/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/020621.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 21, 2002, Vol. 6, No. 122 Headlines 360NETWORKS: Secures Third Extension of Exclusive Periods AES CORPORATION: S&P Views CEO Change as Neutral for Credit ANC RENTAL: Pushing to Consolidate Orlando Airport Operations ADELPHIA BUSINESS: Beal Capital to Provide $15MM DIP Facility AMES DEPT: Wants OK to Pay KRC Acquisition $1.7MM+ Break-Up Fee APPLIED THEORY: Completes Asset Sale to Fastnet and ClearBlue AQUASEARCH INC: Will Make Late Form 10-QSB Filing BALTEK CORP: Must Revise US Credit Pact to Dodge Likely Default BERRY PLASTICS: S&P Rates Proposed $455MM Credit Facility at B+ BETHLEHEM STEEL: Agrees to Let PBGC File Consolidated Claim BIG BUCK: Has Until Aug. 13 to Meet Nasdaq Bid Price Requirement BRIDGE INFO: Cantor Seeks Allowance of $26MM Admin. Expense CMS ENERGY: Fitch Maintains Watch Negative on Several Ratings CELL TECH: December 31 Working Capital Deficit Narrows to $6MM CHATTEM INC: S&P Revises Outlook on B+ Rating to Stable COLUMBUS MCKINNON: S&P Keeps Watch on B+ Corporate Credit Rating COMDISCO INC: Intends to Conduct 2004 Exam. on Moneyline Lease COVANTA ENERGY: Consents to Sale of Hockey League Franchise DAVE & BUSTER: S&P Assigns B Rating to $165MM Sr. Secured Notes DELTA FINANCIAL: Asset-Backed Securitization Priced at $200MM DESA HOLDINGS: Wants to Hire Kekst and Company as PR Consultants DYNASTY COMPONENTS: Confirms Will Not File Financial Reports EOTT ENERGY: Posts $2.3 Million Net Loss for First Quarter 2002 ENCORE ACQUISITION: S&P Assigns BB- Corporate Credit Rating ENRON CORP: Liquids Unit Gets OK to Sell Natural Gas Inventories ENRON CORP: Wins Nod to Expand Susman Godfrey Engagement Scope EXIDE TECHNOLOGIES: Taps Morrison & Foerster as Special Counsel FEDERAL-MOGUL: Court Okays Stipulation with Northern Insurance FOCUS INSURANCE: Intends to Declare Dividend on July 22, 2002 GATEWAY DISTRIBUTORS: Expects Better Results After Fin'l Workout GLOBAL CROSSING: Gets Okay to Assume CEO Legere Employment Pact GLOBAL CROSSING: Will Provide Int'l Voice Services to Techtel GROUP TELECOM: Talks with Lenders About Financial Workout Plan GROUP TELECOM: 3 Shaw Nominees Step-Down from Board of Directors IMP: Sells 499K Shares to Certain Vendors via Private Placement IT GROUP: Court Okays UBS Warburg and Lehman Bros. as Advisors IMMTECH INT'L: Shareholders Continue Selling Up to 1.8MM Shares IMMUNE RESPONSE: Pursuing Equipment Debt Arrangement Workout IMPSAT FIBER: Maintaining Existing Cash Management System INTERNET ADVISORY: Proposes to Amend Articles of Incorporation JUNIPER CBO: Deterioration in Credit Enhancement Concerns S&P KAISER ALUMINUM: Wants Plan Filing Exclusivity Moved to Dec. 12 KMART: Changes Name of Web Site to Kmart.com from BlueLight.com KNOWLEDGE HOUSE: Financial Reporting Defaults Continue KOMAG INC: Intends to Padlock Plant in Santa Rosa, California LEGACY HOTELS: S&P Hatchets Long-Term Corp. Credit Rating to BB+ LIONBRIDGE TECHNOLOGIES: Shareholders' Meeting Set for July 29 LYONDELL CHEMICAL: S&P Assigns BB $275M Senior Notes Rating METALS USA: Wins Nod to Implement Key Employee Retention Plan METROCALL: Gets Nod to Pay Critical Vendors' Prepetition Claims N-VIRO INT'L: Shares Start Trading on OTC Bulletin Board NAPSTER INC: Gets Nod to Appoint Logan & Company as Claims Agent NATIONAL ENERGY: Gets Approval to Amend Cert. of Incorporation NATIONSRENT INC: Banc One Says Ritchie Bros. 'Lacks Experience' NETWORK ACCESS: Brings-In Shook Hardy as FCC Regulatory Counsel NEWPOWER HOLDINGS: Selling Gas Business to Southern Co. for $28M NORTEL NETWORKS: Will Deliver Voice Over IP to Compass Bank OM GROUP: S&P Assigns BB Rating to Proposed $600MM Term Loan C ONI SYSTEMS: S&P Assigns B- Rating to Sub. Debt Assumed by Ciena OWENS CORNING: Enters Exclusive Marketing Agreement with Knauf PHILIPP BROTHERS: S&P Junks Credit Rating On Liquidity Concerns PRESIDENT CASINOS: Files for Chapter 11 Relief in Mississippi PSINET: Court Fixes July 26 Consulting/Knowledge Claims Bar Date RELIANCE GROUP: Resolves Some D&O Insurance Coverage Disputes SNTL INC: Court Confirms Amended Plan of Reorganization SAFETY-KLEEN: Sues Inacom South East to Recoup $1.2MM Preference SALIENT 3 COMMS: Brings-In KPMG Replacing Arthur Andersen SIX FLAGS: S&P Rates $1.05 Billion Facility Bank Loan at BB- SOLUTIA INC: Weak Fin'l Profile Spurs S&P to Cut Rating to BB TELEWEST COMMS: Informal Committee Nixes Liberty Tender Offer USEC: S&P Revises Outlook to Stable Over Resolved Uncertainties USG CORP: Seeks Approval to Hire Wollmuth Maher as N.J. Counsel UNITED STATIONERS: S&P Affirms BB Corporate Credit Rating WEIRTON STEEL: Closes Exchange Offers for $300MM Debt Issues WELLCARE MANAGEMENT: Special Shareholders' Meeting on July 30 WESTERN INTEGRATED: Inks Pact to Sell Assets to SureWest Comms. WORLDCOM: S&P Hatchets 4 Related Synthetic Transactions to B+ *BOOK REVIEW: The Oil Business in Latin America: The Early Years ********* 360NETWORKS: Secures Third Extension of Exclusive Periods --------------------------------------------------------- Judge Gropper rules that the Exclusive Plan Filing Period during which 360networks inc., and its debtor-affiliates may file a plan of reorganization is extended to July 1, 2002. If the Debtors file a plan by that date, they get an automatic extension through July 19, 2002. However, if they don't file a plan by July 1, 2002, the exclusive period terminates. The Court further rules that the Debtors' exclusive period wherein they may solicit acceptances to their plan of reorganization 1s extended to September 16, 2002. (360 Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) AES CORPORATION: S&P Views CEO Change as Neutral for Credit ----------------------------------------------------------- Standard & Poor's views the retirement of Dennis Bakke as chief executive officer of The AES Corp. and the appointment by the board of directors of Paul Hanrahan, formerly one of four chief operating officers, as his replacement as neutral for the credit. Mr. Hanrahan outlined a number of priorities in a conference call on June 19, 2002 that are credit-focused, including increasing liquidity, deleveraging the company through asset sales and equity issuances, and possibly selling or spinning off businesses in Latin America that are currently detracting from shareholder value. While the increased credit focus is encouraging, the future of the credit is dependant less upon plans and goals and more upon execution. AES Corporation's 10.25% bonds due 2006 (AES06USR1), DebtTraders reports, are quoted at a price of 56. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. ANC RENTAL: Pushing to Consolidate Orlando Airport Operations ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to allow them to reject the Alamo Bus Permit and to assume the National Concession Agreement and the National Lease and assign them to ANC. The agreements were entered into with the Greater Orlando Aviation Authority, the controlling authority at the Orlando International Airport in Orlando, Florida. Mark J. Packel, Esq., at Blank Rome Comisky & McCauley LLP in Wilmington, informs the Court that since the agreements do not prohibit dual branding by the concessionaire, the assignment will allow ANC to operate both the National and Alamo tradenames at the airport. As of the date of the Motion, National owes the airport authority $476 in pre-petition expenses and $994,834 in post-petition expenses. In addition, Alamo owes the Authority $846,272.00 in pre-petition expenses. Alamo does not owe the Authority any post-petition amounts. Mr. Packel assures that the Debtors will be curing all the arrearages due and owing under both the National and Alamo brand names. The airport authority will make a claim against the performance bond posted by Alamo pursuant to the Alamo Bus Permit in the amount of the pre-petition debt and upon satisfaction thereof, the Authority will promptly release and return to Alamo the Performance Bond marked "cancelled." The Debtors will also pay any postpetition debt outstanding to the airport authority arising pursuant to the Alamo Bus Permit. Mr. Packel states that the relief requested is in the best interests of the Debtors since it will result in savings of over $10,199,000 per year in fixed facility costs and other operational cost savings. (ANC Rental Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA BUSINESS: Beal Capital to Provide $15MM DIP Facility ------------------------------------------------------------- Adelphia Business Solutions (Pink Sheets: ABIZQ) has entered into an agreement with Beal Capital Markets, Inc., of Plano, Texas in which Beal expresses an interest in providing to ABS a proposed $15 million secured debtor-in-possession credit facility, pending the satisfaction of numerous material conditions, including the negotiation and execution of a definitive agreement and the formal approval of the U.S. Bankruptcy Court. ABS believes that, in conjunction with previous modifications to ABS' business plan, the Credit Facility will provide ABS with the necessary liquidity to emerge from the Chapter 11 process. A copy of the Agreement will be filed by ABS with the Securities and Exchange Commission as an exhibit to a current report on Form 8-K and made available on the SEC's Web site http://www.sec.gov Under its modified business plan, ABS will continue to conduct business operations in 35 company-owned markets located in the eastern half of the U.S., and in 17 other company-managed markets located throughout the country. Most of the 35 owned markets, which stretch from Vermont to Florida and from Kansas to Texas, are interconnected via a high-speed fiber optic network that permits ABS to offer intercity services and allows for efficient, cross-city use of existing telecommunications technology. "The recent upheaval in the telecommunications industry has dramatically reduced the number of companies in the competitive local exchange arena," notes Bob Guth. "We intend to continue to offer customers a choice and to ensure that competitive forces are in place in the industry. We believe that we have a terrific customer base, committed employees and extremely valuable network assets, and expect that this modest interim funding will see us through the Chapter 11 process toward a fully-funded business plan." "I'd like to thank all of our customers, who stood with us during this period of uncertainty," continued Mr. Guth. "We appreciate the value they place on choice, and sincerely appreciate their commitment to ABS, and to the industry as a whole." ABS expects to continue to offer its full line of products and services, including local voice and data, intercity services, long distance, Internet, and a number of other value-added services including web-hosting and co- location. "We looked very closely at ABS' current results and business plan and we see a profitable core operation with strong customer relationships," notes Ken Springfield of Beal Capital Markets. "We're looking forward to completing our due diligence and developing a mutually beneficial business relationship with the people at Adelphia Business Solutions." Concurrent with this business-restructuring announcement, ABS also announced that, on June 18, 2002, certain of its subsidiaries (those not previously included in the initial group of Chapter 11 cases commenced on March 27, 2002) commenced affiliated Chapter 11 cases under joint administration with the initial group of companies. "This is purely an administrative step for us, providing protection to our DIP lender, and is not indicative of any change in the business status of these operations," stated Mr. Guth. Founded in 1991, Adelphia Business Solutions provides integrated communications services including local and long-distance voice services, high-speed data and Internet services. For more information on Adelphia Business Solutions, please visit the Company's Web site at http://www.adelphia.com AMES DEPT: Wants OK to Pay KRC Acquisition $1.7MM+ Break-Up Fee --------------------------------------------------------------- Aligned with the KRC transaction, Ames Department Stores, Inc., and its debtor-affiliates ask for the approval of a break-up fee payable to KRC Acquisition Corp., in the event the Debtors accept another bid for the property. Ames' Senior Vice President and General Counsel, David H. Lissy, claims the Agreement is subject to higher or better offers and this Court's approval. The Debtors have agreed that, in the event a competing offer is accepted, the Debtors, subject to this Court's approval, will pay KRC the Break-Up Fee. The Break-Up Fee is equal to 3% of the Purchase Price or $1,770,000. They will also pay the Expense Reimbursement, which consists of KRC's reasonable and actual due diligence costs and legal fees. Mr. Lissy explains that the Debtors will reimburse KRC for KRC's actual and reasonable due diligence costs and legal fees incurred both prior to and after the Debtors' breach (including the costs of collection). The Break-Up Fee will be paid to KRC from and (and at the time of) a closing of a competing transaction or transactions from a successful competing bid offered and accepted at the Auction. The Expense Reimbursement will be paid to KRC within five days after receipt of a demand thereof from KRC to the Debtors and the Committee (accompanied by reasonably detailed supporting materials). "Payment of these fees is fair and reasonable in light of the extensive efforts of KRC in negotiating the Agreement and related documents, including due diligence, preparation of proposals, and the fact that the terms in the Agreement will serve as a basis by which other offers, if any, will be measured. Any other potential purchaser bidding for the Debtors' assets will have the benefit of the work and resources previously invested by KRC," Mr. Lissy points out. According to Mr. Lissy, there is no relationship between KRC and the Debtors other than the lending relationship between Kimco Funding and the Debtors. The length and extent of the marketing process of the sale, the nature of the assets and the size of the Break-Up Fee and Expense Reimbursement all demonstrate that the fees will encourage rather than chill the bidding process. Given the value be received for the Property, the Debtors submit that the proposed amount of the Break-Up Fee and Expense Reimbursement are within reason. Additionally, Mr. Lissy states that the proposed buyer protection provisions will also include a requirement that the purchase price of any initial competing bid exceed the Purchase Price by at least $5,900,000, and each subsequent bid or bids must be at least $50,000 over the prior highest bid. The purpose of the initial overbid amount and incremental overbids is to protect KRC from having its offer topped in a de minimus amount by a competing bidder who would be in effect be piggy- backing onto KRC's due diligence investigation and other efforts in seeking to acquire the Property. The initial overbid amount not only covers the proposed Break-Up Fee but also leaves a remaining amount to cover some of the costs incurred by the Debtors and enhance the value of the competing bid for the benefit of the Debtors' estates. (AMES Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) Ames Department Stores' 10% bonds due 2006 (AMES06USR1), an issue in default, are trading at a price of 1, says DebtTraders. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=AMES06USR1 APPLIED THEORY: Completes Asset Sale to Fastnet and ClearBlue ------------------------------------------------------------- On May 31, 2002, Applied Theory Corporation completed the sale of certain assets and the assignment of certain leases and executory contracts to Fastnet Acquisition Corp., a Delaware Corporation that is a wholly-owned subsidiary of Fastnet Corporation, a Pennsylvania Corporation. The assets sold and leases and contracts assigned were used by the Company in connection with its access business. The Company made the sale after an auction of the Access Assets that was conducted under the supervision of the U.S. Bankruptcy Court for the Southern District of New York, in the Chapter 11 bankruptcy case of the Company. The auction was held on May 22, 2002 pursuant to the May 6, 2002 Sale Procedures Order entered by the Court. Fastnet's bid was determined to be the highest or best offer made for the Access Assets. The Access Assets sold to Fastnet comprised substantially all of the assets of the Company used exclusively in connection with its access business, excluding certain customer contracts. Fastnet paid $4,000,000 for the Access Assets, of which $100,000 was specifically allocated to assets not encumbered by the security interest held by a group of investors led by Halifax Fund, L.P. In connection with its assumption of certain of the Company's contracts with third parties, Fastnet agreed to make certain payments to such third parties to cure defaults under such contracts. Fastnet also agreed to collect the Company's accounts receivable related to its access business, and guaranteed that at least $2,500,000 of such accounts receivable would be collected. Fastnet also agreed to make cure payments with respect to certain executory contracts that it agreed to assume. All proceeds to the Company, other than those specifically allocated to assets not encumbered by the Security Interest are subject to the Security Interest, if valid. Sale of Hosting Assets On June 13, 2002, the Company completed the sale of substantially all of its other assets and the assignment of certain leases and executory contracts to ClearBlue Technologies Management, Inc., a Delaware Corporation that is a wholly-owned subsidiary of ClearBlue Technologies, Inc., a Delaware Corporation. Revenues and expenses of the transferred business were attributed to ClearBlue as of June 6, 2002. The assets sold and leases and contracts assigned were used by the Company in connection with its managed hosting and services businesses together with certain assets and rights used in connection with both the Company's access business and theHosting Business. The Company made the sale after an auction of the Hosting Assets conducted under the supervision of the Court in the Chapter 11 bankruptcy case of the Company. The auction was held on May 22, 2002 and May 23, 2002, pursuant to the May 6, 2002 Sale Procedures Order entered by the Court. ClearBlue's bid was determined to be the highest or best offer made for the Hosting Assets. The Hosting Assets sold to ClearBlue comprised substantially all of the assets of the Company used exclusively in connection with the Hosting Business, including certain executory contracts used by the Company in connection with the Hosting Business; the Company's accounts receivable created through the operation of the Hosting Business; and the Company's intellectual property assets. The Hosting Assets also included certain executory contracts used in connection with both the Company's access business and the Hosting Business. ClearBlue paid an aggregate of $25,478,795.69 for such assets, which was comprised of (a) $3,900,000 in cash (of which $200,000 was specifically designated for the waiver by the Company of certain claims against third parties), (b) an unsecured promissory note in the principal amount of $5,700,000, with interest payable annually at the rate of 8% per annum and with the principal and all accrued interest payable on the fourth anniversary of the Closing Date, (c) an unsecured promissory note in the principal amount of $300,000, with interest payable annually at the rate of 8% per annum and with the principal and all accrued interest payable on the fourth anniversary of the Closing Date, which promissory note was specifically designated to be in payment for certain of the unencumbered assets of the Company, (d) a non- negotiable secured promissory note in the principal amount of $700,000, with interest payable at the rate of 8% per annum and with the principal and all accrued interest payable on the 180th day after the Closing Date, which note is secured by all assets other than accounts receivable purchased by ClearBlue and which contains certain rights of offset, (e) a secured promissory note in the principal amount of $5,400,000, payable without interest on the 180th day after the Closing Date, which note is secured by all accounts receivable purchased by ClearBlue from the Company and which contains certain rights of offset, (f) the assumption of certain accounts payable, amounts due on certain equipment leases, certain performance obligations of the Company under prepaid contracts and certain liabilities to employees, in an aggregate amount of up to $9,478,795.69, and (g) the assumption of amounts due and to become due under certain real properly leases. All of the proceeds of such sale other than the amounts designated as being for the waiver by the Company of claims against third parties and the amounts designated as being in payment for unencumbered assets are encumbered by the Security Interest, if valid. Chapter 11 Proceeding Applied Theory Corporation will continue to pursue an orderly liquidation of its business assets in its Chapter 11 proceeding, in an attempt to maximize returns to its creditors. The proceeds from the sale of its businesses and assets will not be sufficient to repay the Company's obligations, and no liquidation payments will be made to the holders of its common stock. AQUASEARCH INC: Will Make Late Form 10-QSB Filing ------------------------------------------------- Since November 30, 2001, AquaSearch, Inc. has been engaged in a Chapter 11 proceeding under the United States Bankruptcy Code in the United States Bankruptcy Court of the District of Hawaii. In connection with such proceeding, the Company has changed its internal bookkeeping and accounting functions and staffing. This has created a delay in the review, analysis and preparation of the Company's current financial statements. For this reason, the Company requires an additional five (5) days to complete and file its Form 10-QSB for the period ended April 30, 2002. AZURIX CORP: S&P Further Downgrades Corporate Credit Rating to D ---------------------------------------------------------------- Standard & Poor's lowered its corporate credit and issue ratings on Houston, Texas-based Azurix Corp. to 'D' from double-'C'. Also, the ratings at Azurix Europe Ltd. were withdrawn. "The rating action for Azurix reflects the completion of a tender offer on the company's debt for a price that is less than par value," noted Standard & Poor's analyst John Kennedy. The ratings at Azurix Europe were withdrawn because the debt has been substantially repaid with proceeds received from the sale of U.K.-based Wessex Water Services Ltd. Ltd., Wessex Water Services Finance PLC, and Wessex Water Ltd. (collectively Wessex Water) on May 21, 2002 to YTL Power International Berhad. The only debt remaining at Azurix Europe are loan notes of less than $5 million. The company has retained an equivalent amount of cash from the Wessex Water sale proceeds to redeem the notes at the earliest opportunity, which will be in September this year. BALTEK CORP: Must Revise US Credit Pact to Dodge Likely Default --------------------------------------------------------------- Baltek Corporation (Nasdaq: BTEK) intends to sell its shrimp operation in Ecuador. Jacques Kohn, President of Baltek, stated, "This is a very difficult environment in the shrimp industry, especially for aquaculture farms operating in Ecuador. The combination of the white spot virus, which has severely curtailed our production, and depressed selling prices, has had a negative effect on our financial results." For the year ended December 31, 2001, the core materials business segment reported operating income of approximately $5.3 million. The seafood segment, which includes the shrimp operations in Ecuador and the already discontinued seafood import business, reported a loss from operations of approximately $2.0 million. "We now believe it is in the best interest of Baltek and its shareholders to divest the shrimp operations and focus our resources on the core materials business." Mr. Kohn concluded, "I believe this decision will, over the long run, have a beneficial impact on Baltek's financial results, operating earnings and cash flows." Based on its evaluation of current economic and industry conditions, the Company will record a charge to earnings of $6 million in the quarter ended June 30, 2002 to reduce the assets underlying these operations to their currently estimated fair value. Until we dispose of this business, adjustments may be required to be made to this estimate. The Company will also be required to revise its loan agreement with its Ecuadorian and U.S. banks to reflect appropriate terms based on the financial results of its continuing operations. Should the Company be unable to revise the terms of its U.S. loan agreement, the Company would be in default under the agreement. The Company is in the process of reviewing the terms of this agreement with the lender. Baltek Corporation is a world class manufacturer and distributor of balsa wood products and other structural core materials, including PVC Foam and non-woven mat products. Baltek also produces farm-raised shrimp in Ecuador. BERRY PLASTICS: S&P Rates Proposed $455MM Credit Facility at B+ --------------------------------------------------------------- Standard & Poor's assigned its single-'B'-plus rating to Berry Plastics Corp.'s (100%-owned operating subsidiary of BPC Holding Corp.) proposed $455 million senior secured credit facilities, based on preliminary terms and conditions. In addition, Standard & Poor's assigned its single-'B'-minus rating to Berry's proposed $275 million senior subordinated notes due 2012. Both ratings were placed on CreditWatch with developing implications. Developing means ratings could be raised, lowered, or affirmed. Proceeds will be used to refinance existing debt. The single-'B'-plus corporate credit rating remains on CreditWatch with developing implications, where it was placed on March 22, 2002. Evansville, Ind.