Malcolm, Williams' chairman, president and CEO. The full text of today's FERC filing is available on the company's Web site, http://www.williams.com Williams moves, manages and markets a variety of energy products, including natural gas, liquid hydrocarbons, petroleum and electricity. Our operations span the energy value chain from wellhead to burner tip. Based in Tulsa, Okla., Williams and its 12,000 worldwide employees contributed $45 million in 2001 to support the environment, health and human services, the arts, and education in its communities. Williams information is available at http://www.williams.com WINSTAR COMMS: Court Okays Kaye Scholer as Trustee's Counsel ------------------------------------------------------------ Judge Akard vacated his previous order denying the Trustee's application to employ Kaye Scholer as counsel. Earlier, Judge Akard questioned the need for the Trustee -- located in Delaware -- to employ lawyers in Kaye Scholer's Chicago office. The Court approves the appointment of Kaye Scholer as counsel to Winstar Communications, Inc.'s Chapter 7 Trustee, nunc pro tunc to January 28, 2002, the date of the appointment of the Chapter 7 Trustee. Specifically, the Trustee will look to Kaye Scholer: A. to provide legal advice with respect to the powers and duties of a trustee; B. to prepare on behalf of trustee necessary applications, motions, answers, orders, reports, and other legal documents; C. to analyze the Debtors financial condition in order to ascertain potential causes of action held by the Debtors' estates and whether such causes of action should be prosecuted by the Trustee; D. to develop a strategy to maximize potential returns for the Debtors' estates and, in turn, their creditors; E. to appear in court on behalf of the Trustee to prosecute the interests of the Trustee, the Debtors' estates and the creditors of the estates; and F. to perform all other legal services required by the Trustee in these chapter 7 cases. Sheldon L. Solow, Esq., a Kaye Scholer member, informs the Court that the firm intends to apply for compensation for professional services rendered in connection with these cases and for reimbursement of actual and necessary expenses incurred, in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the local rules and orders of this Court. The attorneys presently designated to represent the Trustee and their current standard hourly rates are: Sheldon L. Solow (Partner) $590 per hour Richard G. Smolev (Partner) $590 per hour Nicholas J. Cremona (Associate) $335 per hour Mr. Solow submits that other Kaye Scholer attorneys and paraprofessionals will, from time to time, serve the Trustee in connection with the matters herein described. The hourly rates for Kaye Scholer attorneys and paraprofessionals are within the following ranges: Partners $425 to $690 Counsel $385 to $475 Associates $215 to $430 Paraprofessionals $100 to $175 Kaye Scholer has also informed the Trustee that it is the firm's policy to charge all of its clients for out-of-pocket expenses incurred in connection with the client's case. Mr. Solow assures the Court that Kaye Scholer: A. does not hold or represent an interest adverse to the Debtors' estates; B. is a "disinterested person" as defined by section 101(14) of the Bankruptcy Code; and C. has no connection with the Debtors, their creditors or other parties-in-interest in these cases. (Winstar Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM INC: Wireless Unit Ends Contract with Third Millenium -------------------------------------------------------------- Third Millennium Telecommunications, Inc. (OTCBB:TMTM) announced that it received notice May 20, 2002 from WorldCom Wireless, Inc., providing 30 days notice terminating the Sales Agency Agreement between Third Millennium and WorldCom Wireless, Inc. WorldCom, Inc. the parent of WorldCom Wireless, indicated that the termination was the result of WorldCom, Inc.'s decision to phase-out its involvement in the wireless industry. Following the termination of the Sales Agency Agreement, WorldCom also terminated Third Millennium's $200,000 line of credit. "We expect the termination of the Sales Agency Agreement and credit line to have an immediate, material, adverse effect on our financial condition and results of operation," stated Mike Galkin, President of Third Millenium. "The sale of WorldCom Wireless services during the fiscal years ended March 31, 2002 and March 31, 2001, accounted for substantially more than half of our revenues and income". Galkin, however, indicated hope for the future. "These events pose a substantial challenge for our Company and there are no guarantees. But, we have begun taking steps to replace the loss of revenues and income by increasing our revenue from other cellular providers and resellers, and are expanding our product and service lines." Third Millennium, founded in 1997, offers wireless products and services on a national basis through its proprietary enterprise software platform and state-of-the-art fulfillment center. The Company can create customized and scalable solutions to meet the evolving needs of the Internet marketplace. The Company has relationships with AT&T Wireless, GlobalstarUSA Satellite Services and Dish Network. Its products and services are marketed online and through independent dealers and affiliates nationwide. * * * As previously reported, Fitch Ratings has downgraded several of Worldcom Inc.'s debt rating to low-B level. Additionally, Standard & Poor's dropped the company's corporate credit rating and its ratings on four related synthetic transactions to low-B level. WORLDCOM INC: Intends to Exit Non-Core Wireless Resale Business --------------------------------------------------------------- WorldCom, Inc. (Nasdaq: WCOM, MCIT) plans to exit the wireless resale business. With approximately $1 billion in revenues and nearly two million customers, WorldCom is the largest reseller of wireless services in the United States. "After carefully assessing our business and the current market conditions for wireless resale services, we have decided to exit the wireless resale business -- a business that is not a core WorldCom asset," said John Sidgmore, WorldCom president and CEO. "As we exit the business we will further strengthen our cash position." WorldCom has been a reseller of wireless services for more than five years. Initially, WorldCom entered the resale marketplace as a first step toward becoming a facilities-based wireless carrier, which ultimately did not materialize. Slowing market growth, intense pricing pressure and acquisition cash requirements have rendered WorldCom's position as a pure reseller unprofitable. The multi-month process of exiting the wireless resale business will begin immediately. WorldCom has received interest from several major facilities-based carriers regarding purchasing the business. WorldCom expects to quickly evaluate its options and select an exit strategy. As it does so, some of WorldCom Wireless' 2,200 workforce will be reduced while the remainder will continue operations in the interim period. Regardless of the exit option chosen, WorldCom said it is committed to ensuring the process is seamless and transparent to customers. During the transition process, the Company will continue to serve its existing customer base and will continue to provide customer care. Additionally, once an exit method is determined, customers will have the option of selecting a new wireless provider or transitioning to another carrier. WorldCom, Inc. (Nasdaq: WCOM; MCIT) is a pre-eminent global communications provider for the digital generation, operating in more than 65 countries. With one of the most expansive, wholly- owned IP networks in the world, WorldCom provides innovative data and Internet services for businesses to communicate in today's market. In April 2002, WorldCom launched The Neighborhood built by MCI -- the industry's first truly any- distance, all-inclusive local and long-distance offering to consumers for one fixed monthly price. Effective July 12, 2002, WorldCom will eliminate its tracking stock structure and have one class of common stock with the Nasdaq ticker symbol WCOM. For more information, go to http://www.worldcom.com * FTI Consulting Launches Strategic Settlement Services Practice ---------------------------------------------------------------- FTI Consulting, Inc. (NYSE: FCN), the premier national provider of strategic and litigation-related consulting services, announced that Ronnie A. Martin has been appointed managing director of its new Houston-based Strategic Settlement Services Practice. The new practice will help FTI's clients to mitigate the cost of or avoid litigation by evaluating claims and risks, coordinating business expertise with legal and technical analysis, developing cost-effective settlement strategies, and implementing profitable business resolutions. "Ronnie is recognized in the energy industry for his ability to bring a business perspective to litigation strategy," said Jack Dunn, FTI's chairman and chief executive officer. "At Texaco, Ronnie built a state-of-the-art business model that ensured the right business strategy was developed to create the best business results. We expect him to adapt this model for other industries and expand FTI's role in strategic settlement services across our client base." Ronnie has over 33 years of experience in various sales, operations and management aspects of the energy industry relating to oil, gas and natural gas liquids. Prior to joining FTI, he was vice president of Texaco Exploration and Production Inc., responsible for the development of business-oriented conflict avoidance and resolution strategies for Texaco's domestic exploration and production activities. Ronnie's responsibilities also included claims analysis and fact testimony in contract and royalty disputes, severance tax assessments, joint interest operations disputes and environmental claims. He also served as lead negotiator and client representative in numerous mediations, arbitrations and trials in which Texaco was a party. In addition to his dispute management responsibilities, Ronnie led other Texaco oil and gas initiatives including the development of a now industry- accepted crude oil tendering program that was designed to achieve the company's business objectives of maximizing sales value and addressing royalty and tax valuation requirements. "The need for well-reasoned strategic settlement services is greater today than ever before," Ronnie commented. "With a properly developed strategy, current as well as potential disputes can be effectively managed and acceptable resolutions can be achieved. The settlement skills and strategy practices employed in the energy business are completely transferable to other industries, and FTI has encouraged me to build a broad- based settlement practice." Joining Ronnie in the Strategic Settlement Services practice are Douglas A. Duke and Belinda A. Frasier. Doug has held various management positions in the natural gas industry for 24 years and has extensive experience in the areas of natural gas production, regulations and marketing, as well as settlement negotiations and development of litigation strategy and support for royalty and severance tax claims. Most recently, he was manager of production services for Texaco Exploration and Production Inc., where he was responsible for providing