/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/020917.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 17, 2002, Vol. 6, No. 184 Headlines 2002 TARGET TERM: Board of Directors Adopts Plan of Termination 360NETWORKS: Balks at T-Systems' Action to Terminate Agreement ACANDS INC: Case Summary & 21 Largest Unsecured Creditors ACTERNA CORP: S&P Revises Corp. Credit Rating to CCC+ from SD A.D.A.M. INC: Fails to Satisfy Nasdaq Continued Listing Criteria ADELPHIA COMMS: Wants Equity Trading Restricted to Preserve NOLs ALL-AMERICAN TERM: Board of Directors Adopts Plan of Termination ALLIED DEVICES: Commences Trading on OTCBB Effective Sept. 16 ANC RENTAL: Consolidating Operations at Sacramento Airport ARMSTRONG HOLDINGS: Keeps Plan Filing Exclusivity Until April 4 ASBESTOS CLAIMS: Taps Kirkpatrick as Special Insurance Counsel AVIATION SALES: Signs-Up KPMG to Replace Andersen as Auditors BAPTIST FOUNDATION: Trust to Auction Off Properties on October 5 BRITISH ENERGY: Fitch Comments on Government's Emergency Funding BUDGET GROUP: Asks Court to Approve Asset Sale to Cendant Corp. CAREMARK RX: Intends to Redeem Outstanding 7% Convertible Notes CLICKS & FLICKS: Airs Confidence in Ability to Turnaround Biz. CONSECO FINANCE: Fitch Lowers Five Classes of Notes and Certs. CONSTELLATION BRANDS: Will Publish Q2 Results on September 25 COSERV ELECTRIC: Texas Court Confirms Reorganization Plan CUTTER & BUCK: Hearing on Appeal of Nasdaq Action Set for Friday ENRON CORP: Court OKs Stipulation Allowing Valero Claim Set-Off EXODUS COMMS: Relera Warns Against Transfers of 1.2MM Preferreds FEDERAL-MOGUL: Wants More Time to Make Lease-Related Decisions FIRST ALLIANCE: Calif. Court Confirms Joint Amended Reorg. Plan FLAG TELECOM: Court Okays Houlihan as Committee's Fin'l Advisors GLOBAL CROSSING: Seeks Approval of Lucent Settlement Agreement GROUP TELECOM: US Court Protection Extended Until September 25 HAYES LEMMERZ: Wants Lease Decision Period Stretched to Jan. 3 HESKA CORP: Gets Approval to Transfer Listing to Nasdaq SmallCap INGERSOLL INT'L: Looks to Merrill Lynch for Financial Advice INTEGRATED HEALTH: Settlement Pact re Walker Securities Approved INTERPLAY ENTERTAINMENT: Shareholders Meeting Moved to Oct. 10 IPET: Will Make Liquidating Cash Distribution by September 27 IT GROUP: Seeks Approval to Enter into Shaw Master Services Deal KMART CORP: Judge Sonderby Deems 6 Utilities Adequately Assured LAKE TROP: Files for Chapter 11 Protection in Las Vegas, Nevada LAKE TROP: Case Summary & 2 Largest Unsecured Creditors LANDSTAR INC: Enters into Various Debt Restructuring Agreements LUCENT: Fitch Concerned About Weak Credit Protection Measures LUCENT TECHNOLOGIES: Expects Fiscal Q4 Revenues to Plunge 25% LUCENT: DebtTraders Maintains BUY Recommendations on Sr. Notes LTV CORP: Blanking Unit Gets OK to Sell 11.11% Interest in TWB MASSEY ENERGY: Virginia Court Dismisses Appeal from Jury Verdict MATLACK SYSTEMS: Signing-Up Trans Tech as Freight Bill Auditors MEMC ELECTRONIC: Amends Euro Obligation with Texas Pacific Group NCS HEALTHCARE: Obtains Waiver to Discuss Omnicare Proposals NEXGEN VISION: Working Capital Deficit Tops $5M at June 30, 2002 ORGANOGENESIS: Furloughs 110 Employees Due to Lack of Cash Flow OWENS CORNING: Obtains Court Approval to Redevelop Florida Plant OWENS CORNING: Names Stephen Krull as VP of Corp. Communications OWOSSO: Auditors Doubt Company's Ability to Continue Operations PAYSTAR CORP: June 30 Balance Sheet Upside-Down by $7 Million PERSONNEL GROUP: Changes Name of Allegheny Personnel Svcs. Unit PRECISION SPECIALTY: Taps Parente as Special Tax Consultants PROCOM TECHNOLOGY: Wants to Transfer Listing to Nasdaq SmallCap PSINET INC: Resolves Dispute with Alpine over Lucent Equipment PUMATECH: Fails to Maintain Nasdaq Continued Listing Standards RADIO UNICA: Nasdaq Knocks-Off Shares Effective Sept. 16, 2002 RESOURCE AMERICA: Issuing $125 Million Notes to Pay Down Debts SAFETY-KLEEN CORP: Signs-Up Grant Thornton as Tax Accountants SLI INC: Del. Court Approves $20 Million Interim DIP Financing SPECTRASCIENCE: Files for Chapter 7 Liquidation in Minneapolis STANDARD MEMS: Case Summary & 20 Largest Unsecured Creditors STAR TELECOMMS: Liquidating Plan Declared Effective on August 13 STERLING CHEMICALS: Files Second Joint Chapter 11 Plan in Texas TRANSCARE: Retains Nixon Peabody as Special Corporate Counsel TYCO INT'L: Board Declares Regular Quarterly Cash Dividend UNIFORET INC: Court Extends CCAA Protection Until December 12 UNIROYAL TECHNOLGY: Retaining Ordinary Course Professionals UNITED AIRLINES: Promises to Work with ATSB on Recovery Plan US AIRWAYS: Court OKs KPMG's Retention as Debtor's Tax Advisors USG: Asks Court to Extend Removal Period Until March 31, 2003 WARNACO: Wants to Conduct 26 Calvin Klein Store Closing Sales WARPRADIO.COM: Brings-In Bill Hogan as Management Consultant WORLDCOM INC: Intends to Pay Former Employees' Severance Claims ********* 2002 TARGET TERM: Board of Directors Adopts Plan of Termination --------------------------------------------------------------- 2002 Target Term Trust Inc. (NYSE: TTR), a closed-end management investment company that seeks to invest in high quality fixed- income and adjustable-rate securities, announced that at a meeting held on September 11, 2002, the Trust's Board of Directors adopted a Plan of Termination as contemplated when the Trust was first organized. The Plan is intended to accomplish the complete liquidation of the Trust's portfolio and the dissolution of the Trust. Pursuant to the Plan, it is anticipated that the Trust will make a liquidating distribution payable on or about November 29, 2002. The record, ex-dividend and payable dates relating to this distribution will be set and announced in November 2002. The Trust plans to de-list its shares from the New York Stock Exchange effective on or about November 15, 2002. The Trust will make a subsequent announcement concerning the exact date on which the de-listing is to occur. While the Trust's portfolio is being managed in an effort to return the initial offering price of $15.00 per share, this is not guaranteed. 360NETWORKS: Balks at T-Systems' Action to Terminate Agreement -------------------------------------------------------------- "T-Systems cannot establish cause to obtain relief from the automatic stay because 360 has not breached the Agreement," Martin Klotz, Esq., at Willkie Farr & Gallagher, in New York, contends. The Agreement does not contain any requirement that 360 is required to ensure that the 360 Network is available at a rate of 99.5%, calculated on a monthly basis, including any planned maintenance of the 360 Network. Furthermore, the Agreement does not obligate 360 to "complete repairs to Wavelengths and Dark Fiber within 12 hours or less; the mean time to repair connector-related problems is six hours." Mr. Klotz explains that Network availability and repair time are "Key Performance Indicators" or target rates. Failure to meet these rates is not a breach of the Agreement. The Agreement provides that if the Network is not available at 99.5% target, 360 will be penalized. If the Wavelength or Dark Fiber Link fails to comply with the requirements continuously for 15 days, 360 will use reasonable efforts to provide a replacement Wavelength or Dark Fiber within five days. T-Systems claims that there were 10 instances between August 2001 and August 2002 when 360 failed to comply with the 99.5% monthly service reliability standard. However, Mr. Klotz points out that one instance was not on a Wavelength covered by the Agreement. Of the nine other alleged instances, six circuit outages were fixed within the 18 hours target. For the other three outages, T-Systems was issued a credit against its May 2002 invoice for he additional hours it took to fully repair the outage, in complete accordance with the Agreement. On T-System's claim that they have to seek network capacity from other carriers due to the frequent outages, Mr. Klotz notes that the Agreement is not an exclusive arrangement between the two parties, thus, T-Systems can purchase the services from other carriers. In any case, Mr. Klotz says, T-Systems did not provide any examples of any network capacity or services that were available from 360 but it has to acquire from another carrier. T-Systems asserts that 360 "lacks uniform redundancy and path diversity" in breach of the Agreement. T-Systems also claims that it was "forced at its own expense" to investigate the 360 Network for problems. But Mr. Klotz informs Judge Gropper that it was 360 who conducted and expended, without cost to T- Systems, a network-wide analysis and a three-month diversity project when it discovered that the Wavelengths being provided to T-Systems were not consistently diversely routed. To date, 360 promptly corrected the problem to T-Systems' satisfaction. For the obligations management allegation, Mr. Klotz clarifies that it was not 360 that refused to pay the third-party vendor but a subcontractor that refused payment. 360 tried to pay the vendor in behalf of the contractor but the offer was rejected. Hence, 360 applied the Force Majeure clause of the Agreement, which T-Systems never objected, since the situation was out of its control. T-Systems also alleges that four of the nine locations 360 offered for collocation have failed to meet communications industry standards. Mr. Klotz relates that under the Agreement, T-Systems must inspect the Equipment Space and Collocation Facilities prior to installing its communications Equipment and either accept or reject the space. However, to date, 360 has not received any formal notification of rejection as provided in the Agreement. There is currently an action plan in place in both Detroit and Denver Facilities and 360 is prepared to promptly remedy the local access situation. In addition, contrary to T-Systems' assertions, 360 offered to relocate T-System to a better-connected collocation space in Atlanta, at 360's expense. However, T-Systems asked 360 to release it from service at Houston and Atlanta due to declining sales in these markets. For the alleged failure to fulfill domestic and international service offerings, Mr. Klotz points out that the Agreement specifically provides for North America service only. T-Systems further contends that 360 is "reneging on its offer of critical dark fiber segments to that would be available to it. Mr. Klotz asserts that this allegation is unwarranted because: (1) T-Systems has never purchased dark fiber from 360; (2) there is no list of "promised" segments; and (3) T-Systems has never put in a request to purchase Wavelengths that 360 has rejected because it could not meet the request. For the alleged failure to provide adequate technical support, 360 retorts that there has been no occasion when T-Systems has require technical support from 360 without receipt of a prompt response. Accordingly, Mr. Klotz argues, the motion should be denied because: (a) the Motion lacks urgency or the seriousness of 360's alleged failures when T-Systems filed the motion 14 months after the Petition Date; (b) T-Systems is a large and sophisticated company hat was quite capable of incorporating the types of representations it relied from the Request for Proposal process into the Agreement; (c) with the entry of settlements with other parties, clearly, other industry entities have confidence in 360's ability to perform in the future; (d) losing the T-Systems contract, with its requirement that it makes $38,000,000 in additional purchases by year end, would be enormously detrimental to 360; (e) there are no available damages claims against the Debtors; on the contrary, T-Systems has a payable of over $28,000,000 to the Debtors; and (f) T-Systems does not have the right to have the Court deem the Agreement rejected since only a trustee or debtor- in-possession is afforded this privilege under Section 365(a) of the Bankruptcy Code. (360 Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) ACANDS INC: Case Summary & 21 Largest Unsecured Creditors --------------------------------------------------------- Debtor: ACandS, Inc 120 N. Lime Street Lancaster, Pennsylvania 17608 Bankruptcy Case No.: 02-12687 Chapter 11 Petition Date: September 16, 2002 Court: District of Delaware (Delaware) Judge: Peter J. Walsh Debtors' Counsel: Laura Davis Jones, Esq. Pachulski Stang Ziehl Young & Jones 919 N. Market Street 16th Floor Wilmington, DE 19899-8705 302-652-4100 Fax : 302-652-4400 Estimated Assets: More than $100 Million Estimated Debts: More than $100 Million Debtor's 21 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Angelos, Peter G Asbestos $11,722,096 Lester, Diane 1 Charles Center 100 North Charles Street 22 Floor Baltimore, MD 21201 Crawford, James C. Asbestos $11,421,000 Wise & Julian, P.C. 355 College Ave. Alton, IL 62002 Bousman, William Asbestos $3,750,000 Provost & Umphrey 4920 Park Street Beaumont, TX 25704 Williams, Roy Asbestos $3,000,000 Robert J. Cooney & Associates 120 North LaSalle Street 30th Floor Chicago, IL 60602 Jordan, Earnest Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 White, Charles Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 Curry, James Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 Lawrence, Bobbie Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 Johnson, Simeon Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 Pate, Phillip Asbestos $1,360,000 Byrd & Associates 427 Fortification Street Jackson, MS 39202 Basford, Kathleen Asbestos $1,200,000 Kazan, Mcclain, Edises & Simon 171 12th Street, Ste 300 Oakland, CA 94607 Raney, Kenneth Asbestos $1,150,000 Kazan, Mcclain, Edises & Simon 171 12th Street, Ste 300 Oakland, CA 94607 Scott, Matthew Asbestos $1,000,000 Kazan, Mcclain, Edises & Simon 171 12th Street, Ste 300 Oakland, CA 94607 Wilkins, William H Asbestos $1,000,000 Kazan, Mcclain, Edises & Simon 171 12th Street, Ste 300 Oakland, CA 94607 Arseneault, Richard Asbestos $1,000,000 Weitz & Luxenberg 180 Maiden Lane New York, NY 10038 Blackard, William Asbestos $1,000,000 Michie, Hamlett, Lowery, Rasmussen & Tweed 500 Court Square, Ste. 300 Charlottesville, VA 22902 Cook, Kenneth Asbestos $1,000,000 Weitz & Luxenberg 180 Maiden Lane New York, NY 10038 Foster, Jack Asbestos $1,000,000 Ness, Motley PO Box 1792 Mt. Pleasant, SC 29465 Halstead, Ronald Asbestos $1,000,000 Provost & Umphrey 4920 Park Street Beaumont, TX 25704 Handy, Clarence Asbestos $1,000,000 Provost & Umphrey 4920 Park Street Beaumont, TX 25704 Patrick, Andrew Asbestos $1,000,000 John F. Dillon 1515 Paydars Street Suite 2080 New Orleans, LA 70112 ACTERNA CORP: S&P Revises Corp. Credit Rating to CCC+ from SD ------------------------------------------------------------- Standard & Poor's Ratings Services revised its corporate credit rating on Acterna Corp., to 'CCC+' from 'SD', its senior secured bank loan rating to 'CCC+' from 'B-', and its subordinated note rating to 'CCC-' from 'D'. The actions were based on Standard & Poor's reassessment of Acterna's credit quality and its associated obligations after the company completed its tender offer for $109 million of its subordinated notes at below par. Acterna, based in Germantown, Maryland, is the world's second largest communications test and management company. It offers instruments, systems, software and services used by service providers, equipment manufacturers, and enterprise users. It has total outstanding debt of about $869 million. The outlook is negative. Acterna's operating performance is dependent on deteriorating telecommunications end markets, operating losses, and challenges associated with rationalizing its operations in difficult industry conditions. These concerns are only partially offset by its broad product and service capability in the communications test industry. Standard & Poor's believes sales are likely to continue to deteriorate as they have since late 2000, as the global telecommunications industry continues to reduce capital spending. Moreover, pricing pressures are likely to present a further obstacle to management's efforts to improve operating performance. Therefore the timing of a return to profitability is uncertain. "Ratings could be lowered unless operating performance improves in the near term," said Standard & Poor's credit analyst Andrew Watt. Cash flow measures are very weak and are unlikely to improve considerably in the near term. Still, management reduced debt by more than 20%, or nearly $240 million, since June 30, 2002, and annual interest payments by more than $17 million by tendering for a portion of its outstanding debt and paying down its term loan. Liquidity is modest, with cash balances of $49 million and availability under its $153 million revolving credit facility of $80 million. However, financial covenants, become more challenging in the next two quarters. A.D.A.M. INC: Fails to Satisfy Nasdaq Continued Listing Criteria ---------------------------------------------------------------- A.D.A.M., Inc. (Nasdaq NM: ADAM), received notice from the Staff at the Nasdaq Stock Market on September 12, 2002 indicating that A.D.A.M. does not comply with the minimum bid price requirement for continued listing set forth in Nasdaq Marketplace Rule 4450(a)(5), and that its common stock is, therefore, subject to delisting from the Nasdaq National Market. Pursuant to the notice, the minimum bid price of A.D.A.M.'s common stock must close at $1.00 per share or more for a minimum of 10 consecutive trading days at anytime before December 11, 2002. If this compliance does not occur, then Nasdaq will provide written notice of delisting, which A.D.A.M. may appeal. A.D.A.M. currently meets the listing requirements to list on the Nasdaq SmallCap Market. If A.D.A.M. applies to transfer it securities to the Nasdaq SmallCap Market and the transfer is approved by Nasdaq, A.D.A.M. is afforded until March 11, 2003 to meet the $1.00 minimum bid price, which may be extended for an additional 180 days. Headquartered in Atlanta, A.D.A.M., Inc., is a leading publisher of interactive, visually engaging health and medical information for healthcare organizations, medical professionals, consumers and students. A.D.A.M. products contain physician-reviewed text, graphics produced in-house by medically trained illustrators, and multimedia interactivity to create health information solutions that offer a unique "visual learning" experience in both the healthcare and education markets. For more information, visit http://www.adam.com ADELPHIA BUSINESS: Will File Schedules & Statements by Sept. 25 --------------------------------------------------------------- Judy G.Z. Liu, Esq., at Weil Gotshal & Manges LLP, in New York, advises the U.S. Bankruptcy Court for the Southern District of New York that Adelphia Business Solutions, Inc., and its debtor- affiliates encountered some technical problem in filing their schedules of assets and liabilities, statements of financial affairs and lists of leases and contracts. The documents -- tens of thousands of pages -- need to be reformatted and reprinted. The ABIZ Debtors expect to deliver the financial disclosure data to the Court by Sept. 25, 2002. (Adelphia Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMMS: Wants Equity Trading Restricted to Preserve NOLs ---------------------------------------------------------------- Roger Netzer, Esq., at Willkie Farr & Gallagher LLP, in New York, estimates that the Adelphia Communications Debtors presently have federal tax net operating losses of at least $3,500,000,000, which amounts are likely to be substantially higher when they emerge from Chapter 11. The NOLs are a valuable asset of the ACOM Debtors' estates. The NOLs will be used to offset future income, thereby significantly reducing their future federal income tax liability. By this motion, the ACOM Debtors seek the Court's authority to protect and preserve the NOLs in excess of at least $3,500,000,000 by establishing notice and hearing procedures governing the transfer of, or trading in, certain equity securities of the ACOM Debtors, to be complied with as a condition to the effectiveness of these trades or transfers. If left unrestricted, Mr. Netzer fears that trading could severely limit the ACOM Debtors' ability to use a valuable asset of their estates and could have significant negative consequences for the ACOM Debtors, their estates and the reorganization process. Specifically, trading of equity securities could adversely affect the ACOM Debtors' NOLs if too many 5% or greater blocks of equity securities are created, or too many shares are added to, or sold from, these blocks -- such that, together with previous trading by 5% stockholders during the period since October 1, 1999, an ownership change within the meaning of Section 382 of the Internal Revenue Code is triggered prior to consummation of a confirmed Chapter 11 plan. Thus, in order to preserve to the fullest extent possible the flexibility to craft a plan of reorganization which maximizes the use of their NOLs, the Debtors seek relief that will enable them to closely monitor certain transfers of equity securities, so as to be in a position to act expeditiously to prevent these transfers, if necessary, to preserve their NOLs. As any sale or other transfer of equity securities of the Debtors that would trigger a change of ownership is null and void ab initio under the automatic stay of Section 362 of the Bankruptcy Code, Mr. Netzer explains that the Debtors merely seek to provide notice to potential transferees that any transfers or sales are ineffective. By establishing procedures for continuously monitoring trading in the Debtors' common and preferred stock, the Debtors can preserve their ability to seek substantive relief at the appropriate time if it appears that unrestricted trading may jeopardize the use of their NOLs. The salient terms of the proposed procedures for trading in the Equity Securities are: A. Prior to effectuating any transfer of equity securities, which would result in an increase in the amount of stock of the Debtors beneficially owned by a Substantial Equityholder or would result in a person or entity becoming a Substantial Equityholder, the Substantial Equityholder will file with the Court, and serve on the Debtors and its counsel, advance written notice of the intended transfer of equity securities; B. Prior to effectuating any transfer of equity securities -- including any sale, transfer, assignment, pledge, hypothecation, option to acquire stock, or other disposition or encumbrance -- which would result in a decrease in the amount of stock of the Debtors beneficially owned by a Substantial Equityholder or would result in a person or entity ceasing to be a Substantial Equityholder, the Substantial Equityholder will file with the Court, and serve on the Debtors and counsel to the Debtors, advance written notice, of the intended transfer of equity securities; C. The Debtors will have 30 calendar days after receipt of a Notice of Proposed Transfer to file with the Court and serve on the Substantial Equityholder an objection to any proposed transfer of equity securities described in the Notice of Proposed Transfer on the grounds that the transfer may adversely affect the Debtors' ability to use their NOLs and are void ab initio. If the Debtors file an objection, the transaction will not be effective unless approved by a final and non-appealable order of the Court. If the Debtors do not object within the 30-day period, the transaction may proceed solely as set forth in the Notice of Proposed Transfer. Any transaction for which a Notice of Proposed Transfer is filed is void ab initio unless either: -- express permission for the transaction is granted by the Debtors; -- the 30-day period expires without objection from the Debtors; or -- it is approved by final and non-appealable order of the Court. Further transactions within this scope must be the subject of additional notices, with an additional 30-day waiting period; D. Any person or entity that currently is or becomes a Substantial Equityholder will file with the Court, and serve upon the Debtors and counsel to the Debtors, a notice of the status, on or before the later of: -- 40 days after the effective date of notice of the Order, or -- 10 days after becoming a Substantial Equityholder; and E. For purposes of the Order: -- a "Substantial Equityholder" is any person or entity that beneficially owns at least: a. 10,200,702 shares of Class A Common Stock representing 4.5% of the 226,682,269 shares of Class A Common Stock outstanding; b. one share of Class B Common Stock; c. shares of 13% Series B Cumulative Exchangeable Preferred Stock with an aggregate liquidation preference of $6,750,000 representing 4.5% of the $150,000,000 liquidation preference of all outstanding 13% Series B Cumulative Exchangeable Preferred Stock; d. shares of 5.5% Series D Convertible Preferred Stock with a liquidation preference of $25,875,000 -- representing 4.5% of the $575,000,000 liquidation preference of all outstanding 5.5% Series D Convertible Preferred Stock; e. shares of 7.5% Series E Mandatory Convertible Preferred Stock with a liquidation preference of $15,525,000 -- representing 4.5% of the $345,000,000 liquidation preference of all outstanding 7.5% Series E Mandatory Convertible Preferred Stock; or f. shares of 7.5% Series F Mandatory Convertible Preferred Stock with a liquidation preference of $25,875,000 -- representing 4.5% of the $575,000,000 liquidation preference of all outstanding 7.5% Series F Mandatory Convertible Preferred Stock; -- "beneficial ownership" of equity securities includes direct and indirect ownership -- e.g., a holding company would be considered to beneficially own all shares owned or acquired by its subsidiaries, ownership by the holder's family members and persons acting in concert with the holder to make a coordinated acquisition of stock, ownership