-based Berry is a leading manufacturer and supplier of rigid open-top containers, plastic injection molded aerosol overcaps, closures, drinking cups, and housewares. The outstanding debt as at March 31, 2002, was $493 million. In May 2002, Berry announced that GS Capital Partners 2000 L.P., a private equity investment fund managed by Goldman, Sachs & Co., has agreed to acquire Berry for about $869 million, including repayment of existing indebtedness. "Upon successful completion of the transaction, Standard & Poor's will likely affirm its ratings on Berry with a positive outlook. The company's leading shares in niche markets, low-cost position, and consistent free cash generation are expected to support a gradual improvement to the company's financial profile in the intermediate term," said Standard & Poor's credit analyst Liley Mehta. The ratings would also incorporate the expected improvement in financial flexibility through enhanced liquidity under the proposed $100 million revolving credit facility (undrawn at closing), and a light debt amortization schedule until 2008. The company is expected to continue to generate modest free cash flows, supported by steady volume growth and attractive operating margins. Acquisitions remain an integral part of the company's growth strategy, and large acquisitions are expected to be funded through a mix of debt and equity, while maintaining a gradually improving financial profile. BETHLEHEM STEEL: Agrees to Let PBGC File Consolidated Claim ----------------------------------------------------------- Pension Benefit Guaranty Corporation is a wholly owned United States Government corporation that administers the defined benefit pension plan termination insurance program under Title IV of the Employee Retirement Income Security Act of 1974, as amended. Pension Benefit contends that the Debtors are jointly and severely liable to the Pension and Plan and Pension Benefit under Sections 1082(c)(11), 1307(e)(12) and 1362(a) of the U.S. Labor Code. Accordingly, Pension Benefit must file three proofs of claim against each Bethlehem Steel Corporation Debtor or a total of 69 proofs of claim with statements in support of the claims. The multiple claims would impose a significant administrative burden on Pension Benefit, the Debtors, the Claims agent and the Court. Thus, in a Stipulation between the Debtors and Pension Benefit, the parties agree: (a) Notwithstanding anything to the contrary set forth in any applicable bar date order or notice of claims bar date, the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and the local bankruptcy rules that would otherwise require Pension Benefit to file proofs of claim against each of the Debtors, it is expressly agreed by the parties that the filing of a proof of claim or proofs of claim by Pension Benefit on its own behalf or on behalf of the Pension Plan in Chapter 11 Case No. 01-15288, and any amendment to the claim or claims, shall be deemed to constitute the filing of the proof of claim, proofs of claim, or amendment in each of the Debtors' Chapter 11 cases. The Debtors acknowledge that each proof of claim filed by the Pension Benefit on or before the applicable bar date in Case No. 01-15288 will be deemed timely filed against each of the Debtors for all purposes; (b) This Stipulation is solely for the purpose of administrative convenience and, except to the extent expressly set forth herein, will not affect the substantive rights of the Debtors, Pension Benefit or any other party in interest; (c) The Debtors and Pension Benefit are presently aware of only one defined benefit plan sponsored by the Debtors to which Title IV of ERISA applies. In the event there are other benefit plans of the Debtors, this Stipulation will apply to any proof of claim filed by the Pension Benefit with respect to other plans. Judge Lifland approves the Stipulation on June 4, 2002. (Bethlehem Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Bethlehem Steel Corporation's 10.375% bonds due 2003 (BS03USR1) are trading at about 10. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BS03USR1for real-time bond pricing. BIG BUCK: Has Until Aug. 13 to Meet Nasdaq Bid Price Requirement ---------------------------------------------------------------- Big Buck Brewery & Steakhouse, Inc. (Nasdaq: BBUC) has received notice from Nasdaq confirming that it has regained compliance with the $1,000,000 minimum market value of publicly held shares requirement stated in Marketplace Rule 4310(C)(7). Big Buck has not regained compliance with the $1.00 minimum bid price requirement stated in Marketplace Rule 4310(C)(4). Big Buck has until August 13, 2002 to regain compliance with the minimum bid price requirement, which would require Big Buck's common stock to achieve a bid price of $1.00 or more for a minimum of 10 consecutive trading days. If Big Buck fails to meet this requirement, or fails to maintain compliance with any other listing requirement, its securities will become subject to delisting from The Nasdaq SmallCap Market. If Big Buck's securities do not continue to be listed on The Nasdaq SmallCap Market, such securities would become subject to certain rules of the SEC relating to "penny stocks." Such rules require broker-dealers to make a suitability determination for purchasers and to receive the purchaser's prior written consent for a purchase transaction, thus restricting the ability to purchase or sell the securities in the open market. In addition, trading, if any, would be conducted in the over-the-counter market in the so-called "pink sheets" or on the OTC Bulletin Board, which was established for securities that do not meet Nasdaq listing requirements. Consequently, selling Big Buck's securities would be more difficult because smaller quantities of securities could be bought and sold, transactions could be delayed, and security analyst and news media coverage of Big Buck may be reduced. These factors could result in lower prices and larger spreads in the bid and ask prices for Big Buck's securities. There can be no assurance that Big Buck's securities will continue to be listed on The Nasdaq SmallCap Market. Big Buck Brewery & Steakhouse, Inc. operates restaurant-brewpubs in Gaylord, Grand Rapids and Auburn Hills, Michigan, offering casual dining featuring a high quality, moderately priced menu and a variety of award- winning craft-brewed beers. In August 2000, the Company opened its fourth unit in Grapevine, Texas, a suburb of Dallas. This unit is owned and operated by Buck & Bass, L.P. pursuant to a joint venture agreement between the Company and Bass Pro Outdoor World, L.L.C. BRIDGE INFO: Cantor Seeks Allowance of $26MM Admin. Expense ----------------------------------------------------------- Telerate and Cantor Fitzgerald are parties to an Agreement -- the Cantor Fitzgerald Agreement -- wherein Cantor granted Telerate the right to distribute certain information relating to the brokerage of U.S. government securities, including data reflecting bids, offers and trades of Treasury bills, notes, bonds and federal agency securities on the Telerate System. Stephen J. Shimshak, Esq., at Paul, Weiss, Rifkind, Wharton & Garriso, in New York, relates that under the Agreement, Telerate is obligated to display or publish Cantor Fitzgerald Government Securities Data over the entire Telerate System, which includes the information systems through which Telerate's parent, and affiliates distribute financial information services. Furthermore, under the Agreement, Telerate is required to pay Cantor certain fees if Telerate displays or publishes on the Telerate System Non-Qualified Broker Data. "From the Petition Date through the Rejection Date, Cantor provided the services to Telerate under both Agreements," Mr. Shimshak says. However, during the postpetition period Telerate made no payments of Non-Qualified Broker Data Fees or Monthly Secondary Competitors Fees to Cantor. Mr. Shimshak reports that during the postpetition period, Telerate became liable to Cantor for no less than an aggregate amount of $26,360,684 for: (i) non-payment of Non-Qualified Broker Data Fees, currently believed to be not less than $2,908,176, plus interest and inflation adjustments; (ii) non-payment of Monthly Secondary Competitors Fees, currently believed to be not less than $172,356, plus interest and inflation adjustments; (iii) damages resulting from the daily failure to display the Cantor Fitzgerald Government Securities Data beyond the minimum number of screens on the Telerate System in an unliquidated amount to be determined, but in case no less than $3,280,152, plus interest and inflation adjustments; and (iv) the loss of substantial marketing, public relations and other commercial opportunities, lost profits, and the loss of good will and other consequential damages in an unliquidated amount to be determined but believed to be not less than $20,000,000. In addition, Mr. Shimshak says, Cantor is entitled to recover its costs and expenses from Telerate, including reasonable legal fees and disbursements, incurred in connection with damages and liabilities suffered by Cantor arising as a result of Telerate's breaches. "Cantor cannot reasonably calculate or estimate the amount of costs and expenses, but Cantor does not waive and expressly reserves their rights by not stating a specific amount at this time," Mr. Shimshak adds. Mr. Shimshak contends that the information and services rendered under the Agreements provided benefit to Telerate's estate and assisted the Debtors in maintaining the going concern value of their businesses. Thus, the amounts remaining unpaid under the Agreements constitute actual and necessary costs of preserving the Debtors' estates. Therefore, Cantor Fitzgerald asks the Court to grant their administrative expense claim in the aggregate amount of no less than $26,360,684 plus interest and inflation adjustments. (Bridge Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURNHAM PACIFIC: Deutsche Bank Discloses 11.2% Equity Stake ----------------------------------------------------------- Deutsche Bank AG, whose principal business office is located at Taunusanlage 12, D-60325, Frankfurt am Main, Federal Republic of Germany, beneficially owns 3,682,090 shares of the common stock of Burnham Pacific Properties, Inc. The Bank has sole sole voting power over 97,067 shares and dispositive powers over the total 3,682,090 shares, which amount represents 11.2% of the outstanding common stock of Burnham Pacific. The securities reported upon here were inadvertently reported to the SEC as being beneficially owned by Taunus Corporation and Deutsche Bank Securities Inc. on a Schedule 13G filed on June 10, 2002. Burnham has previously announced that, in accordance with its Plan of Complete Liquidation and Dissolution, it intends to enter into a liquidating trust agreement on June 28, 2002 for the purpose of winding up Burnham's affairs and liquidating Burnham's assets. It is currently anticipated that, on June 28, 2002, Burnham will transfer its then remaining assets to (and its then remaining liabilities will be assumed by) the trustees of the BPP Liquidating Trust, and Burnham will be dissolved. June 27, 2002 will be the last day of trading of Burnham common stock on the New York Stock Exchange, and Burnham's stock transfer books will be closed as of the close of business on such date. CMS ENERGY: Fitch Maintains Watch Negative on Several Ratings ------------------------------------------------------------- Fitch Ratings is maintaining a Rating Watch Negative on CMS Energy and its subsidiaries, Consumers Energy and CMS Panhandle Eastern Pipe Line Co. following the announcement that the company has reached an agreement with its lenders to extend a $450 million revolving credit facility through July 12th. CMS is now working on establishing a longer-term financing structure. CMS' financial statements for 2000 and 2001 are being restated following the revelation that revenues and expenses were overstated in those periods due to 'wash trades' in the energy marketing and trading business. The SEC investigation of the 'wash trades' combined with CMS' engagement of Ernst & Young to replace former audit firm Arthur Anderson will likely complicate the refinancing of the expiring bank facility and $100 million of maturities at Consumers in 2002. While Consumers and PEPL are financially sound, the companies' financial condition and credit ratings may be adversely affected by the financial stress of their parent. Consequently, Fitch will continue to monitor the liquidity of CMS and the impact of CMS' problems on the credit of its subsidiaries. CMS is a utility holding company whose primary subsidiaries are Consumers, a regulated electric and gas utility serving customers in western Michigan, and PEPL, which is primarily engaged in the interstate transportation and storage of natural gas. Unregulated activities include independent power production, oil and gas exploration and production and energy marketing, services and trading. Ratings currently on Rating Watch Negative CMS Energy Corp. --Senior unsecured 'BB+'; --Preferred stock 'BB-'. Consumers Energy Co. --Senior secured 'BBB+'; --Senior unsecured 'BBB'; --Preferred stock 'BB+'. Consumers Power Financing Trust I --Trust referred securities 'BB+'. CMS Panhandle Eastern Pipe Line Co. --Senior unsecured 'BBB'. CELL TECH: December 31 Working Capital Deficit Narrows to $6MM -------------------------------------------------------------- Cell Tech International Incorporated (OTC:EFLI) announced that its annual results for 2001 were a net loss of $5.0 million compared to a net loss in 2000 of $2.8 million. The 2001 net loss primarily reflected a $2.6 million write-off of assets, related to management's decision not to utilize certain equipment at our A-Canal harvest site for the foreseeable future. "We will, of course, continue to harvest directly from Upper Klamath Lake with on-lake harvesters." Revenues for 2001 of $30 million declined $8.9 million or 23.0% from the prior year. Cell Tech's fourth quarter 2001 results included a net loss of $2.8 million and revenues of $7 million, which decreased $1.7 million or 6.5% from the fourth quarter of 2000. The fourth quarter of 2001 largely reflected the impact of our $2.6 million write-down of the unnecessary assets and license rights that related to the harvest site. At December 31, 2001, Cell Tech's balance sheet shows a working capital deficit of about $6.4 million. Cell Tech's Chairman Donald P. Hateley stated, "The problems associated with our efforts to restructure the company are in the final stages, and management will now be able to direct their efforts toward building our brand name, increasing our revenues and pursuing strategic relationships directed toward increasing our market share." Marta C. Carpenter, Cell Tech's President & CEO, stated, "We are pleased with our ability to reduce our long-term debt, and we are excited about the revisions to our compensation plan and the new products that we have announced and are developing. We believe that fiscal 2002 will provide us with new opportunities as a result of our restructuring. We encourage our distributors to join with us by focusing on the business opportunity, our compensation plan and the new products which we believe will be some of the best available in the marketplace." Cell Tech International Incorporated is engaged in the development, production and distribution of food products made with blue-green algae harvested from Klamath Lake, Oregon. The Company uses a multi-level distributor network throughout the United States and Canada to distribute its twenty products divided into five categories that include daily health maintenance, digestive health, defensive health, powdered drinks and snacks and animal and plant food. CHATTEM INC: S&P Revises Outlook on B+ Rating to Stable ------------------------------------------------------- Standard & Poor's revised its outlook for Chattanooga, Tennessee-based Chattem Inc. to stable from negative. The single-'B'-plus corporate credit rating for the consumer products manufacturer was affirmed. The outlook revision is based on Chattem's recent announcement that it intends to sell 1.8 million shares to the public and apply $38.5 million of the proceeds to reduce debt through the repayment of the bank term loan, with the remainder held as cash. "The additional resources will allow Chattem to pursue its growth strategy within the parameters of the current rating," said Standard & Poor's credit analyst Lori Harris. Total debt outstanding at May 31, 2002, was about $243 million. Standard & Poor's expects that Chattem's good presence in certain niche areas of the U.S. branded over-the-counter (OTC) pharmaceuticals, toiletries, and dietary supplements industries will continue to support the ratings. It is anticipated that the company will utilize its debt capacity for the current rating to make strategic investments. Financially, lower debt leverage, resulting from the expected repayment of the senior bank debt, will bring about a strengthening of credit protection measures. Standard & Poor's anticipates that fiscal 2002 EBITDA interest coverage will exceed 2.5 times, while debt to EBITDA will be in the 4.0x area. However, Standard & Poor's expects the company's credit protection measures will continue to fluctuate given the firm's acquisition orientation. Even so, Standard & Poor's anticipates that acquisitions will be financed in a manner consistent with the ratings. COLUMBUS MCKINNON: S&P Keeps Watch on B+ Corporate Credit Rating ---------------------------------------------------------------- Standard & Poor's that its single-'B'-plus corporate credit on Columbus McKinnon remains on CreditWatch with negative implications (where it was placed May 22, 2002) following the company's June 10 and June 12, 2002, announcements that it has received a waiver from its senior lenders to help cure its covenant violation and that the company intends to offer up to 5.25 million shares of common stock pending SEC approval. Proceeds from the equity offering are expected to be used to pay down outstanding debt. In addition, the Amherst, New York-based company announced that it plans to obtain a new credit facility within the next several weeks, the size and terms have not yet been publicly disclosed. Columbus McKinnon is manufacturer of material handling, lifting, and positioning products. As a result of the pending equity issuance, Columbus McKinnon's financial profile should improve somewhat with total debt to EBITDA to about 4.8 times on a pro forma basis as of March 31, 2002, compared with around 5.8x on an actual basis as of March 31, 2002. "The company's debt to capital ratio should improve to about 70% compared with around 83% as of March 31, 2002," said Standard & Poor's analyst Eric Ballantine. Columbus McKinnon continues to be affected by soft industrial markets in the U.S. and Europe. Management has tried to offset the decline in operating results by initiating various cost- cutting initiatives, however, financial results remain weak. Market conditions are expected to remain challenging over the near term, and as a result, operating performance will only gradually improve. Standard & Poor's will continue to monitor the details of the equity offering and new credit facility; if the offering is completed as currently announced and if the company has sufficient availability under the company's new credit facility, the corporate credit rating will be affirmed at single-'B'-plus. COMDISCO INC: Intends to Conduct 2004 Exam. on Moneyline Lease -------------------------------------------------------------- Comdisco, Inc., and its debtor-affiliates ask for the Court's authority to allow them to conduct examinations of any entity regarding their property that was leased to Moneyline Network, Inc. The Debtors and Moneyline entered into a Subordinated Loan and Security Agreement wherein the Debtors made loans to Moneyline in the original principal amount of $5,000,000. The Loans were secured by a blanket lien on substantially all of the personal properties of Moneyline. Moneyline also executed a Collateral Grant of Security Interest in Patents and Trademarks. The Debtors and Moneyline also entered into a Master Lease Agreement wherein the Debtors leased certain equipment to Moneyline. On the other hand, on August 24, 2001, Moneyline and Bridge Information Systems Inc. entered into an Asset Purchase Agreement. Moneyline acquired: -- the global business of Telerate, Inc., Bridge Information Systems, Inc.'s information businesses in Europe and Asia, and -- the Bridge Trading Room System, for $15,000,000 in cash, which was purportedly paid by Moneyline. Matthew R. Kipp, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, relates that Moneyline's purchase of the Telerate business may have compromised the Debtors' security interest in Moneyline's collateral without their knowledge or consent. Mr. Kipp notes that Moneyline never provided to the Debtors any final documentation relating to the merger and to the Telerate Asset Acquisition. Mr. Kipp explains that to determine if the Telerate Asset Acquisition and Merger involved any of the Debtors' equipment or collateral, the Debtors' counsel requested a comprehensive explanation from Moneyline. However, Moneyline's counsel questioned the Debtors' request and did nothing to provide the documents asked. Despite the good faith efforts to resolve the matter and obtain the information and documents requested, the parties were unable to reach an accord. Mr. Kipp asserts that the Debtors need the additional information regarding the Telerate Asset Acquisition and Merger because: (i) if the Telerate Assets are owned by an entity other than Moneyline, the Debtors' liens may not be perfected and they might not have priority against other creditors; (ii) the funds used by Moneyline to acquire the Telerate Assets might be considered proceeds of the Debtors' collateral and subject to its liens; and (iii) the transfer of the Debtors' collateral to another entity would constitute a default under the Loan Agreement. Accordingly, the Debtors ask the Court to authorize them to begin an examination and request documents, and compel Moneyline to: (a) produce all documents that were executed in conjunction with the Asset Purchase Agreement to effectuate the transactions; (b) identify the person that acquires the Telerate Assets under the Agreement; (c) identify the person that currently owns the Telerate Assets; (d) (if the person who acquired Telerate is not the current owner of the Assets), explain in detail how the Telerate Assets were transferred or assigned and provide all documents that reflect the transaction; (e) (if the person who acquired Telerate is not the current owner of the Assets), describe the legal relationship between the two; (f) identify the person that provided the funds for the person who acquired the Telerate Assets under the Agreement; (g) (if the funding of the Telerate Asset Acquisition was done through a loan to Moneyline), describe in detail the terms of the loan, including the amount the recipient of the funds, the method by which the funds were transferred, whether the loan was secured, whether the loan was made in exchange for equity and Moneyline's repayment obligations; (h) (if the funding of the Telerate Asset Acquisition was done through a loan to Moneyline), provide copies of all documents reflecting the loan; (i) identify the location of the Telerate Assets; (j) describe the legal status of TM Holdings and TM Acquisition Sub, Inc.; (k) provide copies of all documents that were executed in conjunction with the merger; (l) describe the legal relationship between and among Moneyline Telerate Holdings, Moneyline Telerate Inc. and Moneyline Network Inc.; (m) provide copies of the certificate of incorporation, by- laws for Moneyline Telerate Holdings and Moneyline Telerate Inc.; (n) provide copies of all Board and shareholder resolutions or consents from Moneyline Telerate Holdings, Moneyline Telerate Inc or Moneyline Network Inc. relating to the Telerate Asset Acquisition and merger; (o) identify the person who owns the trademark "Moneyline"; (p) provide copies of all documents evidencing the ownership of the Moneyline trademark; (q) provide copies of all documents evidencing the ownership of the "Telerate" trademark; (r) identify the shareholders of each of Moneyline Telerate Holdings, Moneyline Telerate Inc. and Moneyline Network Inc. and for each shareholder, the number and class of shares owned and for each class, the percentage of total shares; and (s) provide current consolidating financials for each of Moneyline Network Inc., Moneyline Telerate Inc., and Moneyline Telerate Holdings Inc. (Comdisco Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVANTA ENERGY: Consents to Sale of Hockey League Franchise ----------------------------------------------------------- Covanta Energy Corporation and an unaffiliated non-debtor, Palladium Corporation, are secured creditors of Ottawa Senators Hockey Club Corporation, owner of the dormant American Hockey League franchise. Ottawa Senators is selling the American Hockey League franchise to B.C. Senators, Inc. for a purchase price of $2,500,000 to fund the operations of the active National Hockey League team. To close the sale, each of the secured creditors must consent to the Sale and release any and all security interests they have in the American Hockey League franchise. The lien to be released by Covanta is contractually subordinated to approximately $49,500,000 in senior debt instruments held by other senior secured creditors who are expected to consent to the Sale. Accordingly, the Debtors seek the Court's authority to: (1) consent to the Sale of the American Hockey League franchise through a Consent Agreement, and (2) release its security interest in the franchise under the terms of the Bondholder Approval Agreement. The Consent Agreement basically provides that: (a) The Parties consent to the Sale and release any and all security interests it has or may have in the American Hockey League franchise in connection with the Secured Loan Documents or any other agreement, document or instrument; (b) The Parties appoint Perley-Robertson, Hill & McDougall LLP as its agent to register a partial discharge of its security interest registered against Ottawa Senators Hockey Club 2001 Limited Partnership or Ottawa Senators Hockey Club Corp., solely in respect of the American Hockey League franchise; (c) Ottawa Senators confirm, acknowledge and agree that the Secured Loan Documents will remain in full force and effect, except with respect to the security interest in the American Hockey League franchise, which is released; (d) The Consent, Release and Agreement will not be effective until it has been executed and delivered by all the parties, Palladium Corporation has obtained all necessary consents from its lenders and bondholder and the Bankruptcy Court authorize the entry of this Consent, Release and Agreement by Covanta; and (e) The execution and delivery of the Consent Agreement will not constitute a waiver of any default or event of default now existing or arising under the Secured Loan Documents and a consent agreement dated January 25, 1999 between, among others, the National Hockey League and Ottawa Senators. Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, asserts that consenting to the sale is within the Debtors' business judgment and in the best interest of the estate because the Sale will be beneficial to the cash flow and ongoing operations of the National Hockey League Franchise in which Covanta still has a security interest. Moreover, Ms. Buell contends that even if the Debtors do not give the consent, the Debtors would still unlikely recover any proceeds from the Sale because the senior secured debt is far greater than the purchase price. (Covanta Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) DAVE & BUSTER: S&P Assigns B Rating to $165MM Sr. Secured Notes --------------------------------------------------------------- Standard & Poor's assigned its single-'B' rating to large-format entertainment complex operator Dave & Buster's Inc.'s planned $165 million senior secured note offering due in 2009 and assigned a single-'B'-plus rating to the company's $30 million senior secured bank loan due in 2007. Proceeds from the senior notes will be used to fund the LBO of the company and refinance existing debt. A single-'B' corporate credit rating was also assigned to the Dallas, Texas-based company. The outlook is stable. "The ratings are based on the risks associated with the company's small size in the highly competitive out-of-home entertainment business, its vulnerability to changes in consumer spending, and a highly leveraged capital structure," Standard & Poor's credit analyst Robert Lichtenstein said. "These risks are partially offset by the company's unique concept of combining numerous entertainment and restaurant options and an established operating history." Standard & Poor's said that, pro forma for the LBO and senior note transaction, the company is highly leveraged with lease- adjusted total debt to EBITDA for the 12 months ended May 5, 2002, of about 5 times. Credit protection measures are weak, with pro forma EBITDA coverage of interest at about 2x. Standard & Poor's expects EBITDA coverage of interest to improve only marginally over the next three years. A new five-year $30 million revolving credit facility, which will be undrawn at closing, and a lack of near-term maturities provides some liquidity. DELTA FINANCIAL: Asset-Backed Securitization Priced at $200MM ------------------------------------------------------------- Delta Financial Corporation (OTCBB: DLTO.OB), recently priced through its subsidiary $200 million of residential closed-end home equity loan-backed securities through lead manager Greenwich Capital Markets, Inc. and co-manager Wachovia Securities Inc. The Renaissance Home Equity Loan Trust 2002-2 was a senior subordinate structure, with a fully funded overcollateralization account at closing. All the securities were rated by Standard & Poor's, Fitch IBCA, and Moody's Investors Service, Inc. Commenting on the securitization, Hugh Miller, President and Chief Executive Officer stated, "We are pleased with the overall execution and investor participation on this transaction. Due to investor demand - as much as four times oversubscribed on some of the securities - we were able to market and price the transaction within 24 hours." Primarily as a result of the better than expected securitization transaction, the Company is once again revising its 2002 earnings estimate upward to $0.75 for the year. The Company expects to release its second quarter earnings in early August, and at that time intends to provide earnings guidance for the year 2003. Founded in 1982, Delta Financial Corporation is a Woodbury, New York-based specialty consumer finance company that originates, securitizes and sells (and until May 2001, serviced) non- conforming home equity loans. Delta's loans are primarily secured by first mortgages on one- to four-family residential properties. Delta originates home equity loans primarily in 20 states. Loans are originated through a network of approximately 1,500 brokers and the Company's retail offices. Since 1991, Delta has sold approximately $7.2 billion of its mortgages through 32 AAA rated securitizations. * * * As previously reported in the Troubled Company Reporter, Delta Financial Corp. recorded for the year ended December 31, 2000, a net loss of $49.4 million. The majority of the net loss incurred related to (1) the write-down of the Company's capitalized mortgage servicing rights, (2) a reduction in the carrying value of a portion of the Company's excess cashflow certificates related to an increase in the discount rate of such certificates included in the Company's NIM Transaction, (3) the write-down of the Company's goodwill relating to the 1997 purchase of Fidelity Mortgage, (4) costs associated with the Company's NIM transaction in November 2000, and (5) restructuring and debt modification charges. DESA HOLDINGS: Wants to Hire Kekst and Company as PR Consultants ---------------------------------------------------------------- DESA Holdings Corporation and its debtor-subsidiaries seek permission from the U.S. Bankruptcy Court for the employment of Kekst and Company as Public Relations Consultants. Kekst is a communications firm that has extensive experience in crisis communications involving matters such as corporate transactions, bankruptcies, reorganizations and restructurings. Kekst has extensive experience in assisting financially troubled companies with public relations, including companies in bankruptcy. The Debtors relate that they have retained the services of Kekst as their public relations consultant since May 20, 2002. The Debtors believe hat Kekst is well qualified and able to represent them in a cost-effective, efficient and timely manner. Many persons and entities will be interested in the Debtors' bankruptcy. The cooperative participation of these persons and entities will be necessary for the Debtors to successfully reorganize. Kekst will be able to assist the Debtors in protecting, retaining and developing the goodwill and confidence of these constituencies, the Debtors point out. Kekst will provide such public relations services as the Debtors deem appropriate, including: a) preparing materials to be disputed to Debtors' employees explaining the impact of the chapter 11 cases; b) drafting correspondence to creditors, vendors, employees and other interested parties regarding the chapter 11 cases; c) preparing written guidelines for head office and location managers to assist them in addressing employee and customer concerns; d) preparing news releases for dissemination to the media for distribution; e) interfacing and coordinating media reports to contain the correct facts and the Debtors' perspective as an ongoing business; f) assisting the Debtors in handling inquiries, e.g. shareholders, employees, vendors, customers, retirees, etc. and developing internal systems for handling such matters; h) coordinating public relations services with a third party making an investment in the Debtors; and i) performing other strategic communications consulting and public relations services as may be required by the Debtors in the chapter 11 cases. Other professionals in these cases and officers who might otherwise handle public relations matters will be able to focus better on their respective competencies and jobs in the management and reorganization of the Debtors. The Debtors agree to compensate Kekst on its hourly rates, as agreed by the parties, pursuant to the Retention Agreement: a) Senior Partners $600 to $825 b) Partners $500 to $600 c) Senior Associates $425 to $475 d) Associates $225 to $375 DESA, a leading manufacturer, distributor and marketer of vent- free heating appliances, outdoor heaters, motion sensor lighting, wireless doorbells, lawn and garden electrical products and consumer fastening systems in the United States, filed for chapter 11 protection on June 8, 2002. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl Young & Jones represents the Debtors in their restructuring efforts. DYNASTY COMPONENTS: Confirms Will Not File Financial Reports ------------------------------------------------------------ Dynasty Components Inc. (TSX: DCI) confirmed that it will not file and provide to its shareholders its audited annual financial statements related to its fiscal year ended December 31, 2001, and its interim unaudited financial statements for the three months ended March 31, 2002, while it remains under the protection of a court order made pursuant to the Companies' Creditors Arrangement Act. DCI originally announced the expected delay in filing its financial statements on May 8, 2002, by way of press release and default announcement. There have been no material changes to the information provided by DCI in these documents other than those that have been disclosed in material change reports filed by DCI. This press release has been issued by DCI in compliance with section 3.2 of Ontario Securities Commission Policy 57-603 - Defaults by Reporting Issuers in Complying with Financial Statement Filing Requirements. EOTT ENERGY: Posts $2.3 Million Net Loss for First Quarter 2002 --------------------------------------------------------------- EOTT Energy Partners, L.P. (NYSE: EOT) reported a net loss of $2.3 million for the first quarter of 2002 compared to net income of $5.3 million for the first quarter of 2001, before the cumulative effect of accounting changes. Earnings before interest, taxes, depreciation and amortization (EBITDA) was $18.0 million for the first quarter of 2002 compared to $22.1 million in 2001. "The lower first quarter 2002 results reflect the negative impacts of significantly weaker market conditions for our crude oil gathering and marketing operations when compared to the first quarter of 2001, increased customer credit costs and lower crude oil volumes related to the Enron bankruptcy and higher debt and related interest costs. These impacts were partly offset by the earnings from the Liquids assets acquired in June 2001," said Dana R. Gibbs, President and Chief Executive Officer of EOTT Energy Corp. "First quarter results reflect the impact of lower lease and pipeline throughput and reduced sales volumes with the first quarter 2002 turnaround of MTBE facility. With this release of first quarter earnings and the filing of our Form 10-Q with the Securities and Exchange Commission this week, we are pleased to be back on a normal schedule for communicating our financial and operating results to our customers and unitholders." OPERATING RESULTS Operating income from the North America - East of Rockies and Pipeline segments declined $7.7 million for the first quarter of 2002 reflecting significantly weaker market conditions and reduced volumes compared to the first quarter of 2001. Income from the West Coast segment was $.2 million below 2001. Offsetting these lower results was $3.6 million of operating income from the Liquids assets and $.6 million of lower corporate and other costs, reflecting the benefit of a $1.1 million insurance recovery partly offset by higher administrative expenses related to the Enron bankruptcy. Total crude oil lease purchased and pipeline throughput volumes for the first quarter of 2002 declined approximately 10 percent from the fourth quarter of 2001, averaging 308,800 barrels per day and 439,500 barrels per day, respectively. Sales from the Liquids facilities averaged 10,200 barrels per day of MTBE equivalent, reflecting the reduction from the successfully completed 30 day turnaround during the first quarter of 2002. At quarter end, production from the facility was back up to the normal level, exceeding 16,000 barrels per day. Operating cash flow -- net income (loss) excluding depreciation and amortization -- totaled $6.8 million for the first quarter of 2002, a decrease of $8.0 million from 2001, reflecting the impact of the lower operating income and a $3.9 million increase in interest and related charges due to higher interest and credit costs under EOTT's third party credit facilities. NEW DIRECTOR NAMED EOTT announced that K. George Wasaff, managing director of supply chain management worldwide for Enron Corp., has been named to the Board of Directors of the General Partner, replacing Stanley C. Horton, who has resigned from the Board. Mr. Wasaff has held a number of operating positions with Enron since 1991, including responsibilities for various Latin American operations. He also held positions with El Paso Natural Gas Company and Transwestern Pipeline Company. Mr. Wasaff is a graduate of the University of Texas, and is a Certified Public Accountant. OTHER INFORMATION Due to second quarter weakness in the MTBE market and an inability to predict MTBE commodity margins for the remainder of 2002 -- particularly in light of recent industry announcements related to West Coast usage of MTBE -- the company said it is retracting its previous guidance. The delay in reporting of EOTT's first quarter 2002 results stemmed from events and circumstances surrounding Enron's bankruptcy, including the resignation of EOTT's former auditors, and efforts to appoint new independent directors who comprise EOTT's audit committee. EOTT Energy Partners, L.P. is a major independent marketer and transporter of crude oil in North America. EOTT transports most of the lease crude oil it purchases via pipeline that includes 8,000 miles of active intrastate and interstate pipeline and gathering systems and a fleet of 260 owned or leased trucks. EOTT Energy Corp, a wholly owned subsidiary of Enron Corp., is the general partner of EOTT Energy Partners, L.P., with headquarters in Houston. The Partnership's Common Units are traded on the New York Stock Exchange under the ticker symbol "EOT". EOTT Energy's December 31, 2001 balance sheet shows a working capital deficit of about $192 million. ENCORE ACQUISITION: S&P Assigns BB- Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's assigned its double-'B'- minus corporate credit rating to Encore Acquisition Company and its single-'B' rating to Encore's proposed $150 million senior subordinated notes due 2012. The notes are being offered under rule 144a with registration rights. Proceeds from the note offering will be used to reduce outstanding bank indebtedness. The outlook is stable. "The ratings of Fort Worth, Texas-based Encore reflect the company's small to midsize reserve base, limited geographic diversification, and an aggressive growth strategy," noted Standard & Poor's credit analyst Brian Janiak. "These weaknesses are tempered by the company's high percentage of company- operated properties (90%) that require modest future development expenses, and its high percentage of proved developed reserves (85%), which have a long reserve life of about 15 years and provides the company with meaningful operational and financial flexibility," Janiak added. Standard & Poor's expects management to further expand the company's reserves and production through acquisitions that are to be financed ultimately in a balanced manner. Failure to adhere to moderate financial policies to expand its reserves and production growth could warrant an outlook revision and/or lower ratings. The ratings of Encore reflect its position as an independent exploration and production company in the oil & gas industry, with a relatively small, concentrated reserve base (131 million barrels of oil equivalent at year-end 2001, pro forma for recent acquisitions in 2002; 90% oil; 85% proved developed reserves), and its moderately leveraged capital structure. In addition, the company's relatively modest production decline rates should somewhat mitigate the company's reinvestment needs. ENRON CORP: Liquids Unit Gets OK to Sell Natural Gas Inventories ---------------------------------------------------------------- Enron Gas Liquids Inc. (doing business as Enron Clean Fuels Company) and Enron Liquid Fuels Inc. (doing business as Enron Petrochemicals Company) obtained Court approval to sell certain petrochemicals and other liquids inventories. Storage Operators have 30 days from receipt of the Court's order to send notice of any lien claim against the proceeds of the NGL Inventories to the Enron Liquids Companies. Within 15 days after the expiration of the initial 30-day notice of lien period, the Court directs the Enron Liquids Companies to notify the lien claimants whether they agree or object to their respective lien claims. "If the Enron Companies agree to a lien claim, they shall promptly pay the amounts after 10 days' notice of the proposed payments to the Creditors' Committee without further order of the Court," Judge Gonzalez rules. If the Enron Liquids Companies object to the lien claims, the Court gives the parties 15 days to resolve their disputes. But if the parties are unable to resolve their disputes, Judge Gonzalez orders the party asserting the lien claim that is in dispute to file a motion with the Court for resolution. Pending resolution of any dispute, the Court instructs the Enron Liquids Companies to keep segregated, an amount of cash proceeds equal to the full amount of the lien claimed. "But nothing in this Order shall require the Debtors, including the Enron Liquid Companies, to satisfy any liens in excess of the net proceeds from the sale of the NGL Inventories, including those liens of the Storage Operators," Judge Gonzalez emphasizes. According to the Court, any amounts that become payable by the Enron Liquids Companies pursuant to the Sale Process, including the payment of the Commissions or postpetition storage costs, or any of the documents delivered by the Enron Liquids Companies pursuant to or in connection with the Sale Process will: (a) constitute administrative expenses of the Enron Liquids Companies estates under sections 503(b) and 507(a)(1) of the Bankruptcy Code; and (b) be due and payable by the Enron Liquids Companies on consummation of a sale transaction with respect thereto, without the need for further order of or application to this Court. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Enron Liquids Companies traded, prior to the Petition Date, various types of natural gas liquids (including methanol, ethane, propane, isobutane, normal butane, natural gasoline) and petrochemicals such as styrene. Mr. Rosen informs Judge Gonzalez that the Enron Liquids Companies have stopped purchasing the Natural Gas Liquids since it filed for bankruptcy. The Enron Liquids Companies currently hold various quantities of NGLs: Product Quantity in Barrels ------- ------------------- Methanol 54,025 Ethane 16,359 Propane 80,314 Isobutane 974 Normal Butane 663 Natural Gasoline 3,392 According to Mr. Rosen, all of the NGL Inventories were purchased on the open market for the sole purpose of trading activity and the profit associated with it. "The NGL Inventories are held in various storage facilities across the United States and operators of these storage facilities may have lien rights on the quantities of the NGL Inventories they hold," Mr. Rosen tells the Court. Based on market indications during the week of April 10, 2002, Mr. Rosen reports that the portfolio of NGL Inventories is valued at roughly $2,000,000 net of storage costs. Clearly, Mr. Rosen asserts, systematic selling of the NGL Inventories into the spot market, as opposed to a one-time auction, will maximize the value of the NGL Inventories. Furthermore, the Enron Liquids Companies also obtained the Court's authority to use brokers if doing so would maximize the returns. Typically, Mr. Rosen relates, the Enron Liquids Companies pay a commission to brokers who sell NGL Inventories in the spot market. "The current commission rate to sell NGLs in the spot market is $0.001 per gallon," Mr. Rosen notes. Based on these commission rates, the Enron Liquids Companies estimate that complete liquidation of NGL Inventories will cost $6,200 in brokerage fees, which is less than 0.31% of the net value of the Inventories. Should Enron Liquids Companies chose to use one or more brokers for the sale of the NGL Inventories; Mr. Rosen contends that the Court should authorize the payment for standard broker fees. For those Storage Operators that hold valid liens, Mr. Rosen says, the pre-petition storages costs associated with the NGL Inventories will be paid in accordance with the Warehousemen Order while post-petition storage costs will be paid as administrative expenses or, the lien will attach to the proceeds from the sale of the NGL Inventories. (Enron Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Wins Nod to Expand Susman Godfrey Engagement Scope -------------------------------------------------------------- Enron Corporation and its debtor-affiliates obtained Court approval to modify the March 14, 2002 Court Order to expand the role of Susman Godfrey L.L.P. to authorize it to: (i) pursue certain litigation relating to a wrongful setoff of Enron's bank accounts, (ii) assist Weil, Gotshal & Manges LLP as co-counsel in the adversary proceeding commenced against Dynegy Inc. et al., and (iii) represent the Debtors in any other litigation that the Debtors and bankruptcy counsel agree should be handled by Susman. * * * * As previously reported in the March 1, 2002 issue of the Troubled Company Reporter, Enron Corporation and its debtor- affiliates employed Susman Godfrey LLP as class action defense counsel in connection with putative securities class actions and putative employee benefit plan class actions commenced against the Debtors, as well as certain shareholder derivative actions filed on behalf of Enron Corporation. The Debtors sought the Bankruptcy Court's permission to continue Susman's employment, nunc pro tunc to the Petition Date. The Debtors proposed to compensate Susman its customary hourly rates for services and to reimburse Susman according to its standard reimbursement policies. Mr. Rosen lists Susman's regular hourly rates: Partners $900 - 325 Associates 275 - 175 Paraprofessionals 150 - 75 Moreover, Susman regularly charges for reimbursement of out-of- pocket expenses including secretarial overtime, travel, copying, outgoing facsimiles, document processing, court fees, transcript fees, long distance phone calls, postage, messengers, overtime meals and transportation. The Debtors paid Susman approximately $2,650,000 on November 1, 2001 for professional services performed and to be performed and for reimbursement of related expenses relating to a variety of litigation matters. Enron Corp.'s 9.125% bonds due 2003 (ENRON2), DebtTraders reports, are trading at about 12.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRON2 EXIDE TECHNOLOGIES: Taps Morrison & Foerster as Special Counsel --------------------------------------------------------------- Exide Technologies and its debtor-affiliates want to employ and retain the firm of Morrison & Foerster LLP as special intellectual property, regulatory and environmental counsel to represent them in various matters. The Debtor had originally believed that employing Morrison under the procedures set forth in the Ordinary Course Order would be sufficient; however, the services of Morrison have been and will continue to be more extensive than originally anticipated by the Debtors. Accordingly, the Debtors ask the Court to authorize them to employ and retain the firm of Morrison, nunc pro tunc to April 15, 2002, as special intellectual property, regulatory and environmental counsel under a general retainer to perform the legal services that will be necessary during these Chapter 11 cases. According to Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones P.C. in Wilmington, Delaware, the Debtors seek to retain Morrison as special intellectual property, regulatory and environmental counsel because of its extensive experience and knowledge in the field of intellectual property, regulatory and environmental matters. In preparing for its representation of the Debtors in these cases, Morrison has become familiar with the Debtors' businesses and affairs and many of the potential legal issues that may arise in the context of these chapter 11 cases. The Firm is being retained to continue to represent the Debtors as global intellectual property counsel, involving any issues related to patents, trademarks, etc. Ms. Jones adds that the Firm provides an extranet-based database of the Debtors' intellectual property holdings. Finally, the Firm acts as counsel in environmental, health and safety matters in California. Specifically, Morrison is currently representing the Debtors, or has in the past represented the Debtors, in these regulatory and environmental-related matters: A. State of California Department of Toxic Substances Control v. Alco Pacific, Inc., et al., Case No. 01-09294-MMM (FMOx), United States District Court for the Central District of California (and related actions); B. Flaherty v. Exide Corp., Case No. C-01-0730 CRB, United States District Court for the Northern District of California (and related actions). Ms. Jones relates that Morrison also provides the Debtors with advice and representation with respect to their potential liability and obligations regarding the Puente Valley Operable Unit. In another matter, Morrison represents the Debtors in response to alleged violations of South Coast Air Quality Management permit requirements by the Debtors' facility at 2700 S. Indiana Street, Los Angeles, California. Morrison is also providing counsel to the Debtors on various issues associated with that facility's hazardous waste permit. In addition to these specific matters, Morrison is also providing counsel on Proposition 65 issues as well as general advice on environmental issues to the Debtors as the Firm serves as general outside environmental to the Debtors for all California matters. Ms. Jones informs the Court that Morrison represents the Debtors in connection with their global intellectual property matters, including patent and trademark prosecution. Morrison manages a trademark portfolio with over 600 separate trademarks and at least 3,000 separate trademark applications and registrations for the Debtors. Morrison maintains a docketing system tracking deadlines on each of these applications and registrations and works with a trademark committee to determine which applications/registrations to maintain and which to abandon. Moreover, Morrison consults with the Debtors to select and clear potential new trademarks and to protect those trademarks in various jurisdictions. Morrison also works with Exide's marketing department to assure that the Debtors properly use their own trademarks as well as trademarks licensed from third parties. In addition to representing the Debtors on their trademark prosecution matters, Ms. Jones accords that Morrison also represents the Debtors in connection with three related trademark cases that were filed in the Delhi High Court against Exide Technologies and Tudor India in India, Exide Industries Limited v. Exide Corporation, et. al. (Civil Suit No. 812 of 1997), Exide Industries Limited v. Exide Corporation, et. al. (Civil Suit No. 725 of 1998), and Exide Industries Limited v. Tudor India Limited (Civil Suit No. 1162 of 1997), as well as numerous opposition and cancellation proceedings throughout the world. In each case, the Debtors are seeking to stop others from using their various trademarks or are seeking to assure their ability to continue to use the trademarks. Ms. Jones submits that Morrison also represents the Debtors in connection with their U.S. and international patent portfolio. Morrison's objectives include identifying all patent holdings of the Debtors and managing Exide's portfolio of pending and active patent matters. To date, Morrison has identified and is handling over 2,200 matters relating to pending and issued patents throughout the world. Morrison's efforts include determining which of these matters relate to active patents and patent applications and, among these, which matters the Debtors intend to pursue to maximize the value of their portfolio. To the best or our knowledge, Morrison is not currently handling any Inter Partes matters relating to Exide's patent portfolio. Morrison is, however, involved in the Ex Parte prosecution of patent applications in the patent issuing authorities in over a dozen different countries. In addition, Morrison is currently evaluating an infringement allegation taken against Exide. Ms. Jones notes that Morrison is also responsible for the maintenance of Exide's portfolio of active, issued patents. In connection with this responsibility, Morrison keeps track of issued, active patents, advises the Debtors on required annuity and maintenance fee payments associated therewith, and oversees the payment of such fees. Morrison also oversees the activity of foreign legal associates handling non-U.S. patent matters on the Debtors' behalf. These associates act as legal representative before the local patent issuing authorities. Morrison provides such associates with instructions for patent matters, based on Morrison's communication with the Debtors' legal, business, and