T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 18, 2002, Vol. 6, No. 141 Headlines 360NETWORKS: Maintains Plan Filing Exclusivity Until Sept. 30 ANC RENTAL: Seeks Okay to Supplant 10-Year Contract with AT&T ADELPHIA COMMS: Continuing Prepetition Insurance Policies AMCAST INDUSTRIAL: Negotiates Credit Facilities' Restructuring AMERALIA INC: Shareholders Re-Elect Board of Directors AMERALIA INC: Wins Suit against Ex-Employee Marvin H. Hudson APPLE CAPITOL: Files Voluntary Chapter 11 Petition in Florida AQUA VIE BEVERAGE: Seeks Okay to Amend Articles of Incorporation BALANCED CARE: Preparing for Shareholder Vote on IPC Transaction BRIMINGHAM STEEL: Delaware Court Fixes August 12 Claims Bar Date BRIDGE INFORMATION: Resolves Claim Dispute with Hughes Network CD WAREHOUSE: Must Raise New Funds to Meet Current Obligations CENTRAL GARDEN: S&P Affirms BB- Corporate Credit Rating CHIVOR SA: Look for Schedules and Statements on October 21, 2002 COMDISCO: Secures Okay to Sell Certain Assets to CLIX Network CONTOUR ENERGY: Directors Conklin and Davidson Resign from Board CONTOUR ENERGY: Signs-Up Porter & Hedges as Bankruptcy Counsel COVANTA ENERGY: CIBC Asks Court to Enforce Final DIP Order DESA HOLDINGS: US Trustee Appoints Unsecured Creditors Committee ELCOM INT'L: Applying for Transfer to Nasdaq SmallCap Market ENRON CORP: Settles Turbine Purchase Dispute with Mitsubishi ENRON CORP: Asks Court to Reconsider Swidler Payment Order ETHYL CORP: S&P Withdraws B+ Corporate Credit Rating EXIDE TECH: U.S. Trustee Balks at Blackstone Engagement Terms EXODUS: Says Customers Not Affected by Latest Akamai Maneuver FAIRFIELD MANUFACTURING: S&P Withdraws B- Corporate Rating FEDERAL-MOGUL: Receives Rights to Market TRW Chassis Products FLAG TELECOM: Court Okays Arthur Andersen-UK as Accountants GLOBAL CROSSING: Turning to KPMG for Specific Tax Services GRAND COURT: Court to Consider Plan of Reorganization Today HARBISON-WALKER: Halliburton Stay Extended to September 18, 2002 IMP INC: Fiscal 2002 Revenues Plummet 25% to $23.4 Million INSCI CORP: Files Tardy & Unaudited Form 10-K with SEC ION NETWORKS: Deloitte & Touche Expresses Going Concern Doubt INTELLISEC: Auctioning-Off Ariz. & N. Carolina Units on July 30 JAGGED EDGE MOUNTAIN: Auditors Raise Going Concern Doubt KEY TRONIC: Obtains Waiver of Default Under Financing Agreement KMART: S&P Drops Credit Lease Series 1995-K3 & -K4 Ratings to D KMART CORP: S&P Drops Ratings on Series 1995-K1 & -K2 to D KMART FUNDING: S&P Gives Default Ratings on Series F & G Bonds KNOLOGY: Prepares Prepackaged Chapter 11 to Effect Debt Workout LTV CORP: Dofasco Inc. to Acquire Ohio Automotive Tubular Assets LAIDLAW INC: Expects to Release Fiscal 2001 Results by July 29 MALDEN MILLS: Maintains Plan Exclusivity through August 14 MOBILE SERVICES: S&P Assigns B+ Corporate Credit Rating NATIONAL STEEL: Wants to Retain MB Valuation as Appraiser NATIONSRENT: John Hancock Seeks Sanctions for Noncompliance NETWORK ACCESS: Committee Signing-Up Fox Rothschild as Counsel NEXTEL COMMS: Posts Improved Results for Second Quarter 2002 PANACO INC: Files for Chapter 11 Reorganization in Texas PANACO INC: Voluntary Chapter 11 Case Summary POPE & TALBOT: S&P Rates $50 Mill. Senior Unsecured Notes at BB PRESIDENT CASINOS: First Quarter Net Loss Slides-Up to $2.7MM PREVIO INC: Board Approves Plan of Liquidation and Dissolution PSINET INC: GECC Pressing for Adequate Protection Payments R&S TRUCK BODY: Gets Nod to Use Cash Collateral Until July 25 RESOURCE AMERICA: S&P Ups Corp. Credit & Sr. Unsec. Ratings to B SVI SOLUTIONS: Obtains Bank Loan Extension Until August 31, 2002 STARBAND COMMS: US Trustee Appoints Official Creditors Committee SUN HEALTHCARE: Obtains Final Decree Closing Subsidiary Cases THOMSON KERNAGHAN: Canadian Court Names Ernst & Young as Trustee TIMCO AVIATION: Completes Outstanding Senior Debt Refinancing TRI-UNION: S&P Junks $130MM Senior Notes Following Agreement U.S. CELLULAR: June 30 Working Capital Deficit Tops $7 Million VELOCITA INC: U.S. Trustee Names Creditors to Official Committee VISKASE: Executes Debt Workout Agreement with Ad Hoc Committee WILLIAMS COMM: Wants to Enjoin Claim Transfers to Preserve NOLs WILLIAMS CONTROLS: Inks New Credit Agreement with Wells Fargo WILLIAMS CONTROLS: Reaches Pact to Amend 7.5% Conv. Debentures WORLDCOM INC: Misses Payment of $74 Million Interest Due Monday WORLDCOM INC: Fitch Further Junks Senior Unsecured Debt Rating WORLDCOM INC: Suit Filed by Banks Transferred to Federal Court WORLDCOM: Where, Oh Where, Will WorldCom File for Bankruptcy? WORLDWIDE WIRELESS: Jury Awards 1st Universe $330,000 in Suit XO COMMS: Court Approves Ernst & Young for Accounting Services * Alvarez & Marsal Strategically Expands National Reach * DebtTraders' Real-Time Bond Pricing ********* 360NETWORKS: Maintains Plan Filing Exclusivity Until Sept. 30 ------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York awarded 360networks inc., and its debtor-affiliates an extension of their Exclusive Periods. The period within which the Debtors have the exclusive right to file a plan of reorganization is extended through September 30, 2002, and the Company's time to solicit and obtain acceptances of that plan is extended through November 30, 2002. ANC RENTAL: Seeks Okay to Supplant 10-Year Contract with AT&T ------------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to consider supplanting an existing ten-year contract for voice and data services between AT&T and ANC Rental Corporation with a more favorable three-year agreement. According to Mark J. Packel, Esq., at Blank Rome Comisky & McCauley LLP in Wilmington, Delaware, the implementation of the new agreement is part of the Debtors' plan of shrinking the communications vendor base to reduce the overall support costs and the management overhead associated with governing additional vendors and contracts. The old agreement expires in 2005 and requires AT&T to pay a minimum annual revenue commitment of $11,000,000 or 90% of the previous year's billings. The new agreement pegs ANC's commitment at $9,000,000 annually. Mr. Packel explains that the new agreement would place the Debtors on a more favorable keel because AT&T would be waiving all of its pre-petition claims against ANC. These include any claim for rejection damages, claims arising from the rejection of the Old Agreement, as well as any claim for any pre-petition amounts owing pursuant to the agreement. AT&T would also be adjusting ANC's minimum annual revenue commitment if the volume of traffic is reduced. ANC, meanwhile, will be required to subscribe to AT&T's telecommunications services for at least 95% of its inter-exchange telecommunications requirements. However, ANC shall not breach any contract existing as of the date that ANC orders services under the New Agreement and will not be prevented from obtaining from other inter-exchange carriers the same telecommunications services ANC requires at a specified location but are not available from AT&T. Mr. Packel estimates the annual cost of the New Agreement at $11,000,000 to $12,000,000, depending on ANC communications traffic and the projected annual savings of the New Agreement over the Old Agreement at $4,700,000. An additional $1,000,000 in savings is expected if the Alamo Local Communications traffic is transferred to the new agreement. Mr. Packel points out that the million dollar savings that the new agreement will provide the Debtors is sound enough to merit approval of a new agreement. Besides, entering into an agreement with AT&T as opposed to another service provider minimizes potential rejection damages claims and would prevent changes to over 10,000 communications lines and 200 web addresses. (ANC Rental Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMS: Continuing Prepetition Insurance Policies --------------------------------------------------------- Adelphia Communications sought and obtained authority to maintain all of its Insurance Policies, continue all prepetition insurance-related practices, and to pay all prepetition Insurance obligations, including premiums, fees and retroactive adjustments. According to Myron Trepper, Esq., at Willkie Farr & Gallagher in New York, the ACOM Debtors maintains certain property and liability insurance policies with respect to, inter alia, property, fire, general liability, products liability, automobile and physical damage, aircraft, boiler and machinery liability, earthquake, flood, foreign liability, excess liability, umbrella liability, media professional liability, fiduciary liability, and directors' and officers' liability. Mr. Trepper informs the Court that the Debtors' Insurance Policies are managed by several insurance brokers, including Wharton/ Lyon & Lyon and Aon Risk Services. In the ordinary course of the Debtors' business, when premiums are due, the Debtors will remit payment to the applicable insurance broker, who in turn will pay the applicable insurance carriers. To the extent a premium relating to a period prior to the Petition Date is outstanding with respect to any Insurance Policy, the Debtors seek the authority to make the payment. As most, if not all, premiums under the Insurance Policies are paid in advance, the Debtors estimate that no prepetition obligations, with the exception of periodic adjustments, will be outstanding on the Petition Date. ACOM's most substantial Insurance Policies are: A. General Liability And Automobile Policies: The Debtors maintain several liability and casualty policies with Royal Insurance Company. The Debtors pay premiums in respect of the Casualty Program in five 20% installment payments (each in the amount of $6,029,533) which are due to be paid on May 16, 2002, May 30, 2002, June 16, 2002, July 16, 2002 and August 16, 2002. Except for workers' compensation, a description of the most substantial policies included in the Casualty Program is set forth below: 1. General Liability: The Casualty Program includes a commercial general liability policy. The Policy insures the Debtors against personal and advertising injury, fire damage, employee benefits liability and medical expenses. The annual premium under the Policy is $5,894,427. 2. Automobile: In addition to the general liability Policy, the Casualty Program includes three automobile liability insurance policies with Royal Insurance Company. The Automobile Policies provide the Debtors with insurance coverage in all fifty states for bodily injury, property damage, collision and medical payments. Under the Automobile Policies, the Debtors pay aggregate annual premiums of $9,207,426. B. Property Insurance: The Debtors maintain a property insurance policy with Royal Indemnity Company, which provides the Debtors with insurance coverage for claims relating to, among other things, property damage. Under the Property Policy, the Debtors' aggregate annual premium is $2,112,218. On May 28, 2002, the Debtors paid the premium in respect of the Property Policy for the term commencing May 16, 2002 through May 16, 2003. Accordingly, except for any retroactive premium adjustments that may arise, the Debtors have satisfied all prepetition obligations associated with the Property Policy. C. Umbrella Policy: In addition to the foregoing policies, the Debtors maintain an umbrella policy with Liberty Mutual, which provides excess liability coverage. The $1,400,000 annual premium under this policy was paid by the Debtors on May 28, 2002. D. Difference In Conditions: In the ordinary course of their business, the Debtors maintain two difference in condition casualty policies to insure against, among other things, earthquakes and floods. One policy is with Essex Insurance Company and the other is with Lloyd's of London. The annual premiums for those policies were paid on May 28, 2002 and equal $185,000 and $103,400, respectively. Thus, other than retroactive adjustments that may arise, the Debtors do not owe any premiums with respect to these policies. E. Media Professional Liability: In addition to the foregoing