of shares which the holder has an option to acquire, and beneficial ownership as defined by Rule 13d-3 of the Securities Exchange Act of 1934; -- the acquisition of stock pursuant to the exercise of any option to acquire stock, including the acquisition of stock upon the conversion of Adelphia's 6% Convertible Subordinated Notes Due 2006, or Adelphia's 3.25% Convertible Subordinated Notes Due 2021 will be treated as a transfer of the stock; and -- an "option" to acquire stock includes any contingent purchase, warrant, convertible debt, put, stock subject to risk of forfeiture, contract to acquire stock or similar interest, regardless of whether it is contingent, otherwise not currently exercisable, or exercisable beyond 60 days. Mr. Netzer notes that Section 172 of the Internal Revenue Code permits corporations to carry forward NOLs to offset future income, thereby reducing federal income tax liability on future income and significantly improving their cash position. Section 382 of the Internal Revenue Code limits the amount of taxable income that can be offset by the corporation's NOLs in any taxable year following an ownership change. Generally, an "ownership change" occurs if the percentage of the stock of the corporation owned by one or more five-percent stockholders has increased by more than 50 percentage points over the lowest amount of stock owned by the stockholders at any time during the 3-year testing period ending on the date of the ownership change. According to Mr. Netzer, transfers of the Debtors' equity securities to date have resulted in 5% stockholders increasing their holdings by 36% within the relevant testing period. If the ownership changes exceed 50%, a change in ownership pursuant to Section 382 will be triggered. This will limit the Debtors' future use of its NOLs from and after the time of the change. Once an NOL is limited under Section 382, Mr. Netzer says, its use is limited forever. The relief sought is necessary to avoid an irrevocable loss of the Debtors' NOLs and the irreparable harm, which could be caused by unfettered trading in the Debtors' equity securities. This trading jeopardizes the Debtors' ability to offset future taxable income freely with NOLs. Mr. Netzer assures that the requested relief does not bar all stock trading. At this juncture, the Debtors seek only to establish procedures enabling them to monitor those stock transfers that pose a serious risk under the ownership change test, so as to preserve their ability to seek substantive relief if it appears that a proposed trade will jeopardize the use of their NOLs. The procedures requested by the Debtors would permit most stock trading to continue subject only to Rule 3001(e) of the Federal Rules of Bankruptcy Procedure and applicable securities, corporate and other laws. Following entry of the Order, the Debtors propose to send a notice to: -- The Office of The United States Trustee for the Southern District of New York; -- any committee appointed under section 1102 of the Bankruptcy Code; -- counsel for the Debtors' prepetition and postpetition lenders; -- all known stockholders of record as of September 30, 2002; -- transfer agents for each class of stock of the Debtors; -- the indenture trustees for Adelphia's 6% Convertible Subordinated Notes Due 2006 and Adelphia's 3.25% Convertible Subordinated Notes Due 2021; -- the Securities and Exchange Commission; and -- the Department of Justice. Upon receipt of Notice, Mr. Netzer relates that any transfer agents for any class stock of the Debtors will be required, on at least a quarterly basis, to send Notice to all holders of stock registered with the transfer agent. In the case of the Convertible Subordinated Notes, the indenture trustees will be required to send Notice to all holders of these notes registered with the indenture trustee, on at least a quarterly basis. Upon receipt of Notice, any registered holder must, in turn, send Notice to any holder for whose account the registered holder holds these stock or notes, and so on at each level of ownership and custodianship thereunder. Additionally, any person who sells or otherwise transfers: -- shares of Class A Common Stock in one or more sales of at least 2,266,823 shares; -- at least one whole share of Class B Common Stock to a single purchaser; -- 13% Series B Cumulative Exchangeable Preferred Stock in one or more sales of shares with at least an aggregate liquidation preference of $1,500,000; -- 5.5% Series D Convertible Preferred Stock in one or more sales of shares with at least an aggregate liquidation preference of $5,750,000; -- 7.5% Series E Mandatory Convertible Preferred Stock in one or more sales of shares with an aggregate liquidation preference of $3,450,000; or -- 7.5% Series F Mandatory Convertible Preferred Stock in one or more sales of shares with at least an aggregate liquidation preference of $5,750,000 of Adelphia to another person or entity must provide a copy of the Order authorizing these procedures to the purchaser of the securities or any broker or agent acting on their behalf on the stock. (Adelphia Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALL-AMERICAN TERM: Board of Directors Adopts Plan of Termination ---------------------------------------------------------------- All-American Term Trust Inc. (NYSE: AAT), a closed-end management investment company with an investment objective of providing a high level of current income, consistent with the preservation of capital, announced that at a meeting held on September 11, 2002, the Trust's Board of Directors adopted a Plan of Termination as contemplated when the Trust was first organized. The Plan is intended to accomplish the complete liquidation of the Trust's portfolio and the dissolution of the Trust. Pursuant to the Plan, it is anticipated that the Trust will make a liquidating distribution payable on or about December 31, 2002. The record, ex-dividend and payable dates relating to this distribution will be set and announced in December 2002. The Trust plans to de-list its shares from the New York Stock Exchange effective on or about December 16, 2002. The Trust will make a subsequent announcement concerning the exact date on which the de-listing is to occur. Based on the Trust's net asset value of $12.19 per share as of September 12, 2002, the time remaining until the Trust's termination on or about December 31, 2002, and assuming the continuation of current market conditions, UBS Global Asset Management believes that it is unlikely that the Trust will be able to return the full amount of its $15 initial offering price to shareholders upon its termination. ALLIED DEVICES: Commences Trading on OTCBB Effective Sept. 16 ------------------------------------------------------------- Allied Devices Corporation (Nasdaq: ALDV), received a Nasdaq Staff Determination on September 6, 2002, indicating that the Company had failed to comply with the minimum bid price requirement for continued listing on the Nasdaq SmallCap Market as set forth in Marketplace Rule 4310(C)(4), and, therefore, its securities were subject to delisting from the Nasdaq SmallCap Market. Accordingly, the Company's Common Stock was delisted from the Nasdaq SmallCap Market as of the opening of business on September 16, 2002. The Company's Common Stock (ALDV) commenced trading on the Over- the-Counter Bulletin Board under the same symbol following its delisting from The Nasdaq SmallCap Market. Allied Devices is a leading manufacturer and distributor of high precision mechanical assemblies and components used in industrial and commercial equipment. These products, manufactured to exacting tolerances, provide precision motion control in such products as factory automation, robotics, aerospace and scientific instrumentation, semiconductor equipment, and medical diagnostic and operating room equipment. ANC RENTAL: Consolidating Operations at Sacramento Airport ---------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates intend to reject the March 9, 1993 Rental Car Concession and Lease Agreement between Alamo and the Sacramento County, California and assume the March 9, 1993 Rental Car Concession and Lease Agreement between National and the Sacramento County and assign it to ANC. The agreements allowed Alamo and National to operate a car rental concession and lease certain premises to Alamo at the Sacramento Airport. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, relates that the Court should grant the relief requested in the motion because it will result in savings to the Debtors of over $1,508,000 per year in fixed facility costs and other operational cost savings. It will also allow ANC to operate as a single operator under the National and Alamo trade names, thereby improving its customer service. (ANC Rental Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARMSTRONG HOLDINGS: Keeps Plan Filing Exclusivity Until April 4 --------------------------------------------------------------- Judge Newsome granted Armstrong Holdings, Inc., and its debtor- affiliates the exclusive right to file a Chapter 11 plan through April 4, 2003, and the exclusive right to solicit acceptances of that plan from their creditors through June 3, 2003, without prejudice to their right to request further extensions. Armstrong Holdings Inc.'s 9.0% bonds due 2004 (ACK04USR1), an issue in default, are trading at 58.5 cents-on-the-dollar, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1 ASBESTOS CLAIMS: Taps Kirkpatrick as Special Insurance Counsel -------------------------------------------------------------- Asbestos Claims Management Corporation seeks approval from the U.S. Bankruptcy Court for the Northern District of Texas to employ Kirkpatrick & Lockhart LLP as special insurance counsel. The Debtor tells the Court that Kirkpatrick & Lockhart has extensive expertise and experience in the representation of policyholders in coverage disputes with their historical insurance carriers. Particularly, Kirkpatrick & Lockhart has considerable experience and knowledge with the Debtor's insurance coverage issues due to its previous engagement. Kirkpatrick & Lockhart currently holds a $100,000 retainer provided by the NGC Settlement Trust. The NGC Settlement Trust has agreed to pay all allowed fees earned and expenses incurred by K&L with respect to representing ACMC as special insurance counsel. The Debtor has approximately $75.5 million in outstanding unsettled insurance limits that it believes is available under its insurance policies to pay asbestos claimants. Coverage has been denied by the insurers and, accordingly, is subject to litigation. Moreover, a significant amount of Debtor's insurance coverage is due from insurers that are now insolvent. Asbestos Claims Management Corporation filed for chapter 11 protection on August 19, 2002 at the U.S. Bankruptcy Court for the Northern District of Texas. Michael A. Rosenthal, Esq., and Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors it listed debts and assets of over $100 million. AVIATION SALES: Signs-Up KPMG to Replace Andersen as Auditors ------------------------------------------------------------- TIMCO Aviation Services, Inc., has elected, effective June 12, 2002, to engage KPMG LLP as its independent auditors to audit the Company's consolidated financial statements for the year ending December 31, 2002. KPMG LLP will commence its engagement with the review of TIMCO's financial statements for the fiscal second quarter ended June 30, 2002. The decision to dismiss Arthur Andersen LLP, effective June 12, 2002, the Company's prior independent auditors, and to retain KPMG as the Company's independent auditor was made by the Audit Committee of the Board of Directors. The Company's auditors for the last two years have been Arthur Andersen. Arthur Andersen's reports on the Company's consolidated financial statements for each of the years ended December 31, 2001 and 2000 contained a going concern modification. Aviation Sales provides maintenance, repair, and overhaul services to major commercial carriers, airline leasing companies, and jet engine manufacturers (including Pratt & Whitney). Aviation Sales is restructuring: It has sold its redistribution business (to Kellstrom Industries), as well as its manufacturing operations and other noncore businesses. With the divestitures, MRO operations -- including aircraft heavy maintenance, component repair and overhaul services, and engineering services -- are now Aviation Sales' sole focus. The company operates repair facilities in the US. BAPTIST FOUNDATION: Trust to Auction Off Properties on October 5 ---------------------------------------------------------------- The BFA Liquidation Trust has teamed up with CWS Marketing Group of Arizona in an effort to sell some of its remaining ranch properties in Arizona. The Trust has more than 3000 acres of land in Arizona that will be available for public bidding on October 5th at the Scottsdale Hilton Resort and Villas, located at 6333 N. Scottsdale Road, Scottsdale, Arizona. Registration will begin at 8:00 a.m. with the auction following at 9:30 a.m. Sale of the Trust's land will further assist in recovering debt from the bankrupt Baptist Foundation of Arizona. In addition to the Arizona properties, land in New Mexico, Nevada, and Arkansas will also be available at this auction through several other partnerships that have joined forces with CWS Marketing Group, creating a mammoth real estate sales event! With limited safe places to invest, this auction will also provide the general public an opportunity to buy land for use as a real estate investment or to develop the property in accordance with zoning regulations. Prior to the live auction, bidders from across the country will have the opportunity to submit bids online. This will provide those unable to attend the event an opportunity to participate. Those needing more information on this may call 480-905-5814. Complete auction information and details can also be found at http://www.cwsmarketing.com BRITISH ENERGY: Fitch Comments on Government's Emergency Funding --------------------------------------------------------------- Fitch has published a comment on progress at British Energy plc in addressing the company's current liquidity crisis. The ratings of 'B+/B' remain on Rating Watch Evolving. The comment focuses on the possibility that the recent loan granted by the government may in future benefit from collateral, which may in turn be to the detriment of existing BE bondholders. "The situation is highly fluid," noted Isaac Xenitides, head of Fitch's European Energy group. "If the new facility involves material collateral being pledged to the UK government, a further negative rating action on the senior unsecured bonds of British Energy is highly likely." Normally, documentation for unsecured corporate bonds in the UK market would impose severe limitations upon how much, if any, secured indebtedness can be raised, to the detriment of unsecured bondholders (i.e. without the provision of equal and rateable security to the unsecured bondholders). Though exceptions of several types are not unusual, existing bond documentation for BE contains language (atypical for the UK bond market) which may permit additional secured debt of up to GBP250m, if such debt has a maturity of not less than 15 years. While it would seem unlikely at this point that a direct loan from government, or a government-guaranteed loan, would be made for this maturity, this does leave the door open to secured indebtedness without equal and rateable security being offered to the existing unsecured bondholders. Xenitides added: "A number of factors combine to support the view that existing creditors will be keen to accommodate a restructuring rather than actively pursue insolvency," including issues surrounding the Bruce Power leasing arrangements and the inherent difficulties of valuing the core UK operations. "In any event, three weeks is unlikely to prove adequate time for a plan to be developed that allows BE to resume trading without government support." Fitch also noted that it is watching for how the nuclear generator's liabilities to UK-government owned fuel reprocessor BNFL Ltd. will be treated in forthcoming discussions. "On a going concern basis, there is obviously a real chance that the contracts behind these obligations will change materially, and thus the scale of these liabilities, amounting to potentially GBP2.1bn, could change dramatically," added Richard Hunter of Fitch's Global Power group. "Even if BE faces break-up, the government would have to make a choice on whether it encourages acceleration on BNFL's claims, uses them to possibly take the company back into public ownership, or alternatively takes a more pragmatic view on which liabilities may be pursued, and which a liquidation value would have to satisfy." BUDGET GROUP: Asks Court to Approve Asset Sale to Cendant Corp. --------------------------------------------------------------- Matthew B. Lunn, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware relates that Freres & Co. LLC contacted 39 equity investors and purchasers in early January 2002 to gauge market interest in an equity investment or a going-concern sale. Lazard distributed preliminary marketing information addressing Budget Group Inc., and its debtor-affiliates' business and forms of confidentiality agreements. Out of those 39 potential investors, 33 signed confidentiality agreements and reviewed the informational marketing materials provided by Lazard. Nine parties expressed significant interest in the Debtors' business and subsequently attended Lazard's management presentation and conducted initial due diligence. On May 10, 2002, four final bids were submitted: three bids proposed equity investments and one offered to purchase substantially all of the Debtors' assets. Cendant Corporation made the offer to purchase. Mr. Lunn tells the Court that the Debtors and Lazard continued to negotiate with the four parties that submitted final bids, in an attempt to increase the value of those offers. Ultimately, the Debtors determined that Cendant's bid was the highest and best bid. The Debtors then focused their attention on negotiating a definitive letter of intent with Cendant. A non- binding letter of intent with Cendant was executed on June 13, 2002. An Asset and Stock Purchase Agreement followed on August 22, 2002, after the Debtors and Cendant engaged in extensive, good faith, arm's-length negotiations concerning the definitive terms for the sale of the Acquired Assets. The Ad Hoc Committee of Senior Noteholders -- several members of which now serve in the Official Committee of Unsecured Creditors -- was involved in these negotiations and that led to an increase in the purchase price. At this juncture, subject to higher and better offers in a competitive bidding process, the Debtors ask the Court to approve the sale of substantially all of their assets, free and clear of all adverse interests. A full-text copy of the Stock and Asset Purchase Agreement is available at no charge at: http://bankrupt.com/misc/274AssetStockPurchaseAgreement.pdf The salient terms of the Asset & Stock Purchase Agreement between Cherokee Acquisition Group Corp., a newly formed and wholly owned subsidiary of Cendant, and the Debtors are: A. Consideration: The Buyer will acquire the Acquired Assets for $107,500,000 in cash -- payment of which is guaranteed by Cendant -- plus the assumption of Assumed Indebtedness and Assumed Liabilities and fleet debt exceeding $2,700,000,000. The Buyer will reimburse the Debtors for certain fees, expenses and other costs of the Debtors relating to the bankruptcy cases, the financings and the transactions contemplated by the Agreement not exceeding $41,000,000 -- or under certain circumstances, $44,000,000 -- less the amount of the Qualified Fees paid by the Debtors from June 30, 2002 until the closing under the Agreement. The cash purchase price will be reduced if the Qualified Fees paid from June 30, 2002, until the Closing exceed $42,000,000 -- or $45,000,000, under certain circumstances; B. Acquired Assets: -- the Equity Securities of the Acquired Companies and in Minority Investees, and -- substantially all of the assets, properties, contracts, rights and other interests of the Debtors primarily used or held for use by Seller Parties in connection with the Seller Parties' automotive rental businesses and operations throughout the United States, Canada, the Caribbean region, Latin America and the Asia Pacific region -- excluding Europe, the Middle and Africa -- whether tangible or intangible, real, personal or mixed; C. Assumed Liabilities: The Buyer will assume certain specified liabilities of the Debtors including: * the Assumed Indebtedness -- including indebtedness under Demand Notes, up to $$72,000,000 in principal under the Nissan Facility, up to $100,000,000 in principal under the DIP Financing and up to $433,000,000 in principal under the Amended and Restated Credit Facility and DIP L/C Rollover; * liabilities expressly contained in any Assumed Contract or Assumed Lease and first arising after the Closing Date, * liabilities under certain Assumed Benefit Plans, * certain specified operating liabilities, and * the Qualified Fees; D. Assumption of the Assumed Contracts/Leases: Subject terms of the Agreement, which provides a mechanism for the rejection of Contracts and Leases -- including those currently identified as Assumed Contracts and Assumed Leases -- the Debtors will assume and assign to the Buyer all of the Assumed Contracts and Assumed Leases. The Debtors will pay, at Closing, those specified amounts required to cure the outstanding balances owing under the contracts and leases pursuant to Section 365 of the Bankruptcy Code; E. The Order Authorizing Assumption and Assignment of Assumed Contracts and Assumed Leases: The Agreement further requires that the Order approving the assumption and assignment of the Assumed Contracts and Assumed Leases provides, among other things, that: -- All defaults of Seller Parties under the Assumed Contracts and Assumed Leases arising or accruing prior to the date of the Order, without giving effect to any acceleration clauses or any default provisions in the contracts of a kind specified in Section 365(b)(2) of the Bankruptcy Code, have been cured or will be promptly cured by Seller Parties and that Buyer will have no liability or obligation with respect to any default or obligation arising or accruing prior to Closing, and -- The Assumed Contracts and Assumed Leases will be assumed and assigned to, and remain in full force and effect for the benefit of, Buyer, notwithstanding any provision in the Assumed Contracts or Assumed Leases or in applicable Law that prohibits, restricts, or conditions in any way the assignment or transfer including, change of control, payment or Liabilities triggered by the sale of the Acquired Assets or any portion thereof and use and going dark restrictions. F. Excluded Assets: The Acquired Assets do not include certain assets of the Debtors defined as Excluded Assets and listed in the Agreement, including assets held or used solely in connection with operations in Europe, the Middle East, and Africa, and certain tax refunds and intercompany receivables; G. Excluded Liabilities: Pursuant to the Agreement, the Buyer does not assume Liabilities not expressly included within the definition of Assumed Liabilities, which include, without limitation, the Excluded Liabilities listed in the Agreement; H. Conditions to Closing: The conditions to closing of the Agreement include, without limitation, compliance with various foreign competition laws and Sale Order containing the provision required by the Agreement. Additionally, both the Debtors' and the Buyers' obligations under the Agreement are conditioned upon, among others, compliance with all covenants, representations contained in the Agreement. Significantly, there is no financing or due diligence contingency in the Agreement. Clearance under the Hart- Scott-Rodino Antitrust Improvements Act of 1976 has already been received; I. Termination: The Agreement may be terminated at any time prior to the Closing Date: -- by mutual written consent of the Buyer or the Debtors; -- by either the Buyer or the Debtors; -- by the Buyer; and -- by the Debtors. The Buyer is permitted to terminate the Agreement for a variety of reasons, including, without limitation, Seller Parties' breach of representations, warranties and covenants and failure of the Seller Parties' to achieve certain milestones. Milestones include obtaining entry of: -- The Bidding Procedures Order by September 10, 2002, -- The Sale Order by October 28, 2002, and finality of that Order by November 8, 2002, and -- Closing by November 9, 2002. The Buyer may also terminate the Agreement for failure of the Seller Parties to meet certain financial tests; defaults under various postpetition debt facilities which result in acceleration or termination of vehicle lease agreements; conversion of any Seller Parties' case to Chapter 7 and various actions relating to an Alternative Transaction; J. Termination Amount: The Seller Parties, jointly and severally, will pay in cash to Buyer as a termination fee and as liquidated damages, the applicable percentages of an amount equal to $15,000,000. (Budget Group Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392- 0900) Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1), DebtTraders reports, are trading at 18 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for real-time bond pricing. CAREMARK RX: Intends to Redeem Outstanding 7% Convertible Notes --------------------------------------------------------------- Caremark Rx, Inc. (NYSE: CMX), intends to redeem all of its outstanding 7% convertible subordinated debentures due 2029, which are held by Caremark Rx Capital