technical personnel. Since Morrison is already familiar with the Debtors' current status, the Firm is fully prepared to address the legal issues that will come before it in this regard, which is critical to the successful reorganization of the Debtors' estates. Subject to Court approval, and in accordance with Section 330(a) of the Bankruptcy Code, Ms. Jones states that compensation will be payable to Morrison on an hourly basis, plus reimbursement of actual, necessary expenses and other charges incurred by Morrison. Consistent with the terms of past representation, Morrison and the Debtors have agreed that the Firm's discounted rate structure will continue to apply to the ongoing representation. Since the Firm represents the Debtors in a variety of capacities, the Firm agreed pre-petition to a volume discount with respect to the fee arrangement with Exide. Specifically, Morrison will provide the Debtors a 5% discount for all work performed by the Firm, starting at zero and up to 1 million in fees. Above 1 million, Morrison will provide a discount of 10%. The discounts apply on the standard hourly rates for the attorneys aid other professionals that might be called upon to perform work for the Debtors. The principal attorneys and paralegals presently designated to represent the Debtor and their current standard hourly rates under the Firm's general rate structure range from: Partners $360 to $650 Associates $195 to $410 Legal Assistants/Support Staff $ 90 to $405 In addition, Morrison may, from time to time, require the assistance of outside services relating to its representation of the Debtors in various matters, including, but not limited to, court fees, court reporters, transcription services, consulting services and expert witness fees. Because the timing and nature of these type of expenses may be critical to ongoing matters, Morrison requests approval from the Bankruptcy Court authorizing the Debtor to reimburse Morrison directly for all outside Special Expenses within 10 days from the date an invoice is submitted to the Debtors for payment. Michele B. Corash, Esq., a Partner of the Firm, assures the Court that Morrison does not hold or represent any interest adverse to the Debtors' estates, and accordingly, Morrison is a "disinterested person" as that phrase is defined in Section 101(14) of the Bankruptcy Code. However, the firm currently represents or in the past has represented several parties in matters unrelated to these cases, including: A. Creditors: Bank of New York, Enron Metal & Commodity, Anixter Inc., Exide Delaware, and Praxair Distribution Inc.; B. Insurance Companies: Zurich American Insurance Co., and National Union; C. Secured Lenders: Credit Suisse First Boston, Aimco CDO 2000, Alliance Cap Fund, Bank of Scotland, Bank One NA, Bank Nationale, Bear Sterns, Black Diamond, BNP Paribas, Citicorp USA, Dai Ichi Kangyo Bank, Dresdner Bank, First Union National Bank, Fleet National Bank, Fortis Bank Nederland NV, GE Capital, General Motors, Indosuez Capital Funding, JH Whitney Fund, Lehman Bros., Mitsubishi Trust & Banking Corp., Morgan Stanley, Octagon Investment, Orix Finance, Paribas Capital Funding, Salomon Bros., Scotiabank, Societe Generale, Sumitomo Trust & Banking, Textron Financial Corp., Toronto Dominion Bank, and UBS AG; D. Litigation Parties: Lucent Technologies, Edison Mission power and Pacific Dunlop Investments; E. Equity Holders: Wisconsin State Investment Board, Dimensional Fund Advisors, Loomis Sayles & Co., and Pacific Dunlop Holdings USA; F. Professionals: Wolf Block Schorr & Solis Cohen LLP, and Kirkland & Ellis. Ms. Corash informs the Court that prior to the petition date, the Firm has rendered services that have not been billed or has not yet been paid by the Debtors, amounting to $244,924.06. Ms. Jones contends that retroactive approval of Morrison' s retention is appropriate under the circumstances. This Application was prepared and filed as soon as possible after the Debtors realized that Morrison would be providing more extensive services than those anticipated when the Debtors filed these cases. (Exide Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says that Exide Technologies' 10% bonds due 2005 (EXIDE2) are quoted at a price of 15. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXIDE2for real-time bond pricing. FEDERAL-MOGUL: Court Okays Stipulation with Northern Insurance -------------------------------------------------------------- Federal-Mogul Corporation and its debtor-affiliates have verified that there is insurance coverage available with respect to the claims of Northern Insurance Company of New York, as Subrogee of Harlan Bakeries, Inc., and Harlan Bakeries, Inc. The parties sought and obtained Court approval of their stipulation. The terms of the stipulation are: A. the automatic stay is modified to allow Northern Insurance Company of New York and Harlan Bakeries to proceed with their lawsuit pending at the U.S. District Court for Southern District of Indiana, Indianapolis division, solely for the limited purpose of obtaining a decision from the Indiana Court and obtain a recovery, if any, from any applicable insurance coverage; and B. to the extent that damage awarded in the action are greater than the amount of any applicable insurance which the Debtors may have, that excess amount will be the subject of proofs of claim to be filed in this Court and Northern Insurance Company of New York. Harlan Bakeries has the right to amend any filed proof of claim within 30 days after entry of a judgment against the Debtors in the federal court action to reflect that judgment. (Federal-Mogul Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) FOCUS INSURANCE: Intends to Declare Dividend on July 22, 2002 ------------------------------------------------------------- IN THE SUPREME COURT OF BERMUDA COMPANIES (WINDING-UP) NO. 369 OF 1990 IN THE MATTER OF FOCUS INSURANCE COMPANY LTD. IN LIQUIDATION and IN THE MATTER OF THE COMPANIES ACT 1981 and IN THE MATTER OF THE INSURANCE ACT OF 1978 (Under an Order for Winding-Up the above-named Company, dated 5th February, 1991.) NOTICE OF INTENTION TO PAY DIVIDEND NOTICE IS HEREBY GIVEN that Focus Insurance Company, Ltd. - In Liquidation intends to declare a first and final dividend on 22 July 2002, under the provisions of Rule 84 of the Companies (Winding-up) Rules 1982. All known creditors have been sent a notification by Focus Insurance Company Ltd. - In liquidation of the basis upon which their dividends will be calculated. Creditors who have not received such notification, or who do not agree with the basis of calculation of their dividend should submit a completed Proof of Debt form to the Liquidator of Focus Insurance Company Ltd. - In Liquidation, PricewaterhouseCoopers Dorchester House, 7 Church Street, Hamilton HM 11, Bermuda on or before 5:00 pm (Bermuda Time) 12 July 2002. Failure to notify the Liquidator in writing of your disagreement with the basis of calculation, by submitting a proof of Debt form, on or before 12 July, 2002, will result in your exclusion from participation in payment of the dividend to be declared. Proof of Debt forms may, be obtained from the Liquidator, Focus Insurance Company Ltd. - In Liquidation at the address shown below. PETER C.B. MITCHELL Liquidator Focus Insurance Company Ltd. - In Liquidation Pricewaterhousecoopers, P.O. Box HM1171 Hamilton HMEX BERMUDA. Telephone: 441-295-2000 Fax: 441-295-1242 GATEWAY DISTRIBUTORS: Expects Better Results After Fin'l Workout ---------------------------------------------------------------- Gateway Distributors Ltd. (OTCBB: GTWY) has undergone significant financial restructuring and projects that 2002 revenues will greatly exceed their previous financial performance and will be in excess of $4 million in 2002. This will be more than double the sales of 2001. Projections In 2001 GTWY had annual sales of $1,875,326.80 after significant financial restructuring and the establishment of new and exciting products. GTWY projects that they will greatly exceed the figures of 2001 setting all-time financial highs for 2002. GTWY currently has developed a database of over 80,000 customers and 7,000 are actively selling the company's products. With GTWY's newly implemented strategy they will capitalize on the 73,000 distributors not currently in full use and expand their market presence. SYMBOL: GTWY 52-Week High: $1.95 52-Week Low: $0.015 Current Price: $0.0001 Through its intensive financial restructuring and devotion to the continual innovation of products, GTWY is headed for a bright future. This will allow GTWY to compete with companies such as NuSkin (NYSE: NUS) and Herbalife (Nasdaq: HERBB). GLOBAL CROSSING: Gets Okay to Assume CEO Legere Employment Pact --------------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates obtained Court approval to assume the Legere/Global Crossing Agreement, as revised to delete references to AGC and reflect modifications based on negotiations with the statutory committee of unsecured creditors appointed in these Chapter 11 cases. The following is a summary of the principal executory obligations of the Legere/Global Crossing Agreement: A. Term: October 3, 2004, with automatic one-year renewals, unless either the Debtors or Mr. Legere notifies the other at least six months before the scheduled expiration date that the term is not to renew. B. Base Salary: Reduced from $1,100,000 to $770,000 during the restructuring process (reduction does not affect annual bonus or severance calculation). C. Annual Bonus: Target bonus equal to 125% of Base Salary, dependent on meeting specified corporate and individual performance goals set by the compensation committee of the Global Crossing Board of Directors. The performance goals for the annual bonus will be subject to the reasonable approval of the Creditors Committee. D. Tax Indemnification: $5,000,000 paid in advance. Any unvested portion of this payment will be repayable to Global Crossing if Mr. Legere voluntarily terminates his employment (other than for Good Reason). One quarter of the payment will vest on each of July 15, 2002, September 2, 2002, December 15, 2002, and the date the court either confirms a chapter 11 plan, converts the case to Chapter 7, appoints a trustee, or appoints an examiner with powers to oversee business operations. The balance of the Tax Indemnification payments ($3,838,848) will be made by Global Crossing in four equal installments on the dates specified above. E. Termination of Employment by Global Crossing "For Cause": Mr. Legere will be entitled to the amount of any accrued but unpaid Base Salary, any unpaid Annual Bonus for the previous year, pay for accrued but unused vacation time, un-reimbursed business expenses, and any benefits he may be entitled to under a Global Crossing benefit plan. F. Termination of Employment by Mr. Legere "For Good Reason" or by Global Crossing "Without Cause": Mr. Legere will be entitled to: a. the amount of any accrued but unpaid Base Salary, b. any unpaid Annual Bonus for the previous year plus a pro rata bonus for the current year, c. pay for accrued but unused vacation time d. recoupment of un-reimbursed business expenses e. the vesting of all options, f. a lump-sum payment of twice the sum of Base Salary and target Annual Bonus, and g. continuation of benefits for one year or until such earlier date as equivalent benefits are provided from other employment. G. Mitigation of Severance Payments: 50% of any severance payment due will be subject to mitigation in the event termination of employment occurs after conversion of the case to Chapter 7, appointment of a trustee, or appointment of an examiner with powers to oversee business operations. H. Non-solicitation: Two year prohibition on soliciting the employment of any Global Crossing employee or the business of customers or clients of Global Crossing I. Indemnification: Indemnification from and against all costs, charges, expenses or liabilities whatsoever incurred or sustained by Mr. Legere, at the time such costs, charges, expenses, or liabilities are incurred or sustained, in connection with any action, suit, or proceeding to which Mr. Legere may be made a party by reason of his being or having been an officer or employee of Global Crossing or AGC. (Global Crossing Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Will Provide Int'l Voice Services to Techtel ------------------------------------------------------------- Global Crossing is providing Techtel Argentina with international voice services, connecting Techtel customers in Argentina to the United States, Europe and Latin America, under an agreement signed earlier this year. The new service will enable Techtel Argentina to transport and terminate voice traffic on Global Crossing's global IP-based fiber-optic network. "Our diversified portfolio of IP-based services offers customers the most advanced and reliable data and voice products available anywhere in the world," said Jose Antonio Rios, international president of Global Crossing. "Our Carrier Outbound Service, a high-quality product that specifically targets wholesale telecom customers, is an important part of our strategy to solidify the company's market position in Latin America and the Caribbean." John Legere, chief executive officer of Global Crossing added, "We are very pleased to count Techtel as one of our customers, a company that links all of the major cities in Argentina. Our global voice network, which now carries more than 4 billion minutes of voice each month, with an average of 15-20% of that over IP, continues to grow as we add new customers and steadily increase business with our existing customers." Global Crossing's Carrier Outbound Service, which is available in more than 450 destinations throughout the Americas, Europe and Asia, provides complete global termination capabilities for facilities-based carriers. "All of our customers know and are familiar with Global Crossing's state of the art technology and high quality of services standard," said Hector Masoero, Executive President, Techtel. Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, Global Crossing and certain of its affiliates (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Please visit http://www.globalcrossing.comor http://www.asiaglobalcrossing.comfor more information about Global Crossing and Asia Global Crossing. Techint Organization established Techtel in 1997 with the aim of transmitting data, Internet, corporate voice and video with wireless technology through the 10.5 and 28 GHZ frequencies that were granted by The Communications Secretary of Argentina. During the year 2000, Techtel made a Strategic Agreement with America Movil, the international business unit of Telmex (Telefonos de Mexico) to add forces in the deregulation process of the Argentine telecommunications market. Telmex, the major telephonic operator of Mexico in expansion in Latin America, has more than 13,5 million phone lines, 100.000 data links, more than 900.000 internet subscribers and 5,6 million added value services over local lines (call waiting, three way call, call transfer, mail box). Telmex is currently positioned as the regional market leader in Telecommunications, with presence in Ecuador, Honduras, Guatemala, Brazil, Puerto Rico, Uruguay, Venezuela and The United States. After the agreement with America Movil, Techtel increased its capital in 125 million dollars and foresees an investment of 400 million dollars for the next five years. Techtel owns an Interurban Fiber Optic Network of more than 4.000 km. This Network links the most important cities of the country: Buenos Aires, La Plata, Rosario, Cordoba, Mendoza, Neuquen, Mar del Plata, Bahia Blanca and more than 60 medium size cities, that represent more than the 80% of the population of Argentina. Techtel offers tailor made telecommunications products that suit the client's requirements, with the best cost benefit trade off. Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX3), DebtTraders says, are quoted at a price of 1.75. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for real-time bond pricing. GROUP TELECOM: Talks with Lenders About Financial Workout Plan -------------------------------------------------------------- GT Group Telecom Inc. (TSX: GTG.B, GTG.A, NASDAQ: GTTLB), Canada's largest independent, facilities-based telecommunications provider, provided an update on its expected financial results for the quarter ending June 30, 2002, on its efforts to reorganize its operations to reduce costs and on its efforts to consider changes to the Company's capital structure. On February 19, 2002, Group Telecom announced a reorganization of its operations to reduce costs and manage its business to profitability. The results from the initiatives announced on February 19 have been positive, with Group Telecom realizing estimated annual cash savings of approximately C$38 million, in excess of initial estimates of C$30 million. In providing financial guidance for the current quarter, Group Telecom had previously indicated that it hoped to meet the revenue covenant ($260 million on a rolling four quarter basis) contained in its secured debt facilities through a combination of organic revenue growth and the completion of dark fiber and related hardware sales. Group Telecom currently believes that it will not complete all of the dark fiber and related hardware transactions within the timeframe necessary to enable it to meet its June 30, 2002 revenue covenant. Group Telecom has initiated discussions with the agents to its secured lending syndicate with respect to obtaining a waiver of, or forebearance in respect of, any failure to meet its revenue covenant. If the revenue covenant is not met and relief from it is not obtained, Group Telecom will have to consider all of its alternatives. On March 22, 2002, Group Telecom announced the formation of a special committee and the engagement of Morgan Stanley & Co. Incorporated to assist the company in the consideration and possible pursuit of capital structure modifications. Group Telecom has worked with its professional advisors to review the company's capital structure and business plans in light of the current environment for telecommunication providers in Canada. Group Telecom has also held discussions with its secured lenders, including banks and vendors, with respect to a possible restructuring of Group Telecom's capital structure. These discussions are ongoing and further updates will be provided when appropriate. Group Telecom has previously disclosed that, as of March 31, 2002, it had available liquidity of C$514 million, consisting of C$275 million in cash and C$239 million in available vendor facilities from Lucent and Cisco. These facilities are no longer available to Group Telecom. Group Telecom believes that its cash position of approximately C$220 million is more than sufficient to fund operations while it continues discussions with its secured lenders. Group Telecom is Canada's largest independent, facilities-based telecommunications provider, with a national fiber-optic network linked by 454,125 strand kilometers of fiber-optics, at March 31, 2002. Group Telecom's unique backbone architecture is built with technologies such as Gigabit Ethernet for delivery of enhanced network performance and Synchronous Optical Network (SONET) for the highest level of network reliability. Group Telecom offers next-generation high-speed data, Internet, application and voice services, delivering enhanced communication solutions to Canadian businesses. Group Telecom operates with local offices in 17 markets across nine provinces in Canada. Group Telecom's national office is in Toronto. GT Group Telecom's 13.25% bonds due 2010 (GTGR10CAR1) are trading at about 6, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GTGR10CAR1 for real-time bond pricing. GROUP TELECOM: 3 Shaw Nominees Step-Down from Board of Directors ---------------------------------------------------------------- In light of the announcement by GT Group Telecom Inc. relating to GT's on-going concerns in meeting the covenants owed to its secured lending syndicate and vendor financiers, Shaw Communications Inc. (NYSE:SJR)(TSX:SJR.B.TO) announced that its three nominees sitting as directors on the Board of Directors of GT have resigned, effective immediately. "Shaw felt that it was prudent to give GT some flexibility in constituting its board with directors to deal specifically with the restructuring challenges facing GT. Shaw will be waiving its right to representation on GT's board for the time being", commented Jim Shaw, Chief Executive Officer of Shaw. Shaw Communications Inc. is a diversified Canadian communications company whose core business is providing broadband cable television, Internet and satellite services to approximately 2.9 million customers. Shaw also has significant interests in telecommunications, Internet infrastructure and interactive television companies. Shaw is traded on the Toronto and New York stock exchanges (symbol: TSX - SJR.B, NYSE - SJR). IMP: Sells 499K Shares to Certain Vendors via Private Placement --------------------------------------------------------------- On June 12, 2002, IMP, Inc., a Delaware corporation, completed the sale and issuance of an aggregate of 499,103 shares of IMP's common stock in a private placement to certain of its vendors pursuant to a Stock Purchase Agreement dated June 12, 2002. The consideration for the issuance of the shares was the cancellation of trade payables or other indebtedness relating to goods and/or services provided to IMP by those vendors. IMP has agreed to use its commercially reasonable efforts to register the resale of the shares on a registration statement to be filed with the Securities and Exchange Commission. About 80% of IMP Inc.'s sales come from its silicon wafer foundry services, through which it makes integrated circuits (ICs) for customers such as International Rectifier (30% of sales) and National Semiconductor (15%). IMP also makes its own analog and mixed-signal microchips. The company makes data communications ICs (including small computer system interface -- SCSI -- terminators) and power management ICs (including voltage regulators and lamp drivers) for communications, computer, and systems control applications. More than four-fifths of sales are to US customers. India-based Teamasia Semiconductor owns more than 60% of IMP. At December 31, 2001, IMP Inc. reported a working capital deficit of about $200,000. Also, as previously reported, the company is in violation of certain minimum listing requirements to continue trading on Nasdaq. IT GROUP: Court Okays UBS Warburg and Lehman Bros. as Advisors -------------------------------------------------------------- The IT Group, Inc., and its debtor-affiliates obtained Court authorization to employ and retain UBS Warburg, LLC, and Lehman Brothers to provide financial advisory services during these chapter 11 cases. James Redwine, the Debtors' Vice President and Corporate General Counsel, relates that, under the terms of an Engagement Letter, UBS Warburg and Lehman Brothers will assist the IT Group in analyzing and considering one or more transactions, including the possible sale or merger of The IT Group or one or more of its material subsidiaries and/or the restructuring of the Debtors. UBS Warburg is an international M&A and strategic advisory, corporate finance and merchant banking firm that provides financial advice to leading companies such as the Fortune 500 and other top companies and investors worldwide. Lehman is one of the world's leading full-service investment banks with $9,200,000,000 in equity and $248,000,000,000 in assets and is a leader in M&A advisory, fixed income, equity, private equity and research. Lehman has extensive experience in assisting companies with in-court and out-of-court restructuring, and advising companies in making acquisitions of distressed companies. Specifically, the Financial Advisors will: A. render a general business and financial analysis of the Company including transactions feasibility analysis; B. aid in the preparation of descriptive materials concerning the Company; C. develop, and evaluate with the Company on an ongoing basis a list of parties which might possibly be interested in purchasing or investing in the Company. D. consult with and advise the Company regarding opportunities for the sale of the Company as identified by Lehman, being the sale advisor, or others and, if requested by the Company, represent the company in negotiations for such sales; E. aid in the study and formulation and execution of various capitalization techniques which the company is considering including the issuance of equity, debt or any related securities for the Company in public or private placements; and, F. take part in the Company's preparation for any public disclosures regarding a transaction. Mr. Redwine states that as compensation for their services, the Advisors were paid a non-refundable monthly retainer fee of $150,000 a month for November and December 2001 for services given prior to Petition Date. UBS received 70% of the initial monthly retainer fee while Lehman got the remaining 30%. Going forward, the Debtors agree to pay the Financial Advisors: A. a monthly advisory fee of $125,000 a month starting January 2002 with such fee apportioned 70% to UBS Warburg and 30% to Lehman. Should one Advisor decides to terminate the engagement, the portion of the Monthly Advisory fee to which that party is entitled shall be payable pro rata based on the number of days it has accorded its service in the month of termination; B. related to the Sale, when the Company enters into a definitive deal resulting into a Sale, in either case, a. within the term of Lehman or UBS Warburg's engagement or b. during the a 12-month period following the effective termination of either of the Advisors' engagement, a Sale Transaction Fee of that Sale is payable in cash at the closing thereof, in a sum equal to 1.5% of the consideration involved in each such Sale apportioned 70% to Lehman and 30% to UBS Warburg; C. related to Restructuring, or a reorganization through the approval of the creditors, filing of such plan or entering into a deal which ultimately results into the consummation of the Restructuring, in any case, a. during the term of either Lehman's or UBS Warburg's engagement or b. at any time within a 24-month period following the effective date of termination of either Advisors' engagement, a Restructuring Transaction Fee in connection with such is accorded in a sum equal to 1% of the face value of the outstanding indebtedness of the Company, payable to cash on the consummation of their Restructuring apportioned 30% to Lehman and 70% to UBS Warburg; D. related to Financing, a Financing Transaction Fee payable on the date that the Company first receives funds made available under such agreement, equal to: a. 5% of the actual gross amount of cash proceeds raised in such in case of equity of equally-linked financing, b. 3% in the case of debt-financing of the actual gross amount of cash proceeds raised in such, apportioned 70% to UBS Warburg and 30% to Lehman; and c. refund upon request for UBS Warburg's reasonable expenses including professional and legal fees and disbursements incurred related to UBS Warburg's deal, which does not exceed $50,000 without prior approval of the Company. In addition to the structured compensation described, the agreement provides that the Debtors will indemnify