policies, the Debtors maintain a media professional liability policy with Executive Risk Indemnity Inc., which insures against claims for invasion of privacy, copyright infringement, libel, slander, infliction of emotional distress, product disparagement, trade libel and trademark infringement. The Debtors prepaid the 3-year $97,674 premium under the Policy in November of 1999. Thus, subject to any retroactive adjustments that may arise, the Debtors do not owe any prepetition premiums under the MP Policy. F. Directors' And Officers' Liability Policies: The Debtors maintain a primary directors' and officers' liability policy with Associated Electric & Gas Insurance Services Limited (AEGIS). Under the D&O Policy, the Debtors have paid an aggregate annual premium of $650,000. As of the Petition Date, aside from any retroactive adjustments that may arise, the Debtors estimate that no amounts will be owing under the D&O Policy. In addition to the D&O Policy, the Debtors maintain two excess D&O policies. One policy is through the Federal Insurance Company and the annual premium required to be paid thereunder is $300,000. The other excess policy is with Greenwich Insurance Company and the annual premium required to be paid thereunder is $157,220. As of the Petition Date, aside from the need for retroactive adjustments, the Debtors do not owe any premiums under the Excess Policies. Mr. Trepper fears that if these policies were allowed to lapse, the Debtors would be exposed to substantial liability. In particular, maintenance of the directors' and officers' liability policies is necessary to retain the Debtors' senior management who are critical to the success of the Debtors' business and reorganization. The U.S. Trustee's Guidelines also require that the Debtors maintain the Insurance Policies. When compared with the size of the Debtors' estates and the potential liability exposure that would ensue absent insurance coverage, the amount of any premium adjustment that may be assessed militates strongly in favor of the relief requested. To the extent that any Insurance Policy or any other agreement, policy or contract is deemed an executory contract within the meaning of section 365 of the Bankruptcy Code, the Debtors do not at this time intend to assume them. "Court authorization of payments will not be deemed to constitute postpetition assumption or adoption of any Insurance Policy or any other agreement, policy or contract described herein as an executory contract pursuant to section 365 of the Bankruptcy Code," Mr. Trepper says. The Debtors will review the Insurance Policies and other agreements, policies or contracts described herein at a later date, and reserve all of their rights under the Bankruptcy Code with respect thereto. (Adelphia Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are quoted at 38 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1 for real-time bond pricing. AMCAST INDUSTRIAL: Negotiates Credit Facilities' Restructuring -------------------------------------------------------------- Amcast Industrial Corporation, (NYSE:AIZ) announced that the Company has successfully negotiated a restructuring of its credit facilities with its bank-lending group and senior note holders. As restructured, the bank credit facilities have been continued through September 14, 2003, and a required $12.5 million prepayment under the senior notes has been deferred until maturity in November 2003. Byron O. Pond, Chairman of the Board and Chief Executive Officer, said, "We are extremely pleased with the confidence and support expressed by our bank-lending group and senior note holders. The restructuring of our credit facilities is an important step in allowing the Company to continue implementing its world class initiatives and return to profitability." After restructuring, long-term debt at the end of the fiscal third quarter was $160.4 million. This reduced short-term debt to $25.4 million, or 13.7% of total obligations. Mr. Pond added, "I would like to reiterate our appreciation for the understanding and patience shown by Amcast's shareholders, customers, suppliers, lenders, and other stakeholders. Completing this important process permits a stronger focus on the operational improvements we envision for Amcast." Amcast Industrial Corporation is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels, and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy. AMERALIA INC: Shareholders Re-Elect Board of Directors ------------------------------------------------------ AmerAlia, Inc., held its annual meeting of shareholders on June 18, 2002. At the annual meeting the shareholders only considered the election of directors. At the meeting, the following seven persons were nominated as directors of AmerAlia for a term of one year and until the election and qualification of their successors. At the annual meeting of shareholders, 10,239,281 shares were represented in person or by proxy (being approximately 73.3% of the total number of shares outstanding), and Bill H. Gunn, Robert van Mourik, John F. Woolard, Neil E. Summerson, Robert A. Cameron, Geoffrey C. Murphy, and James V. Riley were each re-elected to the Board of Directors. As a result of their election and their service on the board of directors as of July 1, 2002, each of Neil E. Summerson, Robert A. Cameron, Geoffrey C. Murphy, and James V. Riley will receive options to acquire 37,500 shares of AmerAlia pursuant to its 2001 Directors' Incentive Plan which the shareholders had approved at the 2000 annual meeting held in June 2001. The options are exercisable pursuant to the terms of that plan at an exercise price equal to the average market price of the AmerAlia common stock during June 2002, and will be exercisable through June 30, 2005. The purpose of the Directors' Incentive Plan is to provide incentives to attract, retain and motivate persons whose present and potential contributions as members of the Board of AmerAlia, Inc. are important to AmerAlia's success and the success of its subsidiaries, by offering them an opportunity to participate in AmerAlia's future performance through awards of options. AmerAlia, through subsidiary Natural Soda, Inc., is developing a sodium bicarbonate deposit on 1,320 acres of federal land in Colorado's Piceance Creek Basin. The land, leased through 2011, is estimated to contain about 300 million tons of the mineral per square mile. AmerAlia has made a bid to acquire White River Nahcolite Minerals, which holds an adjoining lease covering more than 8,000 acres. Sodium bicarbonate (baking soda) is used in animal feed, food, and pharmaceuticals. Its production byproducts (soda ash and caustic soda) are used to make glass, detergents, and chemicals. At March 31, 2002, AmerAlia's balance sheet showed that its total current liabilities exceeded its total current assets by about $13 million. AMERALIA INC: Wins Suit against Ex-Employee Marvin H. Hudson ------------------------------------------------------------ In July 1999, AmerAlia filed a complaint against Mr. Hudson in the Colorado District Court for Arapahoe County, Colorado (civ. act. no. 99-CV-2207). As claims for relief against Marvin H. Hudson, a former officer and employee, AmerAlia alleged: * that an employment contract that Mr. Hudson alleged AmerAlia entered into with him were forgeries or procured by fraud or duress and, therefore, not enforceable; and * that Mr. Hudson had converted to his own use funds, documents, personal property, and equipment belonging to AmerAlia. In the State Action, AmerAlia sought damages and exemplary damages against Mr. Hudson, as well as an injunction and an accounting. Mr. Hudson sought to remove this action to the federal court, but the federal court remanded it back to the Arapahoe County District Court. In November 1999 the Arapahoe County District Court granted Mr. Hudson's motion to change venue of the State Action to El Paso County, Colorado where it was assigned case no. 99-CV-3050 in Division 5. In December 1999 Mr. Hudson filed an answer with counterclaims in the State Action in which he denied the material allegations of AmerAlia's complaint and alleged against AmerAlia: * "Breach of Contract" in which Mr. Hudson alleged that he had been employed by AmerAlia pursuant to an employment contract executed by Mr. Gunn in 1996 on behalf of AmerAlia which AmerAlia breached when it allegedly terminated Mr. Hudson's employment in June 1998. Mr. Hudson alleged that this employment contract provided for a salary of $80,000 per year, options to purchase 30,000 shares of common stock per year, and 200,000 stock appreciation rights; * damages for alleged "Willful and Wanton Breach of Contract" and "Wrongful Termination"; and * alleged violation of the Colorado Wage Claim Act (Section 8-4-101 et seq.) and common law fraud. Mr. Hudson also named Messrs. Gunn, van Mourik and Summerson individually and as officers and directors of AmerAlia although only AmerAlia and Mr. Gunn were served and were involved in this action. AmerAlia and Mr. Gunn replied to Mr. Hudson's counterclaims denying all of Mr. Hudson's material allegations. The action was transferred to the El Paso County (Colorado) district court. Trial was held on the matter from April 30 through May 10, 2002. Before submitting the case to the jury, the Court directed a verdict: * In favor of Bill Gunn by dismissing Mr. Hudson's claims for breach of contract, wrongful termination in violation of public policy, wage claim act, extreme and outrageous conduct, and defamation. * In favor of AmerAlia, by dismissing Mr. Hudson's claims against AmerAlia, the court (by directed verdict) dismissed Mr. Hudson's claims against AmerAlia for defamation, extreme and outrageous conduct, and under the Colorado wage claim act. Jury Verdict In its deliberations, the jury considered the remaining claims and reached conclusions on the claims against Hudson, AmerAlia and Mr. Gunn as follows: * In favor of Mr. Hudson by dismissing AmerAlia's claims against Mr. Hudson for conversion of AmerAlia's assets. * The only remaining claims against AmerAlia were for breach of contract, wrongful termination in violation of public policy, and common law fraud. - The jury found in favor of AmerAlia in the claim for wrongful termination in violation of public policy. - The jury found in favor of Mr. Hudson on the breach of contract claim and awarded damages to Mr. Hudson from AmerAlia in the amount of $322,900. There were two remaining claims: common law fraud against Mr. Gunn and common law fraud against AmerAlia. The jury would have only considered those claims had they found that there was no valid contract. Since the jury found that there was a valid contract, they did not need to consider the common law fraud claims. In conclusion, the jury assessed damages against AmerAlia for $322,900 because it found that the contract that Mr. Hudson presented was valid and AmerAlia had breached that contract. Following the jury's verdict, both parties filed certain post- trial motions in which the court denied Mr. Hudson's motion for attorneys' fees and accepted AmerAlia's calculation of interest. As a result, AmerAlia anticipates that the court will enter judgment for Mr. Hudson in an amount less than $400,000. Judgment has not yet been entered. After the entry of judgment, the parties have ten days to file post-trial motions if any party desires. These could include a motion for judgment notwithstanding the verdict, interest, attorneys' fees, reduction of the award, and other possible actions. Either party can appeal the judgment. Were AmerAlia to appeal the judgment, it would have to post a bond. AmerAlia has made no decision whether to appeal the judgment. AmerAlia, through subsidiary Natural Soda, Inc., is developing a sodium bicarbonate deposit on 1,320 acres of federal land in Colorado's Piceance Creek Basin. The land, leased through 2011, is estimated to contain about 300 million tons of the mineral per square mile. AmerAlia has made a bid to acquire White