Trust I. The redemption date will be October 15, 2002. Upon this redemption, the trust will be required to redeem on the same date all of its outstanding 7% shared preference redeemable preferred securities, $50 liquidation amount per security, and its common securities. The redemption price for each trust security, $50 liquidation amount per security, will be $52 plus accrued and unpaid distributions to the redemption date. The holders of the trust securities may elect to convert their trust securities into shares of common stock of the Company at any time prior to 5:00 p.m., New York City time, on October 11, 2002. Trust securities validly submitted for conversion will be converted into shares of common stock at the current conversion rate of 6.7125 shares of common stock per trust security (which is equivalent to a conversion price of $7.4488 per share of common stock). Fractional shares will be paid in cash. The Company will pay an aggregate redemption price of $208 million to redeem all of the outstanding debentures. If all holders of outstanding trust securities elect to convert their trust securities, the Company will issue an aggregate of 26.9 million shares of its common stock. These shares are already reflected in the Company's outstanding shares for purposes of calculating its earnings per share. Caremark Rx, Inc., also announced that it recently amended its credit facility to permit repurchases of its common stock in an amount not to exceed $150 million. Prior to the amendment, the credit facility limited stock repurchases to an aggregate of $150 million, not to exceed $50 million in any year. The $50 million annual limitation was removed in the amendment. "The conversion further strengthens our balance sheet and enhances our cash flow in the future while the amendment to the credit agreement gives us more flexibility to deploy our cash as we move into 2003," stated Mac Crawford, Chairman of the Board and Chief Executive Officer of Caremark Rx, Inc. Caremark is a leading pharmaceutical services company providing comprehensive drug benefit services to over 1,200 health plan sponsors and holding contracts to serve approximately 24 million participants throughout the U.S. Caremark's clients include managed care organizations, insurance companies, corporate health plans, unions, government agencies, and other funded benefit plans. The company operates a national retail pharmacy network with over 55,000 participating pharmacies, three state- of-the-art mail service pharmacies, the industry's only FDA- regulated repackaging plant and 21 specialized therapeutic mail service pharmacies for delivery of advanced medications to individuals with chronic or genetic diseases and disorders. Additional information about Caremark Rx is available on the World Wide Web at http://www.caremarkrx.com In its June 30, 2002 balance sheet, Caremark recorded a total shareholders' equity deficit of about $629.5 million. CLICKS & FLICKS: Airs Confidence in Ability to Turnaround Biz. -------------------------------------------------------------- Clicks & Flicks, Inc., a company used to operate one-hour photo developing stores filed for chapter 11 protection on September 4, 2002 in the U.S. Bankruptcy Court for the Southern District of New York. Faced with competition, the Debtor expanded its business and ventured on commercial digital imaging by partnering with Extreme Digital, Inc. Cliff Strome, the Debtor's president, tells the Court that the business expansion proved to be capital intensive, which exhausted the company's resources. After several attempts of refinancing, the Debtors returned to its traditional method of operations. Extreme Digital assumed the Debtor's digital imaging business, Image Lab. Extreme Digital's assumption of Image Lab entitled the Debtor a $2,500 per week through October 28, 2005. Additionally, Mr. Strome personally served as a consultant to Extreme Digital at $15,000 per month. Mr. Strome tells the Court that he intends to dedicate a sizeable share of his consulting fees to formulate a plan of reorganization in this case. However, most of his consulting fees are used to pay his ex-wife, Wendy Strome, who retains a lien and interest against the assets of the Debtor based on the Strome couple's 1995 Separation Agreement and divorce. In this regard, Mr. Strome assures the Court that his bankruptcy attorneys will review the continuing validity of this lien for the benefit of the overall creditor body. The Debtor is confident that it will be able to operate profitably in the upcoming months towards the confirmation of a consensual reorganization plan. Kevin J. Nash, Esq., at Finkel Goldstein Berzow Rosenbloom Nash represents Clicks & Flicks, Inc. in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated debts and assets of $1 million to $10 million each. CONSECO FINANCE: Fitch Lowers Five Classes of Notes and Certs. -------------------------------------------------------------- Fitch Ratings downgrades the notes and certificates issued by Conseco Finance Vehicle Trust as follows: --Class A-2 Notes to 'BB' from 'BBB+'; --Class A-3 Notes to 'BB' from 'BBB'; --Class M-1 Notes to 'CCC' from 'BB'; --Class M-2 Notes to 'CC' from 'B'; --Class B Certificates to 'D' from 'DDD'. In addition, the Class A-2, A-3, M-1 and M-2 notes remain on Rating Watch Negative. The downgrades come in response to continued asset deterioration well outside of performance expectations as well as other recent negative developments. Conseco Finance Vehicle Trust 2000-B is backed by receivables from Conseco Finance Corp.'s truck and trailer retail installment sales contracts and promissory notes. Fitch downgraded certain classes of the transaction on March 15, 2002, as a result of poor performance. The trucking industry remains entrenched in a prolonged downturn as the weakened U.S. economy has slowed freight traffic. Coupled with increasing diesel prices, obligors are being pressed resulting in continued high delinquencies and defaults. The depressed truck wholesale market has magnified loss severity contributing to higher overall net losses. Further, the specialized servicing associated with this asset and the increased likelihood of a servicer transfer following Conseco Inc.'s (CFC's parent) downgrade ('D' as of 9/10/02), resulting in additional concern with respect to any recovery in the near term by Fitch. Fitch will continue to closely monitor the transaction and may take further action as warranted. CONSTELLATION BRANDS: Will Publish Q2 Results on September 25 ------------------------------------------------------------- Constellation Brands, Inc., (NYSE: STZ and STZ.B) will be reporting financial results for the Second Quarter ended August 31, 2002, on Wednesday, September 25, 2002 after market hours. A conference call to discuss the Second Quarter financial results will be hosted by Richard Sands, Chairman and CEO and Tom Summer, Executive Vice President and CFO on Thursday, September 26, 2002 at 11:00 a.m. Eastern. The news media is invited to listen-only on this call. The conference call can be accessed by dialing 412-858-4600. A live listen-only web cast of the conference call is available on the Internet at the Company's web site, http://www.cbrands.com under Investor Information. If you are unable to participate in the conference call, there will be a replay available by dialing 412-858-1440 from approximately 1:00 p.m., (Eastern) on Thursday, September 26, 2002 through 12:00 a.m. (Eastern) on Friday, October 4, 2002. Digital Playback Instructions - Courtesy of ChorusCall 1. Dial 412-858-1440. 2. Enter '274' when prompted for your account number followed by the # sign. 3. Please press '1' to play recorded conference. 4. Please enter '295184' when prompted to enter the conference number followed by the # sign. 5. Please clearly state your name and company name when prompted to do so followed by any key. 6. Please press '1' to begin the conference playback. Note: You may press 0 at anytime during the conference to hear the Detailed Instructions Menu. You may press 2 at anytime during the conference to stop the playback entirely. You will be placed in the Introduction Menu. Constellation Brands, Inc., is a leading producer and marketer of beverage alcohol brands, with a broad portfolio of wines, spirits and imported beers. The Company is the largest single- source supplier of these products in the United States, and both a major producer and independent drinks wholesaler in the United Kingdom. Well-known brands in Constellation's portfolio include: Corona Extra, Pacifico, Modelo Especial, St. Pauli Girl, Black Velvet, Fleischmann's, Schenley, Ten High, Franciscan Oakville Estate, Simi, Estancia, Ravenswood, Alice White, Talus, Vendange, Almaden, Arbor Mist, Stowells of Chelsea and Blackthorn. * * * As reported in Troubled Company Reporter's January 28, 2002 edition, Standard & Poor's assigned its single-'B'-plus rating to Constellation Brands Inc.'s $200 million senior subordinated notes due 2012, the proceeds of which are to be used for retiring the company's subordinated notes due in 2003. In addition, the double-'B' corporate credit and senior unsecured ratings for the company were affirmed. Total debt outstanding as of November 30, 2001 was approximately $1.5 billion. The outlook remains negative. COSERV ELECTRIC: Texas Court Confirms Reorganization Plan --------------------------------------------------------- The Honorable D. Michael Lynn of the U.S. Bankruptcy Court for the Northern District of Texas, Fort Worth Division, entered an order on September 11, 2002, confirming the bankruptcy reorganization plan jointly submitted in June 2002 by Denton County Electric Cooperative, Inc., d/b/a CoServ Electric and National Rural Utilities Cooperative Finance Corporation. Under the plan, $601 million of CoServ's debt will be repaid over the next 35 years. On August 29, 2002, Judge Lynn entered an order confirming the liquidation plan of CoServ Realty Holdings, L.P., also jointly submitted in June 2002 by CoServ and CFC. Under this plan, CoServ's real estate holdings will be transferred to an entity controlled by CFC in satisfaction of indebtedness of approximately $365 million. In addition, the confirmation hearing for the liquidation of CoServ's telecommunications entities is scheduled for September 27. If confirmed, an entity controlled by CFC will acquire all of the telecommunications properties, which CFC intends to sell to others. "Now that Judge Lynn has approved these plans, CoServ will be able to emerge from bankruptcy, refocus its efforts on its core electric business, and begin repaying its debt to CFC," said CFC Governor and CEO Sheldon C. Petersen. "The rapid resolution of this situation is very positive for CFC members and investors." CFC is a not-for-profit finance cooperative that serves the nation's more than 1,000 electric cooperatives and their subsidiaries. With more than $20 billion in assets, CFC provides its member-owners with an assured source of low-cost capital and state-of-the-art financial products and services. CUTTER & BUCK: Hearing on Appeal of Nasdaq Action Set for Friday ---------------------------------------------------------------- Cutter & Buck Inc.,(Nasdaq: CBUKE) announced tat the hearing regarding its appeal of the earlier action by The Nasdaq Stock Market to delist the Company's securities has been set for September 20, 2002 in Washington, D.C. he appeal relates to the Nasdaq Stock Market's decision that the Company's securities no longer meet the requirements for listing stemming from violations of Nasdaq Marketplace rules 4330 and 4330(C)elating to public interest concerns, and Rule 4310(C), which requires the Company to maintain at least three years of audited financial statements. The Company does not expect a Listing Qualifications Panel to make a decision at the time of the hearing. Pending the outcome of the appeal, the Company's Common Stock will continue trading on the Nasdaq National Market under the symbol "CBUKE." The Company is continuing its internal investigation into accounting irregularities during the fiscal years ended April 30, 2000 and April 30, 2001 and intends to restate its financial results for those periods in order to correct inaccurate reporting of certain transactions and to properly reflect the treatment of sales entries that should have been recorded in later periods. "While our process has taken a little longer than originally planned, we expect to be current in our financial reporting by about the end of this month," said Fran Conley, Chairman and CEO. "I am encouraged that as we move toward completing the investigation, we have not seen any reason to believe that the Company's current net worth will be affected or that there will be any change in the Company's total sales for the past three years," continued Conley. The circumstances leading up to the restatement are being investigated by the Securities and Exchange Commission and by Nasdaq and the Company is responding to their inquiries. Cutter & Buck designs and markets upscale sportswear and outerwear under the Cutter & Buck brand. The Company sells its products primarily through golf pro shops and resorts, corporate sales accounts and specialty retail stores. Cutter & Buck products feature distinctive, comfortable designs, high quality materials and manufacturing and rich detailing. ENRON CORP: Court OKs Stipulation Allowing Valero Claim Set-Off --------------------------------------------------------------- Prior to Petition Date, Valero Marketing and Supply Company and Enron Gas Liquids, Inc., entered into contracts relating to Valero's purchase of MBTE from Enron Gas. Under the Contracts, Enron Gas would issue a provisional invoice and Valero would pay the amount of the provisional invoice based upon an estimate of MTBE USGC SPOT -- PLATTS -- Monthly Average, subject to final adjustment based upon the actual MTBE USGC SPOT Monthly Average. Under Valero Contract No. 42-00006790, the provisional payment by Valero for March 2001 exceeded the contract purchase price by $39,390 -- March Overpayment. Under Valero Contract No. 42- 00003907, the provisional payment by Valero for October 2000 exceeded the contract purchase price by $89,248 -- October Overpayment. On the other hand, $1,537,470 is due from Valero under Contract NO. 42-00006790 for November deliveries -- November Payment. Valero has asserted: (a) a right of recoupment for the March Overpayment; and (b) a right to setoff the October Overpayment against the November Payment. Also, pursuant to Valero Contract No. 42-00001474, Valero purchased Isobutane from EGL, as to which Valero owes $389,878 for November 2001 deliveries. To resolve the issues without the cost and expense of litigation, Enron Gas and Valero entered into a Stipulation containing these terms: (a) Valero may offset the $89,248 October Overpayment against the November Payment; (b) Valero may recoup the $39,690 March Overpayment against the November Payment; (c) Valero will pay $1,408,532 to EGLI in full and complete satisfaction of all sums due from Valero under Contract No. 42-00006790; (d) Valero will pay $389,878 to EGLI in full and complete satisfaction for all sums due from Valero under Contract No. 42-00001474; (e) Except as expressly provided herein, the parties reserve all of their respective rights, claims and defenses; and (f) Valero will make the payments required by wire transfer to: Bank: Citibank New York Beneficiary: EGM Cash Services (for EGLI) Account #: 30420778 ABA #: 021000089. Accordingly, Judge Gonzalez puts his stamp of approval on the Stipulation. (Enron Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) Enron Corp.'s 9.125% bonds due 2003 (ENRN03USR1), DebtTraders reports are trading at 11.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR1 for real-time bond pricing. EXODUS COMMS: Relera Warns Against Transfers of 1.2MM Preferreds ---------------------------------------------------------------- Apparently not completely aware that all prepetition equity interests in Exodus Communications, Inc., and its debtor- affiliates were cancelled and extinguished under the Plan, in a letter dated August 22, 2002, Edward J. Adkins, Esq., Assistant General Counsel of Relera Internet Centers and Solution, warns the United States Trustee's Office -- for no particular reason - - against transferring 1,200,000 shares of Series A Preferred Stock of Relera, Inc. that are owned by Exodus. Mr. Adkins relates that Exodus is a party to the Amended and Restated Investors' Rights Agreement between Relera and certain of its stockholders, and the Amended and Restated Stockholder Agreement between Relera and certain of its stockholders. Both agreements are dated August 4, 2000. Section 2.1 of the Investors Rights Agreement provides, in pertinent part, that Exodus agrees not to make any disposition of all or any portion of the [Shares] unless and until: "(A) the transferee has agreed in writing to be bound by the terms of [the Investors Rights Agreement], (B) [Exodus] shall have noted [Relera-herein the "Company"] of the proposed disposition and shall have furnished the Company with a detailed statement of the circumstances surrounding the proposed disposition, and (C) if reasonably requested by the Company, [Exodus] shall have furnished the Company with an opinion of counsel, reasonably satisfactory to the Company, or such other evidence that the Company may reasonably request, that such disposition will not result in a violation of the Securities Act [of 1933] or any applicable state securities law." Article III of the Stockholder Agreement provides, in pertinent part, that if a stockholder proposes to sell or transfer any shares held by the stockholder, the other Relera stockholders that are parties to the Stockholder Agreement have rights of first refusal to purchase those shares. Given the respective provision in each agreement, Mr. Adkins points out that only these options exist for any given party on the shares: -- comply with the terms and conditions of the Investors Rights Agreement and the Stockholder Agreement, or -- abandon the Shares. "Distributing the Shares to the creditors of Exodus would be in violation of the Investors Rights Agreement and the Stockholder Agreement and would unnecessarily result in additional federal and state securities law compliance issues," Mr. Adkins asserts. (Exodus Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) Exodus Communications Inc.'s 11.625% bonds due 2010 (EXDS10USR1), DebtTraders says, are trading at about 5. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS10USR1 for real-time bond pricing. FEDERAL-MOGUL: Wants More Time to Make Lease-Related Decisions -------------------------------------------------------------- James O'Neill, Esq., at Pachulski Stang Ziehl Young & Jones P.C., in Wilmington, Delaware, recounts that immediately after the Petition Date, Federal-Mogul Corporation's management and professionals were consumed with effecting a smooth transition to the Chapter 11 environment, including: (a) responding to information requests and concerns of the Committees and various creditor constituencies; (b) handling the typical business emergencies that occur immediately following the commencement of a chapter 11 case of a large operating company; and (c) addressing the Debtors' initial reporting requirements. During the First and Second Extension Periods, the Debtors' management and professionals have expended considerable energies on employee retention issues, including, without limitation: (a) the establishment of bar dates respecting asbestos-related property damage claims and all claims other than asbestos- related personal injury claims; (b) resolving issues raised by numerous parties-in-interest including requests to lift the automatic stay; and (c) commencing negotiations aimed at the formulation of a consensual plan of reorganization in these cases. As part of their reorganization business plan, the Debtors are in the process of: (i) consolidating their facilities to eliminate redundancies and inefficiencies; and (ii) shifting manufacturing efforts to portions of the country and the world more suitable to their businesses. As the Debtors continue to evaluate the remaining 88 unexpired nonresidential real property leases, they anticipate that the process will take at least an additional six months, beyond the October 1, 2002 deadline. Therefore, the Debtors ask the Court to move the lease decision deadline through and including April 1, 2003. Mr. O'Neill tells the Court that the Debtors have had little time to intelligently appraise each lease's value to a plan of reorganization. The existing leases cover a number of the Debtors' significant facilities. Mr. O'Neill explains that the Debtors are evaluating each and every leased facility and the surrounding market for alternative space to determine whether: -- it would be beneficial to move from any of their leased facilities; or -- there would be an opportunity to obtain modifications to the terms of existing leases with their landlords. Pending their election to assume or reject the Real Property Leases, the Debtors promise to perform all of their obligations arising from and after the Petition Date in a timely fashion, including payment of postpetition rent due, as required by Section 365(d)(3) of the Bankruptcy Code. Hence, Mr. O'Neill contends, there should be little or no prejudice to the Lessors as a result of the requested extension. (Federal-Mogul Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) FIRST ALLIANCE: Calif. Court Confirms Joint Amended Reorg. Plan --------------------------------------------------------------- First Alliance Corporation (OTC: FACOQ), along with several of its subsidiaries, announces that on September 9, 2002, the United States District Court for the Central District of California approved the previously disclosed settlement reached between the Company and various litigants, including a certified class of borrowers, other private plaintiffs, the Federal Trade Commission and six states. Additionally, on September 10, 2002, the Court confirmed the Amended Debtor's Joint and Consolidated Plan of Reorganization. As to the Company's shareholders, the settlement provides, in pertinent part, that, under the terms of the Amended Plan, the Company will cancel all issued and outstanding shares of the Company's common stock. After the Effective Date of the Amended Plan, a payment will be made to those persons who held FACO Shares on the Effective Date. The payment will be made from a fund to be established pursuant to the settlement. FACO Shareholders will be paid the lesser of $1.50 per share or the shareholder's purchase basis of such shares prior to cancellation, provided that the total amount of such payments to all shareholders does not exceed $3,250,000.00. Any FACO shares traded after February 25, 2002, will be presumed to have a purchase basis not to exceed $.09. If the total amount of such payments exceeds $3.25 million, the payment to each former shareholder of the Company will be reduced on an equal proportionate basis until the total payments do not exceed $3.25 million. Certain shareholders, including Brian and Sarah Chisick, have waived any payment for FACO shares they hold. Until March 2000, First Alliance Corporation was a sub-prime lender headquartered in Irvine, California, whose business was making mortgage loans primarily to borrowers with impaired credit. FLAG TELECOM: Court Okays Houlihan as Committee's Fin'l Advisors ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of FLAG Telecom Holdings Limited, and its debtor-affiliates, obtained Court authority to employ Houlihan Lokey Howard & Zukin Capital and Close Brothers Corporate Finance Ltd as financial advisors effective May 7, 2002. Specifically, the advisors will render the Committee with: (a) evaluating the assets and liabilities of the Debtors; (b) analyzing and reviewing the financial and operating statements of the Debtors; (c) analyzing the business plans and forecasts of the Debtors; (d) evaluating all aspects of any debtor-in-possession financing, cash collateral usage and adequate protection thereto, as well as any exit financing in connection with any plan of reorganization; (e) providing such specific valuation or other financial analyses as the Committee may require in connection with the Debtors' Chapter 11 cases; (f) helping with the claim resolution process and distributions relating thereto; (g) assessing the financial issues and options concerning (i) the sale of any assets of the Debtors, either in whole or in part, and (ii) the Debtors' plan(s) of reorganization or any other plan(s) of reorganization; (h) preparation, analysis and explanation of any Plan to various constituencies; (i) providing testimony in court on behalf of the Committee, if necessary or as reasonably requested by the Committee; and (j) providing such other financial advisory services as the Committee and Committee Counsel may, from time to time, agree in writing and that are consistent with the Advisors' capabilities. The advisors will jointly be entitled to receive, as compensation for its services: a. a Monthly Fee of $175,000; b. a fee upon the consummation of a Transaction of $2,500,000, less 50% of any Monthly Fees received in excess of $1,050,000; and c. reimbursement of all reasonable out-of-pocket expenses. (Flag Telecom Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Seeks Approval of Lucent Settlement Agreement -------------------------------------------------------------- Paul M. Basta, Esq., at Weil Gotshal & Manges LLP, in New York, relates that pursuant to various agreements, Global Crossing Ltd., and its debtor-affiliates contracted with Lucent for the construction, operation and maintenance of portions of the Debtors' transatlantic fiber-optic cable, as well as