the Financial Advisors except for gross negligence or willful misconduct. (IT Group Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) IMMTECH INT'L: Shareholders Continue Selling Up to 1.8MM Shares --------------------------------------------------------------- Stockholders of Immtech International, Inc. named under the caption "Selling Stockholders" may from time to time offer and sell up to 1,825,786 shares of the Company's common stock. The Shares may be sold in transactions occurring either on or off the NASDAQ at prevailing market prices or at negotiated prices. Sales may be made through brokers or through dealers, who are expected to receive customary commissions or discounts. Immtech will receive no proceeds from the sale of Shares offered. No period of time has been fixed within which the Shares registered may be offered or sold. Immtech's obligation to keep the Registration Statement with the SEC effective expires as to 1,681,743 of the Selling Stockholders' Shares on February 14, 2004, 44,043 Shares on February 22, 2004 and 100,000 Shares on September 12, 2002, or sooner if all Selling Stockholders' Shares are sold. The Company's common stock is traded on the NASDAQ SmallCap Market under the symbol "IMMT." The last reported sale price of its common stock on June 10, 2002 was $5.41. Immtech International, Inc. is a biopharmaceutical company focused on the discovery, development and commercialization of drugs for the treatment of fungal diseases, tuberculosis, hepatitis, pneumonia, diarrhea, and cancer. As of December 31, 2001, Immtech International has a total shareholders' equity deficit of about $1.3 million. IMMUNE RESPONSE: Pursuing Equipment Debt Arrangement Workout ------------------------------------------------------------ As part of an effort to solidify the Company's finances, The Immune Response Corporation (Nasdaq: IMNR) announced an agreement with Transamerica Technology Finance Corporation to restructure its existing equipment loans, in effect curing the existing default under those loans and limiting the circumstances which can serve as the basis for any future default. "We are pleased at our ability to work with Transamerica in reaching this agreement, thereby fixing this default and continuing our efforts to solidify the Company's finances," said Dr. Dennis Carlo, President and Chief Executive Officer for The Immune Response Corporation. "It was in both companies' interests to remedy this situation and move on." The original equipment loan was used primarily to acquire equipment in the Company's Pennsylvania manufacturing facility and was primarily collateralized by the equipment on premises. The restructured agreement affects $1.5 million of the Company's outstanding debt. Pursuant to the agreements signed with Transamerica, the Company is obligated to pay Transamerica milestone payments upon receipt by the Company of proceeds from a certain number of financing activities. The payments would reduce the Company's existing Transamerica debt. The Company also remains obligated to make its scheduled debt payments to Transamerica until all the debt and interest has been paid in full. Additionally, the Company granted to Transamerica a security interest in the Company's assets, including its intellectual property, subject to an existing security interest in the intellectual property. As the Company previously disclosed in its Form 10-Q filed with the Securities and Exchange Commission, Transamerica had delivered the Company a notice of an event of default under its equipment loans. Co-founded by medical pioneer, Dr. Jonas Salk and based in Carlsbad, California, The Immune Response Corporation is a biopharmaceutical company developing immune-based therapies designed to treat HIV, autoimmune diseases and cancer. The Company also develops and holds patents on several technologies that can be applied to genes in order to increase gene expression or effectiveness, making it useful in a wide range of therapeutic applications for a variety of disorders. Company information also is available at http://www.imnr.com IMPSAT FIBER: Maintaining Existing Cash Management System --------------------------------------------------------- IMPSAT Fiber Networks, Inc. asks the U.S. Bankruptcy Court for the Southern District of New York for permission to maintain all existing bank accounts, continue using its existing cash management system, and continue using all existing business forms. The Debtor seeks a waiver of the United States Trustee's requirement that prepetition Bank Accounts be closed and that new postpetition bank accounts be opened. The Debtor believes that this requirements would cause significant and unnecessary disruption in their businesses. The Debtor point out that its Bank Accounts are part of a carefully constructed Cash Management System that ensures the its ability to efficiently monitor and control all of its cash receipts and disbursements. It is important that the Debtor gets permission to maintain its existing Bank Accounts and, if necessary, open new accounts, wherever they are needed, irrespective of whether such banks are designated depositaries in the Southern District of New York. The Debtor also seek an order authorizing it to continue using all Business Forms existing immediately prior to the Petition Date, without reference to the Debtor's status as debtor in possession, and its centralized cash management system in the operation of its business. The Debtor asserts that the basic structure of the cash management system it has described to the Court constitutes its ordinary, usual, and essential business practices. Impsat Fiber, a provider of broadband Internet, data, and voice services in Latin America, filed for chapter 11 protection on June 11, 2002. Anthony D. Boccanfuso, Esq., and Michael J. Canning, Esq. at Arnold & Porter represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $667,189,368 in total assets and $1,334,732,793 in total debts. INTERNET ADVISORY: Proposes to Amend Articles of Incorporation -------------------------------------------------------------- An Information Statement is being furnished to stockholders of The Internet Advisory Corporation, a Utah Corporation, to advise them of corporate action taken without a meeting by less than unanimous written consent of stockholders to amend its Articles of Incorporation to change its name to Scores Holding Company Inc. The Board of Directors fixed the close of business on May 23, 2002 as the record date for the determination of stockholders entitled to vote on the proposal to amend the Articles of Incorporation. On May 23, 2002 there were 15,739,676 shares of the Company's common stock issued and outstanding. The proposed amendment to its Articles of Incorporation requires the affirmative vote of a majority of the outstanding shares of its common stock. Each share of common stock is entitled to one vote on the proposed amendment. The Board of Directors, by written consent on May 22, 2002, has approved, and stockholders holding 10,891,667 (approximately 69.2%) of the outstanding common shares on May 23, 2002, have consented in writing, to the amendment. Accordingly, all corporate actions necessary to authorize the amendment have been taken. In accordance with the regulations under the Securities Exchange Act of 1934, the authorization of the amendment to the Articles of Incorporation by the Board of Directors and the stockholders will not become effective until 20 days after the Company has mailed the Information Statement to its stockholders. Promptly following the expiration of this 20-day period, the Company intends to file the amendment to its Articles of Incorporation with the Utah Department of Commerce. The change of name to Scores Holding Company Inc. will become effective at the time of such filing. The Internet Advisory Corporation is a publicly traded company in the United States and Europe. In the United States it trades on the OTC BB Symbol: PUNK and in Europe on the Frankfurt Stock Exchange Symbol: IAS. The Company offers an expanding package of enhanced Internet tools, including Web site hosting and electronic commerce solutions, (E-Commerce), enabling its customers to conduct transactions with their customers and vendors over the Internet with secure Internet communication links permitting customers to engage in private and secure Internet communication with their employees, vendors, customers and suppliers. On May 25, 2001, The Internet Advisory Corp. file for Chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of Florida (Broward). JUNIPER CBO: Deterioration in Credit Enhancement Concerns S&P ------------------------------------------------------------- Standard & Poor's placed its ratings on the class A-1L, A-1, A- 2, A-3A, and A-3B notes issued by Juniper CBO 1999-1 Ltd., an arbitrage CBO transaction originated in March 1999, on CreditWatch with negative implications. In a previous action, the ratings assigned to all the classes of notes were placed on CreditWatch negative on Feb. 5, 2002. The ratings on the class A-1, A-2, A-3A, and A-3B notes were subsequently lowered to single-'A'-plus from triple-'A' (class A-1), triple-'B'-plus from triple-'A' (class A-2), and triple- 'C'-minus from triple-'B'-minus (classes A-3A and A-3B) and removed from CreditWatch negative on April 9, 2002, while the triple-'A' rating on the class A-1L notes was affirmed and removed from CreditWatch negative. The current CreditWatch placements reflect further deterioration in the credit enhancement available to support the rated notes, since the class A-1, A-2, A-3A, and A-3B notes were last downgraded on April 9, 2002. The overcollateralization ratio tests for Juniper CBO 1999-1 Ltd. continue to be out of compliance, and there has been significant deterioration in the transaction's overcollateralization ratios in recent months. As of the June 2, 2002 monthly trustee report, the class A overcollateralization ratio was 95.4% (the required minimum ratio is 115%), versus 102.4% at the time of the last downgrade. The class B overcollateralization ratio was 83.8% (the required minimum ratio is 104%), versus 90.9% at the time of the last downgrade. The credit quality of the collateral pool has also deteriorated in recent months. Currently, $60.175 million (or approximately 14.89% of the collateral pool) has defaulted. In addition, $10.125 million (or approximately 2.94%) of the performing assets in the collateral pool come from obligors with Standard & Poor's ratings currently in the triple-'C' range; a total of $16.5 million (or approximately 4.80%) of the performing assets in the collateral pool come from obligors with Standard & Poor's ratings currently in the double-'C' range, and $36.455 million (or approximately 10.60%) of the performing assets within the collateral pool come from obligors with Standard & Poor's long- term corporate credit ratings on CreditWatch negative. Standard & Poor's will be reviewing the results of the current cash flow runs generated for Juniper CBO 1999-1 Ltd. to determine the level of future defaults that the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the rated interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the transaction's current collateral pool to determine whether the ratings assigned to the above-mentioned notes are commensurate with the level of credit enhancement currently available. Ratings Placed On Creditwatch With Negative Implications Juniper CBO 1999-1 Ltd. Class Rating Balance (mil. $) To From Original Current A-1L AAA/Watch Neg AAA 153 116.965 A-1 A+/Watch Neg A+ 134 134 A-2 BBB+/Watch Neg BBB+ 34 34 A-3A CCC-/Watch Neg CCC- 60 60 A-3B CCC-/Watch Neg CCC- 40 40 KAISER ALUMINUM: Wants Plan Filing Exclusivity Moved to Dec. 12 --------------------------------------------------------------- "It is simply unrealistic to expect that any party -- be it the Debtors or any other parties in interest -- would be in a position to formulate, promulgate and build consensus around a reorganization plan any earlier than December 12, 2002," Paul N. Heath, Esq., at Richards, Layton & Finger P.A., tells the U.S. Bankruptcy Court for the District of Delaware. Against that backdrop, Kaiser Aluminum Corporation and its debtor-affiliates ask for an extension of their Exclusive Plan Proposal Period through and including December 12, 2002. They ask that the period during which they have the exclusive right to solicit acceptances of their Plan be extended through and including February 10, 2003. Mr. Heath submits that the Debtors' cases are not only large but highly complex. This complexity is partly a function of the extensive size and scope of the Debtors' business operations. In addition, as of Petition Date, Kaiser Aluminum & Chemical Corporation was facing more than 100,000 pending asbestos lawsuits, and the Debtors had: A. tens of thousands of other potential creditors; B. thousands of executory contracts and unexpired leases; C. operations throughout North America and overseas; and, D. four separate business units. Moreover, two separate committees have been appointed in these cases, each with separate sub-constituencies, requiring the Debtors to discuss and negotiate all issues with myriad parties. Mr. Heath asserts that no purpose would be served by prematurely terminating the Exclusive Periods while these large, complex cases are otherwise only a few months old. If negotiations do not resolve the asbestos and legacy-related issues, preparation for and the potential prosecution of litigation regarding the underlying disputes on any number topics undoubtedly will consume many months or even years. Pending a consensual or litigated resolution of those matters, the Debtors will be unable to propose and seek confirmation of meaningful plan of reorganization. Mr. Heath tells Judge Fitzgerald that the Debtors have devoted significant time and effort to critical early phases of their restructuring. With their initial transition into Chapter 11 now largely complete, the Debtors are currently focusing on completing their long-term strategic plan. They anticipate using the requested six-month extension to complete the strategic plan and then begin to address head-on the various asbestos and legacy issues involved in these cases and begin preliminary negotiations with the Committees and other constituencies regarding a plan or plans of reorganization. According to Mr. Heath, since the commencement of their Chapter 11 cases, the Debtors have made considerable progress on a variety of issues. Their achievements to date in these cases include, among others: A. obtaining various "first day" relief to ensure that the Debtors' businesses remain stable and that the Debtors' reorganization efforts move forward, including retaining professionals necessary to those efforts; B. securing approval of a $300,000 debtor-in-possession financing facility to address the Debtors' liquidity needs and to assure the Debtors' vendors, customers and other constituents that the Debtors' businesses remain stable; C. taking steps to ensure that the Debtors' and their nondebtor affiliates' valuable joint venture interests are preserved, including: a. obtaining interim relief to pay claims of and continue transactions with their nondebtor joint venture affiliates; b. working to preserve certain beneficial financial arrangements of certain of the joint ventures; c. obtaining an agreed-upon preliminary injunction to ensure that the status quo is preserved with respect to certain nondebtor subsidiaries' interests in Aluminum Partners of Jamaica; and, d. responding to attempts by certain of their joint venture co-participants to exercise rights under the applicable joint venture documents; D. completing the progress of compiling over 9,200 pages of information required for the Debtors' statement of financial affairs and schedules of assets and liabilities; E. obtaining Court authorization of procedures to streamline the sale of any assets for aggregate consideration under a certain dollar threshold and permit the sales to be consummated without further Court approval; F. in connection with their exit from their unprofitable lid and tab market business, they negotiated, obtained Court approval of and closed a sale of their coating line assets; G. attempting to establish open communications and build productive working relationships with the two official committees appointed in these cases to limit the number of contested matters presented to the Court; H. obtaining various other relief necessary in the first months of these Chapter 11 cases, including the rejection of certain contracts, an extension to the time to assume, assume and assign or reject nonresidential real property leases, an extension of the time to remove lawsuits and the authority to retain and pay professionals in the ordinary course of business; I. successfully resolving or defending various actions against the Debtors' estates, including motions to lift the automatic stay, demands for payment of reclamation claims and demands for utility deposits; J. developing a key employee retention program to ensure key management employees remain with the Debtors and are focused on a successful reorganization, which the Debtors intend to seek Court approval of after input from, and further consultation with, the Committees; and, K. commencing work on a long-term strategic plan. Mr. Heath admits that it is the backdrop of these results that the Debtors seek to extend each Exclusive Periods. Besides, the Debtors' requested extension is in line with similar extensions granted in other large Chapter 11 "asbestos" and "non-asbestos" cases filed in this District and elsewhere. Mr. Heath assures the Court that the extension of the Exclusive Periods will not harm the Debtors' creditors or other parties in interest and will not result in a delay of the plan-of- reorganization process; rather, it will simply permit the process to move forward in an orderly fashion. A hearing on the motion is scheduled on July 23, 2002. Under Local Rule 9006-2, the Debtors' Exclusive Periods to propose and file a Plan of Reorganization remains intact through the conclusion of that hearing. (Kaiser Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART: Changes Name of Web Site to Kmart.com from BlueLight.com --------------------------------------------------------------- DebtTraders reports that Kmart Corporation has changed the official name of its Web site to Kmart.com from BlueLight.com. "The name change represents an effort by the bankrupt retailer to refine its marketing strategy as it struggles to find a market niche for itself," DebtTraders says. Also, the new site highlights Kmart's new "The Stuff of Life" advertising campaign. According to DebtTraders analysts Daniel Fan, CFA, and Blythe Berselli, CFA, Kmart Corporation's 9.375% bonds due 2006 are one of their Actives. These bonds (KMART10) are currently quoted at a price of 41. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=KMART10 KNOWLEDGE HOUSE: Financial Reporting Defaults Continue ------------------------------------------------------ Knowledge House Inc. (TSX VEN:KHI) 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. On June 5, 2002, Mr. Potter advised that the board of directors was 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 (Nova Scotia) 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 bi-weekly 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. KOMAG INC: Intends to Padlock Plant in Santa Rosa, California ------------------------------------------------------------- Komag, Incorporated (OTC Bulletin Board: KMAGQ), the largest independent producer of media for disk drives, plans to close Komag Materials Technology, Inc., a wholly-owned subsidiary located in Santa Rosa, California. At the same time the company reported that it expects sales for the second quarter of 2002 will be 15% to 20% lower than the $61.4 million reported in the first quarter of 2002 as a result of recent market softness. The company also expects that lower sales will result in a $3 million to $4 million increase in operating loss, before restructuring charges, compared to the first quarter. "Because our market continues to be weak and volatile, we find it necessary to take ever more difficult steps to reduce our fixed cost structure," said T.H. Tan, Komag's chief executive officer. "KMT has been part of Komag since 1988. They have been responsible for significant substrate technology, process improvements and cost reductions over the intervening years. Unfortunately, the competitive pressures of our industry no longer allow us to maintain a dedicated substrate development team. We will relocate a small number of key KMT staff members to our R&D center in San Jose to continue substrate development efforts." The KMT shutdown will reduce the company's headcount by approximately 75 people. The shutdown will occur over a three- month period, beginning with a partial reduction in force immediately. The balance of the KMT staff will be terminated as projects are completed. The company expects to record a restructuring charge of $6 million to account for the shutdown. Komag's emergence from chapter 11 will be unaffected by the actions announced above. The company expects its Plan of Reorganization to become effective on or before June 30, 2002. At that time the company will discharge over $520 million of unsecured obligations, cancel its existing common stock and warrants, and make distributions of cash, new common stock, warrants and debt securities to holders of general unsecured claims. Founded in 1983, Komag is the world's largest independent supplier of thin-film disks, the primary high-capacity storage medium for digital data. Komag leverages the combination of its U.S. R&D centers with its world-class Malaysian manufacturing operations to produce disks that meet the high-volume, stringent quality, low cost and demanding technology needs of its customers. By enabling rapidly improving storage density at ever-lower cost per gigabyte, Komag creates extraordinary value for consumers of computers, enterprise storage systems and electronic appliances such as peer-to-peer servers, digital video recorders and game boxes. For more information about Komag, visit Komag's Internet home page at http://www.komag.com LEGACY HOTELS: S&P Hatchets Long-Term Corp. Credit Rating to BB+ ---------------------------------------------------------------- Standard & Poor's lowered its long-term corporate credit and senior unsecured debt ratings on Legacy Hotels Real Estate Investment Trust to double-'B'-plus from triple-'B'-minus. At the same time, the ratings on the Toronto, Ont.-based company were removed from CreditWatch, where they were placed February 14, 2001. The outlook is stable. "The ratings actions reflect Legacy's weaker credit protection ratios and higher debt levels, which are no longer commensurate with Standard & Poor's investment-grade levels generally associated with hotel companies and hotel REITs that have above- average business risk profiles," said Standard & Poor's credit analyst Ron Charbon. "In addition, the credit enhancement provided by the trust's relationship with Canadian Pacific Ltd. (CPL) was reduced with the spin-off of CPL's other subsidiaries, leaving only the hotel business now renamed Fairmont Hotels & Resorts Inc. Although Fairmont has a very strong balance sheet and has assisted Legacy during the post-Sept. 11, 2001, period by taking units in lieu of distributions, Fairmont does not match the financial size and strength that CPL had prior to its breakup," Mr. Charbon added. The ratings on Legacy reflect the trust's strength in business risk, offset by weaker credit protection ratios. Legacy's credit strengths are its portfolio of high-quality luxury Fairmont Hotels in heritage properties across Canada; a highly regarded and seasoned management team; the demonstrated resilience of the Canadian hotel sector since September 11; the relatively strong operating results of Legacy's hotel portfolio; and the established market prominence of the trust's portfolio. Legacy is an unincorporated closed-end hotel REIT that owns and manages 21 upscale and luxury hotels with 9,500 rooms. Fairmont manages 10 luxury hotels, and Delta manages the 11 upscale properties. Legacy's major shareholder is Fairmont, the ongoing company created by the reorganization of CPL and the subsequent spin-off of CPL's operating divisions into separate public entities. Data from hotel industry sources for year-end 2001 and the first two months of 2002 demonstrate the Canadian lodging market has recovered from the events of September 11 reasonably well. Projections for 2002 indicate moderate growth in occupancy, average daily room rate, and revenue per available room (REVPAR). Legacy's operating results have demonstrated that the hotels operating in its properties were most severely affected in the third quarter of 2001 (REVPAR down 6.5% from the same period in 2000) and less so in the fourth quarter of 2001 (REVPAR down 4.3%). In the first quarter of 2002, REVPAR was down 4.2% compared with the first quarter of 2001. Looking forward, Standard & Poor's is cautiously optimistic on the hotel sector and expects continued gradual improvement in operating statistics throughout 2002. LIONBRIDGE TECHNOLOGIES: Shareholders' Meeting Set for July 29 -------------------------------------------------------------- Notice has been given that a Special Meeting of Stockholders of Lionbridge Technologies, Inc., a Delaware corporation, will be held at 10:00 a.m., local time, on July 29, 2002, at the Company's corporate headquarters at 950 Winter Street, Waltham, Massachusetts 02451, to consider and act upon the following proposals: 1. To amend the Company's Second Amended and Restated Certificate of Incorporation to effect a reverse stock split of the shares of the Company's issued and outstanding common stock at a ratio to be determined by the Board of Directors of the Company, in its sole discretion, such that when multiplied by the closing price of common stock on the business day preceding the Special Meeting of Stockholders results in a product between $5.00 and $6.50 per share, inclusive, but which ratio shall not exceed one-for-three whereby one (1) share of common stock will be issued in exchange for not more than three (3) shares of common stock currently issued and outstanding (any fractional shares of common stock which result from this share exchange will not be issued, but will be rounded up and exchanged for one (1) whole share of common stock); provided, that at any time prior to the effectiveness of the filing of the amendment with the Secretary of State of the State of Delaware, the Board of Directors of the Company may abandon such proposed amendment without further action by stockholders if the Board of Directors, in its sole discretion, determines that it is in the best interests of the Company or the stockholders to do so. 2. To transact such other business as may properly come before the Special Meeting or any postponements or adjournments thereof. The Board of Directors has fixed the close of business on May 31, 2002 as the record date for the determination of the Lionbridge stockholders entitled to notice of, and to vote at, the Special Meeting and any postponements or adjournments thereof. Lionbridge Technologies, Inc. provides solutions for worldwide deployment of technology and content to global 2000 companies in the technology, life sciences and financial services industries. As previously reported, Lionbridge Technologies has a working capital deficit of about $1.4 million at March 31, 2002. LYONDELL CHEMICAL: S&P Assigns BB $275M Senior Notes Rating ----------------------------------------------------------- Standard & Poor's assigned its double-'B' rating to Lyondell Chemical Co.'s proposed $275 million senior secured notes due 2012 and affirmed its other ratings on the company, including the double-'B' corporate credit rating. Proceeds of the notes will be used to prepay $200 million of an existing term loan. The balance of the net proceeds (approximately $50 million), together with approximately $100 million from a new equity issue, will be retained on the balance sheet. Houston, Texas-based Lyondell has about $3.9 billion of debt outstanding. The outlook is stable. "A new $350 million committed revolving credit facility, together with Lyondell's plans to retain additional cash on its balance sheet, will provide ample liquidity through the bottom of the current trough in the petrochemical cycle," said Standard & Poor's credit analyst Kyle Loughlin. "In addition, following the proposed transactions, Lyondell will have substantially relieved concerns related to restrictive financial covenants and will benefit from the extension of the debt maturity profile," the analyst said. The ratings for Lyondell Chemical reflect its high debt levels from the 1998 acquisition of ARCO Chemical Co., which continue to overshadow the firm's average business profile as a leading North American petrochemical producer. Lyondell is the world's largest producer of propylene oxide (PO), a key intermediate for urethanes and an array of industrial chemicals. That strong market position is bolstered by large-scale and cost-efficient operating facilities. Long-term prospects for PO profitability remain relatively good, although variations in the pricing of oil-based feedstocks and the level of economic activity can affect short-term results. Recently PO demand has diminished due to economic conditions but should trend back toward the historical growth rate of 3%-5% per year with an economic recovery. The concentration of global production capacity among relatively few producers should limit oversupply conditions, although new plant additions are expected to dampen near-term profit margins. However, product margins should remain less volatile than those of most other petrochemical products. Business attributes are generally less attractive for PO process co-products: styrene and methyl tertiary butyl ether (MTBE). The styrene sector is fragmented and more dependent on construction activity and export demand, and wide swings in cyclical performance are typical. MTBE is an important gasoline additive whose long-term prospects are clouded by regulatory uncertainties. Given the diversity of Lyondell's production base, a significant phase-out of MTBE use in the U.S. is not expected to meaningfully diminish the firm's cash flow generation. (However, any conversion of existing MTBE units for the production of other gasoline blending components would result in incremental capital outlays.) Ratings stability is supported by the firm's commitment to improve its financial profile and maintain adequate financial flexibility, and the expectation that business conditions will begin to recover during 2002. DebtTraders reports that Lyondell Chemical's 10.875% bonds due 2009 (LYOCH3) are quoted at a price of 94. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LYOCH3for real-time bond pricing. METALS USA: Wins Nod to Implement Key Employee Retention Plan ------------------------------------------------------------- Metals USA, Inc., and its debtor-affiliates sought and obtained the Court's Order approving the Debtors' Key Employee Retention Plan (KERP). The Debtors adopt the KERP because the retention of key personnel is necessary for the Debtors' reorganization effort. Metals USA's key employees possess unique knowledge, skills, and experience, as well as customer and supplier relationships, which are important to the business enterprise and, in many cases, impracticable to replicate. According to R. Andrew Black, Esq., at Fulbright & Jaworski LLP in Houston, Texas, although prospects for a successful reorganization are good, key executive, managerial and operational employees of Metals USA may resign because of the uncertainty surrounding the Debtors' reorganization and their future employment status. In addition, since many of the Debtors' key employees have stock incentive programs, their cash compensation is less than market levels. Mr. Black relates that the KERP provides for the creation of two groups of key executives, managers and operational staff: Group 1, with seven key executives, and Group 2, with 140 key managerial and operational staff. The proposed retention incentives for members of Group 1 are based on a five-part plan which provides for: A. Retention Compensation: Metals USA proposes to pay Group 1 Key Executives Retention Compensation equal to 25% of their current Base Salary at the time of this Motion upon the earlier of their termination without cause or the entry of an order by this Court approving the adequacy of a Disclosure Statement. Metals USA intends to file a plan of reorganization before the end of August 2002 when its exclusivity period runs out. The maximum cost of the Retention Compensation for Group 1 is $500,000; B. Timing Performance Bonus: To respond to the Unsecured Creditors Committees' request, the Debtors propose a Timing Performance Bonus of up to 25 % of Base Salary to be paid to Group 1 Key Executives in the following amounts on the Effective Date of a Reorganization Plan for the Debtors, if the Effective Date occurs in these months: November 2002 - 25% December 2002 - 20% January 2003 - 15% February 2003 - 10% March 2003 - 5% April 2003 or thereafter - 0% Any Group 1 executive who is terminated without cause prior to the Effective Date will be entitled to receive a pro rata share of the Timing Performance Bonus. The pro rata share will be calculated by determining (a) the number of days the Group 1 executive continued to be employed after the entry of the order approving this Motion, divided by (b) the number of days between the entry of the order approving this Motion and the Effective Date, multiplied by (c) the Group 1 executive's applicable Timing Performance Bonus. Pro rata shares, if any, due to Group 1 executives will be paid on the Effective Date; C. EDITDA Performance Bonus: The Debtors propose to pay Group 1 Key Executives on the Effective Date an EBITDA Performance Bonus of 25% of their Base Salary. The EBITDA Performance Bonus will be paid only if the Debtors have met or exceeded the Debtors' projected 12-month trailing consolidated EBITDA measured through the last complete month prior to the Effective Date. EBITDA will be measured in accordance with Debtors' post-petition loan agreement dated January 2, 2002; D. Distribution Performance Bonus: Metals USA also proposes a Distribution Performance Bonus, in which Group 1 Key Executives will be paid 0.5% of their Base Salary for each percentage in excess of a 50% recovery to the unsecured creditor class based on the Debtors' estimates of the payments to be made to the estimated allowed unsecured claims as set forth in the Disclosure Statement or the Plan of Reorganization. Distribution Performance Bonuses will be capped at a maximum of 25% of the Group 1 Key Executive's Base Salary. Payment of Distribution Performance Bonuses, if any, shall occur 75 days after the Effective Date and be made in the same form of consideration received by the unsecured creditors. Any securities paid as part of a Distribution Performance Bonus will be valued based upon their average price over any 20 consecutive trading days during the first 60 days after the Effective Date; and, E. Severance Compensation: If a Group 1 Key Executive is terminated without cause at any time prior to six months after the Effective Date, Metals USA proposes to make a Severance Compensation payment equal to 25% of that executive's current Base Salary. Receipt of Severance Compensation will be in lieu of any additional severance pay he or she may have been entitled to under an employment contract or under existing Metals USA employment policies or practices. Prior to receipt of the Severance Compensation payment, the Group 1 Executive will sign a written release waiving any claims that executive may have relating to his or her employment or termination, including any claims arising under his or her employment contract, other than claims for unpaid salary, bonus, or expense reimbursement. As to employees under Group 2, Mr. Black states the Debtors propose to pay the employees retention compensation between 20% to 75% of their Base Salary, as follows: A. Group 2a - consisting of 20 employees who will receive Retention Compensation equivalent to 75% of their Base Salary; B. Group 2b - consisting of 18 employees who will receive Retention Compensation equivalent to 50% of their Base Salary; C. Group 2c - consisting of 74 employees who will receive Retention Compensation equivalent to 30% of their Base Salary; and, D. Group 2d - consisting of 28 employees who will receive Retention Compensation equivalent to 20% of their Base Salary. The cost of the retention compensation for Group 2 employees is approximately $5,600,000. Employees belonging to the group will be paid according to this schedule: A. One payment equal to 12.5% of each Group 2 employee's applicable retention compensation will be made promptly after entry of the Order approving KERP; B. An additional payment equal to 12.5% of each Group 2 employee's applicable KERP will be made on each 90 day anniversary of the entry of the Order approving the KERP until the individual has received 100% of their Retention Compensation or until the individual is terminated without cause or the Effective Date; C. On the Effective Date, or should an individual be terminated without cause prior to the Effective Date, the Group 2 employees will be paid any outstanding portion of their retention compensation not yet received; and, D. Should a Debtor company be sold, Group 2 employees of that Debtor will be entitled to payment, within 14 days of the closing of the sale, of any outstanding portion of their retention compensation not yet received. (Metals USA Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) METROCALL: Gets Nod to Pay Critical Vendors' Prepetition Claims --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approves Metrocall, Inc. and its debtor-affiliates' request to pay prepetition claims of critical trade vendors. The Debtors tell the Court that paying the prepetition claims of these critical vendors will make it possible for the Debtors to obtain and facilitate essential postpetition vendor support on acceptable terms. This is necessary to continue operating their business and maintain uninterrupted supply and service to customers. The Debtors were obtained permission from the Court to pay up to $2,750,000 of Critical Vendors' Claims. 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. N-VIRO INT'L: Shares Start Trading on OTC Bulletin Board -------------------------------------------------------- N-Viro International Corporation (OTC Bulletin Board: NVIC) issued the following letter to stockholders on June 11, 2002: "Dear N-Viro Stockholder: "Obviously we are disappointed in the Nasdaq decision to delist the Company. On January 2, 2002 we advised Nasdaq of our timetable to comply. We were advised by Nasdaq Counsel that the Listing Qualifications Panel had the authority to delay delisting to allow us time to return to Nasdaq standards. On April 18, 2002 we presented to the Listing Qualifications Panel our timetable, which stated clearly that we expected to meet Nasdaq standards by June 30, 2002. Nasdaq chose not to accept our timetable. Their official comment was that 'the Company will likely require significant additional time to implement.' It has cost N-Viro over $2,000,000 to qualify for and maintain our position on Nasdaq. Unless Nasdaq Counsel assures us that they will re-list us when and if we meet our proposed timetable of material events required to meet Nasdaq standards, we may choose to cease all further appeals. Filing for a new listing on the Nasdaq Market is simply cost-prohibitive and not an option at this time. "As I stated at the annual meeting last month, I believe our future has never looked brighter. N-Viro, for a small company, is now strategically positioned to be a major force in organic utilization and alternative fuels management. The potential utilization of these resources in sustainable alternative fuels and/or sustainable agriculture is unlimited. "Clearly, Pat Nicholson was 10 years ahead of his time with the development of N-Viro's pasteurization technology. Now, nine years after publication of federal regulations (40 CFR 503) on municipal wastewater sludge use and an almost total lack of federal implementation and enforcement thereof, the industry fully comprehends the value of pasteurization or sterilization concepts and is quickly moving to adopt them. "N-Viro decided three years ago to focus on privatization contractors whose primary concern is cost efficiency, and to develop the capability to attract local partners with strong credibility. We believe we have achieved both objectives. Today, N-Viro is in final negotiations with the three largest wastewater and water contractors in the world to partner three different projects in North America. We expect to announce two of these projects in the second quarter and the last one in the third quarter of 2002. "Moreover, as announced at the annual meeting, 'N-Viro is in late-stage negotiations with a major (2001 revenue of over $12 billion dollars) Midwestern power utility to jointly develop our N-Viro Fuel technology.' This recently patented technology teaches the ability of our conventional N-Viro Soil(TM) product and similar materials to be used in combination with fossil fuels as a low-cost energy source, as a scrubbing agent to remove nitrous oxides (NOx) and sulfur dioxides (SO2), and as a potential future source of both carbon credits and alternative energy tax credits. The economics of this concept are exciting. Economics, not regulatory policies, is the driving motivation for this strategy. "This technology will allow us to work closely with electric utility generators in every part of the world. We will use their waste fly ash to convert waste organics into a cost-effective, emission-control alternative and sustainable energy source. It is a 24 hour/7 day a week solution to the management of waste organics with total protection of public health, respect for social responsibility, and the elimination of public and private liability concerns now associated with most current organic waste disposal practices. "It is a clear win-win-win situation. A win for organic generators. A win for electric power producers. And a win for both of their neighbors. It also helps N-Viro. "Also, in an effort to make our own communications with stockholders of N-Viro International more efficient and cost effective, we wish to continue to convert as many stockholders as possible to an electronic means of communication. This means having any information, including quarterly reports, press releases and other materials, transmitted by e-mail or fax. "We know many of you do not have access to a computer or the Internet, and we will continue to use direct mail for you. "Please contact us at your earliest convenience to let us know which method you prefer: e-mail or fax. You can e-mail your response directly to info@nviro.com or call or fax our Office Manager, Tricia Bacon, at (419) 535-6374 Ext. 100, or (419) 535- 7008, respectively. If we do not hear from you, we will continue with the latest established method of sending information. "If you wish to be taken off the list at any time, please let us know and we will do so immediately. "Whether our stock is traded on Nasdaq or the OTC Bulletin Board, we at N-Viro are dedicated to recovering for you, our investors, the real value of this Company." Sincerely yours, Terry J. Logan, Ph.D. Chief Executive Officer NAPSTER INC: Gets Nod to Appoint Logan & Company as Claims Agent ---------------------------------------------------------------- Napster, Inc. and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to appoint Logan & Company, Inc. as claims and noticing agent. Under the Logan Agreement, it is anticipated that Logan, at the request of the Debtors or the Clerk's Office, will: a) prepare and serve required notices in these chapter 11 cases; b) within 5 days after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service; c) maintain copies of all proofs of claims and proofs of interest filed in these cases; d) maintain official registers in these cases by docketing all schedules claims, proofs of claim and proofs of interest in a claims database; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest in these cases and make the list available upon request to the Clerk's Office or any party in interest; h) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; i) record all transfers of claims and provide notice of such transfers; j) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and k) provide such other claims processing, noticing and related administrative services as may be requested by the Debtors. The list of services with an associated cost estimate taken directly from Logan & Company's fee schedules are: Database Creation and Claims Docketing -- One time Set-Up Fee $2,500 -- Load Names and Addresses $300 from disk/tape 3,000 x .10 -- Manual Input and verification 25 hours x $55 per hour $1,375 -- Claims Docketing 1000 claims 35 claims per our x $55 $1925 -- Scheduled claims creation 10 hours x $100 per hour $1,000 -- Miscellaneous address changes, transfers, etc 10 hours x $55 Noticing -- Notice of Case Commencement, 341 Meeting of Creditors $900 Postage $1,020 -- Bar Date Notice $900 Postage $1,020 -- Proof of claim form $1440 Schedules and Statement Preparation $25,000 Napster, Inc. and its debtor-affiliates own and operate the peer-to-peer music service known as Napster. The Napster service has provided music enthusiasts with an easy-to-use, high quality service for finding and discovering music and communicating their interests with other members of the Napster community. The Company filed for chapter 11 protection on June 6, 2002. Daniel J. DeFranceschi, Esq., Russell C. Silberglied, Esq. at Richards, Layton & Finger and Richard M. Cieri, Esq., Michelle Morgan Harner, Esq. at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts of more than $100 million. NATIONAL ENERGY: Gets Approval to Amend Cert. of Incorporation -------------------------------------------------------------- At National Energy Group's Annual Meeting of Shareholders held on June 6, 2002, the Company's shareholders voted to amend the Company's Amended and Restated Certificate of Incorporation to effect a reduction in the aggregate number of shares of common stock the Company is authorized to issue from 100,000,000 to 15,000,000 shares. National Energy Group, Inc., headquartered in Dallas, Texas, is an independent energy company engaged in the acquisition, exploration, exploitation, development and production of oil and natural gas properties. The Company's core areas of operations are located in major producing basins in Texas, Louisiana, Oklahoma, and Arkansas. Operations have been focused in areas where the Company has developed geological, geophysical and engineering expertise in order to maximize the potential of its core properties. The Company seeks to operate the properties in which it owns an interest. This emphasis on control of operations has enabled the Company to utilize its expertise to reduce and control lease operating expenses in order to maximize profit margins and production. The Company has recently completed a successful reorganization. Pursuant to the Bankruptcy Court Plan of Reorganization, the Company has become a fifty percent interest holder in a limited liability company into which it has contributed all of its oil and gas properties and for which it will provide management services. As previously reported, National Energy's December 31, 2001 balance sheet shows a total shareholders' equity deficit of about $82 million. NATIONSRENT INC: Banc One Says Ritchie Bros. 'Lacks Experience' --------------------------------------------------------------- Joseph C. Handlon, Esq., at Ashby & Geddes in Wilmington, Delaware, submits that Banc One does not object to NationsRent Inc.'s retention of Ritchie Bros. per se, but reserves its right to object to the appraised values that may be assigned by, or with the assistance of, Ritchie Bros. Upon information and belief, Ritchie Bros. is an auctioneer and is engaged in the business of auctioning equipment. Ritchie Bros. does not remarket construction equipment and, therefore, lacks the qualifications and experience necessary to properly appraise and assign fair market value to equipment like as those leased to the Debtors by Banc One. Mr. Handlon tells the Court that Banc One does not dispute Ritchie Bros.' experience and qualifications as one of the world's largest public auctioneers. However, it does not believe that Ritchie Bros. is qualified to properly assess and apply fair market values to the leased equipment. This is especially critical here, where the Debtors intend to extrapolate values from appraised equipment to a potentially large pool of equipment that will not be inspected or appraised. (NationsRent Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETWORK ACCESS: Brings-In Shook Hardy as FCC Regulatory Counsel --------------------------------------------------------------- Network Access Solutions Corporation and NASOP, Inc. seeks permission from the U.S. Bankruptcy Court for the District of Delaware to continue the retention of Shook Hardy & Bacon LLP as special FCC regulatory counsel. Shook Hardy specializes in, among other things, FCC and state public utility commission telecommunications regulatory matters. The Debtors wish to engage Shook Hardy to render the Debtors the needed consultation and advice regarding FCC and state public utility commission telecommunications regulatory policy. The Debtors propose that Shook Hardy will perform these and other services as they requested from time to time. Shook Hardy's involvement in the financial restructuring of the Debtors is expected to be minimal. Shook Hardy will not be dealing with the claims of any creditors with whom it may have connections, and, therefore, will not have any potential adverse interest on this matter. The Debtors submit that the continued employment of Shook Hardy is in the best interest of the Debtors' estates and creditors. It would be costly and ineffective for the Debtors to find new attorneys who are familiar with and educated about the complex telecommunications regulatory matters of the Debtors. The Debtors have been informed that the principals and associates of Shook Hardy who are most likely to be engaged in these chapter 11 cases are Rodney L. Joyce, J. Thomas Nolan, and Edgar Class. Within one year prior to the Commencement Date, Shook Hardy received from Debtor Network Access Solutions Corporation $185,414 in the aggregate for its pre-petition services and expenses. Of that amount, a total of $50,929 was paid to Shook Hardy on May 31 and June 3, 2002 and $23,492 of those payments was applied to pre-petition amounts owed Shook Hardy. The balance, $27,436, will be held by Shook Hardy as a retainer for post-petition work completed by Shook Hardy, subject to court approval. After application of the payments, the Debtors still owed Shook Hardy $15,710 for services rendered and expenses incurred prior to the Commencement Date, of which Shook Hardy agreed to waive. Network Access Solutions Corporation, provider of broadband network solutions and internet service to business customers, filed for chapter 11 protection on June 4, 2002. Bradford J. Sandler, Esq. at Adelman Lavine Gold and Levin, PC represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $58,221,000 in assets and $84,946,000 in debts. NEWPOWER HOLDINGS: Selling Gas Business to Southern Co. for $28M ---------------------------------------------------------------- NewPower Holdings, Inc. (PINK SHEETS: NWPW), parent of The New Power Company, has signed an asset purchase agreement with Southern Company (NYSE: SO) for the acquisition of NewPower's natural gas customers in Georgia and certain related assets. Southern Company has agreed to pay approximately $28 million or $131.00 for each customer contract. This amount includes the purchase of NewPower's customer care and billing systems. In addition, Southern Company has agreed to pay approximately $32 million for NewPower's Georgia natural gas inventory, accounts receivable and the right to use certain risk management systems. The transaction will be subject to Bankruptcy Court and regulatory approvals. NewPower plans filed Wednesday with the Bankruptcy Court requesting approval of its sales and bidding procedures in connection with its proposed asset sales. NewPower will file the Southern Company asset purchase agreement shortly, for the review and approval of the Bankruptcy Court under the proposed sales and bidding procedures. On June 11, 2002, NewPower announced that it had filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U. S. Bankruptcy Court for the Northern District of Georgia, Case Number 02-10835. NewPower Holdings, Inc. through The New Power Company, is the first national provider of electricity and natural gas to residential and small commercial customers in the United States. The Company offers consumers in restructured retail energy markets competitive energy prices, pricing choices, improved customer service and other innovative products, services and incentives. NORTEL NETWORKS: Will Deliver Voice Over IP to Compass Bank ----------------------------------------------------------- Compass Bank, one of the top 40 U.S. bank holding companies by asset size, has selected a voice over IP (Internet Protocol) solution from Nortel Networks (NYSE:NT)(TSX:NT.) to help the bank drive reduced costs, greater productivity and improved customer service. By implementing Nortel Networks Business Communications Manager at branch locations and IP-enabling Meridian 1 at the central office switch, BellSouth will enable Compass Bank to save annual costs by reducing the number of high-speed T1 lines at each branch. Additionally, Nortel Networks evolution philosophy will allow Compass Bank to use existing phones and voicemail systems, while allowing the bank to take advantage of the unification of voice and data networks inherent in voice over IP technology. "At Compass Bank, we emphasize our branch offices because that's where we have one-on-one communications with our customers," said Rick Nelson, vice president, group operations/telecommunications, Compass Bank. "We selected Nortel Networks Business Communications Manager because it is essential to have a system that operates at a 'five 9s' uptime in order to maximize that personalized customer service." BellSouth worked with Nortel Networks to design the Compass Bank network. BellSouth engineers will deploy BCM and continue to support it after implementation. BellSouth and Nortel Networks have a long-standing relationship, and BellSouth has completed thousands of successful BCM deployments. "BCM will connect each bank branch to its respective hub location for voice and data over the same T1, decreasing traffic into the corporate office and allowing Compass Bank to replace a T1 at each branch with just a few single phone lines for local calling and emergency 911," said Steve Schilling, president, enterprise accounts, Nortel Networks. "We can offer Compass the full voice feature set they are accustomed to using while they convert to voice over IP at their own pace, backed by BellSouth's expertise in implementing our products." Compass Bank is planning to maximize its previous technology investments with BCM deployment by leveraging it with the bank's existing, standardized voicemail platform, Nortel Networks CallPilot. This gives Compass Bank the opportunity to easily transition to complete unified messaging for all employees at each location without having hardware and software at each branch. CallPilot unified messaging enables employees to send and receive voicemail, e-mail and faxes from their personal computers. "After consulting with Compass Bank, BellSouth's experienced account team determined the voice over IP solution would provide a cost-effective means of meeting the bank's business objectives," said Brian Singleton, BellSouth's vice president and general manager for Georgia, Alabama, Louisiana and Mississippi. "BellSouth is committed to combining our industry- leading network services and equipment to provide integrated voice and data solutions that companies can rely on to meet increasing customer demands." Compass Bank is a subsidiary of Compass Bancshares, Inc., a Sunbelt-based financial holding company with US$23 billion in assets and over 340 full-service banking offices in Alabama, Arizona, Colorado, Florida, Nebraska, New Mexico and Texas. Compass is among the top 40 U.S. bank holding companies by asset size and ranks among the top earners of its size based on return on equity. The company's earnings per share have increased for 14 consecutive years and dividends per share have increased for 21 consecutive years. Shares of Compass' common stock are traded through the NASDAQ stock market under the symbol CBSS. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Metro and Enterprise Networks, Wireless Networks and Optical Long Haul Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com * * * As previously reported, Moody's has downgraded Nortel Networks' debt ratings to a low-B Level and its 2001-1 Certificates to Ba3. Meanwhile, Standard & Poor's lowered the company's Lease Pass-Through Certificates Rating to BB-. DebtTraders reports that Nortel Networks Ltd.'s 6.125% bonds due 2006 (NT06CAN1) are quoted at a price of 73.5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAN1for real-time bond pricing. OM GROUP: S&P Assigns BB Rating to Proposed $600MM Term Loan C -------------------------------------------------------------- Standard & Poor's assigned its double-'B' rating to OM Group Inc.'s proposed $600 million senior secured term loan C. At the same time, Standard & Poor's affirmed its double-'B' corporate credit and single-'B'-plus subordinated debt ratings on the specialty chemical and refined metal product provider. Proceeds from the term loan C will be used to repay term loan A and term loan B and reduce borrowings under the $325 million senior secured revolver. The outlook is stable. "This refinancing significantly improves availability under the company's revolving credit facility," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings reflect an average business risk profile derived from OM's position as a leading provider of metal-based specialty chemical and refined metal products, offset by an aggressive financial profile. Cleveland, Ohio-based OM has traditionally focused on the development and manufacture of value-added products derived from metal feedstocks, the most important of which are cobalt, nickel, and copper. OM's acquisition of Degussa Metals Catalysts Cerdec (dmc2) from Degussa for cash consideration of approximately $1.1 billion significantly broadened OM's range of product offerings and provided a complementary slate of metal-based specialty products and technology based on palladium, platinum, silver, gold, and rhodium. OM's sales are broadly distributed across Europe (56%), the Americas (25%), and Asia (19%). Generally favorable business prospects are supported by strong market positions in most product areas, solid growth in many product lines, and barriers to entry in the form of unique feedstock arrangements, processing capabilities, and technologically advanced products in specialty niches. Demand growth tends to be attractive, bolstered by new product introductions. In addition, OM's products typically are priced for their value content, thereby enabling the firm to preserve margins despite the underlying volatility of the base metal products. Despite a January 2002 common stock offering, OM remains aggressively leveraged with debt to EBITDA at roughly 4.0 times. However, management is committed to reducing debt, and accordingly, debt to EBITDA should approach the neighborhood of 3.5x near term, which is considered more appropriate for the current rating. The company's obligations under precious metal leases create additional risks, particularly if these financing arrangements cannot be extended. This risk is mitigated by several factors, including a commitment by Degussa to backstop these arrangements for one year, partially offsetting lease arrangements with OM's customers, and management's plan to reduce dependence on these facilities. Adequate financial flexibility is provided through availability of about $220 million (pro forma for term loan C) under the bank credit facility. The new term loan C is rated double-'B', the same as the corporate credit rating, based on preliminary terms and conditions. That term loan, which matures in 2007, as well as the existing revolving credit facility, are guaranteed by material domestic subsidiaries and are secured by a first- priority perfected lien on all domestic assets and the capital stock of the company's domestic subsidiaries, and 65% of the stock of foreign subsidiaries, which will likely provide some measure of protection to lenders. Solid business positions in diverse and growing product areas should promote sufficient profitability to meet management's objective to reduce financial risk over the intermediate term. ONI SYSTEMS: S&P Assigns B- Rating to Sub. Debt Assumed by Ciena ---------------------------------------------------------------- Standard & Poor's assigned its single-'B'-minus subordinated debt rating to Ciena Corp. (B+/Negative/--) to reflect the company's assumption of ONI Systems Inc.'s $250 million convertible subordinated debt issue, following the announcement that the merger between San Jose, California-based ONI and Ciena Corp. Linthicum, Maryland-based Ciena had received approval from shareholders of both companies. ONI's 'CCC' subordinated debt rating was removed from CreditWatch where it was placed on February 19, 2002, and was withdrawn, and the issue has been assumed by Ciena. The issue is now rated at Ciena's subordinated debt rating of 'B-'. Standard & Poor's also withdrew ONI's corporate credit rating. Ciena now has $1.1 billion of long-term debt outstanding. "Should business conditions not stabilize in the next few quarters, ratings on Ciena could be lowered," said Standard & Poor's credit analyst Emile Courtney. The ratings for Ciena, which provides optical transport systems used in telecommunications networks, continue to reflect a very narrow customer customer base, the challenges of rapid growth, substantial leverage and a high-capacity optical communications market in precipitous decline. OWENS CORNING: Enters Exclusive Marketing Agreement with Knauf -------------------------------------------------------------- Owens Corning, a world leader in building materials systems, announced the execution of an Agreement with Knauf Distribution SAS, under which Owens Corning will have exclusive marketing and sales rights of Knauf's Fibracoustic ceiling and wall product in North America. Conwed, an Owens Corning company, will begin marketing this product as Fibersorb Acoustic Ceilings and Walls immediately in North America. Fibersorb Acoustic Ceiling and Walls will be sold through Independent Manufacturer Representatives and will also be available to select distributors. This agreement combines Knauf's excellent production and manufacturing capabilities with Owens Corning's market access in North America and growing reputation as the acoustics leader. The Fibersorb products, constructed of random wood fibers and a rock-hard cement-like coating, are engineered for excellent acoustical and abuse resistance performance. The porous material effectively traps sound waves, while offering extreme durability to resist heavy and repeated impact. Fibersorb is available in many configurations and styles for both ceiling and wall applications. "The value of this agreement is that two companies with different expertise have come together to increase the marketing potential of this unique product," said Wayne Power, general manager, acoustics systems business. "This will also allow Owens Corning to continue to expand its presence in the growing acoustic market." "This agreement is especially important because we are able to create significant value for the North American building community by combining our individual strengths to introduce this very special product," said Thies Knauf, president, Knauf SAS. "In Europe the Knauf Fibracoustic product is recognized for its superior characteristics and Owens Corning's acoustic market access will ensure that this unique product is now available under the Fibersorb name to American designers and architects." (Owens Corning Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHILIPP BROTHERS: S&P Junks Credit Rating On Liquidity Concerns --------------------------------------------------------------- Standard & Poor's lowered its corporate credit rating on Philipp Brothers Chemicals Inc. to triple-'C'-plus from single-'B', citing significant deterioration in the company's liquidity. At the same time, Standard & Poor's also lowered its subordinated debt rating on the Fort Lee, New Jersey-based company to triple- 'C'-minus from triple-'C'-plus. The outlook is negative. Privately held Philipp Brothers is a manufacturer and marketer of a somewhat diverse line of specialty chemicals to a variety of industries, and has nearly $200 million of debt. Core product segments include agricultural and industrial chemicals, with products sold into a number of end markets, including animal nutrition and health, electronics, wood treatment, pharmaceutical, glass, construction, and concrete."The downgrade reflects substantially heightened concerns regarding the ability of the company to meet near-term financial commitments," said Standard & Poor's credit analyst Peter Kelly. The rating actions also reflect continued weakness in the company's end markets, which is likely to forestall any meaningful recovery in operating performance. Without significant improvement in the company's operational performance and cash flow generation, the company may not be able to service interest and current principal due in fiscal 2003. The company has indicated that it is considering asset divestitures and cost reduction programs to provide funds. A ratings default would occur if the firm does not make an interest or principal payment. Profitability and cash flow have been negatively impacted by lower selling prices across a number of key products, including the negative impact of foreign exchange; volume pressure in certain end markets, such as the printed circuit board industry; and higher selling, general, and administrative expenses. In addition, Philipp Brothers posted lackluster operating margins in recent years, in part reflecting manufacturing problems at ODDA Smelteverk A/S, a Norwegian company acquired in 1998. The acquisition of the medicated feed additives business of Pfizer Inc. in November 2000 significantly increased the company's sales base, and when combined with Philipp Brothers' existing animal nutrition and health business, created a leading global medicated feed additives company with expanded positions in the Americas, the Middle East, and Asia. However, the deal required a meaningful increase in debt. In addition, the acquisition was partially financed by a $45 million PIK preferred stock investment in Philipp Brothers by Palladium Equity Partners LLC, a New York, New York-based private investment firm, and included substantial contingent payments related to the performance of the acquired businesses. Ratings could be lowered further if the probability that the company will miss an interest or principal payment increases or if the likelihood of a default becomes more imminent. PRESIDENT CASINOS: Files for Chapter 11 Relief in Mississippi ------------------------------------------------------------- President Casinos, Inc. (OTC:PREZ) and its wholly owned subsidiary President Riverboat Casino-Missouri, Inc. have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Mississippi. The Company indicated that it will reorganize and has targeted emergence from Chapter 11 in 2003. The Company indicated its decision to seek judicial reorganization was primarily based upon the need to restructure the Company's debt obligations under its senior and secured notes and was accelerated by recent collection efforts initiated by its noteholders, including an action filed on June 18, 2002 to foreclose a mortgage on collateral securing a portion of the notes. The Company does not anticipate that any interim financing will be necessary to continue its operations during the reorganization period. The bankruptcy filing is not expected to have any significant negative impact on the Company's ability to continue its day-to-day gaming and other operations or to meet its payment obligations to its employees and vendors. John S. Aylsworth, President and Chief Operating Officer of the Company said, "We are committed and determined to complete our reorganization as quickly and smoothly as possible, while taking full advantage of this chance to reposition our Company to realize the full value inherent in our properties. Over the past several years the Company has undertaken a number of initiatives designed to reposition the Company and its debt obligations, including asset sales, cost reductions, improvements in operations, and discussions with the Company's noteholders to restructure the Company's debt. Unfortunately, in light of recent developments it has become apparent that this process can best be completed in a bankruptcy reorganization proceeding. We regret that the Company has to take this action to reorganize and any adverse effect today's action may have our employees, customers, vendors and shareholders. We believe that our Company can emerge from this process as a stronger, more flexible enterprise which is better positioned to take full advantage of the value of its businesses." President Casinos, Inc. owns and operates dockside gaming facilities in Biloxi, Mississippi and downtown St. Louis Missouri, north of the Gateway Arch. PSINET: Court Fixes July 26 Consulting/Knowledge Claims Bar Date ---------------------------------------------------------------- To ascertain the extent and scope of claims against the Debtors in the Consulting and/or Knowledge cases in a timely manner, Harrison J. Goldin, Chapter 11 Trustee for PSINet Consulting Solutions Holdings, Inc. and PSINet Consulting Solutions Knowledge Services, Inc., sought and obtained a Bar Date Order issued by the Court, pursuant to sections 105(a) of the Bankruptcy Code and Rules 3001-3005 of the Federal Rules of Bankruptcy Procedure. The Bar Date Order requires that, with certain exceptions, all persons and entities (Creditors) holding or wishing to assert pre-petition claims as defined in 11 U.S.C. Sec. 101(5) against the Debtors in the Consulting and/or Knowledge cases, that is, claims which arose prior to September 10, 2001 for Holdings, and prior to February 27, 2002 for Knowledge, are required to file a separate, completed and executed proof of claim, to be actually received with original signature at or before 5:00 p.m. Eastern Daylight Saving Time on July 26, 2002 at one of the following addresses: By regular mail: Clerk of the United States Bankruptcy Court Southern District of New York Re: PSINet Consulting Solutions Holding, Inc. and PSINet Consulting Solutions Knowledge Services, Inc. Claims Processing Bowling Green Station P.O. Box 5031 New York, New York 10274-5031 By hand or overnight mail: Clerk of the United States Bankruptcy Court Southern District of New York Re: PSINet Consulting Solutions Holding, Inc. and PSINet Consulting Solutions Knowledge Services, Inc. Claims Processing One Bowling Green, Room 534 New York, New York 10274-1408 A separate proof of claim must be filed against Holdings or Knowledge, depending upon which entity the claim is against. A proof of claim must be filed with original signature in the prescribed form, or otherwise in compliance with Official Form No. 10 of the Bankruptcy Rules, and must not be facsimiles. Proofs of claim and proofs of interest are not required to be filed (but may be filed) by Creditors or interest holders holding or wishing to assert Claims against or interests in the Debtors of the types below: (1) creditors who have previously-filed their proofs of claim in the prescribed form; (2) creditors who agree with the way the Debtors will schedule their claims; (3) administrative claims under sections 503(b) or 507(a) of the Bankruptcy Code; (4) claims previously allowed or paid pursuant to a Court order; (5) inter-company Claims; (6) claims based solely upon ownership of equity interest; (7) claims arising from rejection of executory contracts or unexpired leases must be filed on or before the later of (i) the Bar Date, or (ii) 30 days after the entry of an order or expiration of a time period fixed by the Bankruptcy Code or the Court; (8) claims for the principal and interest on the 2.94% Convertible Subordinated Notes due 2004, provided, however, that proofs of claim relating to such claims must be filed by the indenture trustee for each such series of bonds. Under the proposed Bar Date Order, any person or entity that is required to file a timely proof of claim in the form and manner specified by the Bar Date Order but does not: (i) will not, with respect to such claim, be entitled to vote on a proposed plan of reorganization or be entitled to receive any payment or distribution of property from the Debtors, or their successors and assigns, with respect to such claim; and (ii) will be forever barred from asserting such claim against the Debtors or their successors or assigns. The Trustee will mail by First Class United States mail, a copy of the Bar Date Notice within 14 business days after entry of the Bar Date Order dated June 12, 2002 to each known Creditor. The Trustee will cause notice of the bar date to be published once in the Wall Street Journal (national and international editions), the Houston Chronicle and the Minneapolis Star Tribune, by no later than 14 business days after entry of the Bar Date Order. (PSINet Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) RELIANCE GROUP: Resolves Some D&O Insurance Coverage Disputes ------------------------------------------------------------- Reliance Group Holdings, the Pennsylvania Liquidator, George E. Bello, Lowell Freiberg and Syndicate 1212 at Lloyd's of London bring a settlement pact before Judge Gonzalez for approval. The settlement resolves some issues raised in a lawsuit captioned George Bello, et al. v. Syndicate 1212 at Lloyd's of London, et al., Adversary Proceeding No. 01-03572 (AJG), concerning D&O insurance coverage. The insurance companies in Syndicate 1212 involved in the suit are: * Gulf Insurance Inc.; * International Underwriting Association of London; * CNA Reinsurance Company Limited; * Zurich Specialties London; * Zurich Reinsurance London; * X.L. Europe Reinsurance; * Federal Insurance Company; * London Insurance and Reinsurance Market Association; * Executive Risk Indemnity; * Liberty Mutual Insurance Company. The Underwriters dispute the payment of attorneys' fees and other costs under five insurance policies numbered FD9701593, FO1201D96, FO1307D97, FD9798178 and FD9900896 The policies insure RGH and affiliates and certain present and former officers and directors. The policies provide, among other things, insurance coverage against various categories of "Claims," including coverage for certain "Costs, Charges and Expenses" associated with defending against those claims. The "Assureds" under the terms of the policies are RGH, its affiliates (including RIC) and certain present and former directors and officers. As previously reported, the Liquidator filed in the Commonwealth Court of Pennsylvania an "Emergency Petition for Preservation of Insurance Policy Assets." The Insurance Policy Action seeks to declare that the policy proceeds are property of RIC. It also seeks to enjoin RGH, the Underwriters, certain officers and directors and others from advancing or paying certain claims on the policies. As a result of the Liquidator's position in the Insurance Policy Action, the Underwriters ceased paying attorneys' fees and other costs that were incurred by officers and directors of RGH and its affiliates. The Underwriters stated that to protect themselves from multiple liability, they would not make any payments under the Policies without approval of both the Commonwealth Court and this Court. George Bello and Lowell Freiberg, two of the insureds under the Policies, together commenced the Bello Adversary Proceeding against the Underwriters in this Court, on November 13, 2001. The Bello Adversary Proceeding seeks to require the Underwriters to pay the Bello Plaintiffs' "Costs, Charges and Expenses" covered under the Policies. On January 15, 2002, the Bello Plaintiffs filed a motion for summary judgment in the Bello Adversary Proceeding. The Underwriters have opposed the motion and have cross-moved to dismiss or stay the action. On March 5, 2002, the Liquidator was permitted to intervene in the Bello Adversary Proceeding for the limited purpose of seeking a stay of the proceeding. On March 18, 2002, the Liquidator filed a motion to stay the Bello Adversary Proceeding. The hearing on the motions has been adjourned, and the motions have not been decided. To avoid potentially unnecessary litigation in the Bello Adversary Proceeding, the Liquidator, the Bello Plaintiffs and the Underwriters, together with RGH, agreed on May 13, 2002, to an Agreement. Although RGH is not a party to the Bello Adversary Proceeding, RGH joined as a party to the Agreement because the Underwriters were concerned that RGH's rights could be affected. Under the terms of the Agreement, the "Costs, Charges and Expenses" of "Assureds" covered under the Policies will be paid as set forth in the Agreement, so long as the Liquidator and RGH are given notice of the request for payment as provided in the Agreement, and do not object within a 15-day period. The Bello Adversary Proceeding is to be held in abeyance during the term of the agreement. Each of the parties to the Agreement remains free to terminate the Agreement at any time and to resume the Bello Adversary Proceeding. By its terms, the Agreement does not become effective unless approved by this Court, the Commonwealth Court of Pennsylvania and all parties by June 27, 2002. If approval is not received under these conditions, the Agreement may be terminated. Rule 9019 of the Federal Rules of Bankruptcy Procedure provides that the Court may approve a compromise or settlement after notice and a hearing. In determining whether to approve a compromise or settlement, the Court can and should give significant weight to the informed judgment of the debtor and of counsel who has handled the relevant matter. See, e.g., In re Carla Leather, Inc., 44 B.R. 457 (Bankr. S.D.N.Y. 1984), aff'd, 50 B.R. 764 (S.D.N.Y. 1985); In re Texaco, Inc., 84 B.R. 893 (Bankr. S.D.N.Y. 1988). The purpose of the Court's inquiry is to determine whether the proposed compromise or settlement falls within the range of reasonableness. See In re Drexel Burnham Lambert Group Inc., 134 B.R. 493 (Bankr. S.D.N.Y. 1991). RGH submits that the Agreement, which effects a partial compromise and settlement of the issues in the Bello Adversary Proceeding, is reasonable and fair to RGH, its creditors and other interested parties. The Agreement, which is the product of arm's length negotiation, benefits RGH by, among other things, securing to it the right to receive notice and to object to requests for payment under the Policies. In exchange, under the Agreement, RGH is deemed to accede to the reasonableness or necessity of Costs, Charges or Expenses as defined in the Policies if it does not object during the 15-day period provided in the Agreement. RGH and its creditors will not be prejudiced, because RGH retains the right to object to payments under the Agreement during the 15-day period and has the right to terminate the Agreement at will at any time after the Agreement becomes effective. The Agreement does not change the terms of the underlying Policies or prejudice the rights of non-party Assureds. Joseph M. Smick, Esq., at Sedgwick, Detert, Moran & Arnold in New York represents the Underwriters in this matter. (Reliance Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) SNTL INC: Court Confirms Amended Plan of Reorganization ------------------------------------------------------- SNTL Corporation (Pink Sheets:SNLLQ) announced that the United States Bankruptcy Court confirmed SNTL's Plan of Reorganization (as amended) in a public hearing held in Los Angeles on June 18, 2002. The Plan and related Disclosure Statement may be accessed on the Securities and Exchange Commission web site at http://www.sec.gov under "Filings & Forms (EDGAR)," for Superior National Insurance Group, Inc. 2002 documents. The Bankruptcy Court's written order confirming the reorganization plan is expected to be issued Friday, June 21, 2002, and the Plan should become effective during July 2002. Exchanges of SNTL securities for SNTL Litigation Trust Certificates will begin as soon as practicable after the Plan becomes effective. J. Chris Seaman, SNTL's President and CEO, stated, "I am very pleased that the past two years of intensive planning and high- stakes litigation have culminated in the confirmation of SNTL's reorganization plan. This remarkable result was achieved through the dedication of SNTL's home office staff and the efforts of a truly outstanding corps of professional advisors. We are particularly grateful for the advice and support of Capital Z Financial Services Fund II, SNTL's largest stockholder, the principals of which thought first of protecting the interests of SNTL's creditors and worked tirelessly to see this plan through." SAFETY-KLEEN: Sues Inacom South East to Recoup $1.2MM Preference ---------------------------------------------------------------- Safety-Kleen Services, represented by Jeffrey C. Wisler of Connolly Bove Lodge & Hutz of Wilmington, brings suit against Inacom South East Area Inc. to avoid and recover transfers of money and property alleged