River Nahcolite Minerals, which holds an adjoining lease covering more than 8,000 acres. Sodium bicarbonate (baking soda) is used in animal feed, food, and pharmaceuticals. Its production byproducts (soda ash and caustic soda) are used to make glass, detergents, and chemicals. At March 31, 2002, AmerAlia's balance sheet showed that its total current liabilities exceeded its total current assets by about $13 million. APPLE CAPITOL: Files Voluntary Chapter 11 Petition in Florida ------------------------------------------------------------- Applebee's International, Inc. (Nasdaq: APPB), announced that it has reached an agreement with Apple Capitol Group, LLC, an existing Applebee's franchisee, to acquire the assets of 21 Applebee's restaurants located in the Washington, D.C. area for $32.8 million in cash at closing, subject to adjustment. The agreement also provides for additional payments if the restaurants achieve cash flow in excess of historical levels. The 21 restaurants are located in Maryland, Virginia, Delaware, Pennsylvania and West Virginia. Lloyd L. Hill, chairman and chief executive officer, said: "As we announced in May, part of our growth strategy is to use our strong balance sheet and substantial free cash flow for franchise acquisitions. We believe the territory in which the Apple Capitol restaurants are located will ultimately support a total of approximately 40 Applebee's restaurants. These restaurants are contiguous to the Virginia market that we acquired in 1998. Year-to date comparable sales for these restaurants are positive and average weekly sales are in excess of $41,000. We look forward to welcoming this team of associates to Applebee's International. The addition of these restaurants will complement and provide increased depth to our company operations and will bring our company ownership to approximately 24% of the system total." As a condition of this agreement, Apple Capitol has filed a voluntary Chapter 11 petition in the United States Bankruptcy Court for the Southern District of Florida. The acquisition of the restaurants is anticipated to close in the fourth quarter of 2002, subject to normal bankruptcy court bidding procedures, obtaining operating licenses and other third-party consents. Depending upon the ultimate closing date, the company expects the addition of these restaurants to have a neutral impact on fiscal year 2002 earnings and to be accretive to fiscal year 2003 earnings. Apple Capitol acquired these restaurants from Avado Brands, Inc. (formerly Apple South, Inc.) in May 1999 in the final transaction relating to that franchisee's exit from the Applebee's system. Applebee's International has been working in coordination with Apple Capitol and its lender for several months to facilitate the sale of these restaurants through a voluntary bankruptcy process. The agreement commits Apple Capitol to operate the restaurants in accordance with historical operating standards until they are sold. Upon completion of the sale, Apple Capitol will cease to be an Applebee's franchisee. Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill and Bar brand, the largest casual dining concept in the world. There are currently 1,427 Applebee's restaurants operating system-wide in 49 states and seven international countries. Additional information on Applebee's International can be found at the company's Web site http://www.applebees.com AQUA VIE BEVERAGE: Seeks Okay to Amend Articles of Incorporation ---------------------------------------------------------------- Under date of July 8, 2002, Aqua Vie Beverage Corporation has sent an Information Statement to its shareholders informing them of the following proposed actions by consent, which the Company is proposing to provide Management with flexibility to effect future financing for the Company. 1. Approve amendments to the Articles which would combine the common shares in the alternative as provided below, with the Directors to have the discretion as to which amendment to file, or whether to file any such amendment subject to the requirement that any such amendment to effect a combination must be made on or before April 30, 2003, after which this approval would be withdrawn and the amendment would not be considered approved by the shareholders: a. At the rate of one share of common for every 20 common shares outstanding at the time of the Board's action or, b. At the rate of one share of common for every 50 common shares outstanding at the time of the Board's action or, c. At the rate of one share of common for every 75 common shares outstanding at the time of the Board's action or, d. At the rate of one share of common for every 100 common shares outstanding at the time of the Board's action. e. At the rate of one share of common for every 1,000 common shares Outstanding at the time of the Board's action. The Company is not asking shareholders for a proxy and shareholders are being asked not to send a proxy. Aqua Vie Beverage Corporation develops and markets all-natural, lightly flavored, still (non-carbonated) bottled spring water. The company's low-calorie alternative beverages are bacteria- free and contain no preservatives. Aqua Vie produces and markets the Hydrator(TM) line of beverages in the United States and Europe. This beverage line, comprised of seven low-calorie, all- natural beverages that are lightly flavored and packaged in half-liter bottles, is designed to increase one's personal consumption of water, naturally. The underlying technology also serves as the delivery system for Aqua Vie's new line of children's Hydrators(TM), PurePlay(TM), and Eau Vin(TM), Aqua Vie's line of nonalcoholic wine and champagnes made from spring water. Aqua Vie Beverage's January 31, 2002, balance sheet shows a total shareholders' equity deficit of about $618,000. BALANCED CARE: Preparing for Shareholder Vote on IPC Transaction ---------------------------------------------------------------- Balanced Care Corporation will be sending the following to its stockholders: "A special meeting of the stockholders of Balanced Care Corporation will be held on August __, 2002, at _____, local time, at _______, to consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of May 15, 2002, by and among the Company, IPC Advisors S.a.r.l. ("IPC") and IPBC Acquisition Corp. ("Acquisition Corp."), under which Acquisition Corp. will be merged with and into the Company, with the Company surviving the merger as a subsidiary of IPC, and to approve the transactions it contemplates, including the merger. In the merger, each outstanding share of the Company's common stock, other than shares held by IPC or Acquisition Corp., or held by stockholders who perfect their appraisal rights under Delaware law, will be converted into the right to receive $0.25 in cash, without interest, less any applicable withholding taxes. Our board of directors has fixed the close of business on July 17, 2002, as the record date for determining which of our stockholders are entitled to notice of, and to vote at, the special meeting and at any adjournment or postponement thereof." The Company has not yet advised specifics about the date, time and place of the special meeting. The company operates about 65 assisted living and skilled nursing facilities for middle and upper income seniors in 10 states. Its Outlook Pointe assisted living facilities offer 24- hour personal and health care services, including help with bathing, eating, and dressing. The Balanced Gold program provides services aimed at improving residents' cognitive, emotional, and physical well-being. Like many assisted-living providers, Balanced Care is having trouble paying its rent, due in part to an increase in supply that grew faster than demand. A Luxembourg-based investment firm owns more than 50% of the company. According to its SEC filing, Balanced Care's March 31, 2002 balance sheet shows a total shareholders' equity deficit of about $22 million. BRIMINGHAM STEEL: Delaware Court Fixes August 12 Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware fixed August 12, 2002 as the Claims Bar Date for creditors of Birmingham Steel and its debtor affiliates to file their proofs of claim or be forever barred from asserting that claim. To be considered timely filed, all claims must be received by Bankruptcy Services LLC on or before 4:00 p.m. on August 12. Certain types of claims are excluded from the claim-filing deadline: a) claims that are not listed on the Debtors' Schedules of Liabilities as disputed, contingent or unliquidated; b) claims that are properly filed with the Clerk of the Court or BSI against the correct Debtor; c) claims that are allowable as an expense of administration in these cases; d) claims allowed by this Court arising from the rejection of an executory contract or unexpired lease; e) claims on account of common stock r other equity interest in the Debtors; and f) employees' claims for unpaid wages, salaries, commissions, severance or benefits. The Debtors will publish notice of the Bar Date in the national edition of The Wall Street Journal and The Birmingham News. Birmingham Steel Corporation manufacture and distribute steel. Without limitation, the Debtors produce steel reinforcing bar (rebar) for construction industry and merchant steel products for fabricators and distributors across North America. The Company filed for chapter 11 protection on June 3, 2002. James L. Patton, Esq., Michael R. Nestor, Esq., Sharon M Zieg, Esq. at Young Conaway Stargatt & Taylor, LLP and John Whittington, Esq., Patrick Darby, Esq., Lloyd C. Peeples III, Esq. at Bradley Arant Rose & White LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $487,485,834 in assets and $681,860,489 in total debts. BRIDGE INFORMATION: Resolves Claim Dispute with Hughes Network -------------------------------------------------------------- Scott Greenberg, Esq., at Sandberg, Phoenix & von Gontard, in St. Louis, Missouri, relates that Hughes Network Systems is a provider of broadband satellite network solutions for businesses and consumers. Bridge Information Systems, Inc., and its debtor- affiliates, and Hughes entered into a DirecPC Professional Services Data Network Agreement. Under the DirecPC Agreement, Mr. Greenberg states that Hughes agreed to provide the Debtors with satellite services and the Debtors agreed to pay for it. The Satellite Services included the delivery of stock ticker updates in a continuous multicast data stream to the Debtors' remote end-user clients and the Debtors' data center in St. Louis, Missouri. Mr. Greenberg tells the Court that despite Hughes' postpetition provision of Satellite Services under the DirecPC Agreement, the Debtors failed and refused to pay for the postpetition services rendered. "The Debtors owe Hughes a total of $701,406 plus interest, late charges, attorneys' fees and costs for postpetition Satellite Services provided," Mr. Greenberg says. Mr. Greenberg asserts that the administrative expense claim should be recognized as actual and necessary costs of preserving the Debtors' estate. "All postpetition Satellite Services provided for the Debtors and their estate benefited them by preserving the value of their estate, supporting efforts to sell and dispose of the assets of their estate in the context of a going concern and in generating postpetition accounts receivables," Mr. Greenberg points out. Settlement Agreement In order to resolve the dispute between Hughes and the Debtors, the Plan Administrator, Scott P. Peltz, and Hughes have agreed to a Settlement Agreement And Mutual Release. The salient terms of the agreement are: (i) the Plan Administrator will allow Hughes' $526,058 administrative expense claim without offset, defense or counter-claim, and the Plan Administrator will pay Hughes in immediately available funds on or before July 13, 2002; (ii) the Plan Administrator will allow Hughes' $2,040,643 unsecured claim without offset, defense or counter-claim, and the Plan Administrator will pay the unsecured claim