for equipment, services and maintenance related to data transmission across the Debtors' network. As a result, the Debtors regard Lucent as a strategic vendor critical to the continuity of the Network. Lucent asserts claims against the Debtors for $123,000,000, including administrative expense claims under Section 503 of the Bankruptcy Code with respect to certain Debtors and claims having priority or preference under applicable law against certain non-debtor entities. However, the Debtors dispute the amount, extent and priority of Lucent's claims and assert that they may have a claim against Lucent for $25,000,000 under Section 547 of the Bankruptcy Code. To resolve the dispute, the parties entered into a Settlement Agreement that provides: -- Global Crossing Parties: Global Crossing Ltd. and all of its debtor and non-debtor subsidiaries and affiliates, excluding Asia Global Crossing Ltd. and its direct subsidiaries; -- Lucent Parties: Lucent Technologies Inc. and all of its subsidiaries and affiliates; -- Initial Payment by Global Crossing to Lucent: Global Crossing to pay $15,000,000 to Lucent within 10 business days of Court approval of the Lucent Settlement Agreement; -- Global Crossing Release: Within 10 business days of Court approval of the Lucent Settlement Agreement, Global Crossing releases Lucent from all claims (from the beginning of time through and including the date of the Lucent Settlement Agreement) other than claims arising under any warranties contained in the Lucent Agreements, as modified; -- Lucent Release: As of the Effective Date, Lucent releases Global Crossing from all claims (from the beginning of time through and including the date of the Lucent Settlement Agreement) with these claims totaling $123,000,000; -- Conveyance of Title to Systems, Segments and Equipment: Lucent will transfer to Global Crossing all title to the cable segments, systems, systems upgrades and equipment free and clear of liens, claims and encumbrances that arise by or through Lucent. The title will vest in Global Crossing on the Effective Date. The order approving the Lucent Settlement Agreement will confirm transfer of title free and clear of liens, claims and encumbrances that arise by or through Lucent to Global Crossing; -- Transfer/Return Ethernet Cards: Upon receipt of the Initial Payment, Lucent will convey 300 ethernet cards to Global Crossing, with conveyance to be on an "AS IS, WHERE IS" basis. In exchange, the Debtors will give Lucent a release of all claims and liabilities associated with the Cards. The Debtors will return to Lucent 50 unused, boxed Cards to Lucent within 30 days of the Court's approval of the Lucent Settlement Agreement; -- Subsequent Cash Payment by Global Crossing to Lucent: Global Crossing to pay $10,000,000 to Lucent upon the earlier of: a. confirmation of Global Crossing's plan of reorganization, or b. March 31, 2003. -- Payment for Services: Global Crossing to pay $25,000,000 to Lucent for, among other things, work, material, product, services, purchase orders and other matters provided or ordered by December 31, 2002, less any amounts previously paid by Global Crossing to Lucent as described in Schedule 2.1(b) of the Lucent Settlement Agreement, i.e., about $14,500,000. Global Crossing is required to make the Services Payment on or before December 31, 2002; -- Allowed Unsecured Claim: Lucent will jointly have a single allowed general unsecured claim of $20,000,000 against the Debtors on a joint and several basis; -- Amendment to June 2001 Services Agreement: The June 2001 Services Agreement will be amended and clarified to provide for: a. Lucent commits to purchase services from Global Crossing in the amount of the $30,000,000 over the next 6 years; and b. Global Crossing will retain the balance of the $15,000,000 prepayment made by Lucent during the period of July 2001 to July 2002 and the prepayment will not reduce the Services Commitment; -- Responsibilities and Remedies Remaining under Existing Contracts: The Lucent Agreements are modified so that the term of all warranties for products and services provided by Lucent to Global Crossing will conclude on the earlier to occur of: a. the end of the remaining warranty period for the product and service as provided in the applicable contracts; or b. September 30, 2004. All "design life warranties" will be governed by the original terms and conditions of the Lucent Agreements; -- Payment Terms under Existing Contracts: Within 30 days of the effective date of a confirmed plan of reorganization, Lucent and Global Crossing will meet and discuss payment terms in good faith. Until then, for products and equipment, Global Crossing will pay upon shipment the purchase price of all products and equipment, including any costs or charges set forth under the appropriate agreement. For services and maintenance, Global Crossing will prepay in full on the last business day of the preceding month. Within 5 business days after invoice, Global Crossing will pay any additional and undisputed amounts incurred for additional services and maintenance. For project development, construction and installation contracts, Global Crossing will prepay semi- monthly on the first business day on or after the first and fifteenth day of the month; -- Assumption of Executory Contracts: The Debtors will assume the Lucent Agreements, provided that no cure or other payments will be required or made in connection with the assumption; and -- Right of Global Crossing to Assume and Assign Lucent Agreements: Global Crossing will be permitted to assign any or all Lucent Agreements and Lucent waives any right under Section 365 of the Bankruptcy Code; provided, however, that Global Crossing will not be permitted to assign any or all of the Lucent Agreements to any competitor of Lucent or any reseller of Lucent equipment and that Global Crossing will not be permitted to assign any license or right granted with respect to any Lucent intellectual property in a Lucent Agreement separate from the assignment of the entire agreement itself. Accordingly, the Debtors ask the Court to approve the Settlement Agreement with Lucent. (Global Crossing Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) Global Crossing Holdings Ltd's 9.625% bonds due 2008 (GBLX08USR1) are trading at 1.25 cents-on-the-dollar, DebtTraders reports. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX08USR1 GROUP TELECOM: US Court Protection Extended Until September 25 -------------------------------------------------------------- GT Group Telecom (TSX: GTG.B, GTG.A) announced that the preliminary injunction issued on July 29, 2002 by the United States Bankruptcy Court in favor of it and its affiliates, has been further extended from September 13, 2002 until September 25, 2002. Monthly reports, filed by PricewaterhouseCoopers, the Canadian court-appointed Monitor, can be found under the heading "Monitor's Reports" when visiting the PricewaterhouseCoopers information link, on the Group Telecom Web site at http://www.gt.ca Group Telecom is Canada's largest independent, facilities-based telecommunications provider, with a national fibre-optic network linked by 454,125 strand kilometres of fibre-optics, at March 31, 2002. Group Telecom's unique backbone architecture is built with technologies such as Gigabit Ethernet for delivery of enhanced network performance and Synchronous Optical Network for the highest level of network reliability. Group Telecom offers next-generation high-speed data, Internet, application and voice services, delivering enhanced communication solutions to Canadian businesses. Group Telecom operates with local offices in 17 markets across nine provinces in Canada. Group Telecom's national office is in Toronto. HAYES LEMMERZ: Wants Lease Decision Period Stretched to Jan. 3 -------------------------------------------------------------- Hayes Lemmerz International, Inc., and its debtor-affiliates seek to further extend the time within which they must assume or reject their unexpired leases of nonresidential real property through and including the earlier of January 3, 2003, or the date of confirmation of a plan of reorganization. The requested extension is subject to the rights of each lessor under an Unexpired Lease to request that the Court shorten the Extension Period and specify a period of time in which the Debtors must determine whether to assume or reject an Unexpired Lease. Michael W. Yurkewicz, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, informs the Court that the Debtors are lessees of several unexpired leases of nonresidential real property. The Unexpired Leases cover premises that the Debtors use for the operation of their corporate and manufacturing facilities. The Unexpired Leases are assets of the Debtors' estates, and thus, integral to the Debtors' continued operations. Cause exists to extend the Section 365 deadline with respect to the Unexpired Leases, in light of: -- the significant progress made to date on the Debtors' business plan and other matters, -- the fact that the Debtors have been, and will continue to be, current on their administrative obligations, and -- the Debtors' progress in the valuation of their business and the implementation of their 5-year business plan,. Although the Debtors may seek the Court's permission to reject some of the Unexpired Leases prior to the conclusion of these Chapter 11 cases, at this time, they believe that most of the Unexpired Leases will prove to be either desirable or necessary to the continued operation of the Debtors' business. The Debtors may assume and assign the Unexpired Leases to third parties, if they are not necessary to the Debtors' ongoing business operations and are "below market" rate. Mr. Yurkewicz relates that the Debtors have made progress in evaluating their real estate assets throughout these cases and are currently assessing the value and marketability of all of the Unexpired Leases and whether there is sufficient value to merit assumption and assignment rather than rejection. Ultimately, the Debtors' decision whether to assume, assign, or reject particular Unexpired Leases, as well as the timing of the assumption, assignment, or rejection, depends in large part on the Debtors' business plans for the future -- i.e., whether the leased premises will play a role in the Debtors' strategic operating plans going forward. Until the Debtors go-forward business plan is fully implemented, the Debtors cannot determine whether each of the locations covered by the Unexpired Leases will remain a part of the Debtors' business. Indeed, without an additional extension of time within which to make these decisions, the Debtors' business judgment may be compromised as they would be forced to make premature decisions on specific properties before related implementation of their business plan. Mr. Yurkewicz assures the Court that the objecting landlords will not be prejudiced if the relief requested is granted. Throughout the course of these cases, the Debtors have remained current on their administrative obligations, including leasehold obligations. Going forward, there is no reason to believe that the Debtors will not continue to remain current on their leasehold obligations. The Debtors have the financial resources and the unfettered intention to perform all of their obligations under the Unexpired Leases as required by Section 365(d)(4) of the Bankruptcy Code. According to Mr. Yurkewicz, the Debtors' operating results, which continue to exceed projections, also show the Debtors' progress toward reorganization. To date, the Debtors' consolidated EBITDA has continued to surpass initial projections; the Debtors continue to exceed their initial 2002 goals and are significantly ahead on their bank covenants. In addition to meeting financial targets, there are numerous other objective indications of the successful stabilization of the Debtors' business. These measures include maintenance of a strong liquidity position and significant restoration of vendor confidence. If the Extension Period is not extended, Mr. Yurkewicz fears that the Debtors will be compelled prematurely to assume substantial, long-term liabilities under the Unexpired Leases -- potentially creating administrative expense claims -- or forfeit benefits associated with some leases, to the detriment of their ability to operate and preserve the going-concern value of their business for the benefit of their creditors and other parties- in-interest. (Hayes Lemmerz Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) HESKA CORP: Gets Approval to Transfer Listing to Nasdaq SmallCap ---------------------------------------------------------------- Heska Corporation (Nasdaq: HSKA), a company focused on commercializing novel veterinary products, announced its application to transfer the trading of its common stock to the NASDAQ SmallCap Market had been accepted effective at the opening of trading on Monday, September 16th. The company continues to trade under the symbol "HSKA". "We are glad our shares will continue to be listed by NASDAQ. We are committed to ensuring our shares trade on a well- regulated market for the benefit of our shareholders," said Robert Grieve, Heska's Chairman and CEO. "We believe this is the right market for us as we are a small cap company today. I can give all our shareholders my assurance, however, that this management team is committed to increasing shareholder value as quickly as possible. We intend to continue to focus on the fundamentals of our business -- growing revenues, increasing gross margins, and carefully controlling operating expenses -- to drive shareholder value." "One of the challenges for a small company like ours is getting our message out to potential investors," said Jason Napolitano, Heska's CFO. "I note that while there are over 3,000 NASDAQ National Market companies, there are only about 750 listed on NASDAQ SmallCap Market. We are hopeful that this will make it easier for an investor interested in small cap company investments to discover us." Both NASDAQ National Market and NASDAQ SmallCap are a part of The NASDAQ Stock Market and operate under the same electronic, screen-based dealer market with trading executed through an advanced computer and telecommunications network. "We believe this move should be transparent to our investors. We will maintain our current ticker, so there should be no confusion about how to get information on our stock trading. Even though the listing fees on SmallCap are lower than on National, the two exchanges work essentially the same, with only minor technical differences. I'd encourage anyone who's interested to evaluate the ease of getting a quote on our stock to try it today and on Monday -- I think you'll find no material difference between the two. We intend to maintain a NASDAQ listing and provide our investors access to all the benefits of The NASDAQ Stock Market," added Napolitano. Heska Corporation (Nasdaq: HSKA) develops, manufactures and markets veterinary products. Heska's core focus is on the canine and feline companion animal markets where it has devoted substantial resources to the research and development of innovative products. Heska state-of-the-art offerings to veterinarians include diagnostics, pharmaceuticals and vaccines as well as diagnostic and monitoring instruments and supplies. The company has a robust product pipeline to drive future growth and continues to strive to develop high value products for unmet needs and to advance the state of veterinary medicine. For further information on Heska and its products, visit the company's Web site at http://www.heska.com The NASDAQ SmallCap Market has requirements Heska must meet in order to remain listed, including a minimum bid price requirement of $1.00. Heska is currently not in compliance with the minimum bid price requirement. It has until November 18, 2002 to comply with the minimum $1.00 bid price requirement which requires that our common stock close with a bid of $1.00 per share or more for a minimum of 10 consecutive trading days. The Company may also be eligible for an additional 180-day grace period, or until May 16, 2003, provided that it has stockholders' equity of $5 million or meet certain other initial listing criteria required by NASDAQ. There's no assurance, however, that the Company will be able to maintain a listing on The NASDAQ Stock Market. If the Company will be delisted from The NASDAQ Stock Market, its common stock will be considered a penny stock under the regulations of the Securities and Exchange Commission and would therefore be subject to rules that impose additional sales practice requirements on broker-dealers who sell its securities. The additional burdens imposed upon broker-dealers discourage broker-dealers from effecting transactions in its common stock, which could severely limit market liquidity of the common stock and the ability to sell securities in the secondary market. This lack of liquidity would also make it more difficult to raise capital in the future. INGERSOLL INT'L: Looks to Merrill Lynch for Financial Advice ------------------------------------------------------------ Ingersoll International has engaged the investment banking firm, Merrill Lynch & Co., to provide financial advice to the Company's management and board of directors. Merrill Lynch will assist the Company in evaluating strategic alternatives, including restructuring of its bank debt and the possible sale of certain assets. Ingersoll International is a leading multinational supplier of machine tools for the world's metalworking industries, employing more than 2500 people worldwide. INTEGRATED HEALTH: Settlement Pact re Walker Securities Approved ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the Settlement Agreement relating to Walker Facilities' securities, entered into by the Symphony Companies and the Centers for Medicare and Medicaid Services. The Settlement Agreement provides that: (1) The Symphony Companies' share of the CMS Settlement Amount -- $1,159,037, will be set-off against: * the aggregate of all unpaid Use & Occupancy Fees and the Assumed Fee Liability owed by the Symphony to the Walker Facilities -- $176,068; and * amounts owed by the Symphony Companies to the Walker Facilities in connection with legal fees incurred in connection with the negotiation of the Settlement Agreement -- $20,000; (2) The Walker Facilities will pay $962,969 to the Symphony Companies; and (3) Concomitantly with the payment of the Symphony Settlement Amount, the Walker Facilities will execute and deliver to the Symphony Companies a release, which will fully and finally release the Symphony Companies from any and all claims of the Walker Facilities in connection with or related to the Therapies. To recall, certain Symphony Debtors, in the chapter 11 cases involving Integrated Health Services, Inc., acquired two Synergy Companies: * Synergy One, Inc. (f/k/a Rehab Dynamics, Inc.) * Synergy Two, Inc. (f/k/a Restorative Therapy Limited) These Synergy Companies provided occupational and speech therapies to patients at three Walker Facilities: * Walker Methodist Health Center, Inc., * Walker Care Corporation I d/b/a Walker Cityview, and * Walker Care Corporation I d/b/a Walker Southview. The Synergy Companies used and occupied certain Operating Space within the Walker Facilities pursuant to Rehabilitation Services Agreements. The Symphony Companies purchased the assets of the Synergy Companies in June 1997. After the Asset Purchase, the Symphony Companies took over the role of providing Therapies at the Walker Facilities and assumed the Synergy Companies' obligations under the Services Agreements, including, but not limited to, paying use and occupancy fees to the Walker Facilities on a going forward basis. Subsequently, the Secretary of the United States Department of Health and Human Services determined that Medicare had overpaid the Walker Facilities for the Therapies provided by both the Synergy Companies and the Symphony Companies, from 1994 through 1998. In accordance with the HHS Decision, the Walker Facilities remitted to the Centers For Medicare And Medicaid Services an amount equivalent to the alleged Medicare overpayments. The Synergy Companies and the Symphony Companies indemnified the Walker Facilities for the amounts repaid to CMS. In consideration of the indemnification, the Walker Facilities agreed that the Synergy Companies and the Symphony Companies would have the right to appeal the HHS Decision. The Synergy Companies and the Symphony Companies successfully appealed the HHS Decision. (Integrated Health Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERPLAY ENTERTAINMENT: Shareholders Meeting Moved to Oct. 10 -------------------------------------------------------------- Interplay Entertainment Corporation is advising its stockholders that the Annual Stockholders Meeting date has been changed. Originally scheduled for September 17, 2002, the date has now been changed to October 10, 2002. Stockholders need be aware that the 2002 Annual Meeting of Stockholders will now be held at 10:00 A.M., Pacific Daylight Time, on Thursday, October 10, 2002, at the Sutton Place Hotel, 4500 MacArthur Blvd., Newport Beach, California 92660. Interplay Entertainment makes PC and console video games with such serene titles as Dungeon Master II, Redneck Rampage, and Torment. Among the subsidiaries and divisions under the Interplay umbrella are 14 Degrees East (strategy and puzzle games), Black Isle (role playing games), Shiny Entertainment (cartoon animation), Tantrum (action games), and Digital Mayhem. Struggling to rebound from financial problems, Interplay is putting more focus on its console games. As of June 30, 2002, Interplay's balance sheet shows a working capital deficit of about $10 million, and a total shareholders' equity deficit of about $7 million. IPET: Will Make Liquidating Cash Distribution by September 27 ------------------------------------------------------------- IPET Holdings, Inc. (OTCBB:IPETZ), announced its Board of Directors has approved a liquidating cash distribution to be paid out of net available assets of $0.075 per share to stockholders of record as of the Company's final record date of January 18, 2001. It is currently anticipated that this distribution will be made on or about September 27, 2002. Dissolution Distribution Summary: -- A final record date of January 18, 2001 was established by the Company in connection with its filing of a Certificate of Dissolution on that date with the Delaware Secretary of State. At the close of business on this date, the Company closed its stock transfer books and discontinued recording transfers and sales of shares of its capital stock. All liquidating distributions will be made to stockholders according to their holdings of the Company's capital stock as of this final record date. -- An initial liquidating cash distribution of $0.09 per share was previously made to the Company's stockholders of record on September 28, 2001. -- An additional liquidating cash distribution amount to stockholders of $0.075 per share with an anticipated distribution date of September 27, 2002 has been approved by the Board of Directors. -- The Company will retain a contingency reserve of approximately $330,000 which it believes will be adequate to meet its remaining legal obligations during the wind down period, which is expected to be completed in 2003. -- The Company may make a small, final distribution at the end of the wind down period. Looking forward, the Company will focus its efforts on winding up its affairs in accordance with the plan of liquidation and dissolution adopted by the Company's stockholders on January 16, 2001. The timing and amounts of any subsequent distributions to stockholders will be determined by the Company's Board of Directors as the plan of dissolution is executed over the next year. IT GROUP: Seeks Approval to Enter into Shaw Master Services Deal ---------------------------------------------------------------- The IT Group, Inc., and its debtor-affiliates seek the Court's authority to enter into a Master Services Agreement with Shaw Environmental Inc., a subsidiary of Shaw Group Inc. Marion M. Quirk, Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, in Wilmington, Delaware, informs Judge Walrath that the Debtors' Northern California Sites are currently in need of environmental consulting and engineering services, including geo-technical services, laboratory analysis and site assessment to continue with their business operations. There are only 12 employees working at the Sites and they lack the expertise or equipment to perform the necessary Environmental Services, including services in connection with the groundwater recovery construction project at the Panoche Site in Sonoma County, California. The Debtors believe that Shaw Environmental could cost- effectively and efficiently provide the necessary Environmental Services at the Sites since the employees who will be performing the services are the Debtors' former employees who possess the institutional knowledge and background to assist them. Besides, Mr. Quirk says, Shaw Environmental has agreed to provide discounted rates for their services. The Debtors' insurer will also reimburse the Debtors' expenses with respect to their participation in the Master Services Agreement. The salient terms of the Master Services Agreement are: (a) The provision of environmental consulting and engineering services, including, technological services relating to the environment, site assessment, remediation and restoration, and laboratory analysis by Shaw Environmental, Inc.; (b) A one-year term from the date of execution, subject to Bankruptcy Court approval. If the Bankruptcy Court disapproves of IT Group's entry into the Agreement, then all costs incurred by Shaw Environmental will be deemed a priority