information, analysis and testimony with respect to significant domestic claims and litigation. Belinda has 20 years experience in various oil and gas industry financial assignments. Most recently, she was senior financial analyst for production services for Texaco Exploration and Production, Inc. where she was responsible for developing litigation databases and performing extensive economic analyses. She also has extensive experience in oil and gas royalty and severance tax valuation analysis and acquisition and divestiture analysis. "We are very excited that Ronnie, Doug and Belinda have joined our firm," said Stewart Kahn, president and chief operating officer of FTI. "They give us the tremendous combination of senior oil and gas professionals and experienced settlement strategists. Ronnie and his team join the 65 professionals we already have in Texas serving clients on intellectual property matters, forensic accounting, energy disputes, accident investigations and restorations, and trial graphics and technology matters." FTI Consulting is a multi-disciplined consulting firm with leading practices in the areas of bankruptcy and financial restructuring, litigation consulting and engineering/scientific investigation. Modern corporations, as well as those who advise and invest in them, face growing challenges on every front. From a proliferation of "bet-the-company" litigation to increasingly complicated relationships with lenders and investors in an ever-changing global economy, U.S. companies are turning more and more to outside experts and consultants to meet these complex issues. FTI is dedicated to helping corporations, their advisors, lawyers, lenders and investors meet these challenges by providing a broad array of the highest quality professional practices from a single source. FTI is on the Internet at http://www.fticonsulting.com * BOOK REVIEW: Jacob Fugger the Rich: Merchant and Banker of Augsburg, 1459-1525 -------------------------------------------------------------- Author: Jacob Streider Publisher: Beard Books Hardcover: 227 pages List Price: $34.95 Review by Gail Owens Hoelscher Buy a copy for yourself and one for a colleague on-line at http://amazon.com/exec/obidos/ASIN/1587981092/internetbankrupt Quick, can you work out how much $75 million in sixteenth century dollars would be worth today? Well, move over Croesus, Gates, Rockefeller, and Getty, because that's what Jacob Fugger was worth. Jacob Fugger was the chief embodiment of early German capitalistic enterprise and rose to a great position of power in European economic life. Jacob Fugger the Rich is more than just a fascinating biography of a powerful and successful businessman, however. It is an economic history of a golden age in German commercial history that began in the fifteenth century. When the book was first published, in 1931, The Boston Transcript said that the author "has not tried to make an exhaustive biography of his subject but rather has aimed to let the story of Jacob Fugger the Rich illustrate the early sixteenth century development of economic history in which he was a leader." Jacob Fugger's family was one of the foremost family in Augsburg when he was born in 1459. They got their start by importing raw cotton, by mule, from Mediterranean ports. They later moved into silk and herbs and, for a long while, controlled much of Europe's pepper market. Jacob Fugger diversified into copper mining in Hungary and transported the product to English Channel and North Sea ports in his own ships. A stroke of luck led to increased mining opportunities. Fugger lent money to the Holy Roman Emperor Maximilian I to help fund a war with France and Italy. Mining concessions were put up as collateral. The war dragged on, the Emperor defaulted, and Fugger found himself with a European monopoly on copper. Fugger used his extensive business network in service of the Pope. His branches all over Europe collected payments due the Vatican and issued letters of credit that were taken to Rome by papal agents. Fugger is credited with creating the first business newsletter. He collected news of evolving business climate as well as current events from his agents all across Europe and distributed them to all his branches. Fugger's endeavors wee not universally applauded. The sin of usury was still hotly debated, and Fugger committed it wholesale. He was sued over his monopoly on copper. He was involved in some messy bribes in bringing Charles V to the throne. And, his lucrative role as banker in the sale of indulgences, those chits that absolve the buyer of sin, raised the ire of Martin Luther himself. Luther referred to Fugger specifically in his Open Letter to the Christian Nobility of the German nation Concerning the Reform of the Christian Estate just before being excommunicated in 1521. Fugger went on, however, to fund Charles V's war on Protestanism and became even richer. Fugger built many churches and buildings in Augsburg. He was generous to the poor and designed the world's first housing project. These buildings and lovely gardens, called the Fuggerei, are still in use today. A New York Times reviewer said that Jacob Fugger the Rich, a book "concerned with the most famous, most capable, and most interesting of all [the members of the Fugger family] will be as interesting for the general reader as for the special student of business history." This observation is just as true today as in 1931, when first made. Jacob Streider was a professor of economic history at the University of Munich. ********* Bond pricing, appearing in each Monday's edition of the TCR, is provided by DLS Capital Partners in Dallas, Texas. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***