according to the terms of the Second Amended Joint Plan of Liquidation; (iii) in consideration of the payment and the mutual covenants and agreements, Hughes releases and acquits the Debtors from all claims, demands, causes of action, obligations, expenses, costs, and liabilities, related to the DirecPC Agreement or the Motion; (iv) the Plan Administrator releases and acquits Hughes from all claims, demands, causes of action, obligations, expenses, costs, and liabilities, related to the DirecPC Agreement or the Motion; and (v) the parties agree to fully cooperate to effect the agreement and to execute all additional documents, and to undertake any additional actions that may be necessary in order to effectuate the terms, conditions and intent of this Agreement. (Bridge Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) CD WAREHOUSE: Must Raise New Funds to Meet Current Obligations -------------------------------------------------------------- Tuesday, CD Warehouse (OTC Bulletin Board: CDWI) issued a financial update. Two elements or forces have combined since November 2001 that threaten the longevity of the Company. First, the Company's lender, GE Capital Corporation, amended the loan agreement covenants and reappraised the Company's inventory. As a result of the covenant modifications and inventory reappraisal, borrowing availability under the loan was reduced by an aggregate of $1,000,000.00. Second, a number of the Company's franchisees have commenced legal proceedings seeking termination of their franchise agreements. In conjunction with these proceedings these franchisees have ceased making royalty payments. In addition, a number of franchisees are awaiting royalty payments pending resolution of this litigation. As of June 30, 2002 the unpaid royalties were $460,000.00. As of June 30, 2002, the Company did not have any borrowing availability under the loan. Furthermore, last week, an additional $175,000.00 was unexpectedly garnished in satisfaction of an outstanding judgment. The combination of these events has intensified the need for a substantial capital injection to meet the Company's current debts and obligations. The Company does not have any arrangements to obtain additional capital funding. Various financing alternatives are being pursued. However, there is no assurance that any capital funding will become available to the Company on a timely basis or on favorable terms. CD Warehouse, Inc. franchises and operates retail music stores in 35 states, the District of Columbia, England, Thailand, Guatemala, Canada and Venezuela under the names "CD Warehouse, "Disc Go Round", "CD Exchange" and "Music Trader". CD Warehouse stores buy, sell and trade pre-owned CDs, DVDs and games with their customers, as well as sell a full complement of new release CDs. Company information is available at http://www.cdwarehouse.com CENTRAL GARDEN: S&P Affirms BB- Corporate Credit Rating ------------------------------------------------------- Standard & Poor's revised its outlook on Central Garden & Pet Co., a manufacturer and distributor of lawn and garden and pet supply products, to stable from negative after the company's extension of its primary credit facility through July 2004 and its progress toward transitioning to higher-margin branded product sales from distribution sales. At the same time, Standard & Poor's affirmed its double-'B'- minus corporate credit rating. The Lafayette, California-based company had $293 million of debt outstanding as of March 30, 2002. "Since the termination of its distribution agreement with the Scotts Company, the company has increased its focus on branded name products. The transition has resulted in better operating performance and credit measures," said Standard & Poor's analyst Robert Lichtenstein. Operating margins for the 12 months ended March 30, 2002, rose to 9.9% from 7.0% in the comparable period of 2001, while EBITDA coverage of interest expense improved to 3.6 times, from 2.5x. Liquidity is provided by a $125 million revolving credit facility (which has been reduced from $200 million due to lower borrowing requirements) and $105 million of lines of credit through the company's subsidiaries. Although the company holds good market positions in certain product lines, competitors such as The Scotts Co. and The Hartz Mountain Corp. have much better brand name recognition than Central Garden & Pet. This is significant because customer choice is based on brand name recognition as well as quality, value, and price. Central's improved profitability and credit measures resulting from its progress toward transitioning to higher-margin brand product sales from distribution sales provide support for the rating. However, the company is challenged by the intense level of competition in the brand lawn, garden, and pet products businesses and is vulnerable to its seasonality. The outlook also considers acquisition risk as the company expands its brand product portfolio. CHIVOR SA: Look for Schedules and Statements on October 21, 2002 ---------------------------------------------------------------- Chivor S.A. E.S.P., sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to extend its time period to file comprehensive Schedules of Assets and Liabilities, and its Statements of Financial Affairs. The Court gives the Debtor until October 21, 2002 to file its Schedules and Statement and otherwise comply with 11 U.S.C. Sec. 521(1) and Rule 1007 of the Federal Rules of Bankruptcy Procedure. In the event that the Debtor's Prepackaged Plan is confirmed before October 21, 2002, the Court rules that the requirement to files Schedules and Statement will be waived permanently. The Debtor is a corporation (sociedad anonima) and public services enterprise organized and existing under the laws of the Republic of Colombia and is the fourth largest electric power generator in Colombia. The Company, which owns the third largest hydroelectric power generator station, located in east central Colombia filed for chapter 11 protection on July 6, 2002. Howard Seife, Esq., and N. Theodore Zink, Jr., Esq., at Chadbourne & Parke LLP represent the Debtor in its restructuring efforts. As of May 30, 2002, the Debtor listed $588,624,000 in assets and $349,376,000 in debts. COMDISCO: Secures Okay to Sell Certain Assets to CLIX Network ------------------------------------------------------------- Comdisco, Inc., and its debtor-affiliates obtained the Court's authority to sell their interest in certain assets to CLIX Network, Inc. Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, informed the Court that the Debtors entered into an agreement with Clickradio, Inc., wherein the Debtors: (i) lend Clickradio $3,000,000 in subordinated debt; and (ii) extend a credit line of $1,500,000 for equipment lease financing. The Debtors and CLIX Network entered into an agreement wherein the Debtors will sell to CLIX the assets for more than twice the amount of their credit bid. Ms. Perlman provides the salient terms of the agreement as: (i) the Purchase Price at the closing date for the assets would be equal to: (a) $1,980,000 by wire transfers of immediately available United States funds; plus (b) $500,000 in the form of 3-year subordinated, secured promissory note; plus (c) warrants exercisable for $500,000 of capital stock of CLIX. (ii) the proposed sale will include all of the Debtors' right, title and interest in the assets. (Comdisco Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONTOUR ENERGY: Directors Conklin and Davidson Resign from Board ---------------------------------------------------------------- Contour Energy Co., announced that its two outside directors, John J. Conklin, Jr., and Ralph P. Davidson, have tendered their resignations from the Company's Board of Directors. Prior to the two resignations, the Company's four member Board unanimously approved the resolution authorizing yesterday's filing of the Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code. The Company has been diligently working with the majority holders of both its senior secured notes and its senior subordinated notes to restructure and substantially reduce its debt load. The outcome of that effort is the Plan of Reorganization filed with the court yesterday. The Company has strived to negotiate a plan fair to all its stakeholders and hopes the bankruptcy process will proceed without major obstacles. Kenneth R. Sanders, President and CEO, commented, "We greatly appreciate Bud's and Ralph's unwavering support for management during this arduous process, and thank them for their many years of tireless dedication to serving the Company and its Board." The Company has eliminated the vacancies created by these two resignations and no longer has any outside directors. The Company does not expect any outside directors to be added to the Board at this time, and, as debtors and debtors in possession, will continue to manage and operate its assets and businesses subject to the supervision and orders of the bankruptcy court. Contour Energy Co., is engaged in the exploration, development, acquisition and production of natural gas and oil. Contour Energy Co., common stock is traded on the OTC Bulletin Board under the symbol CONC.OB. CONTOUR ENERGY: Signs-Up Porter & Hedges as Bankruptcy Counsel -------------------------------------------------------------- Contour Energy Co., and its debtor-affiliates ask the United States Bankruptcy Court Southern District of Texas to approve their retention of Porter & Hedges, LLP as Legal Counsel. John F. Higgins, Esq., will act as attorney in charge of Contour's chapter 11 cases. The Debtors first retained Porter & Hedges in April of 2001. Porter & Hedges has rendered legal services to Contour and its affiliates in connection with, among other things, general corporate matters, securities offerings and securities law filings, property acquisitions, contractual relationships, litigation, employment, ERISA and benefits matters, the restructuring of senior and subordinate debt, pending disputes with third parties, and general legal advice. The Debtors believe that Porter & Hedges' continued retention is in the best interests of the Debtors, their estates and creditors. Porter & Hedges is expected to: a) render legal advice with respect to Debtors' rights and duties as debtors in possession and continued business operations; b) assist, advise and represent the Debtors in analyzing Contour's capital structure, investigating the extent and validity of liens, cash collateral stipulations or contested matters; c) assist, advise and represent the Debtors in postpetition financing transactions; d) assist, advise and represent the Debtors in the formulation of a joint disclosure statement and plan of reorganization and to assist the Debtors in obtaining confirmation and consummation of a joint plan of reorganization; e) assist, advise and represent the Debtors in any manner relevant to preserving and protecting the Debtors' estates; f) investigate and prosecute preference, fraudulent transfer and other actions arising under the Debtors' bankruptcy avoiding powers; g) prepare on behalf of the Debtors all necessary applications, motions, answers, orders, reports, and other legal papers; h) appear in Court and to protect the interests of the Debtors before the Court; i) assist the Debtors in administrative matters; j) perform all other legal services for the Debtors which may be necessary and proper in these proceedings; k) assist, advise and represent the Debtors in any litigation matter; l) continue to assist and advise the Debtors in general corporate and other matters previously described in this Application; and m) provide other legal advice and services, as requested by the Debtors, from time to time. Porter & Hedges' customary hourly rates are: Partners $300 - $420 Associates/Staff Attorneys $180 - $230 Legal Assistants/Law Clerks $ 90 - $105 Contour Energy Co., a company engaged in the exploration, development acquisition and production of oil and natural