administrative expense; (c) Compensation: (i) Shaw Environmental's fees will be established according to its published rate schedules in effect on the date when the services are performed, subject to a discount of one category rate less than that associated with an individual's project function; (ii) The fees are payable by the earlier of: -- 7 calendar days after IT Group receives payment from a third party; or -- 90 days after IT Group's receipt of the invoice; (iii) Shaw's fees will not exceed $1,000,000, unless otherwise agreed to by both parties; (d) Either party may terminate the Agreement, with or without cause, upon 30 days prior written notice to the other; and (e) Neither party will assign or delegate any of its duties or obligations under the Master Services Agreement without the prior consent of the other. Notwithstanding the foregoing, Shaw may assign or subcontract all or any portion of the services to one or more of its subsidiaries or affiliates or to other persons as it deems appropriate. (IT Group Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Judge Sonderby Deems 6 Utilities Adequately Assured --------------------------------------------------------------- Judge Sonderby signs two Agreed Orders, in settlement of the dispute between Kmart Corporation Debtors, and certain Utility Companies with regards to the provision of adequate assurance of payment of postpetition utility charges. The Utility companies are: 1. Entergy Louisiana, Inc. 2. Entergy Gulf States, Inc. 3. Entergy Arkansas, Inc. 4. Entergy Mississippi, Inc. 5. Entergy New Orleans, Inc. 6. Pacific Gas and Electric Company Pursuant to their respective Agreed Orders, the parties agree that: A. The Utility Order will not govern the terms of postpetition services from the Utilities to the Debtors; B. The terms of postpetition services from the Utilities to the Debtors will be governed by the parties' respective Service Agreements and state-imposed Regulations; C. The Utilities will continue to provide their services to the Debtors and must continue to invoice the Debtors for those services in the same manner customary before the Petition Date. The Debtors will pay the full, undisputed amounts of the Utility's postpetition invoices on or before their due dates. If the Debtors fail to do so, then the Utility may avail itself of its remedies as provided under the State- imposed Regulations; D. The Debtors and Entergy separately agree that: -- The Debtors will pay $500,000 as Initial Advance Payment; -- Entergy will apportion the Initial Advance Payment among the Debtors' Accounts in accordance with the average monthly usage for the prior six months with respect to each Account; -- The Debtors and the Utility will determine the Initial Advance Payment's apportionment among the Accounts; -- Entergy will send the Debtors by the 5th day of each month an invoice specifying, in additional to the information it customarily provides, a statement of the account balance: (a) Each month during the term of this Order, on or before the date that their monthly summary bill invoice payments are due, the Debtors will make an Advance Payment plus (or minus) the amount by which the Debtors' actual usage for the prior billing period was greater (or less than) the amount of the prior Advance Payment; (b) The Debtors will maintain an aggregate Advance Payment credit of $500,000 as of the Invoice Due Date; (c) The Debtors will pay any Advance Payment by check and deliver each check to Entergy: Attn: Jon Majewski Mail Unit L-JEF-359 P.O. Box 6008, New Orleans, LA 70174-6008 (d) The parties will negotiate for a system by which Entergy will submit its bills to the Debtors electronically and the Debtors will submit their payments electronically; -- The Debtors also will pay all invoices for postpetition services that came due before or during April 2002 in accordance with the ordinary payment terms between the parties; E. The Debtors and Pacific Gas also agree that: -- The Debtors will pay $2,000,000 as Security Deposit; -- The Debtors will make necessary payments via electronic funds transfer; -- Pacific Gas will re-compute the amount of the Deposit. (a) Within 15 days of the 6th Month Anniversary Date, Pacific Gas will re-compute the amount of the Deposit. Pacific Gas will send a letter and supporting schedule electronically to the Debtors, with a copy to their undersigned counsel, which sets forth the results of the Re-computation. In re-computing, Pacific Gas will use this method: (i) identify the Account still on line, that is, any for which service either has not been disconnected or there is no pending disconnection order placed by the Debtors with the Utility pursuant to the Regulations; (ii) ascertain the highest monthly Invoice between the Anniversary Date and the Sixth Month Anniversary Date; (iii) divide the Highest Amount by the number of days in the service period attributable to the Highest Amount -- Daily Rate; (iv) multiply the Daily Rate by 35 -- the product is the Deposit Sum; (v) repeat these steps for all of the Recomputed Accounts; and (vi) total the Deposit Sums for all of the Recomputed Accounts -- Recomputed Deposit; (1) If Recomputed Deposit is less than Deposit The Deposit will be reduced by the Difference -- Credit Balance. Pacific Gas will apply the Credit Balance towards the payment of any unpaid charges on the Invoices, and any remainder will be applied towards payment of future Invoices; (2) If Recomputed Deposit is greater than Deposit The Deposit will be increased by the Difference. Within 15 days of Pacific Gas' sending to the Debtors of the Re-computation Letter, in which there is an Additional Deposit, the Debtors will pay the Additional Deposit; (d) Within 15 days of the 12th Month Anniversary, Pacific Gas will re-compute the amount of the Recomputed Deposit employing the same method procedures, this time taking into account the difference of Invoice amounts from the 6th Month Anniversary Date to the 12th Month Anniversary; (e) Within 15 days of the 24th Month Anniversary, Pacific Gas will re-compute the amount of the immediately preceding Recomputed Deposit using the same method, this time considering the Invoice amounts from the 12th Month Anniversary to the 24th Month Anniversary; (f) Every 12 months thereafter during these bankruptcy proceedings, the procedures will repeat, taking into consideration the difference in the Invoice amount within the last 12 months; -- The Security Deposit must bear interest, as provided under the State Regulations, less any amounts due for unpaid utility invoices for postpetition services; F. If there is a default by the Debtors with respect to the payment of the postpetition Utility charges for and that default is not cured within seven days or the period provided for in the State Regulations after a Utility provides a written notice to the Debtors, then that Utility may terminate its utility services without further order from the Court. -- Additionally, Entergy agrees to provide a third party notice of any default notice sent to the Debtors by regular first class mail to: Kurt Ramlo Skadden, Arps, Slate, Meagher & Flom LLP 300 South Grand Avenue, 34th Floor Los Angeles, CA 90071-3144 G. The Debtors concede that any assumption or assignment of Entergy's Service Agreement will not prejudice or otherwise affect Entergy's rights, including without limitation the right to demand a deposit from the Debtors upon the effective date of a confirmed plan of reorganization or from any assignee as a new customer, pursuant to the Regulations with respect to the assumed or assigned Service Agreements; and H. Any undisputed charge for postpetition utility services provided by the Utilities constitutes an administrative expense. (Kmart Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) Kmart Corp.'s 9.0% bonds due 2003 (KM03USR6), DebtTraders reports, are trading at 17 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. LAKE TROP: Files for Chapter 11 Protection in Las Vegas, Nevada --------------------------------------------------------------- MPTV, Inc. (OTC Bulletin Board: MPTV), an innovator in Timeshare Resort Development, announced that its Lake Trop LLC filed for voluntary Chapter 11 protection from its creditor for its principal asset, the Lake Tropicana Timeshare Resort Property in Las Vegas, Nevada. This filing was necessary because of the timing of the Phase I funding and recent actions taken by the lender and its service provider. "We did not want to file for Chapter 11. We were operating on the understanding that we had reached an agreement with our lender on a favorable timeframe and mechanism to satisfy the outstanding mortgage debt. The delay in funding Phase I and recent actions by our lender left us no alternative but to take this step to protect our principal asset. We believe the funding of the refinance of the Lake Tropicana Property and Phase I construction are progressing well. The filing was made at the suggestion of our prospective investor," stated Mr. Hurley Reed, CEO of MPTV, the Managing Director of Lake Trop LLC. MPTV has already been granted building permits for Phase I, which includes the conversion and remodeling of the Lake Trop grounds and apartments into a timeshare resort. MPTV develops and markets timeshare resort properties. The Company's principal asset is a multi-million dollar resort property called Lake Tropicana. MPTV's current project is the Lake Tropicana Timeshare Resort and Towers -- http://www.laketropmptv.com-- located in Las Vegas, Nevada between the MGM Grand Hotel/Casino and the Aladdin Hotel/Casino on the "strip" and the Hard Rock Cafe on Paradise and Harmon Avenue. The "Harmon Corridor" is undergoing transformation with two new casino hotels and three large timeshare projects planned for this area. LAKE TROP: Case Summary & 2 Largest Unsecured Creditors ------------------------------------------------------- Debtor: Lake Trop, L.L.C. 303 East Harmon Las Vegas, Nevada 89109 Bankruptcy Case No.: 02-20394 Chapter 11 Petition Date: September 11, 2002 Court: District of Nevada (Las Vegas) Judge: Robert C. Jones Debtor's Counsel: Shawn Christopher, Esq. Rosenfeld & Money LLP 3800 Howard Hughes #650 Las Vegas, Nevada 89109 (721) 386-8637 Total Assets: $14,748,983 (as of Dec. 31, 2001) Total Debts: $8,688,742 (as of Dec. 31, 2001) Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Clark County, Nevada Property Taxes $53,271 Various Maintenance Trades Trade Debt $35,000 LANDSTAR INC: Enters into Various Debt Restructuring Agreements --------------------------------------------------------------- LandStar Inc., (OTC Bulletin Board: LDSR) (OTO: LDSR) -- http://www.landstarinc.com-- is pleased to report a number of recent developments with respect to the financial organization of the Company. The Company has entered into agreements that restructure shareholder advances to the Company and provide additional working capital. The restructuring converts $5 million of shareholder loans to common share equity at $0.50 per share resulting in the issue of 10 million shares. New equity financing in the current quarter in the amount of $2.5 million will be issued by common shares at $0.25 per share resulting in the issue of an additional 10 million shares. In conjunction with the financing the Shareholder has agreed to guarantee a further $ 800,000 bank loan to be drawn by the Company as required for working capital. In addition, 15 million preferred class C shares issued pursuant to the acquisition of PolyTek Rubber and Recycling, Inc., will be converted to 15 million common shares. These agreements have been executed and the financing has been funded. The Company has also negotiated a debt write off and goodwill reduction in the amount of $5 million. As noted in the June 30, 2002 quarterly filing, this write off eliminates all goodwill resulting from the purchase of PolyTek. In conjunction with settlement of litigation the Company will record a debt reduction of over $750,000 during the current quarter. The Company has negotiated additional debt settlements and conversions of debt to equity in an ongoing effort to improve the financial position of the Company. The Company has continued the reorganization and cost containment within the LandStar Polymer Recovery/PolyTek division. Accounting functions have been decentralized to the plants with a reduction of four positions in accounting staff at the corporate office. The investment made by the Company in information technology and a communications infrastructure facilitated the decentralization. The Company has also reduced the Sales and Marketing staff through attrition. These changes have resulted in a cost reduction for the management of this division in excess of $300,000 per annum. The Company has also significantly reduced corporate overhead by not filling positions vacated by attrition. Several positions that related to the development of the Company's market position and evaluation of business opportunities are not necessary with the business focus that has evolved from this development period. The Company is now advancing into commercial production and marketing of devulcanized rubber. LUCENT: Fitch Concerned About Weak Credit Protection Measures ------------------------------------------------------------- Fitch Ratings has downgraded Lucent Technologies Inc.'s senior unsecured debt to 'B-' from 'B+', the senior secured credit facility to 'B' from 'BB-', and convertible preferred stock and trust preferred to 'CCC-' from 'CCC+'. The Rating Outlook remains Negative. Lucent announced Friday that it expects revenues for the fourth fiscal quarter-ending September 30, 2002, to decline sequentially by 20%-25% from $2.95 billion. Lucent also plans to take additional restructuring actions to reduce quarterly break- even revenue to between $2.5 billion and $3 billion from a previously announced $3.5 billion in order to return to profitability by the end of fiscal 2003. The details of this restructuring have not been announced but Fitch expects that another charge will occur with a certain portion being cash. Lucent already has significant cash obligations from previously announced restructurings, potential funding for its pension plan in fiscal 2003, along with cash needed to fund operations, resulting in a significant cash burn rate for the next 12-18 months. In addition, financial flexibility remains strained despite a recent amendment to its $1.5 billion bank credit facility which provides minimal additional room for operational shortfalls as quarterly minimum consolidated operating EBITDA levels have been reduced significantly. Lucent expects to be in compliance with covenants for the fourth fiscal quarter but this facility, which expires in February 2003, will have to be renegotiated. The ratings reflect Lucent's weaker credit protection measures, limited financial flexibility, continuing significant execution risk surrounding Lucent's expanding restructuring programs, and a continued difficult environment for Lucent's end markets, which are expected to decline in excess of 40% in 2002 and remain pressured thereafter, potentially delaying Lucent's expected return to profitability by the end of 2003. Lucent continues to experience operating losses, requiring financing for its operating deficit and cash requirements for the restructuring programs. Given this limited financial flexibility, it is critical for Lucent to continue to be aggressive in reducing costs while realizing the cost savings from the previous restructuring programs and executing the planned financing transactions, in order to return to profitability. The Negative Rating Outlook reflects the uncertain capital expenditure patterns of Lucent's customer base and the risk that further reductions from both wireless and wireline operators will continue to pressure Lucent's revenues and cash flow. The operational issues and the execution risks surrounding the Lucent's restructuring strategy continue to include significant headcount reductions and organizational changes. In addition, while Lucent has clearly reduced its vendor finance exposure and has improved the credit profile of the portfolio, Fitch believes it remains a risk as Lucent continues to utilize the program to market products. Total debt as of the third quarter ending June 30, 2002, was approximately $3 billion of long-term senior unsecured notes, $330 million of senior secured debt, and $1.8 billion of convertible trust preferred securities. Lucent has no significant long-term debt maturities until 2006, when approximately $1.1 billion of notes are due. Lucent has $1.5 billion of lending commitments from its banks that expire in February 2003. Also, a $500 million securitization facility expiring in June 2004 exists of which approximately $20 million was outstanding as of June 30, 2002. Cash as of June 30, 2002, was approximately $5.4 billion, an increase from $2.4 billion at the end of fiscal 2001. The successful execution of Lucent's $1.8 billion convertible trust preferred issuance in March 2002, $1.9 convertible preferred stock issuance in August 2001, and asset sales, including $2.5 billion from the sale of the optical fiber business and outsourcing contracts, has clearly improved Lucent's liquidity. However, Lucent's liquidity requirements will continue to be affected by the execution risks surrounding the restructuring and weak end-market conditions. In conjunction with cost savings from the restructuring programs, product line consolidation and top line growth are the most important factors for the return to profitability. LUCENT TECHNOLOGIES: Expects Fiscal Q4 Revenues to Plunge 25% ------------------------------------------------------------- Lucent Technologies (NYSE: LU) announced that, due to continuing market softness and ongoing uncertainty in customer spending levels, particularly in North America, it currently expects revenues for the fourth fiscal quarter of 2002 to decline sequentially by approximately 20-25 percent from the $2.95 billion recorded in the third fiscal quarter. The company currently expects to post a pro forma loss per share in the fourth fiscal quarter of approximately 45 cents, primarily as a result of the sequential revenue decline, charges associated with a significant customer financing default this month, and the inability to recognize tax benefits on losses. The company had not previously provided guidance for the fourth fiscal quarter of 2002 due to ongoing market uncertainty. Last quarter, the company posted a pro forma loss of $1.88 per share from continuing operations. Excluding the impact of a non-cash charge of $1.72 per share to increase the valuation allowance on deferred tax assets, the pro forma loss per share (assuming a tax benefit for the quarter) would have been a loss of 16 cents. On a pre-tax basis, the pro forma loss per share would have been 24 cents. The company stated that, given the anticipated results for the quarter, it expects to meet the financial covenants of its existing credit facility. The company noted that it has no outstanding balance on this credit facility. In addition, the company said that it is also actively developing plans to reduce its quarterly EPS breakeven revenue to a range of $2.5 billion to $3.0 billion. With these additional restructuring actions, the company continues to work toward a return to profitability by the end of fiscal 2003. Lucent will provide an update on its new quarterly EPS breakeven revenue figure and its impact on the company's headcount at its October 23 earnings announcement. Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers networks for the world's largest communications service providers. Backed by Bell Labs research and development, Lucent relies on its strengths in mobility, optical, data and voice networking technologies as well as software and services to develop next-generation networks. The company's systems, services and software are designed to help customers quickly deploy and better manage their networks and create new, revenue-generating services that help businesses and consumers. For more information on Lucent Technologies, visit its Web site at http://www.lucent.com Lucent Technologies' 7.70% bonds due 2010 (LU10USR1), DebtTraders says, are trading at 45 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for real-time bond pricing. LUCENT: DebtTraders Maintains BUY Recommendations on Sr. Notes -------------------------------------------------------------- DebtTraders analyst Matthew Breckenridge, CFA, (1 212-247-5300), said that DebtTraders maintains its BUY recommendations on Lucent Technologies' senior Notes, and at the same time, increases its ATTRACTIVENESS rating to 88% from 82% "due to the recent higher yields." "We are maintaining our SAFETY rating of 88% because we believe that the longer and deeper than originally expected downturn in telecom equipment spending is more than offset by Lucent's very strong liquidity position," Mr. Breckenridge said. "Although Lucent has not yet returned to profitability or EBITDA breakeven because of the continued market downturn, Lucent's very strong liquidity position mitigates most of the risk by allowing the Company a significant cushion to return to profitability." LTV CORP: Blanking Unit Gets OK to Sell 11.11% Interest in TWB -------------------------------------------------------------- Judge Bodoh allowed LTV Blanking Corporation to sell its 11.11% limited liability company membership in TWB Company LLC, a Michigan limited liability company. Under the terms of the proposed sale, LTV Blanking would withdraw from the LLC, and the LLC simultaneously would purchase the membership interests of LTV Blanking. The economic terms and conditions of the proposed sale are governed by the Limited Liability Company Withdrawal Agreement dated July 16, 2002, among LTV Blanking, the LLC, ThyssenKrupp, Worthington, Bethlehem and QS. The total cash consideration to be paid on the closing date by the LLC to LTV Blanking for the membership interest aggregates $4,500,000. At the closing of the proposed sale: (a) LTV Blanking will sign an instrument of withdrawal to effectuate its withdrawal from the LLC; and (b) LTV Blanking and the LLC concurrently will sign a mutual release of the parties' claims and causes of action against each other relative to LTV Blanking's membership interest. The conveyance of the membership interest in connection with this sale does not require the consent of the applicable lenders under the Revolving Credit and Guaranty Agreement dated March 20, 2001, among LTV Corporation as Borrower; the subsidiaries of the Borrower as Guarantors; The Chase Manhattan Bank now known as JPMorgan Chase Bank, as Administrative, Documentation and Collateral Agent; and Abbey National Treasury Services plc, as co-Agent, nor are any foreign or domestic governmental or regulatory approvals of the proposed sale required. MASSEY ENERGY: Virginia Court Dismisses Appeal from Jury Verdict ---------------------------------------------------------------- Massey Energy Company (NYSE: MEE) says that the Supreme Court of Virginia has dismissed the Company's appeal from a judgment entered on a $6 million jury verdict in the Buchanan County, Virginia, Circuit Court. As previously reported, a jury verdict was rendered against the Company on August 24, 2000 in a breach of contract action brought by Harman Mining Corporation and affiliates, in connection with Massey's claim of force majeure under a coal purchase agreement between Harman and a former subsidiary of Massey. The amount of the judgment has been previously reserved, but the company expects to incur interest charges on the judgment of approximately $1.2 million. The appeal was dismissed on technical grounds. The Company is considering whether to seek reconsideration of the ruling. Separately, Massey Energy Company reported receipt Friday of a federal income tax refund in the amount of $15.2 million. This refund will not have an impact on the company's earnings, since it was previously accrued. Massey Energy Company, headquartered in Richmond, Virginia, is the fifth largest coal producer by revenue in the United States. At June 30, 2002, Massey Energy's balance sheet shows that its total current liabilities exceeded its total current assets by about $85 million. MATLACK SYSTEMS: Signing-Up Trans Tech as Freight Bill Auditors --------------------------------------------------------------- Matlack Systems, Inc., and its debtor-affiliates want to employ Trans Tech Solutions, Inc., as their freight bill auditors. The Debtors tell the U.S. Bankruptcy Court for the District of Delaware that Trans Tech is a freight management company specializing in invoice post and pre-audit freight bill payment services. Trans Tech believes that it can recover anywhere from $250,000 to $800,000 in freight fees that were undercharged by the Debtors. The Debtors are confident that Trans Tech possesses the requisite resources and qualifications to perform these services effectively, expeditiously and efficiently for the benefit of the Debtors and their estates. Among others, Trans Tech is expected to provide: - Post auditing of freight bill data for the period of January 1, 1999 to the present; - Processing under charges; Collecting of billed undercharge amounts discovered and filed; and - Weekly reporting of above-mentioned activities. Trans Tech, at the request of the Debtors, will provide additional auditing services that the Debtors' bankruptcy counsel deems appropriate and necessary for the benefit of the Debtors' estates. If Trans Tech is successful in obtaining a recovery on behalf of the Debtors, Trans Tech is entitled to a contingency fee of 33% from the total recovery weekly. Trans Tech's fees will remain constant throughout the course of its retention, the Debtors add. Matlack Systems, Inc., North America's No. 3 tank