to be preferential under the Bankruptcy Code. The Debtors say money and property was transferred to Inacom on dates in March, April and May, 2000, within 90 days of the Petition Date, in at least amounts totaling $1,216,718. These transfers were on account of an antecedent debt owed by one or more of the Debtors to Inacom, and the transferring Debtors were insolvent at the times of the transfers. As a result of these transfers, Inacom received more than it would have received if these cases were liquidating proceedings under chapter 7 of the Bankruptcy Code, the transfers had not been made, and Inacom received a distribution from the resulting bankruptcy estate. In the alternative, the Debtors say that Services received less than a reasonably equivalent value in exchange for the transfers, and was insolvent at the time of the transfers, or became insolvent as a result of the transfers. In either event, the Debtors want to recover the transfers and ask for judgment against Inacom in the amount of $1,216,718, plus pre- and post-judgment interest, and their costs. Further, the Debtors want Inacom's claims against these estates disallowed if Inacom refuses to return the transfers. (Safety- Kleen Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) SALIENT 3 COMMS: Brings-In KPMG Replacing Arthur Andersen --------------------------------------------------------- On June 10, 2002, Salient 3 Communications, Inc. dismissed Arthur Andersen LLP as the Company's independent public accountants and engaged KPMG LLP to serve as the Company's independent public accountants for fiscal 2002. The decision to change independent public accountants was recommended by the Audit Committee and approved by the Board of Directors of the Company. Salient 3, formerly known as Gilbert Associates, Salient 3 Communications dumped all non-communications units (such as real estate) to furnish equipment and services for network operators. Unsuccessful in its new strategy, Salient 3 is gradually liquidating. The company has sold all of its three main subsidiaries: Hubbell acquired industrial communications systems supplier GAI-Tronics; Agilent Technologies bought SAFCO Technologies, a provider of engineering services, measurement and analysis tools, and wireless network planning software; and XEL Communications, which designs network products, was sold to a company owned by XEL's president. SIX FLAGS: S&P Rates $1.05 Billion Facility Bank Loan at BB- ------------------------------------------------------------ Standard & Poor's assigned its double-'B'-minus bank loan rating to Six Flags Theme Parks Inc.'s $1.05 billion of senior secured credit facilities. Standard & Poor's said that at the same time it affirmed its existing ratings on the company and its parent, Six Flags Inc., including its double-'B'-minus corporate credit rating. The outlook remains stable. "The ratings on Six Flags Inc. reflect the company's good geographic and cash flow diversity, relatively stable operating performance, and Standard & Poor's expectation that interest coverage will improve modestly despite management's active acquisition orientation." said Standard & Poor's credit analyst Hal Diamond. The new credit facilities reduce near-term amortization requirements and extend bank debt maturities until 2008 and 2009. Six Flags, based in Oklahoma City, Oklahoma is the largest regional theme park operator and the second largest theme park company in the world. The company operates 38 parks, with 28 in the U.S., eight in Europe, one in Canada and one in Mexico. Total debt and preferred stock as of March 31, 2002, was $2.7 billion. Standard & Poor's said that it expects operating performance will remain relatively stable in 2002 because of a shift in consumer preferences for close-to-home entertainment alternatives. SOLUTIA INC: Weak Fin'l Profile Spurs S&P to Cut Rating to BB ------------------------------------------------------------- Standard & Poor's lowered its long-term corporate credit and bank loan ratings on Solutia Inc. to double-'B' from double-'B'- plus, citing slower-than-expected progress in improvement to the financial profile. In addition, Standard & Poor's assigned its double-'B'-minus rating to the company's proposed $250 million senior secured notes due 2009 and lowered its senior unsecured ratings to double-'B'-minus from double-'B'-plus. At the same time, Standard & Poor's withdrew its short-term corporate credit and commercial paper ratings on the specialty and industrial chemicals provider. All outstanding ratings have been placed on CreditWatch with negative implications. Solutia, based in St. Louis, Missouri, is a manufacturer and marketer of specialty and industrial chemical products, including nylon fibers and polymers, and has $1.2 billion of debt (excluding the capitalization of operating leases). "The rating actions reflect the increasing pressure on the company's liquidity and financial profile due to the continuing delays in addressing near-term refinancing needs," said Standard & Poor's credit analyst Peter Kelly. "The ratings on the proposed senior secured notes and the existing senior unsecured debt, both rated one notch below the corporate credit rating, reflect a disadvantaged position in the capital structure relative to other priority obligations," the analyst said. The proposed note issue is Solutia's first step in refinancing its $150 million notes due October 2002 and its bank credit facility, which matures in August 2002. However, Solutia is unlikely to complete the refinancing in the next few weeks, as originally expected, thereby increasing the pressure to complete this plan. The CreditWatch placement indicates that ratings could be lowered further if the refinancing is unsuccessful. Nevertheless, the ratings incorporate the expectation that the refinancing effort will be successful. If completed, the ratings will be affirmed and removed from CreditWatch. The company's financial profile has been weakened by the continuation of challenging industry fundamentals, an increase in liabilities and expenditures related to the company's PCB exposure, and slower-than-expected progress in the completion of asset sales. Profitability and cash flow have been constrained by a slowdown in the company's key end markets and unfavorable currency fluctuations. In addition, higher energy and raw material costs, despite recent improvement, reduced earnings over the past several quarters, with operating margins (before depreciation and amortization) of about 10%. Standard & Poor's recognizes the company's efforts to reduce costs and manage cash flow, recent earnings improvement, and the financial benefit from the sale of the company's interest in the AES joint venture. Ratings reflect Solutia's somewhat-better-than-average business risk profile, tempered by relatively sizable debt levels and significant long-term liabilities. Solutia was created as a spin-off of Monsanto Co.'s industrial chemicals businesses in 1997. The business risk assessment recognizes leading technology-based market positions, favorable cost structures supported by strong vertical integration, and adequate diversification in industrial and specialty chemicals. Major businesses include performance films (including plastic interlayer products), nylon fibers and polymers, and an array of specialty chemical products (augmented by acquisitions serving the attractive pharmaceuticals sector). Solutia's diverse product mix and good geographic reach (more than 30% of sales are made to non-U.S. customers), together with an ongoing emphasis on operating efficiency improvements, should support average operating margins in the mid-teens percentage area. Keen competitive conditions, however, limit pricing flexibility in fibers and some other markets. In addition, earnings are sensitive to volatility in oil- and natural gas- based raw material costs and contractions in such key end markets as automobiles and housing. TELEWEST COMMS: Informal Committee Nixes Liberty Tender Offer ------------------------------------------------------------- The informal Committee of the holders of notes issued by Telewest Communications PLC (NASDAQ:TWSTY) (LSE:TWT), representing over 50% of the notes subject to the tender offer launched last week by Liberty TWSTY Bonds, Inc., announced that they do not intend to participate in the Liberty tender offer. Members of the Committee consider that acceptance of the Liberty tender offer is not in their best interests. As stated in its press release of June 17, 2002, the Committee wishes to discuss with Liberty and Telewest its proposals for a restructuring. The Committee is also seeking disclosure by Liberty of details of the restructuring plan which Liberty has stated, in its tender offer, that it intends to propose to Telewest. The Committee has retained UBS Warburg LLC as its financial advisor and Cadwalader, Wickersham & Taft as its legal counsel. Bondholders wishing to participate in the Committee or to obtain information on its activities should contact Andrew Wilkinson or James Douglas at Cadwalader, Wickersham & Taft in London or Richard Nevins at Cadwalader, Wickersham & Taft in New York. DebtTraders says that Telewest Communications' 9.875% bonds due 2010 (TWT10GBN1) are quoted at a price of 45. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TWT10GBN1for real-time bond pricing. USEC: S&P Revises Outlook to Stable Over Resolved Uncertainties --------------------------------------------------------------- Standard & Poor's revised its outlook on uranium supplier USEC Inc. to stable from negative as recent uncertainties about the company's prospects have been resolved. Standard & Poor's said that at the same time it has affirmed its ratings on the Bethesda, Maryland-based company, including its double-'B' corporate credit rating. USEC had total debt of $500 million at March 31, 2002. USEC has announced the signing of a memorandum of understanding with the U.S. Department of Energy that provides for the clean- up of the portion of USEC's natural uranium inventory that was contaminated with technetium prior to USEC's privatization in 1998. USEC has also announced that the U.S. and Russian governments have approved new, market-based pricing terms for the remaining 12 years of the contract that allows USEC to buy enriched uranium from the Russian company Techsnabexport Co. Ltd. (Tenex). "Although profitability measures are expected to remain weak," said Standard & Poor's credit analyst Scott Sprinzen, "Standard & Poor's expects that these events will allow USEC's financial performance to be relatively stable over the next few years. USEC's large cash position, positive cash flow generation, and available bank credit afford adequate downside protection." Standard & Poor's said that its ratings on USEC Inc. continue to reflect USEC's position as the world's largest producer of enriched uranium. The company provides uranium enrichment services, a step in transforming natural uranium into fuel for nuclear reactors that produce electricity. The company has leading market shares in North America, as well as globally, but has little influence on prices. USG CORP: Seeks Approval to Hire Wollmuth Maher as N.J. Counsel --------------------------------------------------------------- Paul N. Heath, Esq., at Richards, Layton & Finger, tells Judge Newsome that the principal attorneys handling USG Corporation's business at Gibbons, Del Deo, Paul R. DeFilippo, Esq., Elizabeth Kardos, Esq., and Brendan P. Langendorfer, Esq., left that firm. As of May 6, 2002, Mr. DeFilippo joined Wollmuth Maher & Deutsch LLP as a partner, and Mr. Langendorfer joined the Firm shortly thereafter. The Debtors ask to substitute Wollmuth Maher for Gibbons, Del Deo as local New Jersey Counsel under the same terms as the retention of Gibbons, Del Deo. Mr. DeFilipo asserts in his affidavit that the members and associates of the Firm do not have any connections, or any interest adverse to the Debtors, their creditors, attorneys or any other party in interest. The Debtors have not paid Wollmuth Maher within the last year, nor did they owe the Firm anything on the Petition Date. * * * In response to the Debtors' Application to employ Wollmuth Maher, Karen A. Giannelli, Esq., at Gibbons, Del Deo, tells Judge Newsome that her firm has no objection to the Debtors' request. She asks, however that the order, when entered, be modified to reflect that her firm will incur and may be compensated for its services subsequent to May 7, 2002. This would include transition of Gibbons, Del Deo's files as well as "pending or future applications for compensation" to her firm for services rendered to the Debtors. (USG Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED STATIONERS: S&P Affirms BB Corporate Credit Rating --------------------------------------------------------- Standard & Poor's revised its outlook on United Stationers Supply Co. to positive from stable based on the company's ability to maintain credit protection measures and generate significant free cash flow. The double-'B' corporate credit rating on the company was also affirmed. Des Plaines, Illinois-based United Stationers has total rated debt of about $491 million. "United Stationers has maintained credit protection measures and generated significant free cash flow despite challenging operating conditions resulting from the weakened U.S. economy," Standard & Poor's credit analyst Patrick Jeffrey said. "We also believe the company will benefit from cost saving initiatives initiated in 2001, which could help improve credit protection measures and sustain free cash flow generation. The ratings could be raised over the next 12 months if these measures prove successful." Standard & Poor's said the ratings on United Stationers reflect its participation in the highly competitive wholesale segment of the office products industry, which is characterized by very thin margins. It said, however, this risk is mitigated, somewhat, by the company's very efficient distribution capabilities and leading market position. Lease-adjusted operating margins declined to 6.4% in 2001 from 6.8% in 2000 as the company's merchandise mix continued to shift to lower-margin computer consumable products. The expected cost savings related to the 2001 restructuring could help restore margins to historic levels of about 7% over the next three years. EBITDA coverage of interest expense measures about 5.0 times. Leverage has declined, with total debt to EBITDA measuring 2.2x at the end of fiscal 2001, compared with the 4.0x to 5.0x range in the mid-1990s (figures include the effect of certain off-balance-sheet financing activities, such as the accounts receivable securitization and operating leases). The company generated significant free cash flow of $150 million in 2001 through improved working capital management. Adequate liquidity is provided through a $250 million revolving credit facility and a $163 million accounts receivable securitization program. WEIRTON STEEL: Closes Exchange Offers for $300MM Debt Issues ------------------------------------------------------------ Weirton Steel Corporation announced the closing on June 18, 2002, of the exchange offers relating to a total of approximately $300 million of three issues of its publicly held long-term debt, thus concluding its year-long financial and operational restructuring plan in a difficult industry environment. The transactions served as part of a broader restructuring plan initiated by the Company in 2001 designed to lower its leverage, improve near-term liquidity, and obtain additional financial flexibility. Approximately 87% of all outstanding notes and bonds were exchanged into new secured notes and bonds and shares of non- dividend-paying preferred stock resulting in the reduction of approximately $115 million in indebtedness. The Company's annual cash interest obligation will be reduced by 84% from approximately $32 million to approximately $5 million per year through 2004. With the completion of its restructuring plan, the Company will now focus on fundamentally repositioning its business through strategic acquisitions and targeted investments in the tin mill and other higher margin value-added products. Weirton Steel is a major integrated producer of flat rolled carbon steel with principal product lines consisting of tin mill products and sheet products. The company is the second largest domestic producer of tin mill products with approximately 25% of the domestic market share. WELLCARE MANAGEMENT: Special Shareholders' Meeting on July 30 ------------------------------------------------------------- A special meeting of shareholders of The WellCare Management Group, Inc. will be held at WellCare's Florida corporate office, 6800 North Dale Mabry Hwy., Suite 268, Tampa, Florida 33614, on July 30, 2002 at 10:00 a.m., Eastern time, for the following purposes: 1. To adopt the Agreement and Plan of Merger among WellCare Acquisition Company, WellCare Merger Sub, Inc., and WellCare dated as of May 17, 2002, which provides for WellCare Merger Sub, Inc. to merge into WellCare; and 2. To transact such other business as may properly come before the meeting or any adjournment or postponement. In the merger, each issued and outstanding share of common stock and Class A common stock of WellCare (other than shares properly dissenting from the merger) will be converted into the right to receive approximately $.24 in cash. The calculation of the exact amount of cash to be received by WellCare shareholders as a result of the merger is described in the Company's proxy statement. Only shareholders of record at the close of business on June 24, 2002 will be entitled to notice of and to vote at the special meeting and any adjournment or postponement of the special meeting. WellCare Management Group, Inc. is a healthcare management company whose wholly owned subsidiaries, WellCare of New York, Inc. (WCNY) and FirstChoice HealthPlans of Connecticut, Inc., are health maintenance organizations (HMOs). The Company's primary focus is to strengthen and grow its governmental business (Medicare, Medicaid and Child Health Plus products). WCNY and FirstChoice provide comprehensive healthcare services to their members for a fixed monthly premium, plus a co-payment as applicable, by the member to the physician for each office visit, and a dispensing fee or co-payment to the pharmacy for each prescription filled. The basic benefits consist of physician care, inpatient and outpatient hospital services, emergency and preventive healthcare, laboratory and radiology services, ambulance services, eye care, physical and rehabilitative therapy services, chiropractic services, mental healthcare and alcohol and substance abuse counseling. WellCare's December 31, 2001 balance sheet shows a total shareholders' equity deficit of about $9.4 million. WESTERN INTEGRATED: Inks Pact to Sell Assets to SureWest Comms. --------------------------------------------------------------- SureWest Communications (NASDAQ:SURW), a provider of integrated communications services, has signed an Asset Purchase Agreement to acquire certain assets of Western Integrated Networks, LLC, which operates under the "WINfirst" name. WIN is a provider of high-speed voice, data and video services that is currently in Chapter 11 bankruptcy proceedings. The acquisition will allow SureWest to expand its provision of broadband services in the Sacramento, California marketplace. SureWest has agreed to pay $12 million for the assets, which will be acquired from WIN and a number of affiliated entities. On June 6, 2002, the Sacramento Metropolitan Cable Television Commission issued a license to SureWest in anticipation of a potential transaction involving the Company and WIN. The Asset Purchase Agreement and supporting documentation will be filed with the Bankruptcy Court within a few days to begin the process necessary for Court approval. Absent any overbid, closing of the transaction is expected to occur next month, after final approval of the Bankruptcy Court and the satisfaction of other closing requirements. Brian Strom, President and CEO of SureWest Communications, said, "Our strategic goal is to become the dominant integrated communications provider in the Sacramento region. If we are successful in completing the transaction, SureWest will enjoy the benefits of WIN's large capital investment that can be put to immediate use within the Sacramento region. "While SureWest believes there are great opportunities associated with the acquisition, there are challenges to completing the transaction. Closing requires the cooperative efforts of a great number of people including WIN's employees, suppliers and customers. If the transaction is consummated, SureWest will embark on a long-term program to leverage its fiber optic network architecture and service experience to bring broadband data, video and voice services to many more customers. If the transaction is completed, we will host a conference call and simultaneous webcast to discuss our operational plans," Strom said. Given the uncertainties of WIN operating under bankruptcy protection, both SureWest and WIN are working toward a rapid completion of the acquisition, and are requesting final Bankruptcy Court authority to complete the transaction by next month. Until the asset transfer is completed, the management of the operations, business affairs and staff of WIN will remain with WIN, subject, in certain instances, to the approval of or recommendations from the Creditors' Committee. SureWest Communications and its family of companies including Roseville Telephone Company, SureWest Wireless, SureWest Broadband, SureWest Internet, SureWest Directories, SureWest Long Distance and QuikNet, Inc., create value for customers and shareholders through an integrated network of highly reliable advanced communications products and services with unsurpassed customer care. The company's principal operating subsidiary, Roseville Telephone Company, is California's third largest telecommunications company, and has provided telecommunications services for nearly 90 years as the Incumbent Local Exchange Carrier (ILEC) to the communities of Roseville, Citrus Heights, Granite Bay, Antelope and parts of Rocklin. The company, through its Competitive Local Exchange Carrier (CLEC) and subsidiaries, is licensed to provide fiber optics, 39 GHz wireless, PCS wireless, DSL, high-speed Internet access and data transport. For more information, visit the SureWest Web site at http://www.surewest.com WORLDCOM: S&P Hatchets 4 Related Synthetic Transactions to B+ ------------------------------------------------------------- Standard & Poor's lowered its ratings on four synthetic securities related to WorldCom Inc. to single-'B'-plus from double-'B'. Additionally, the ratings remain on CreditWatch with negative implications, where they were placed on April 17, 2002. The lowered ratings reflect the June 17, 2002 downgrade of WorldCom Inc.'s long-term corporate credit and senior unsecured debt ratings. These synthetic securities are weak-linked to the underlying collateral, WorldCom Inc. debt. The lowered ratings reflect the credit quality of the underlying securities issued by WorldCom Inc. Ratings Lowered And Remain On Creditwatch Negative Corporate Backed Trust Certificates, Series 2001-17 Trust $25.00 million corporate-backed trust certs Rating Class To From A-1 B+/Watch Neg BB/Watch Neg PreferredPLUS Trust Series WCM-1 $80.703 million corporate bond-backed trust certs Rating To From Certs B+/Watch Neg BB/Watch Neg CorTS Trust For WorldCom Notes $57.156 million corporate-backed trust securities certs Rating To From Certs B+/Watch Neg BB/Watch Neg SATURNS Trust No. 2001-5 $26.023 million debenture-backed securities Rating To From Units B+/Watch Neg BB/Watch Neg *BOOK REVIEW: The Oil Business in Latin America: The Early Years ---------------------------------------------------------------- Author: John D. Wirth Ed. Publisher: Beard Books Softcover: 282 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/1587981033/internetbankrupt This book grew out of a 1981 meeting of the American Historical Society. It highlights the origin and evolution of the state- owned petroleum companies in Argentina, Mexico, Brazil, and Venezuela. Argentina was the first country ever to nationalize its petroleum industry, and soon it was the norm worldwide, with the notable exception of the United States. John Wirth calls this phenomenon "perhaps in our century the oldest and most celebrated of confrontations between powerful private entities and the state." The book consists of five case studies and a conclusion, as follows: * Jersey Standard and the Politics of Latin American Oil Production, 1911-30 (Jonathan C. Brown) * YPF: The Formative Years of Latin America's Pioneer State Oil Company, 1922-39 (Carl E. Solberg) * Setting the Brazilian Agenda, 1936-39 (John Wirth) * Pemex: The Trajectory of National Oil Policy (Esperanza Duran) * The Politics of Energy in Venezuela (Edwin Lieuwen) * The State Companies: A Public Policy Perspective (Alfred H. Saulniers) The authors assess the conditions at the time they were writing, and relate them back to the critical formative years for each of the companies under review. They also examine the four interconnecting roles of a state-run oil industry and distinguish them from those of a private company. First, is the entrepreneurial role of control, management, and exploitation of a nation's oil resources. Second, is production for the private industrial sector at attractive prices. Third, is the integration of plans for military, financial, and development programs into the overall industrial policy planning process. Finally, in some countries is the promotion of social development by subsidizing energy for consumers and by promoting the government's ideas of social and labor policy and labor relations. The author's approach is "conceptual and policy oriented rather than narrative," but they provide a fascinating look at the politics and development of the region. Mr. Brown provides a concise history of the early years of the Standard Oil group and the effects of its 1911 dissolution on its Latin American operations, as well as power struggles with competitors and governments that eventually nationalized most of its activities. Mr. Solberg covers the many years of internal conflict over oil policy in Argentina and YPF's lack of monopoly control over all sectors of the oil industry. Mr. Wirth describes the politics and individuals behind the privatization of Brazil's oil industry leading to the creation of Petrobras in 1953. Mr. Duran notes the wrangling between provinces and central government in the evolution of Pemex, and in other Latin American countries. Mr. Lieuwin discusses the mixed blessing that oil has proven for Venezuela., creating a lopsided economy dependent on the ups and downs of international markets. Mr. Saunders concludes that many of the then-current problems of the state oil companies were rooted in their early and checkered histories." Indeed, he says, "the problems of the past have endured not because the public petroleum companies behaved like the public enterprises they are; they have endured because governments, as public owners, have abdicated their responsibilities to the companies." Jonh D. Wirth is Gildred Professor of Latin American Studies at Standford University. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. 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 ***