gas, filed for chapter 11 protection on July 15, 2002. John F. Higgins, IV, Esq., and Porter & Hedges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $153,634,032 in assets and $272,097,004 in debts. COVANTA ENERGY: CIBC Asks Court to Enforce Final DIP Order ---------------------------------------------------------- Canadian Imperial Bank of Commerce is the agent for the Canadian Loss Sharing Lenders, all of whom are parties to the prepetition credit agreement titled, "Revolving Credit and Participation Agreement" dated March 14, 2001, among Covanta Energy Corporation, certain of its Subsidiaries, Bank of America, N.A., as administrative agent, co-arranger and co-book runner, and Deutsche Bank AG, New York Branch, as documentation agent, co- arranger and co-book runner. The parties also executed the Intercreditor Agreement. Kathrine A. McLendon, Esq., at Simpson Thatcher & Bartlett, in New York, relates that Prepetition Credit Agreement provides that: (a) the Revolving Lenders agreed to extend certain credit facilities to the Borrowers for the purpose of, among other things, providing financing for working capital and general corporate purposes, including the provision of letters of credit and the funding of permitted investments; (b) the Pooled Facility Lenders agreed to purchase participations in the credit exposures of each of the Pooled Facility Lenders under the Pooled Facilities; (c) the Pooled Facility Lenders and the Opt-Out Facility Lenders agreed to cause the maturities of each of the Facilities to occur on may 31, 2002; (d) the Lenders agreed to adopt certain common covenants under the Pooled Facilities and the Opt-Out Facilities; and (e) an intercreditor arrangement would be established among the various groups of Lenders. Pursuant to the terms of the Intercreditor Agreement, on April 29, 2002, Canadian Imperial sent a loss sharing payment notice to the Collateral Agent, directing them to take into account, inter alia, the conversion of the Designated Letters of Credit to Tranche B Letters of Credit in calculating the Repayment Shortfall. The Loss Sharing Payment Notice also directed the Collateral Agent to calculate the Repayment Shortfall as of the date of the Final DIP Order was entered by the Court. Mr. McLendon recalls that under the Final DIP Order, the Tranche C Facility provides the funding mechanism for the loss sharing arrangements among the lenders under the Intercreditor Agreement. The Final DIP Order also provides that all obligations under the Tranche C Facility are Prepetition Secured Obligations owing to the Prepetition Lenders and have the same priority as the reimbursement obligation in respect to the loss sharing payments required to be made under the Intercreditor Agreement. Accordingly, Canadian Imperial asks the Court to: (a) enforce and interpret the provisions of the Final DIP Order that the roll-up and conversion of the Designated Letters of Credit under the Prepetition Credit Agreement to Tranche B Letters of Credit under the DIP Agreement constitute a reduction in the unfunded exposure of the Pooled Facility Lenders under the Pooled Facilities by the same amount and thus entitle the Canadian Loss Sharing Lenders to a loss sharing payment based on the roll-up and conversion in accordance with the formula provided in the Intercreditor Agreement; and (b) confirm that the resulting amount of the Tranche C Loan to the Debtors is the same as the amount of the loss sharing payment to the Canadian Loss Sharing Lenders in respect thereof. Mr. McLendon states that confirmation of the treatment of the Designated Letters of Credit as rolled-up Tranche B Letters of Credit, with rights and priorities not shared by the prepetition letters of credit is necessary to initiate the process that will result in the calculation of the Tranche C Loans owed by the Debtors. "For the amount of the Tranche C Loans to be made to the Debtors under the DIP Agreement to be quantified, the correct amount of the loss sharing payment to the Canadian Loss Sharing Lenders under the Intercreditor Agreement must first be determined," Mr. McLendon says. Moreover, Mr. McLendon adds, determining the correct amount of the Tranche C Loans is consistent with the establishment of an early bar date to formulate a Plan and commence negotiations with their constituencies. Mr. McLendon explains that the roll-up of the Designated Letters of Credit under the Prepetition Credit Agreement to Tranche B Letters of Credit under the DIP Agreement caused a reduction in the unfunded exposure of the Pooled Facility Lenders under the Pooled Facilities. Accordingly, the converted Tranche B Letters of Credit: (a) give rise to the right to a loss sharing payment in favor of the Canadian Loss Sharing Lenders based upon the corresponding reduction in exposure of the Pooled Facility Lenders, and (b) result in the creation of a Tranche C Loan to the Debtors in the same amount. "The Collateral Agent has advanced an interpretation of the Tranche B Facility that is antithetical to what the DIP Agreement, the Interim Order and the Final Order unequivocally provide," Mr. McLendon reports. The Collateral Agent asserts that the Tranche B Letters of Credit are mere continuations of the prepetition letters of credit while the DIP Agreement and the Final DIP Order describe the prepetition letters of credit as terminated and converted to letters of credit having the benefits of postpetition liens and claims. Mr. McLendon believes that the Collateral Agent's position is prejudicial to the rights of the Canadian Loss Sharing Lenders under the Intercreditor Agreement and the Prepetition Credit Agreement. Mr. McLendon adds that the Debtors are also prejudiced because the amount of the Tranche C Loans cannot be accurately quantified if the loss sharing payment the Canadian Loss Sharing Lenders do not properly give effect to the bargained-for rights of all the parties. (Covanta Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392- 0900) DESA HOLDINGS: US Trustee Appoints Unsecured Creditors Committee ---------------------------------------------------------------- The United States Trustee appoints a 5-member Official Unsecured Creditors Committee in DESA Holdings Corp.'s chapter 11 cases. The creditors appointed to the Committee are: 1. HSBC Bank 10 E. 40th Street, 14th Floor New York, NY 10016 Attn: Russ Paladino Tel: 212-525-1324, Fax: 212-525-1366; 2. Barclays Bank PLC/Barclay Capital, Inc. 222 Broadway, New York, NY 10038 Attn: Jason Koh Tel: 212-412-2653, Fax: 212-412-1706; 3. HYI Investments, LLC 2 N. Riverside Plaza, Suite 600 Chicago, IL 60606 Attn: Marc D. Hauser Tel: 312-466-3556, Fax: 312-454-0335; 4. Shinn Fu Company of America, Inc. 10939 N. Pomona Avenue Kansas City, MO 64153 Attn: Stephen B. Sutton, Esq. Lathrop & Gage Tel: 816-460-5526, Fax: 816-292-2001; and 5. SIT USA 8100 G Arrowridge Blvd. Charlotte, NC 28273 Attn: Rudy Lee Blank Tel: 704-522-6325, Fax: 704-522-7945. 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. ELCOM INT'L: Applying for Transfer to Nasdaq SmallCap Market ------------------------------------------------------------ Elcom International, Inc. (Nasdaq: ELCO), a leading international provider of remotely-hosted eProcurement Marketplace solutions, intends to apply to transfer its current stock listing from the Nasdaq National Market to the Nasdaq SmallCap Market. Under the procedures to apply for such transfer, Elcom has until August 12, 2002 to initiate such request and will have approximately three months thereafter to meet the minimum listing requirements. Elcom has decided that it is in its best interest to apply for this transfer. Robert J. Crowell, Elcom International's Chairman and CEO, stated, "We have reduced our expenses and cash outlays significantly, and even with no revenues from any new clients, we can now expect to fund our operations through 2002 without a capital infusion. During this time, the Company believes it will be better served by extending its participation in Nasdaq by applying to transfer its public listing to the Nasdaq's SmallCap Market." Mr. Crowell further stated, "I believe that Elcom is better positioned for a strategic partner/investor now than it was three or four months ago and I am confident that the revenues and cash flow from our existing client base, which is expected to exceed $5 million this year, creates a basic value foundation for the Company. We are currently in discussions with multiple potential strategic partners and/or investors and although the economic environment is difficult, our prospective sales pipeline is significant and can only be accelerated by a capital infusion." The Company's common stock currently trades on the Nasdaq National Market. The closing bid price of the Company's common stock has been below $1.00 per share since April 1, 2002, and on May 14, 2002, the Company received notice from Nasdaq that, for continued listing on the Nasdaq National Market, the Company is required to comply with the $1.00 minimum bid requirement for ten consecutive trading days by August 12, 2002 or be subject to delisting from the Nasdaq National Market. Alternatively, the Company may apply to transfer its common stock to the Nasdaq SmallCap Market, assuming approval of its transfer application to the SmallCap Market. The Company believes that it currently meets all of the listing requirements of the Nasdaq SmallCap Market, with the exception of the $1.00 minimum bid price requirement. If the Company's stock listing is transitioned to the Nasdaq SmallCap Market, the Company will have 180 calendar days from May 14, 2002 to satisfy the minimum bid requirement for ten consecutive trading days. For detailed information on elcom's PECOS(TM) technology and optional Dynamic Trading functionality, please visit its Web site at http://www.elcominternational.com/products.htm Elcom International, Inc. (Nasdaq: ELCO), operates two wholly- owned subsidiaries: elcom, inc., a leading international provider of remotely-hosted eProcurement and Private eMarketplace solutions and Elcom Services Group, Inc., which is managing the transition of the recent sale of certain of its assets and customer base. elcom, inc.'s innovative remotely- hosted technology establishes the next standard of value and enables enterprises of all sizes to realize the many benefits of eProcurement without the burden of significant infrastructure investment and ongoing content and system management. PECOS Internet Procurement Manager, elcom, inc.'s remotely-hosted eProcurement and eMarketplace enabling platform was the first "live" remotely-hosted eProcurement system in the world. Additional information can be found at http://www.elcominternational.com ENRON CORP: Settles Turbine Purchase Dispute with Mitsubishi ------------------------------------------------------------ Enron Brazil Power Holding XVIII Ltd., a Cayman corporation is an indirect wholly owned subsidiary of Enron Corporation. It is not a debtor in these cases. In December 2000, Enron Brazil entered into an Amended and Restated Purchase Agreement with Mitsubishi Heavy Industries Ltd., a Japanese corporation for the purchase of two M501F gas turbines and associated auxiliaries. At the same time, Martin A. Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, tells the Court, Enron Brazil and Mitsubishi also entered into a second Amended and Restated Purchase Agreement for the purchase of two additional M501F gas turbines and associated auxiliaries. Mr. Sosland relates that Enron Brazil was identified as the purchaser of the Units and was responsible to Mitsubishi for purposes of performing all obligations. However, Mr. Sosland notes that each Purchase Agreement referred to an unidentified entity as the "Owner" to mean the special purpose project company that was to own the power station(s) in which the Units were to be installed. According to Mr. Sosland, the "Owners" referred to in the Purchase Agreements are Enron Brazil Turbines I Ltd. for Units 1 & 2, and Enron Brazil Turbines II Ltd. for Units 3 & 4. Mr. Sosland explains that Turbines I and Turbines II are off-balance sheet vehicles wholly owned by Enron Brazilian Power Development Trust, a Delaware business trust indirectly owned by certain third-party investors unaffiliated with Enron. Enron Brazil secured financing of its turbine purchases through an Amended and Restated Credit Agreement dated December 20, 2000 among the Owner Trust, Westdeutsche Landesbank Girozentrale, New York Branch, as lender agent, and various lenders. "In addition to liens against Enron Brazil's interest in the Units and in the Purchase Agreements, the Lenders are cross- collateralized by certain power development projects in South America in which other Enron-related non-debtor entities have interests," Mr. Sosland says. The non-debtor Enron-affiliated entities' obligations under the Related Projects are supported by Enron guarantees. Mr. Sosland points out that the Related Projects are currently financially viable, and represent a valuable ongoing asset of certain affiliates of the Debtors. All components of Units 1 & 2 delivered prior to December 2, 2001 have been physically delivered to Westdeutsche on behalf of the Lenders, as a result of Enron's Chapter 11 petition and default under the Credit Agreement. To secure the performance of Enron Brazil's obligations under the Units 1 & 2 Purchase Agreement and the Units 3 & 4 Purchase Agreement, Enron executed two Parent Guarantees in favor of Mitsubishi. Pursuant to the Units 1 & 2 Purchase Agreement, Enron Brazil has paid $59,472,288 prior to the Petition Date, with a $20,000,312 balance remaining. On the other hand, Enron Brazil has paid $27,048,320, with a remaining balance of $45,474,720. As a special purpose vehicle, Mr. Sosland says, Enron Brazil has relied entirely on the Lenders' funding to make the payments. When Enron filed for bankruptcy, Mitsubishi sought assurances of payment from Enron Brazil for the remaining balances. But Enron Brazil never did. As a result, Mitsubishi sent a notice of cancellation of the Purchase Agreements on January 16, 2002 to Enron Brazil. Now, Enron, Mitsubishi, Enron Brazil, Westdeutsche, the Lenders and certain other related parties wish to bury the hatchet by entering into a Settlement Agreement. The principal terms of the Settlement Agreement are: a. Promptly after the Effective Date, the Lenders shall pay Mitsubishi $6,000,000 which will be applied against the remaining purchase price for Units 1 & 2; b. The parties will acknowledge that the Purchase Agreements were validly cancelled pursuant to Mitsubishi's notice of cancellation; c. Mitsubishi shall deliver the remaining components of Units 1 & 2 to Turbines I; d. Mitsubishi shall credit from amounts previously paid under the Units 3 & 4 Agreement, the sum of $14,000,312 as payment for the balance of the purchase price owing under the Units 1 & 2 Agreement; e. Turbines I and Mitsubishi shall enter into a Turbines Purchase Agreement (Units 1 & 2) and a Spare Parts Supply Agreement relating to Units 1 & 2, covering all prospective obligations, rights and performances with respect to Units 1 & 2; f. Mitsubishi shall retain all payments made with respect to Units 3 & 4, which have not been otherwise applied to Units 1 & 2, and shall retain all work in progress (including any completed component parts) with respect to Units 3 & 4, without further claim from any party to the Settlement Agreement; g. The Parent Guarantees shall be terminated; h. Mitsubishi will have a right to a sliding sales commission to the extent it assists in marketing Units 1 & 2; and i. All parties will grant mutual releases in favor of the other parties to the Settlement Agreement. Mr. Sosland notes that the Settlement Agreement will extinguish any obligations related to the Parent Guarantees, thereby benefiting Enron's estate and its creditors. "Due to certain cross-collateralization rights of the Lenders against the Related Projects, the Settlement Agreement will also indirectly benefit the non-debtor affiliates of Enron having an interest in the Related Projects," Mr. Sosland adds. By this Motion, the Debtors ask the Court for an order pursuant to Bankruptcy Rule 9019 approving the Settlement Agreement. The Debtors further ask the Court to determine that: (i) the Additional Payment shall be deemed made for value received under the Settlement Agreement and not as a payment on account of antecedent debt; (ii) the payments and all other consideration received and to be received by Mitsubishi under the Settlement Agreement shall be deemed received for fair consideration and reasonably equivalent value; (iii) in the event of a sale or other disposition of Units 1 or 2, Turbines I shall be authorized to distribute and shall distribute any sale proceeds up to and including $6,000,000 to Westdeutsche and the Lenders upon the closing of any sale or disposition, as reimbursement for the Additional Payment made by the Lenders; and (iv) the entry of an order is without prejudice to the right of Westdeutsche and the Lenders to demand immediate payment of any and all proceeds from the sale or other disposition of Units 1 or 2. (Enron Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders says, are trading around 11.5. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 ENRON CORP: Asks Court to Reconsider Swidler Payment Order ---------------------------------------------------------- Enron Corporation, and its debtor-affiliates contend that reconsideration of the Order denying payment for Swidler's representation of the Debtors' present and former employees in connection with the Enron Corp.'s Examiner's investigation and court-ordered civil discovery is warranted. Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in New York, asserts that the Order created a negative impact. For example, Mr. Bienenstock notes, the Examiner has expressed concern that Swidler's absence will terminate his ability to have informal discovery, will compel a compulsory process, and will increase the cost and expense of his investigation. According to Mr. Bienenstock, the examiner's investigation implicates the same concerns as the governmental investigations. "Any witness, including one who has not committed and is not accused of wrongdoing, needs counsel in a governmental investigation," Mr. Bienenstock says. Indeed, Mr. Bienenstock believes that a witness who speaks to an investigator without counsel present is at a greater risk of being charged with false statements, perjury, or obstruction of justice, even if innocent of these or any other crimes and substantive wrongdoings. Mr. Bienenstock illustrates that a simple, innocent mistake, like forgetting a detail or recalling something incorrectly, can lead to a charge. Even if an investigator ultimately decides not to charge a witness with obstruction, perjury, or false statement, Mr. Bienenstock says, the mere possibility that it could investigate that witness to consider a charge, which happens with some frequency, is reason enough for innocent witnesses to proceed with caution. Mr. Bienenstock points out that the government has made abundantly clear through its prosecution of Arthur Andersen that it takes obstruction of justice and related crimes seriously. Mr. Bienenstock emphasizes that representation by counsel can protect a witness against the danger of being charged with any wrongdoing. Mr. Bienenstock explains that counsel can properly prepare a witness to speak in interviews or investigations. For example: (a) counsel can review relevant documents and help the witness refresh his or her recollection; (b) counsel can force the witness to think about transactions and events in the context of applicable legal issues and statements made by others, thereby helping to focus the witness and facilitate accurate, detailed, comprehensive, comprehensible, and relevant responses to the investigator's questions; (c) counsel can advise a witness not to speculate, which is often misinterpreted, and can lead investigators to consider false statement, perjury, or obstruction charges. Furthermore, Mr. Bienenstock continues, the presence of counsel at an interview with an investigator can: (1) protect a witness against misinterpretations, (2) clarify speculation versus fact, (3) provide yet another written record of the interview (especially if not transcribed or under oath), (4) clarify often confusing questions, and (5) identify and prompt the correcting of misstatements. Mr. Bienenstock adds that counsel can help promote the candid and accurate provision of information by the witness by alleviating the witness's concerns about the potential ramifications of discussing these topics with the investigators or of being incorrect and by ensuring that the witness's statements are adequately explained and understood in context. Mr. Bienenstock observes that these issues have been at the forefront of U.S. current events. "Innocent, mere witnesses in this case have been confronted, for months, with clear indications that anyone associated with Enron will be subjected by investigators to the highest scrutiny," Mr. Bienenstock notes. For example, Mr. Bienenstock says, the government prosecuted and obtained a conviction against Arthur Andersen for obstruction of justice, although that case did not involve any allegations of "substantive" improprieties. Two weeks ago, Mr. Bienenstock recounts, the government charged three individuals with crimes relating to Enron. It is clear that the government's investigations are both active and very public, Mr. Bienenstock remarks. "Innocent witnesses recognize appropriately that they must have counsel to protect their interests," Mr. Bienenstock says. According to Mr. Bienenstock, the Examiner's investigation is significantly impeded due to the Employees' refusal to meet with the Examiner and his representatives, and the Debtors have not yet been able to produce a witness in response to the May 15 Order. "It is clear that without the authorization to pay Swidler for representing current and former employees in connection with these two matters, at the very least, the situation will not improve," Mr. Bienenstock contends. Thus, the Debtors urge Judge Gonzalez to reconsider his decision and approve the payment of Swidler's subsequently approved applications for representing Enron employees in connection with the Enron Corp.'s Examiner's investigation and court-ordered civil discovery. (Enron Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) ETHYL CORP: S&P Withdraws B+ Corporate Credit Rating ---------------------------------------------------- Standard & Poor's withdrew its single-'B'-plus corporate credit rating on Ethyl Corp. at the company's request. Richmond, Virginia-based Ethyl is a manufacturer and marketer of fuel and lubricant additives products. Rating Withdrawn Ethyl Corporation To From Corporate credit rating N.R. B+ EXIDE TECH: U.S. Trustee Balks at Blackstone Engagement Terms ------------------------------------------------------------- Based on Exide Technologies's Application and the accompanying Affidavit of Arthur B. Newman in support of the Application, Mark S. Kenney, Esq., informs the Court that the UST does not object per se to the employment of Blackstone Group. However, the UST objects to specific terms and conditions of the proposed engagement. The UST complains that: A. The Application seeks approval of an agreement with Blackstone which provides for a flat monthly advisory fee of $200,000. The fee is payable regardless of actual benefit provided to the Debtors, together with a contingent, declining scale "Transaction Fee" which starts at 1% of the first $500,000,000 of Consideration received from the sale or disposition of the Debtors' core assets or the Debtors' stock, plus a flat Restructuring Fee of $10,000,000 upon the effective date of a plan of reorganization supported by the Debtors. * If a sale or all or substantially all of the Debtors' assets or stock occurs in a single transaction in connection