truck company, provides liquid and dry bulk transportation, primarily for the chemicals industry. The company filed for chapter 11 protection on March 29, 2001 and is represented by Richard Scott Cobb, Esq., at Klett Rooney Lieber & Schorling. Matlack's 8Q Report, filed with the Securities and Exchange Commission for the month of July 2002, lists assets of $1,172,477 and liabilities of $49,386,969. MEMC ELECTRONIC: Amends Euro Obligation with Texas Pacific Group ---------------------------------------------------------------- As previously reported, on November 13, 2001, an investor group led by Texas Pacific Group and E.ON AG and its affiliates closed the transactions contemplated by their purchase agreement dated September 30, 2001. In connection with those transactions, TPG acquired from E.ON and retained a 55 million Euro debt obligation issued by the Company's Italian subsidiary that had a maturity date of September 22, 2002. Pursuant to a restructuring agreement between the MEMC Electronic Materials and TPG, the Company agreed to restructure the Euro Obligation on terms set forth in the restructuring agreement. The parties were unable to restructure the Euro Obligation on the original terms contemplated in the restructuring agreement. On September 6, 2002, MEMC's Italian subsidiary and TPG amended the Euro Obligation and issued a new promissory note evidencing such indebtedness. Under the New Euro Obligation, 35 million Euro will be payable on or before September 25, 2002 and 20 million Euro will be payable on or before April 15, 2003. The New Euro Obligation is unsecured, guaranteed by the Company and bears interest at 8%. In connection with the foregoing amendment, TPG has agreed to provide the Company with a new $35 million secured revolving credit facility. The new $35 million revolving credit facility will have a five-year term, bear interest at LIBOR plus 10%, be secured by substantially the same collateral base that secures the Company's $150 million revolving credit facility with Citibank and UBS AG and contain substantially the same covenants as the Citibank Facility. As a condition to any borrowings under the new $35 million revolving credit facility, the Company must have repaid the New Euro Obligation in full and must have borrowed in full all amounts available under the Citibank Facility. The above transactions will have no net impact on the Company's current level of liquidity or cash balances, and will extend the maturity date for 20 million Euro of the 55 million Euro Obligation from September 2002 until April 2003. MEMC is a leading worldwide producer of silicon wafers for the semiconductor industry. Silicon wafers are the fundamental building block from which almost all semiconductor devices are manufactured, such as are used in computers, mobile electronic devices, automobiles, and other consumer and industrial products. Headquartered in St. Peters, MO, MEMC operates manufacturing facilities directly or through joint ventures in every major semiconductor manufacturing region throughout the world, including Europe, Japan, Malaysia, South Korea, Taiwan and the United States. As reported in Troubled Company Reporter's July 15, 2002 edition, TPG exercised its right to convert all of the 260,000 shares of Series A Cumulative Convertible Preferred Stock and the related accumulated but unpaid preferred dividends into MEMC common stock. Following the conversion, MEMC's common shares outstanding increased to approximately 195.5 million shares and TPG's ownership of MEMC's common shares increased to approximately 175.0 million shares, or 90%. As of June 30, 2002, the Company had approximately 70.5 million common shares outstanding. METALS USA: Santa Monica Asset Sale Hearing Set for Tomorrow ------------------------------------------------------------ In connection with the asset sale of Harvey Titanium Ltd. and Metals Aerospace International Inc. to Rolled Alloys LP, Metals USA, Inc., and its debtor-affiliates sought and obtained Court approval of the Sale Procedures, Bidding Protections and Form of Notice of the sale. For purposes of determining whether a higher -- but not necessarily better -- offer has been received, all bids must be accompanied by a standard deposit of $150,000. Any Bid received by the Debtors at or prior to the Auction, must exceed the purchase price in the initial Asset Purchase Agreement by no less than the sum of: -- the Break-Up Fee of $50,000, and -- an additional $50,000 as initial overbid. Bidding increments after the initial overbid will be made in minimum increments of $50,000. Judge Greendyke will convene a Sale Hearing tomorrow, September 18, 2002. (Metals USA Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) NCS HEALTHCARE: Obtains Waiver to Discuss Omnicare Proposals ------------------------------------------------------------ Under the Genesis Merger Agreement, NCS Healthcare, Inc., may engage in discussions with a party making an Acquisition Proposal, if the NCS Board determines that the proposal is, or is likely to result in, a Superior Proposal and such party first executes a confidentiality agreement on terms no less restrictive than those contained in the confidentiality agreement executed by Genesis. Although the NCS Board has not made such a determination with respect to the Offer and various proposals from Omnicare contemplating a merger transaction with NCS, at the Company's request, Genesis and Subsidiary provided the Company with a waiver dated September 10, 2002, from such requirements in order to permit the Company to engage in discussions with Omnicare. The foregoing waiver of the confidentiality agreement requirement relates solely to entering into discussions with Omnicare and not to the furnishing of any nonpublic information. As previously disclosed, Omnicare has been unwilling to enter into a confidentiality agreement similar to the Genesis confidentiality agreement and, accordingly, the Company does not currently intend to provide Omnicare with any nonpublic information. As a result of the Waiver, the Company intends to discuss the Omnicare Proposals with Omnicare. However, given the provisions of the Genesis Merger Agreement and the Voting Agreements, the NCS Board believes it is unlikely that a business combination with Omnicare may be consummated. The NCS Board has instructed management not to disclose the specific terms of any discussions or negotiations with Omnicare unless and until an agreement is reached with Omnicare. NCS HealthCare, Inc., is a leading provider of pharmaceutical and related services to long-term care facilities, including skilled nursing centers, assisted living facilities and hospitals. NCS serves approximately 206,000 residents of long- term care facilities in 33 states and manages hospital pharmacies in 14 states. NCS HealthCare's June 30, 2002 balance sheet shows a total shareholders' equity deficit of about $108 million. NEXGEN VISION: Working Capital Deficit Tops $5M at June 30, 2002 ---------------------------------------------------------------- NexGen Vision, Inc., was incorporated on October 18, 2001 under the laws of the State of Delaware. The Company is principally engaged, through its wholly-owned subsidiary, Cobra Vision, Inc., in the distribution of ophthalmic polycarbonate lenses used in eyeglasses. In addition to lens sales and distribution, the Company also conducts operations in research and development, in casting and print coat sales, in photochromic lens distribution, and in licensing proprietary technologies relating to the ophthalmic field. NexGen is the majority owner of FB Optical Manufacturing, Inc., formerly known as Cannber Consulting, Inc. The Company's subsidiary, formerly known as Cannber Consulting, Inc., purchased the assets of FB Optical Manufacturing, Inc., a California corporation, on March 6, 2001 and changed its name to FB Optical Manufacturing, Inc. on August 16, 2001. Prior to March 6, 2001, the Company had no operations. FB California is considered to be the Company's predecessor. The statements of operations and cash flows for the period October 1, 2000 to March 5, 2001 are those of FB California. The statements of operations and cash flows for the period March 6, 2001 to June 30, 2001 are those of the Company's majority-owned subsidiary, FB Florida. The statement of operations for the three months ended June 30, 2001 is also that of FB Florida. The Company, through its majority-owned subsidiary, FB Florida, is in the business of refurbishing used optical equipment for resale to customers in the United States and developing markets located outside the United States. The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiary, Cobra Vision, Inc., and its majority- owned subsidiary, FB Optical Manufacturing, Inc. On July 26, 2002, the Company amended its agreement with the loan holders of $1,000,000 of promissory notes. The Company was obligated to release the principal as a guarantor on the Company's bank line of credit by August 19, 2002, which did not occur. In connection with this commitment, all of the shares of Class B common stock of NexGen (which constitute the control block) have been pledged as a guarantee that the outstanding balance of the Company's line of credit guaranteed by the Guarantor is paid in full or the guarantee removed. The bank agreed to an extension until November 15, 2002. Additionally, the Guarantor has agreed to extend the time to remove him from the guarantee until September 30th, and if the Company pays the bank $100,000 by September 30, 2002, the Company will have until October 31,2002 to remove the guarantee. The Company is currently engaged in discussions with a new bank to refinance the loan. To assist the Company in solving this problem, an affiliate of an investment banking firm, which firm has agreed to raise money for NexGen in the near future, has agreed to guarantee the new proposed loan together with the Company's chief executive officer. In July 2002, the Company closed its private placement of Units by issuing 18.5 Units consisting of three Units sold for cash of $135,000 and 15.5 Units sold in exchange for cancellation of $ 697,500 of indebtedness held by the Company's chief executive officer ($90,0000) and president ($157,500) and TRIC ($450,000). Except for the cancellation of indebtedness instead of cash payments, the Units were identical to the Units sold for cash. The Company's total revenues were $ 936,665 for the three month period ended June 30, 2002 compared to $ 64,487 for the same period ended June 30, 2001, an increase of $ 872,178. The increase is a result of the Company's acquisition of the Cobra Vision business segment in April 2002. Cobra Vision's revenues for the three months ended June 30, 2002 were $844,685. The Company's FB Optical segment generated $91,980 of revenues during the three month period ended June 30, 2002 compared to $64,487 for the same period, an increase of $27,493, or 42.6%. The change in FB Optical sales is attributed to an increased awareness in the market and the assistance of the Cobra Vision Sales force. Cobra Vision anticipates continued growth in sales of distributed polycarbonate and glass ophthalmic lenses and expects significant sales to be generated from the sale of the NexGen Casting and Print Coat Systems planned for launch in the first quarter of 2003. As of June 30, 2002, the Company had a working capital deficit of $4,929,733. The Company generated a deficit in cash flow from operations of $ 699,902 for the nine month period ended June 30, 2002. The deficit in cash flow from operating activities for the nine month period ended June 30, 2002 is primarily attributable to the Company's net loss from operations of $ 3,130,364 adjusted for depreciation and amortization of $ 524,363 and an increase in accounts payable of $ 1,502,448 assumed in connection with the acquisition of the Cobra's business segment in April 2002. Current liabilities substantially exceed the Company's current assets and it is dependent upon the sale of its Class A common stock and other securities to pay liabilities and expand business. The Company expects to commence another private placement of up to $1,500,000 in early September through a New York-based investment banker. Additionally, the investment banker has discussed with the Company that it is willing to raise up to $6,500,000 from the sale of securities. There are no assurances the Company will be successful in raising the funds required in both of these proposed offerings. NexGen has been advised by its current bank that it will extend the current line of credit until November 15, 2002 and thereby waive the existing default. As mentioned above, NexGen is attempting to refinance this line of credit with another bank in order to obtain more permanent financing and remove the Guarantor from the existing line of credit. An affiliate of the above referenced investment banker has agreed, together with the Company's chief executive officer, to guarantee this new line of credit. The independent auditors report on Cobra's December 31, 2001 financial statements included in the Company's Report states that Cobra's recurring losses raise substantial doubts about the Company's ability to continue as a going concern. O2WIRELESS SOLUTIONS: Commences OTCBB Trading Effective Sept. 16 ---------------------------------------------------------------- o2wireless Solutions, Inc., received notification from the Nasdaq Listing Qualifications Panel that it had denied o2wireless' request for continued listing on the Nasdaq National Market and that its common stock was delisted from the Nasdaq Stock Market effective as of the opening of business on September 16, 2002. o2wireless' common stock immediately began trading on the OTC Bulletin Board on September 16, 2002 under the symbol "OTWO.OB". The OTCBB is a regulated quotation service that displays real- time quotes, last sales prices and volume information in over- the-counter equity securities. OTCBB quoted securities are traded by a community of registered market makers that enter quotes and trade reports through a computer network. Information regarding the OTCBB, including stock quotes, can be found at http://www.otcbb.com Investors should contact their broker for further information about executing trades in o2wireless' common stock on the OTCBB. o2wireless Solutions provides outsourced telecommunications services to wireless services providers, equipment vendors and tower companies. o2wireless' full suite of services includes planning, design, deployment and on-going support of wireless voice and data telecommunications networks. It has contributed to the design and implementation of more than 50,000 communications facilities in all 50 US states and in 30 countries. o2wireless offers expertise in all major technologies, including 2.5G and 3G technologies. The company is headquartered in Cumming, Georgia. For more information, please visit http://www.o2wireless.com ORGANOGENESIS: Furloughs 110 Employees Due to Lack of Cash Flow --------------------------------------------------------------- Organogenesis Inc., has temporarily halted sales of its mainstay product, Apligraf(R), to Novartis Pharma AG until it reaches an equitable resolution with the Swiss pharmaceutical corporation over the product's future. Organogenesis announced in July that it entered into discussions with Novartis to restructure the two companies' relationship for the supply of Apligraf living, bi-layered skin substitute. The parties' discussions, which involve a variety of possible solutions, have not yet concluded. Because of its current lack of cash flow as well as any agreement, the company has placed 110 employees on furlough for up to two weeks as it continues to work toward a positive resolution of the issues with Novartis that is fair to both sides. In a statement given to employees this week, Organogenesis' president and chief executive officer, Steven B. Bernitz, said the company has been focused on protecting the health of Organogenesis and maximizing the company's opportunities for success. "This is a painful but necessary step in light of our current situation," Bernitz said. "We continue to be hopeful and look forward to some good news within the next two weeks. The incredible value and effectiveness of this product is undisputed, and our goal is to resume shipping very soon and therefore minimize the disruption to patients who can significantly benefit from Apligraf." Organogenesis Inc. -- http://www.organogenesis.com-- was the first company to develop and gain FDA approval for a mass- produced product containing living human cells. Apligraf is FDA- approved for the treatment of diabetic foot ulcers and venous leg ulcers. Novartis has global Apligraf marketing rights. OWENS CORNING: Obtains Court Approval to Redevelop Florida Plant ---------------------------------------------------------------- Owens Corning and its debtor-affiliates obtained the Court's approval to execute a postpetition redevelopment agreement with Jacksonville City and the Jacksonville Economic Development Commission. The agreement provides the Debtors with an economic development grant to be used for the expansion and the addition of industrial machinery and equipment of the Debtors' roofing shingles plant in Jacksonville, Florida. The grant stipulated in the agreement will be provided on an annual basis for 10 years and will be equal to a percentage of the incremental increase in municipal and county ad valorem taxes paid on the personal property at the plant site, up to $310,000. The agreement also requires the Debtors to pour a $10,000,000 private capital investment and to create 25 full- time equivalent jobs as a result of plant improvements. (Owens Corning Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS CORNING: Names Stephen Krull as VP of Corp. Communications ---------------------------------------------------------------- Owens Corning announced that Stephen Krull has been named Vice President of Corporate Communications. In this role, his responsibilities will be to oversee the company's national and international corporate communications, as well as media relations and internal communications. Mr. Krull will report to CEO Dave Brown and will be a member of his NLT. Prior to accepting this position, Mr. Krull was vice president and general counsel, operations, for the company, responsible for day-to-day legal affairs affecting the operations of the company. Prior to joining Owens Corning, Mr. Krull practiced with the Chicago firm, Sidley and Austin. He earned a bachelor's degree in business administration from Eastern Illinois University and a law degree from Chicago-Kent College of Law. Owens Corning is a world leader in building materials systems and composite systems. Founded in 1938, the company had sales of $4.8 billion in 2001 and employs approximately 19,000 people worldwide. Additional information is available on Owens Corning's Web site at http://www.owenscorning.comor by calling the company's toll-free General Information line: 1-800-GETPINK. OWOSSO: Auditors Doubt Company's Ability to Continue Operations --------------------------------------------------------------- Owosso Corporation has experienced a significant downturn in its operating results over the past two years and has been unable to remain in compliance with its debt covenants under its revolving credit facility. In February 2001, the Company entered into an amendment to its revolving credit facility agreement, wherein the lenders agreed to forbear from exercising their rights and remedies under the facility in connection with such non- compliance until February 15, 2002, at which time the facility was to mature. The Company entered into a further amendment to the facility in February 2002, which extended the maturity date to December 31, 2002. The amendment calls for further reductions in the outstanding balance based on expected future asset sales and increases the interest rate charged. The Company's consolidated financial statements were prepared on a going concern basis of accounting and do not reflect any adjustments that might result if the Company is unable to continue as a going concern. However, the Company's recurring losses from operations, working capital deficiencies, default under its debt agreements and inability to comply with debt covenants raise substantial doubt about its ability to continue as a going concern. Management of the Company has taken a series of steps intended to stabilize and improve the operating results including the implementation of cost and personnel reductions at the corporate office throughout fiscal 2001 and reductions in fixed costs at the remaining operating units, commensurate with reductions in sales volumes. Effective February 15, 2002, the corporate function was merged and absorbed by Stature. In order to reduce its obligation under its revolving credit facility, the Company completed the sale of Dura-Bond Bearing Company and Sooner Trailer, the sale of substantially all of the assets of Cramer and substantially all the assets of the Company's Coils segment. Subsequent to the third quarter, the Company completed the sale of all of the outstanding stock of Motor Products and MP-Ohio , which comprise a significant portion of Owosso's non-gearmotor business, to a subsidiary of Hathaway Corporation (Nasdaq: HATH) for $11.5 million in cash and a $300,000 note guaranteed by Hathaway Corporation. Net proceeds from these sales were utilized to reduce the Company's revolving credit facility. Management intends to dispose of the real estate at the former Cramer and Snowmax subsidiaries as soon as practicable and net proceeds, which are expected to be between $1.5 and $2.5 million, will also be utilized to reduce the Company's revolving credit facility. Management believes that, along with the sale of assets, available cash and cash equivalents, cash flows from operations and available borrowings under the Company's revolving credit facility will be sufficient to fund the Company's operating activities, investing activities and debt maturities for fiscal 2002. As of July 28, 2002, the Company's outstanding revolving credit facility maturing in December 2002 is $17.6 million and is classified as current on the balance sheet. At the end of the third quarter of 2002, the Company was not in compliance with its debt covenant requirements, however, the Company has entered into a thirteenth amendment which anticipates that the Company and its lenders will agree upon replacement debt covenants. It is management's intent to refinance the Company's revolving credit facility prior to its maturity in December 2002. However, there can be no assurance that management's plans will be successfully executed. Net sales for the third quarter of 2002 decreased 17.4%, or $2.4 million, to $11.4 million, as compared to net sales of $13.8 million in the prior year quarter. Net sales from Motors, the Company's only remaining segment, decreased 12.9% to $11.4 million in 2002, from $13.1 million in 2001. Although improved over the first quarter of fiscal 2002, the general economic slowdown continued to effect the Company's primary markets, particularly the heavy truck and recreational vehicle markets. Pricing pressures and increased Pacific Rim competition in the healthcare market also continues to adversely affect the Company's results. The quarter results also include the effect of disposing of Cramer in 2001. Sales attributable to Cramer were $708,000 in the third quarter of 2001. For the third quarter of fiscal 2002, the Company reported a loss from operations of $1,154,000 as compared to loss from operations of $686,000 in the prior year third quarter. The Motors segment reported income from operations of $386,000, or 3.4% of net sales, in the third quarter of 2002, as compared to $1.7 million, or 12.9% of net sales, in the prior year quarter. These results reflect decreased sales volume and decreased margins caused by price pressures and changes in product mix, as well as the under absorption of overhead costs, partially offset by a 15.1%, or $230,000, decrease in selling, general and administration expenses. Net loss available for common shareholders was $1.5 million, or $.25 per share, in the third quarter of fiscal 2002, as compared to a net loss of $1.3 million, or $.22 per share, in the prior year quarter. Income or loss available for common shareholders is calculated by subtracting dividends on preferred stock of $338,000 and $330,000 for 2002 and 2001, respectively. Cash and cash equivalents were $248,000 at July 28, 2002. The Company had negative working capital of $10.6 million at July 28, 2002, as compared to negative working capital of $14.4 million at October 28, 2001. Net cash provided by operating activities of continuing operations was $5.0 million as compared to net cash provided by operating activities from continuing operations of $727,000 in the prior period. PAYSTAR CORP: June 30 Balance Sheet Upside-Down by $7 Million ------------------------------------------------------------- PayStar Corporation was incorporated under the laws of the state of Nevada on June 16, 1977. Since that date, there have been three changes in the name and in the capitalization resulting in authorized common capital stock of 100,000,000 shares at $.001 par value. On October 12, 1998, the name was changed to PayStar Communications Corporation resulting from the acquisition of all of the outstanding stock of PayStar Communications, Inc. On December 21, 1999, the capitalization was increased to include 10,000,000 shares of preferred stock at $.001 par value. On July 31, 2001, the name was changed to PayStar Corporation. The Company incurred a net loss for the six months ended June 30, 2002 of $2,736,237. Losses incurred in prior years have contributed to a stockholders' deficit of $7,279,874. Further, current liabilities exceed current assets by $9,873,575. Accordingly, there is substantial doubt concerning the Company's ability to continue as a going concern. Management is currently in the process of (1) seeking additional funding, (2) changing its business model, (3) reducing expenses and (4) decreasing human resources. However, there can be no assurances that management's efforts to restore the Company to profitable operations will be successful. The pay telephone industry revenues continued to deteriorate. Management believes the downslide was due to the rapid increase in individuals using cellular phones and, more specifically, the refusal of major long distance companies to pay private payphone owners the mandated compensation ordered by FTC regulators. This caused nearly a 50% decline in PayStar's payphone revenues in just two short years. As a prudent business decision, management was compelled to re-evaluate its current business practices relating to pay telephone operations and concluded it could not sustain a viable business and continue to service the payphone owners at the current levels. Management believed that if the owners dealt directly with a smaller company capable of servicing their units, there might be an opportunity for them to earn profits by eliminating PayStar's large overhead. This transition to another service company was commenced in November 2001 and concluded as of May 1, 2002. PayStar is no longer in the pay telephone management business. A similar situation arose in the Company's CTM management business unit. The market place experienced an increase in cash dispensing ATMs, which affected PayStar's business model. This lead to a situation in which approximately a third of all CTMs under management were located at non-performing or under- performing locations. In an effort to remedy this downturn, the Company surveyed the CTM business unit owners with three options and/or alternative choices which PayStar intends to disclose in a registered offering filed with the Securities and Exchange Commission and various state securities regulators: * Purchase Opportunity. The company would exercise its contractual right to purchase the machine from the owner. The company would execute a promissory note for the purchase of the equipment which would be payable over a five or ten year period. * New Management Company. The owner could exercise their right to transfer the management of their business to another service provider. * Stock Option. PayStar Corporation would purchase the CTM unit from the owner for shares of PayStar Corporation common, 144 Regulation D stock through a registered offering. These options were initially disclosed to the CTM owners in January 2002 and the process will not be completed until a registration statement filed with the Securities and Exchange Commission and state securities agencies is declared effective. PayStar anticipates filing a registration statement this month. As a result of the decreased revenues from the CTM operations, the Company was unable to pay the required service agreement fees to the CTM owners since approximately September 2001. A number of CTM owners have filed complaints against PayStar, either in court or with regulators. The Company estimates that the unpaid amount is approximately $725,000. The six-month year to date consolidated revenues decreased by 82%, or $6,854,000, when comparing June 30, 2002 to June 30, 2001. Revenue from the (a) payphone subsidiary decreased $2,363,000, (b) CTM subsidiary decreased $3,255,000, and (c) SHS division decreased $1,313,000. The remainder of the revenue, and increase of $77,000, was derived from acquisitions that were made in 2001. The six-month year to date consolidated cost of sales and services increased as a percentage of sales from 69% to 48% when comparing June 30, 2002 to June 30, 2001. This is due to the revenue mix in 2002 consisting mainly of monthly recurring charges and in high margin equipment sales. Sales and general and administrative costs decreased for the six-month period ending June 30, 2002, as compared to June 30, 2001, by 27%, or $870,000. The factors attributed to this decrease are (a) salary expense, $480,000, (b) professional fees, $290,000, (c) stock grants, $82,000 and (d) the balance from travel and entertainment, and office expense. With the addition of payphone assets, acquired through acquisitions throughout 2001 and the purchase of a switch, the depreciation expense increased by $285,000 when comparing year- to-date June 30, 2002 to June 30, 2001. Liquidity And Capital Resources As of June 30, 2002 PayStar had $11,000 in cash. Operating activities generated a negative cash flow of $53,000 for the quarter ended June 30, 2002. The cash used in investing activities of $277,000 was used for the purchase of equipment and other assets. Financing activities provided cash of $57,000 as of June 30, 2002. The Company's future capital requirements will depend on numerous factors, including: * Ability to succeed in the prepaid ATM/debit cards marketplace. * An increase in placing and managing Internet kiosks. * Greater efficiency of operations. * Increase in the acquisition of CTMs. PayStar management has indicated that it expects to generate sufficient working capital to sustain operations, as well as seeking capital funding from future private and public financing. PERSONNEL GROUP: Changes Name of Allegheny Personnel Svcs. Unit --------------------------------------------------------------- Personnel Group of America, Inc., (NYSE:PGA) announced that its Allegheny Personnel Services unit, a Pittsburgh area provider of full-service staffing solutions specializing in Human Capital Management, has changed its name to Venturi Staffing Partners. Allegheny Personnel's renaming represents the continuation of a nationwide brand harmonization across Personnel Group of America's 100 commercial staffing operations, which is expected to be completed by the end of this year. Founded in 1972, Allegheny Personnel Services is one of the oldest staffing companies in Pittsburgh and one of the largest in the region. Allegheny Personnel Services has six offices that serve the Greater Pittsburgh and Camp Hill/Harrisburg markets and supplies more than 5,000 temporary employees to area businesses each year. "When PGA acquired Allegheny Personnel Services back in 1996, the Company's philosophy was to acquire strong regional staffing companies in selected markets and allow those companies to retain their original identities," Ron Alvarado, president of Allegheny Personnel Services, said. "When viewed on a national level, this high degree of brand diversity has proven to be challenging for both customers and temporary associates alike. PGA has undertaken to brand its network of staffing companies under the same name to eliminate the confusion and inefficiencies inherent in multi-branded operations." Although the face of Allegheny Personnel Services business will take on a new look, PGA will continue to operate its business units in a decentralized, customer-focused manner, engendering common core values, processes and procedures. Localized customer service and entrepreneurial flexibility will remain the cornerstones of PGA's value proposition within the staffing marketplace. Allegheny Personnel Services provides temporary staffing, temporary-to-hire staffing, full-time staffing, single source management and e-business solutions. In the marketplace, Allegheny Personnel Services focuses on high-end clerical, administrative, secretarial, customer service, call center, light technical, light industrial and medical placements. The famous 18th century Italian Physicist Giovanni Venturi, known for his groundbreaking work in fluid mechanics, inspired the Venturi name. A Venturi is a device shaped in a manner such that anything flowing through it speeds up and experiences a drop in pressure. "The new name serves as a metaphor for the service we provide our clients," Alvarado said. "We speed needed resources to our clients, removing the pressures they experience in dealing with volatile staffing needs." Personnel Group of America, Inc., is a nationwide provider of information technology consulting and custom software development services; high-end clerical, accounting and other specialty professional staffing services; and technology systems for human capital management. The Company's IT Services operations now operate under the name "Venturi Technology Partners" and its Commercial Staffing operations are being rebranded "Venturi Staffing Partners" over the balance of 2002. * * * As previously reported in Troubled Company Reporter, Personnel Group of America said it is "working hard to remain in compliance with the New York Stock Exchange listing standards." The Company continues to be monitored by the NYSE for compliance with the business plan we submitted to the NYSE earlier this year. The weak equity market and the balance sheet reduction in shareholders' equity caused by the adoption of SFAS 142 have now resulted in the Company dipping below the NYSE's $1.00 minimum trading price and $50.0 million total shareholders' equity requirements. "We are in ongoing discussions with the NYSE and are committed to taking appropriate action to ensure that PGA's common shares remain listed for trading, either on the NYSE or on another stock exchange." Additionally, the Company had cash on hand at the end of the second quarter of $25.3 million, which preserves the Company's negotiating options during discussions examining alternatives for debt restructuring. Should those discussions not lead to a near-term outcome, that cash on hand will be applied to debt repayment. PRECISION SPECIALTY: Taps Parente as Special Tax Consultants ------------------------------------------------------------ Precision Specialty Metals, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for permission to retain Parente as its Special Tax Consultant as of August 1, 2002. The Official Committee of Unsecured Creditors in the Debtor's chapter 11 cases retained Parente to serve as its accountants and financial advisors. This engagement afforded Parente a working knowledge of tax issues on this matter. Parente does not believe that there is a conflict in its acting as Special Tax Consultant to the Debtor and as financial advisor to the Committee because Parente would be representing the Estates and not the Debtor. The Debtor further explains that it formerly retained Arthur Anderson, LLC to assess the Debtor's tax issues. However, the Los Angeles office of Arthur Andersen ceases operation in the area. The former Arthur Andersen accountants are now with PricewaterhouseCoopers. The Debtor asserts that the cost to retain PwC would be substantially more than that of Parente considering that Parente is likewise as familiar with the books and records of the Debtor. Parente is expected to: a. Assist the Debtor in preparing the Federal Form 1120 and applicable State corporate returns for the years ending December 31, 2001 and 2002, and, if required, file for the year ending December 31, 2000; b. Review the impact that the 2002 Tax Act has on the Debtor's tax position, particularly focusing on any refund opportunities related to the changes in the Net Operating Loss carryback rules; c. Provide general tax consulting as it relates to issues encountered by Parente in performing the services enumerated above; and d. Prepare and file amended tax returns for the Debtor for the tax years 1996 through 1998, inclusive. Parente's standard hourly rates are: Howard S. Cohen Principal $335 per hour Joseph C. O'Neill Principal $250 per hour Michael E. Lautensack Manager $215 per hour John Talton Manager $160 per hour Marianne Stewart Manager $135 per hour Precision Specialty Metals is a specialty steel conversion mill engaged in re-rolling, slitting, cutting and polishing stainless steel and high-performance alloy hot band into standard or customized finished thin-gauge strip and sheet product. The Company filed for Chapter 11 protection on June 16, 2001 in the U.S. Bankruptcy Court for the District of Delaware. Laura Davis Jones, Esq., at Pachulski, Stang, Ziebl, Young & Jones P.C. represents the Debtor on its restructuring efforts. PROCOM TECHNOLOGY: Wants to Transfer Listing to Nasdaq SmallCap --------------------------------------------------------------- Procom Technology Inc. (NASDAQ: PRCM), a leading developer and worldwide provider of network attached storage solutions, is taking steps to transfer the listing of its stock from the Nasdaq National Market to the Nasdaq SmallCap Market. This transfer is subject to the approval of Nasdaq's Listing Qualifications Panel. The company is taking the steps necessary to apply for the transfer following notification by Nasdaq on July 22, 2002 that it did not, for a period of 30 consecutive days, meet the $1 minimum bid price per share requirement for continued listing on the NNM. Procom has until Oct. 21, 2002 to comply with the NNM minimum bid price requirement for continued listing. The company can achieve compliance with this requirement if it trades, for a period of at least 10 consecutive trading days, above $1 per share before that date. Transfer to the Nasdaq SmallCap Market, if approved, makes available a 180-day grace period, expiring Jan. 18, 2003, to demonstrate compliance with the $1 minimum bid price for a period of 10 consecutive trading days. If necessary, the company will also then be eligible for an additional 180-day grace period to demonstrate compliance provided it meets Nasdaq listing criteria, other than the minimum bid price, for the SmallCap Market. Furthermore, Procom may be eligible for transfer back to the Nasdaq National Market if, by the end of all grace periods, its bid price maintains the $1 per share requirement for 30 consecutive trading days and the company has maintained compliance with all other applicable listing requirements. It is expected that Procom will retain the trading symbol "PRCM" and investors and other interested parties will see no difference in how they obtain stock price quotes or news about the company following the company's transfer to the Nasdaq SmallCap Market. "This decision does not affect Procom's business operations, nor does it change our strategic focus," said Alex Razmjoo, Procom's chief executive officer. "We are continuing to execute on our plan to be a major provider of storage solutions to the under- served midrange NAS market." There can be no assurance the Nasdaq Listing Qualifications Panel will grant the company's request to transfer the listing of its stock from the NNM to the Nasdaq SmallCap Market. If the company has not met the minimum bid price requirement at the expiration of all grace periods, or otherwise fails to satisfy the applicable Nasdaq listing requirements, the common stock may be subject to delisting from the SmallCap Market, in which event the company's securities may be quoted in the over-the-counter market. The value leader in NAS filers, Procom Technology has been designing and producing enterprise-class storage solutions for Fortune 2000 companies since 1987. The company has an installed base of more than 1,500 NetFORCE units and 25,000 installations of DataFORCE, Procom's previous flagship product line. Procom is headquartered in Irvine, Calif., and maintains a global presence with offices in 10 countries. More information is available by telephone at 800-800-8600, toll free; e-mail at info@procom.com; or on the Web at http://www.procom.com PSINET INC: Resolves Dispute with Alpine over Lucent Equipment -------------------------------------------------------------- Alpine and PSINet Liquidating LLC now want to resolve the dispute pertaining to the Lucent Equipment located in the United States. Accordingly, the parties seek the Court's approval for this Stipulation with these terms: 1. PSINet acknowledges the validity and unavoidability of the security interest held by Alpine relating to the U.S. Equipment; 2. The Lucent Claim as it pertains to the U.S. Equipment will be deemed an allowed claim for $21,323,789.28, consisting of a secured portion in an amount equal to the value of the Equipment as determined according to this Stipulation and an unsecured portion in an amount equal to the balance, if any; 3. To determine the value of the secured portion of the claim: a. The parties agree to hire Reid Krakower of Continental Plants Corp. (the Liquidator) to liquidate the U.S. Equipment for the benefit of Alpine; b. The parties agree to cooperate with the Liquidator in the sale of the U.S. Equipment; c. The Liquidator will market the U.S. Equipment for sale on terms and conditions mutually acceptable to the parties; d. The Liquidator's fees and reimbursement of expenses will be paid solely from the proceeds of the sale of the U.S. Equipment; e. Alpine will be solely responsible for any claims or causes of action asserted or assertable against the Liquidator in connection with the liquidation of the U.S. Equipment; f. Unless otherwise extended by the parties, the Liquidator will market the U.S. Equipment for sale for a 90 day period commencing within 5 days of the Court's approval of this Stipulation; g. In the event that the marketing and sales process extends beyond the first 45 days of this 90 day period, Alpine will be solely responsible for all of the go-forward costs associated with PSINet's continued possession of the U.S. Equipment during the marketing process; h. Any portion of the U.S. Equipment that is not sold will be deemed abandoned to Alpine, at a value to be agreed to by the parties or otherwise determined by the Bankruptcy Court; i. As a distribution on account of its secured claim, Alpine will receive all the net proceeds from the sale of the U.S. Equipment, after payment of the Liquidator's commission, fees and expenses associated with liquidating the U.S. Equipment; and j. The distribution will satisfy in full any lien, encumbrance, security interest or other rights that Alpine may have with respect to the U.S. Equipment, but not with respect to the Previously Sold Lucent Equipment; 4. Alpine's allowed unsecured claim with respect to the U.S. Equipment will be equal to $21,323,789.28 minus the gross proceeds received from the sale of the U.S. Equipment; 5. PSINet will provide Alpine with not less than 10 days' written notice of its intention of making an Initial Distribution, as defined in the Plan, to creditors holding Allowed General Unsecured Claims under the Plan; 6. The parties agree to continue good faith negotiations towards resolution of any outstanding issues relating to the Previously Sold Lucent Equipment including Alpine's reasonable access to all documents relating to the sale of the Previously Sold Lucent Equipment; and 7. This Stipulation is in full compromise and settlement of all disputes relating to the Lucent Claim as it pertains to the U.S. Equipment. (PSINet Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) PUMATECH: Fails to Maintain Nasdaq Continued Listing Standards -------------------------------------------------------------- Pumatech, Inc. (Nasdaq:PUMA), the leading provider of synchronization software and services, has received a notice from the Nasdaq National Market stating its intent to de-list Pumatech's common stock for failure to maintain compliance with the $1.00 minimum bid price requirement of Nasdaq Marketplace Rule 4450(a)(5). Pumatech has appealed the decision, and the de- listing has been delayed pending a hearing before the Nasdaq Qualifications Panel. The hearing date has not yet been scheduled. The Company is currently evaluating various alternatives to present to the Nasdaq Listing Qualifications Panel, including a reverse stock split. The Nasdaq staff also indicated that Pumatech currently qualifies to have its securities transferred to the Nasdaq SmallCap Market. The Company's Board of Directors has approved implementing one or more reverse stock splits, and if approved by stockholders at the Company's annual stockholder meeting on Dec. 6, 2002, the Company believes that a reverse stock split could result in Pumatech regaining compliance with Nasdaq's minimum bid requirement. "Pumatech intends to take all necessary steps to address the potential de-listing of its securities from Nasdaq," said Woodson (Woody) Hobbs, Pumatech president and CEO. "We have made significant progress in cutting our operating costs and focusing on our core products during the past six months, and continue to believe in the fundamental strength of our business." Pumatech, Inc., (Nasdaq:PUMA) provides organizations with a comprehensive suite of software products and services that synchronizes and distributes critical information throughout an enterprise. Organizations can choose to use Pumatech's ready- made enterprise offerings, or they can leverage Pumatech's professional services team to create custom solutions built upon Pumatech's core enterprise platform. Pumatech's customer and strategic partner base includes Global 2000 companies such as Siebel, Oracle, Yahoo!, NTT DoCoMo, Boeing, CNET and General Motors. The Company has headquarters in Silicon Valley, Tokyo and London. Pumatech offers more information on its products and services at http://www.pumatech.com RADIO UNICA: Nasdaq Knocks-Off Shares Effective Sept. 16, 2002 -------------------------------------------------------------- Radio Unica Communications Corp., received notice from the Nasdaq Listing Qualifications Panel that the Company's Common Stock was delisted from the Nasdaq National Market effective on the opening of trading on September 16, 2002 for failure to comply with the minimum net tangible assets requirement or the minimum stockholders equity requirement. The Company began trade on the OTC Bulletin Board under the same ticker symbol, UNCA. Radio Unica Communications Corp., based in Miami, Florida, is the only national Spanish-language radio network in the country and reaches approximately 80% of Hispanic USA through a group of owned and operated stations and affiliates located nationwide. The Company's operations include the Radio Unica Network and an owned and/or operated station group covering the top U.S. Hispanic markets including Los Angeles, New York, Miami, San Francisco, Chicago, Houston, San Antonio, McAllen, Dallas, Fresno, Phoenix, Sacramento, Denver and Tucson. RESOURCE AMERICA: Issuing $125 Million Notes to Pay Down Debts -------------------------------------------------------------- Resource America Inc., (NASDAQ:REXI) intends to sell on a private placement basis under Rule 144A of the Securities Act of 1933 $125 million aggregate principal amount of senior notes due 2010. The Company intends to use the proceeds from the sale of the Notes to pay down credit facilities and other debt. The Notes will not be and have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements under the Securities Act. Resource America, Inc., is a proprietary asset management company that uses industry-specific expertise to generate and administer investment opportunities for our own account and for outside investors in the energy, real estate and equipment leasing industries. * * * As reported in Troubled Company Reporter's July 23, 2002, Moody's Investors Service upgraded the senior implied rating for Resource America, Inc., to B2 from B3, and confirmed its senior unsecured rating at Caa1. The outlook is stable. Moody's noted, "RAI has made progress in executing a prudent growth strategy, and has demonstrated an increased degree of focus in its real estate and energy businesses. Furthermore, the Company has delivered steady earnings while maintaining acceptable leverage levels. Moody's expects RAI will continue to prudently manage its growth, especially in its newly formed leasing organization. Also, mortgages in RAI's real estate portfolio carry favorable loan-to-value ratios." SAFETY-KLEEN CORP: Signs-Up Grant Thornton as Tax Accountants ------------------------------------------------------------- Grant Thornton LLP is a leading global accounting, tax, and business advisory firm dedicated to serving the needs of public and private middle-market companies. Founded in 1924, Grant Thornton serves its clients through 50 offices in the United States, and in more than 650 offices in 109 countries through Grant Thornton International. Grant Thornton has been retained as accountants, financial advisors, and/or tax advisors to render professional services to debtors, creditors, creditors' committees, investors, and others in Chapter 11 cases. Now, Safety-Kleen Corp., and its debtor-affiliates also want to employ and retain Grant Thornton to provide accounting support services, nunc pro tunc to August 12, 2002. As part of their overall plan to improve the operations of the "Branch Sales and Service Division" in an attempt to successfully emerge from bankruptcy, the Debtors have identified the need to retain an experienced firm to assist with various accounting and administrative needs to improve business processes and controls. Michael W. Yurkewicz, Esq., at Skadden Arps, relates that employees from Arthur Anderson LLP originally satisfied the Debtors' need for staffing assistance. However, upon Arthur Anderson's well-publicized exit from the industry, the Debtors were forced to explore other alternatives. The Debtors believe that Grant Thornton LLP possesses all the skills, qualifications, and experience necessary to provide the various accounting, finance, and administrative needs -- at significantly lower rates than the hourly rates charged by larger accounting firms. In fact, Grant Thornton LLP will perform some of the same services that Arthur Andersen previously provided to the Debtors at significantly reduced rates. Some Grant Thornton employees working on these matters will be former Arthur Andersen employees who