with a Restructuring, Blackstone will receive a Restructuring Fee but not a Transaction Fee. * Under all other circumstances involving both asset or stock sales and a Restructuring, Blackstone will be entitled to both Transaction Fees and the Restructuring Fee. B. As presently structured, no portion of the Monthly Fees paid will be credited against the Transaction or Restructuring Fees. The full amount of any Monthly Fees should be credited against any Transaction or Restructuring Fees payable to Blackstone. C. The Blackstone engagement is terminable on 30 days' notice by either the Debtors or Blackstone. However, the Blackstone engagement letter contains a "tail" provision whereby Blackstone will be entitled to receive Transaction Fees and a Restructuring Fee for any Transaction or Restructuring consummated within 12 months after termination unless the engagement has been terminated because of Blackstone's gross negligence or willful misconduct. * The tail provision appears to make the Transaction and Restructuring Fees payable to Blackstone regardless of that firm's contribution in causing or procuring any Transaction or Restructuring, regardless of whether it was the Debtors or Blackstone that terminated the engagement, and regardless of whether the Debtors are required to compensate any other professional persons for their role in causing or procuring a Transaction or Restructuring after termination of the Blackstone engagement. * While the potential for payment under a tail provision is not out of the question, such a payment should not be made if a post-termination Transaction or Restructuring is caused or procured by a professional other than Blackstone, especially if the other professional is or may be entitled to compensation in connection with the Transaction or Restructuring. The estate should not be exposed to the risk of having to pay multiple fees for a single result. D. The Transaction and Restructuring Fees would be payable to Blackstone regardless of the actual benefit, if any, provided to the estates. Under the terms of the proposed engagement, an asset sale that produces a worse result than an immediate Chapter 7 liquidation, or a plan of reorganization that produces one dollar more than creditors would receive in a piecemeal Chapter 7 liquidation, would entitle Blackstone to its "contingent" Transaction and/or Restructuring Fees. Indeed, it appears that Blackstone would be entitled to collect these fees even if the payment of those fees would result in creditors receiving less than they would receive in an immediate Chapter 7 liquidation. * No success fee of any kind should be payable to Blackstone except upon demonstration of value added to the estates, and the fee should not under any circumstances exceed the demonstrable added value. The estates should be enriched, not impoverished, by the engagement of Blackstone. E. The Application seeks pre-approval, subject to review only under the improvidence standards of 11 U.S.C. Section 328(a), of the entire proposed fee arrangement. Indeed, the engagement letter specifically requires the Debtors to use their best efforts to obtain a retention order from this Court that is "subject to the standard of review provided in Section 328(a) of the Bankruptcy Code and not subject to any other standard of review under Section 330 of the Bankruptcy Code. * Such pre-approval is premature. Review, consideration and approval of Blackstone's fees should be deferred until the conclusion of these cases when the efficacy of Blackstone's services can be evaluated upon application to the Court for payment, with opportunity for all parties in interest to comment on or object to the application. * Limiting review of Blackstone's fees to the standard provided by Section 328(a) improperly shifts the burden of proof to any party in interest who might object to Blackstone's fees. In addition to developments which are not presently capable of being anticipated but which would render the terms of Blackstone's engagement improvident, there a number of developments which are presently capable of being anticipated. * The Court should not deprive itself of future discretion by entering what is in essence a final compensation order at the commencement of Blackstone's engagement. Blackstone should be required to satisfy its burden of proof under 11 U.S.C. Section 330 when it applies for compensation, and should not be permitted to use 11 U.S.C. Section 328(a) to circumvent that burden. F. The engagement letter annexed to the Application requires the Debtors to indemnify Blackstone for any claims made against Blackstone excepting only those claims which are finally judicially determined to have resulted directly from Blackstone's bad faith, gross negligence or willful misconduct. * Blackstone's request for indemnification appears inconsistent with the Bankruptcy Code, applicable notions of bankruptcy professionalism, and public policy. Indeed, such a request is inconsistent with Blackstone's obligation to be and to remain disinterested. Even the threat of a claim against Blackstone for which it might seek indemnity directly pits Blackstone's interests against the interests of the estate. * The indemnification provisions should be stricken in their entirety and no indemnification should be approved by the Court for Blackstone's benefit at any time during this proceeding. (Exide Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) Exide Technologies' 10% bonds due 2005 (EXDT05USR1) are quoted at a price of 15 cents-on-the-dollar, DebtTraders says. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05USR1 for real-time bond pricing. EXODUS: Says Customers Not Affected by Latest Akamai Maneuver ------------------------------------------------------------- Customers of the Cable & Wireless (NYSE: CWP) business formerly known as Digital Island, are not affected by U.S. District Court Judge Rya W. Zobel's action to grant Akamai Technologies Inc., an injunction against Cable & Wireless' defunct, original version of its content-delivery-network (CDN) technology. "The injunction ruling is a legal technicality about a legacy part of the CDN that was abandoned some time ago and our customers will not be impacted," said Chris Albinson, chief strategy officer for Exodus, a Cable & Wireless Service, the organization formed with the integration of Digital Island with the Exodus business. "Exodus will continue business as usual delivering fast, secure, guaranteed and global services without interruption." A month ago, the judge upheld a Dec. 21 jury verdict invalidating all key claims of U.S. Patent 6,108,703, which the Massachusetts Institute of Technology (MIT) licenses to Akamai as the basis for its content-delivery products. Both the judge and jury have found the Cable & Wireless business formerly known as Digital Island first invented Internet CDN technology. The judge also ruled that Akamai must pay Cable & Wireless the cost of some attorney fees. This trial is one aspect of what is expected to be a multi-year effort to protect Cable & Wireless' intellectual property and defend its status as the first inventor of CDN technology. The company expects to appeal any adverse decisions affecting its intellectual property to the Federal Circuit Court of Appeals and to continue to pursue patent protection covering its CDN technology with the PTO. (Exodus Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says that Exodus Communications Inc.'s 11.625% bonds due 2010 (EXDS10USR1) are trading at about 5.75. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS10USR1 for real-time bond pricing. FAIRFIELD MANUFACTURING: S&P Withdraws B- Corporate Rating ---------------------------------------------------------- Standard & Poor's withdrew its single-'B'-minus corporate credit rating on gears and gear systems producer Fairfield Manufacturing Co., Inc., at the company's request. As of March 31, 2002, Lafayette, Indiana-based Fairfield had about $176 million in debt securities and preferred stock outstanding. FEDERAL-MOGUL: Receives Rights to Market TRW Chassis Products ------------------------------------------------------------- Federal-Mogul Corporation (OTC Bulletin Board: FDMLQ) and TRW Inc., announced a strategic agreement through which Federal- Mogul will retain exclusive rights to market, package and distribute TRW branded chassis products within the North American replacement parts industry. Subject to approval by the U.S. Bankruptcy Court in Wilmington, Delaware, the agreement represents an extension of a long-term supply and license arrangement for TRW branded chassis parts dating to 1992. Among the existing customers to be serviced under the new agreement will be TRW Autospecialty, part of TRW Automotive's aftermarket business. The TRW branded chassis program will be launched with TRW Autospecialty as soon as possible, according to Jay Burkhart, vice president, marketing, Federal-Mogul. "TRW is a very well known and respected brand of OE-replacement chassis components," Burkhart said. "We are excited to relaunch the TRW chassis program within the North American aftermarket and look forward to developing a wide range of new strategic market opportunities for this strong brand." Peter Lake, vice president and general manager, planning and business development and parts and service for TRW Automotive, said: "We are confident Federal Mogul will do an excellent job in servicing the replacement market with the TRW branded product line. Our TRW Autospecialty unit looks forward to offering an expanded and aggressive TRW chassis program." Federal-Mogul is a global supplier of automotive components and sub- systems serving the world's original equipment manufacturers and the aftermarket. The company utilizes its engineering and materials expertise, proprietary technology, manufacturing skill, distribution flexibility and marketing power to deliver products, brands and services of value to its customers. Federal-Mogul is focused on the globalization of its teams, products and processes to bring greater opportunities for its customers and employees, and value to its constituents. Headquartered in Southfield, Michigan, Federal-Mogul was founded in Detroit in 1899 and today employs 49,000 people in 24 countries. For more information on Federal-Mogul, visit the company's Web site at http://www.federal-mogul.com TRW Autospecialty is part of TRW Automotive's aftermarket business, which delivers a comprehensive range of replacement parts for braking, steering and suspension and clutch systems covering passenger car, sport utility vehicle and light truck applications. TRW Automotive is a world leader in braking, steering and suspension systems, automotive electronics, fastening systems, occupant safety systems, commercial steering systems and engine components for the global automotive industry. Federal-Mogul Corporation's 8.8% bonds due 2007 (FEDMOG6), DebtTraders says, are quoted at 19 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=FEDMOG6for real-time bond pricing. FLAG TELECOM: Court Okays Arthur Andersen-UK as Accountants ----------------------------------------------------------- FLAG Telecom Holdings Limited, and its debtor-affiliates sought and obtained authority from Judge Gropper to employ Arthur Andersen UK to perform on-going accounting, auditing, tax counseling and consulting services. Richard M. Williams, a partner at AA UK, says the Firm has audited the Debtors' financial statements since fiscal 1996 and has performed the most substantial parts of the audits of the FLAG Ltd. and FLAG Telecom Holdings Ltd. consolidated financial statements since 1998. AA UK is to merge into Deloitte & Touche under an agreement that is still awaiting regulatory approval. Scope of Services The Debtors want to retain AA UK to: a. audit financial statements and assist in preparing and filing financial statements and disclosure documents required by the SEC and statutory and/or other regulatory authorities around the world; b. review unaudited quarterly financial statements of the Debtors as required by applicable law or regulations, or as requested by the Debtors; c. provide tax consulting and preparation services (including transfer pricing studies); d. assist in preparing financial disclosures required by the Court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; e. assist the Debtors and other financial professionals, retained by the Debtors, with the preparation of its business plan on a collaborative basis so as not to be duplicative in efforts or expense; f. assist the Debtors by analyzing operations and identifying areas of potential cost savings and operating efficiencies; g. assist in the coordination of responses to creditor information requests and interfacing with creditors and their financial advisors; h. assist Debtors' legal counsel, to the extent necessary, with the analysis and revision of the Debtors' plan or plans of reorganization; i. attend meetings and assist in discussions with the creditors' committee, the U.S. Trustee, and other interested parties, to the extent requested by the Debtors; j. consult with the Debtors' management on other business matters relating to its chapter 11 reorganization efforts; and k. assist with such matters as the Debtors' management or legal counsel and AA UK may agree from time-to-time. Compensation Kees van Ophem, Secretary and General Counsel of FLAG Telecom Holdings Ltd., says the Debtors agree to pay AA UK its customary hourly rates: Actual Illustrative Pound Rates USD equivalents ----------- --------------- Partners/Principals 435 - 604 $620 - 860 Managers/Directors 283 - 498 $400 - 710 Seniors/Associates/Consultants 147 - 276 $210 - 390 Staff/Analysts 81 - 130 $115 - 185 Within the one-year period before the Debtors' Chapter 11 cases were filed, Andersen Worldwide received compensation of approximately Pound 920,000 ($1,300,000) from the Debtors, Mr. Williams says. Disinterestedness Mr. Williams says AA UK does not hold interest adverse to the Debtors or their estates for the matters for which AA UK is to be employed. He assures the Court that the Firm will conduct an ongoing review of its files to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new facts or relationships are discovered, AA UK will supplement its disclosure to the Court. (Flag Telecom Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Turning to KPMG for Specific Tax Services ---------------------------------------------------------- Global Crossing Ltd., and its debtor-affiliates request that the Court approve the retention and employment KPMG LLP to provide specific and limited tax services, nunc pro tunc to May 20, 2002. The Debtors want to retain and employ a discrete group of individuals from KPMG LLP to perform a specific and narrow set of tasks for a limited period of time. In particular, the Debtors seek to retain and employ Carol Conjura, partner in the Washington D.C. office; Mark Hutchison, partner in the Woodland Hills office; David Madden, principal in the Washington D.C. office; and Andrew Gantman, senior manager in the Washington D.C. office. Mitchell C. Sussis, the Debtors' Corporate Secretary, relates that prior to the Commencement Date, the Tax Advisors performed a number of important tax-related services for the Debtors including federal tax research and planning for the years 2000 and 2001. Based on their work, the Tax Advisors became familiar with the Debtors' complex tax structure and past transactions. The Tax Advisors have also developed a unique insight into the Debtors' tax planning and tax-related strategies and objectives. Mr. Sussis believes that a taxpayer must obtain a tax opinion on more complex transactions, particularly when the tax authorities may disagree with its interpretation of the tax law, or when available legal precedents are not entirely clear. In addition, obtaining a tax opinion supporting the position a taxpayer take vis a vis its taxes will insulate the taxpayer from penalties for any underpayment of taxes. Prior to the Commencement Date, Mr. Sussis recounts that the Tax Advisors advised the Debtors about providing several tax opinions to the Debtors, related to the their 2001 federal tax return. In mid-May 2002, the Tax Advisors began drafting the Tax Opinions for the Debtors. The Debtors estimate that the tax deductions supported by these Tax Opinions could result in several million dollars in tax refunds from federal and state governments. The services of the Tax Advisors are thus necessary to enable the Debtors to execute their duties as debtors and maximize the value of their estates. Mr. Sussis tells the Court that the Tax Opinions must be drafted and reviewed by the Debtors before they file their 2001 Federal Income Tax returns in July 2002. Because the Tax Advisors possess a unique familiarity with the Debtors' complex tax structure and their tax planning goals, the Tax Advisors are in the singular position to offer the Debtors these services by the applicable deadline. The Debtors represent that it would be impracticable to retain other professionals to draft these tax opinions, because there is not adequate time for other professionals to familiarize themselves with the Debtors' complex tax structure, tax history, and tax-related objectives. Mr. Sussis assures the Court that the principals of KPMG International serving as JPLs are members of KPMG-UK and KPMG- Bermuda, and it is highly unlikely that there will be any interaction between the KPMG LLP Tax Advisors and the JPLs. To further ensure that the Tax Advisors are isolated from the JPLs or any KPMG LLP personnel performing work for the JPLs, KPMG LLP has created ethical walls. These walls will prevent any communication or exchange of information related to these Chapter 11 cases between the Tax Advisors and the JPLs and any KPMG LLP personnel working with the JPLS. Mark Hutchison, a partner of KPMG LLP, ascertains that the Firm is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code and that the partners, principal, manager, and other employees of KPMG LLP do not have any connection with the Debtors, their creditors, or any other party in interest, or their respective attorneys. However, KPMG LLP currently performs or has previously performed accounting, tax advisory or consulting services in matters unrelated to this Chapter 11 case for these entities: A. Professionals: Arthur Andersen, Blackstone Group LP, Debevoise & Plimpton, Ernst & Young LLP, Jaffe Raitt Heuer & Weiss, Nixon Peabody LLP, Weil Gotshal & Manges LLP, Willkie Farr & Gallagher, Shearman & Sterling, Milbank Tweed Hadley & McCloy LLP, PricewaterhouseCoopers LLP, Deloitte & Touche LLP, and Chanin Capital Partners L.P.; B. Indenture Trustee: Manufacturers Hanover Trust Company; C. Top Unsecured Creditors: Accenture, Aegon USA Investment Management LLC, Alcatel, Alltel, Anixter, AT&T, Bank of New York, Bell Atlantic, Bell South Corporation, Century Telephone, Chase Manhattan Bank, Cincinnati Bell Telephone, Cisco, Citizens Communications, Comp USA, Encompass, Frontier Communications, Frontline, Gotham Incorporated, Hartford Investment Management Corporation, Hartford Investment Services Inc., Hitachi Telecom USA Inc., JP Morgan Chase Bank, Juniper Networks, Kajima, Knights of Columbus, Level 3, Lucent Technologies Inc., Mastec North America Inc., MCI Telecommunications, MCSI, Media Partnership/Gotham, Mercer Consulting, Morgan Stanley Investment Management, Nationwide Insurance, Nortel Networks, Northwestern Mutual Life Insurance Company, Polycom, PPM America, Primus Telecommunications, Qwest, SBC Communications, Sonus Networks Limited, Sprint, Teachers Insurance and Annuity Association of America, Tekelec, Telcobuy.com, Tycom US Inc., U.S. Trust Company, United Telephone, Verizon Communications Inc., Wilmington Trust Company, and Z Tel; D. Strategic Partners: CISCO Systems Inc., EMC Corporation, Exodus Communications, Financial Fusion Inc., Hitachi Telecom (USA) Inc., Juniper Networks Inc., Lucent Technologies, Nortel Networks, PRC, Sonus Networks, Inc., and Swift; E. Other Creditors: Banc One, Chase Manhattan Bank, Credit Suisse First Boston, PB Capital Corp., Wachovia Bank, Washington Mutual, Westdeutsche Landesbank, and Zurich Scudder Investments; F. Underwriters and Agents: Deutsche Bank AG, CIBC Inc., Canadian Imperial Bank of Commerce, Goldman Sachs Credit Partners L.P., Citicorp USA Inc., Merrill Lynch Capital Corporation, Salomon Smith Barney Inc., CIBC World Markets Corp., Deutsche Bank Securities Inc., Chase Securities Inc., and West LB; G. Significant Stockholders: Gary Winnick, Lodwrick M. Cook, Microsoft Corp., and Softbank Corp.; H. Secured Creditors: ABN Amro Bank N.V., Aegon USA Inc., Alliance Capital Management, Allstate Insurance, American Express Asset Management, Apollo Advisors, Bain Capital Inc., Bank Leumi, Bank of America, Bank of China, Bank of Hawaii, Bank of Montreal, Bank of New York, Bank of Nova Scotia, Bank of Scotland, Bank of Tokyo Mitsubishi, Bank One, Bank United, Barclays, Bayerische Landesbank Giro, BHF, Chang Hwa Commercial Bank, CIBC Oppenheimer, Citibank, City National Bank, CoBank, Credit Lyonnais, Credit Suisse Asset Management, Cypress Tree Investment Management Inc., Dai Ichi Kangyo Bank Ltd., Deutsche Bank, Dresdner Kleinwort Wasserstein, Equitable Life Insurance, Erste Bank, First Union, Fleet BankBoston, Fuji Bank Ltd., General Electric Capital Corporation, General Reinsurance - New England Asset Management, Goldman Sachs & Co., Gulf International Bank, Hypo Vereinsbank, IBM Credit Corporation, IKB Capital Corporation, Imperial Credit Industries, Indosuez, Industrial Bank of Japan, ING Capital Advisors, Invesco, JP Morgan Chase, Katonah Capital, KBC Bank, Key Bank, LB Series Inc., Lutheran Brotherhood High Yield, Merrill Lynch, Merrill Lynch Asset Management, Mitsubishi Trust & Banking Corp., Monument, Morgan Stanley Dean Witter, Oppenheimer Funds, Pacific Investment Management Company, Rabobank Nederland, Royal Bank of Canada, Scotia Capital, Scudder Investments, Stein Roe Farnham Inc., Sumitomo Trust & Banking Co., TCW, Textron Financial Corporation, Toronto Dominion Inc., UBS Warburg, Van Kampen, and West LB. Mr. Hutchison accords that KPMG LLP will bill the Debtors on an hourly-billing rate subject to a fee cap of $250,000 plus applicable expenses for the Tax Opinions. The customary hourly rates for advisory services to be rendered by KPMG LLP are: Partners $500 - $750 Directors/Senior Managers/Managers $375 - $475 Senior/Staff Accountants $300 - $450 Paraprofessionals $170 - $275 As of the filing date, Mr. Hutchison informs the Court that the Debtors owed KPMG LLP $44,000 for work performed on behalf of the Debtors. If this Application is approved, KPMG LLP will waive its claim against the Debtors' estates for these services. KPMG LLP also received $2,358,543 within the 90-day period preceding the filing of the Debtors' Chapter 11 cases. (Global Crossing Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) Global Crossing Holdings Ltd.'s 9.625% bonds due 2008 (GBLX3) are trading at about 1.25, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX3for real-time bond pricing. GRAND COURT: Court to Consider Plan of Reorganization Today ----------------------------------------------------------- UNITED STATES BANKRUPTCY COURT DISTRICT OF NEW JERSEY In re: : Chapter 11 : Case No. 00-32578 (NLW) GRAND COURT LIFESTYLES, INC., : NOTICE OF CONFIRMATION HEARING : AND OBJECTION DEADLINE Debtor. : Hearing Date: July 18, 2002 : Hearing Time: 10:00 a.m. TO: ALL INTERESTED PARTIES PLEASE TAKE NOTICE that on or about April 23, 2002, this Court entered an Order (i) determining treatment of certain claims for notice and voting purposes, (ii) establishing a record date and procedures for filing objections to the Plan, and temporary allowance of claims, and (iii) approving solicitation procedures for confirmation of. PLEASE TAKE FURTHER NOTICE that in the Solicitation Procedures Order, the Court set a hearing on confirmation of the