were involved in providing similar services to the Debtors in these Chapter 11 cases. The Engagement Letter Under the terms of an engagement letter between the Debtors and Grant Thornton dated August 29, 2002, Grant Thornton is to provide personnel to assist the Debtors' staff with various needs, including but not limited to: (a) asset verification; (b) accounting reconciliation; (c) verification of information in various data bases such as the Debtors' customer data base, real estate lease database and equipment lease database; (d) research, as directed by the Debtors; (e) the performance of administrative functions as directed by the Debtors; (f) the collection, analysis, preparation, presentation and dissemination of information as directed by the Debtors' personnel; and (g) ensuring compliance with established company controls, practices and procedures as directed by the Debtors' personnel. Grant Thornton will provide personnel to the Debtors on a temporary basis. Each time the Debtors request Grant Thornton's assistance for a discrete project, the Debtors will complete an authorization form for that project. Grant Thornton has reserved the right to refuse to accept any new project in its sole discretion. Either party may terminate the arrangement upon thirty days' prior written notice to the other party. The Debtors' Duties The Debtors will be responsible for all services rendered and expenses incurred by Grant Thornton LLP prior to the date of termination. The Debtors will be responsible for providing Grant Thornton's personnel with access to all individuals and tools necessary to perform the Accounting Services pursuant to the Engagement Letter and the Debtors will be responsible for obtaining all consents from third parties required to permit and authorize such access. The Debtors have agreed to indemnify Grant Thornton LLP against any claim or claims arising out of the Debtors' failure to obtain any such consent. Grant Thornton's Duties The employees of Grant Thornton who provide Accounting Services to the Debtors pursuant to the Engagement Letter will remain employees of Grant Thornton, and Grant Thornton will continue to be responsible for their salaries, tax withholdings, unemployment insurance, workers' disability and compensation, Social Security contributions, and employee benefits such as vacation, sick pay, insurance, pension, and profit-sharing benefits. Furthermore, each party to the Engagement Letter is an independent contractor with no authority to bind the other. The Debtors assure Judge Walsh that Grant Thornton's services will not overlap or duplicate the services provided by other retained professionals. Disinterestedness W. Kelley Jones, a partner at Grant Thornton, advises Judge Walsh that Grant Thornton has not represented the Debtors, their creditors, equity security holders, or any other parties-in- interest, or their respective attorneys and accountants, the United States Trustee or any person employed in the office of the United States Trustee, in any matter relating to the Debtors or their estates. To the best of the firm's and Mr. Jones' knowledge, the principals, professionals and employees of Grant Thornton: (a) do not have any connection with the Debtors, their creditors, or any other party-in-interest, or their respective attorneys or accountants, (b) do not hold or represent an interest adverse to the estates, and (c) are "disinterested persons" under Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. Mr. Jones asserts that his research did not reveal any fact or situation, which would represent a conflict of interest for Grant Thornton with regard to the Debtors. Nevertheless, Mr. Jones tells the Court that Grant Thornton regularly provides services related to bankruptcy and troubled loans to creditors of the Debtors like Alliance Capital Fund, Banque Indosuez, CIT Group/Business Credit Inc., Citibank Mortgage, Inc., First Union/Wachovia, Merrill Lynch Shares, PricewaterhouseCoopers, Ryder Truck Rentals, Summit Bank (now Fleet), The Chase Manhattan Bank, US Bank, and Wachovia Bank. However, Mr. Jones emphasizes, Grant Thornton has not provided any of these services to these creditors in relation to these Chapter 11 cases. Mr. Jones further discloses that David Martin, a partner in Grant Thornton's Orlando office, is the brother of Brian Martin, the newly appointed controller of the Debtors. "David Martin is not and will not be personally involved in any of the services by Grant Thornton to the Debtors, nor is he located in any of the offices that will be providing those services," Mr. Jones says. Professional Compensation Grant Thornton will calculate its fees based on the time required to complete the assignment, plus all reasonable and necessary travel related and other out-of-pocket costs incurred. The current hourly rates charged by Grant Thornton in connection with this engagement for any staff are: Experienced Partners and National Directors $200 Partners and Principals $175 Senior and Experienced Managers $160 Managers $150 Senior Associates Level III-II $125 Senior Associates Level I $115 Associates Level II $115 Associates Level I and Paraprofessionals $105 Grant Thornton LLP has advised the Debtors that the rates set forth are less than Grant Thornton's standard hourly rates for audit and accounting services. Grant Thornton's usual rates are: $450 - $475 partners $200 - $315 managers $115 - $150 associates and paraprofessionals The rates in this Application are subject to being revised in accordance with the regular hourly rates of Grant Thornton LLP in effect as the engagement progresses. Nunc Pro Tunc Engagement Because their needs were immediate, the Debtors asked Grant Thornton to start providing accounting services on August 12, 2002. The Debtors contend that Grant Thornton should not be penalized for providing services prior to Court approval. Accordingly, the Debtors believe that it is appropriate to compensate Grant Thornton for the fees and expenses it has incurred beginning on August 12, 2002. (Safety-Kleen Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) SLI INC: Del. Court Approves $20 Million Interim DIP Financing -------------------------------------------------------------- SLI Inc., announced that the U.S. Bankruptcy Court of the District of Delaware has approved the Company's request for $20 million of interim funding under the $35 million debtor-in- possession financing facility provided by a consortium of banks, including lead lender and administrative agent, Fleet Bank. The facility will be used to fund continuing operations, pay employees, and purchase goods and services during the restructuring period. All suppliers will be paid on existing terms for goods furnished and services provided after the filing date. As reported on September 9, 2002, the Company announced that in order to facilitate a financial restructuring, the Company and its United States subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Chapter 11 filing does not include the Company's non-United States operations, such as those in Europe, Latin America, or Asia. The Company's Chairman and Chief Executive Officer Frank Ward said he was pleased with the Bankruptcy Court's approval of essentially all of the "first-day" orders, including the order authorizing the interim DIP financing. "We anticipate that the combination of DIP financing and cash flow from our businesses will provide adequate funding for our post-petition suppliers and employee obligations and business investments", said Mr. Ward. Under the terms of the DIP, the Company has agreed to pursue a possible sale of one or more lines of its business. SLI Inc., based in Canton, MA, is a vertically integrated designer, manufacturer and seller of lighting systems, which are comprised of lamps and fixtures. The Company offers a complete range of lamps (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, LED and special lamps). They also offer a comprehensive range of fixtures. The Company serves a diverse international customer base and markets, has 35 plants in 11 countries and operates throughout the world. SLI, Inc., is also the #1 global supplier of miniature lighting products for automotive instrumentation. For more information, visit its Web site: http://www.sliinc.com SPECTRASCIENCE: Files for Chapter 7 Liquidation in Minneapolis -------------------------------------------------------------- SpectraSCIENCE, Inc. (OTCBB:SPSI), has filed for protection from its creditors under Chapter 7 of the U.S. Bankruptcy Code. The filing was made in the U.S. Bankruptcy Court in Minneapolis, Minnesota. The filing follows SpectraSCIENCE's unsuccessful attempts to complete a financing transaction in order to be able to financially execute its current business plan. SpectraSCIENCE ceased operations on Friday, September 13, 2002. SpectraSCIENCE intends that the proceeds from the sale of its assets in connection with the bankruptcy proceeding will be used to pay its creditors and any remaining proceeds from the sale of its assets after payment in full to all of its creditors will be distributed to SpectraSCIENCE's shareholders. STANDARD MEMS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Standard MEMS, Inc. 3 New England Executive Park Burlington, MA 01803 Bankruptcy Case No.: 02-12690 Chapter 11 Petition Date: September 16, 2002 Court: District of Delaware (Delaware) Judge: Mary F. Walrath Debtor's Counsel: Mark E. Felger, Esq. Cozen O'Connor 1201 N. Market Street, Suite 1400 Wilmington, DE 19801 302-295-2087 Fax : 302-295-2013 Estimated Assets: $10 to $50 Million Estimated Debts: $10 to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ MEMC Electronic Materials, Inc. $1,055,836 Attn: Larry Rock PO Box 730195 Dallas, Texas (536) 474-5675 Innovion $861,048 2121 Zanker Road San Jose, CA 95131 (408) 501-9100 PG&E $807,332 Gracie of Jennifer Scott PO Box 997300 Sacramento, California 95898-7300 Morrison & Foerster, LLP $820,585 PO Box 80000 San Francisco, CA 94160-2497 415-268-7000 RITE TRACK $598,652 Attn: Ted Bettes 8655 Rite Track Way West Chester, Ohio 45069 (513) 881-7820 Applied Materials, Inc. $551,603 Attn: Cindy Souze Spare Parts 2801 Scott Blvd. Santa Clara, CA 95050 (406) 748-5187 Citicorp Vendor $333,903 Finance - 10938411 700 E. Gate Drive Mount Laurel, New Jersey 08054 (800) 527-8451 Karl Suss America, Inc. $315,042 PO Box 1311 Williston, VT 05495 ASM Lithography $306,686 Attn: Mary 2833 Junction Ave. Suite 101 San Jose, California 95134 (406) 383-4161 Callaham-Pentz Properties $302, 984 Buckeye Two c/o GS Mgmt. Co. 5674 Sonoma Drive Pleasanton, California 94566 PRI Automaton, Inc. $237,942 Agilent Technologies $210,440 Surface Technology Systems $209,373 Connecticut General Life Insurance Co. $197,747 SAP America, Inc. $195,300 Unaxis USA, Inc. $185,028 AIR Products and Chemicals, Inc. $176,408 Shipley Company, LLC $157,069 Standard Microsystems Corporation $135,545 PRI Automaton, Inc. $123,710 STAR TELECOMMS: Liquidating Plan Declared Effective on August 13 ---------------------------------------------------------------- As previously reported in the Troubled Company Reporter's August 12, 2002 edition, the U.S. Bankruptcy Court for the District of Delaware confirmed Star Telecommunications, Inc.'s First Amended Liquidating Chapter 11 Plan. The Plan took effect on August 13, 2002. Pursuant to the Article 2, Section B.7 of the Plan, all interests in the Debtor, including equity securities shall be deemed canceled as of the Effective Date. All persons/entities entitled to seek claims against the Debtor's estates should file their proofs of claims on: Rejection Claim Bar Date October 4, 2002 Administrative Bar Date September 13, 2002 Final Fee Application October 13, 2002 A copy of all proofs of claim must be afforded to: i) Claims Agent Star Telecommunications, Inc. c/o Robert L. Berger & Associates, LLC PMB 1005 10351 Santa Monica Blvd., Suite 101A Los Angeles, CA 90025 ii) Liquidating Trustee Star Liquidating Trustee 223 East De La Guerra Santa Barbara, CA 93101 A hearing on all timely-filed applications is currently scheduled on December 16, 2002 at 4:00 p.m (Eastern Time) before the Honorable Judge Mary F. Walrath. Star Telecommunications, Inc., a leading provider of global telecommunications services to consumers, long distance carriers, multinational corporations and Internet service providers worldwide, filed for chapter 11 protection on March 13, 2001. Laura Davis Jones, Esq. at Pachulski, Stang, Ziehl, Young & Jones represent the Debtor in its restructuring effort. When the company filed for protection from its creditors, it listed $630,065,000 in assets and $284,634,000 in debts. STERLING CHEMICALS: Files Second Joint Chapter 11 Plan in Texas --------------------------------------------------------------- Sterling Chemicals Holdings, Inc. (OTC Bulletin Board: STXX), Sterling Chemicals, Inc. and certain of their direct and indirect U.S. subsidiaries filed their second proposed plan of reorganization and related disclosure statement with the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division. Sterling Chemicals Holdings, Inc., and most of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code on July 16, 2001. "The filing of our amended reorganization plan is a major step in our financial restructuring," said David G. Elkins, Sterling's President and Co-Chief Executive Officer. "The plan is based on an overall structure that has the support of the representatives of all our major creditor groups. Although a lot of work remains to be done, our goal is to have the plan confirmed and consummated by the end of the year. The plan will help us achieve one of our primary objectives, which is to emerge from Chapter 11 with a much-improved and viable capital structure." The second proposed plan of reorganization, as filed, contemplates a reorganization of Sterling around its core petrochemicals business. Sterling's pulp chemicals business would be sold at the time Sterling emerges from bankruptcy, with the proceeds being used to provide $80 million of Sterling's exit financing requirements and to partially repay Sterling's obligations under its 12-3/8% Senior Secured Notes due 2006. Under the proposed plan, Sterling's obligations under its 12-3/8% Senior Secured Notes would be retired in exchange for cash from the proceeds of the sale and new senior secured notes issued by the Company. The proposed plan calls for the infusion of $60 million in new equity capital at the time Sterling emerges from Chapter 11, all of which will be provided by Resurgence Asset Management, L.L.C., subject to the right of Sterling's unsecured creditors to participate in the investment in an amount up to $30 million in the aggregate. Under the proposed plan, the common equity of Sterling's petrochemicals business will be owned 1.3% by the holders of Sterling's exiting 13-1/2% Senior Discount Notes, 11.7% by the remaining unsecured creditors of Sterling and 87% by Resurgence Asset Management, L.L.C. and those unsecured creditors participating in the new equity investment. The interests of Sterling's current stockholders would be eliminated, and Sterling's obligations to its existing unsecured creditors would be extinguished. Based in White Plains, New York, Resurgence Asset Management, L.L.C. is a leading global private investment firm with approximately $1.3 billion in assets under management. The disclosure statement is subject to the approval of the Bankruptcy Court before being mailed to creditors in connection with their consideration of approval of the plan. As bankruptcy law does not permit solicitation of an acceptance or rejection of a plan of reorganization until a disclosure statement relating to the plan is approved by the Bankruptcy Court, this announcement is not intended to be, nor should it be construed as, a solicitation for a vote on the plan. Sterling will emerge from Chapter 11 if and when the plan receives the requisite creditor approvals and is confirmed by the Bankruptcy Court. The plan is subject to supplementation, modification and amendment prior to confirmation. The entities included in the Chapter 11 bankruptcy proceeding own and operate Sterling's manufacturing facilities in Texas City, Texas; Pace, Florida; and Valdosta, Georgia. Sterling's foreign subsidiaries, including those in Canada, Australia and Barbados, are not included in the bankruptcy cases. Based in Houston, Texas, Sterling Chemicals Holdings, Inc., is a holding company that, through its operating subsidiaries, manufactures petrochemicals, acrylic fibers and pulp chemicals, and provides large-scale chlorine dioxide generators to the pulp and paper industry. Sterling has a petrochemicals plant in Texas City, Texas; an acrylic fibers plant in Santa Rosa County, Florida; and pulp chemical plants in Grande Prairie, Alberta; Saskatoon, Saskatchewan; Thunder Bay, Ontario; Vancouver, British Columbia; Buckingham, Quebec and Valdosta, Georgia. TRANSCARE: Retains Nixon Peabody as Special Corporate Counsel ------------------------------------------------------------- TransCare Corporation and its debtor-affiliates want the U.S. Bankruptcy Court for the Southern District of New York to give them authority to retain Nixon Peabody LLP as special corporate, regulatory and litigation counsel. The Debtors tell the Court that Nixon Peabody has been the Debtors' counsel in corporate, regulatory and litigation matters for many years. The Debtors want Nixon Peabody's legal services to continue without interruption. The Debtors tell the Court that they have selected Nixon Peabody the Firm's attorneys have extensive experience and knowledge in the fields of general corporate and commercial law, health care regulatory law, and litigation, among others. Particularly, Nixon Peabody also has extensive experience with the Debtors' businesses. If the Debtors are not permitted to retain Nixon Peabody as their special counsel, the Debtors believe that they would be unduly prejudiced by the time and expense necessarily required for any other counsel, to familiarize themselves with the matters in which Nixon Peabody has been retained pre-petition. Nixon Peabody will be requested to perform all necessary services as the Debtors' special counsel for corporate legal matters, regulatory matters, and certain litigation matters, including, without limitation, providing the Debtors with advice, representing the Debtors, and preparing all necessary documents on behalf of the Debtors. The professionals' hourly rates presently designated to represent the Debtors are: Attorneys $240 to $535 per hour Paralegals1 $115 to $165 per hour TransCare, a privately held corporation, is one of the largest privately owned providers of ambulance and ambulette services in the United States, providing both emergency and non-emergency services, primarily on a fee-for-service basis. The Company filed for chapter 11 protection on September 9, 2002. Matthew Allen Feldman, Esq., at Willkie Farr & Gallagher represents the Debtors in their restructuring efforts. When the Debtors sought protection from its creditors, it listed an estimated assets of $10 million to $50 million and debts of over $100 million. TYCO INT'L: Board Declares Regular Quarterly Cash Dividend ---------------------------------------------------------- The Board of Directors of Tyco International Ltd. (NYSE: TYC, LSE: TYI, BSX: TYC), has declared a regular quarterly cash dividend of one and one quarter cents per common share. The dividend is payable on November 1, 2002 to shareholders of record on October 1, 2002. Tyco International Ltd., (NYSE: TYC; LSE: TYI; BSX: TYC) is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in medical device products, and plastics and adhesives. Tyco operates in more than 100 countries and had reported fiscal 2001 revenues from continuing operations of approximately $34 billion. Tyco International Group's 6.75% bonds due 2011 (TYC11USR1) are trading at 76.5 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TYC11USR1for real-time bond pricing. UNIFORET INC: Court Extends CCAA Protection Until December 12 ------------------------------------------------------------- Uniforet Inc., and its subsidiaries, Uniforet Scierie-Pate Inc. and Foresterie Port-Cartier Inc., have obtained from the Superior Court of Montreal an order extending for an additional period of 90 days, expiring on December 12, 2002, the Court protection afforded to the Company under the "Companies' Creditors Arrangement Act". As already announced, the meeting of the class of US Noteholders-creditors to vote on the amended plan of arrangement is still temporarily suspended, following the institution of proceedings by a group of US Noteholders, until the composition of that class of creditors is settled. The representations concerning these proceedings were completed on March 15, 2002. The Company awaits the decision of the Court and shall have a new press release issued once this decision has been rendered. The Company intends to keep on its current operations and its customers are not affected by the Court order. Suppliers who will provide goods and services necessary for the operations of the Company will continue to be paid in the normal course of business. Uniforet Inc., is an integrated forest products company which manufactures softwood lumber and bleached chemi-thermomechanical pulp. It carries on its business through its subsidiaries located in Port-Cartier (pulp mill and sawmill) and in the Peribonka area in Quebec (sawmill). Uniforet Inc.'s securities are listed on The Toronto Stock Exchange under the trading symbol UNF.A, for the Class A Subordinate Voting Shares, and under the trading symbol UNF.DB, for the Convertible Debentures. UNIROYAL TECHNOLGY: Retaining Ordinary Course Professionals ----------------------------------------------------------- Uniroyal Technology Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to let them continue employing professionals to which the Company's turned for services in the ordinary course of their business, primarily: i) attorneys who represent the Debtors in regulatory matters or local matters in a specific jurisdiction, ii) accountants, tax advisors, auditors, iii) employee benefit consultants, and iv) environmental consultants. The Debtors want to continue employing the Ordinary Course Professionals without filing formal retention or fee applications for each firm. The Debtors tells the Court that it would be burdensome, impractical and inefficient to require each individual Ordinary Course Professional to apply separately to this Court for approval of its retention and/or the compensation owed by the Debtors. Moreover, many of the Ordinary Course Professionals are unfamiliar with the fee application process employed in a bankruptcy case and might be less inclined to work with the Debtors if they were forced to adhere to such requirements. The Debtors proposes that they will pay the Ordinary Course Professionals, 100% of the fees and disbursements to each upon submission of an appropriate invoice. Such fees and disbursements must not exceed a total of $15,000 per month per Professional, and no more than $40,000 per month for all Ordinary Course Professionals. With respect to Deloitte, the Debtors' lender requires that the Debtors provide audited financial statements by the end of the calendar year 2002. The Debtors propose that from September through December 2002, the fees and disbursements of Deloitte shall not exceed a total of $50,000 per month or $200,000 in the total aggregate. After them, the Caps set forth for the Ordinary Course Professionals shall apply to Deloitte. The Debtors further relates that if they lose the expertise and background knowledge of certain of these Ordinary Course Professionals, the estates undoubtedly will incur additional and unnecessary expenses. The Debtors will be forced to retain other professionals without such background and expertise. The Debtors maintain that it is in the best interest of their bankruptcy estates to avoid any disruption in the professional services required in the day-to-day operation of their businesses. Uniroyal Technology Corporation and its subsidiaries are engaged in the development, manufacture and sale of a broad range of materials employing compound semiconductor technologies, plastic vinyl coated fabrics and specialty chemicals used in the production of consumer, commercial and industrial products. The Company filed for chapter 11 protection on August 25, 2002 Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $85,842,000 in assets and $68,676,000 in debts. UNITED AIRLINES: Promises to Work with ATSB on Recovery Plan ------------------------------------------------------------ United Airlines (NYSE: UAL) issued the following statement regarding its continued recovery efforts: "The coalition of union leaders representing United's organized employees has told United it will provide an alternative framework for participation in United's financial recovery plan by approximately September 19. We're encouraged that our conversations remain positive and productive, and we're appreciative of the coalition's efforts. We will work with the ATSB to ensure that we can update the business plan the company intends to provide to the board after we receive the coalition's alternative framework." * * * As reported in Troubled Company Reporter's Sept. 5, 2002 edition, Standard & Poor's said its CCC ratings given to UAL Corp., and its subsidiary United Air Lines Inc., remain on CreditWatch with developing implications. Standard & Poor's ratings could be lowered if progress toward a financial restructuring does not materialize, or if such a plan includes defaulting on debt instruments; alternatively, ratings could be raised if such a plan is concluded successfully. UNITED AIRLINES: Union Intends to Provide Alternative Framework --------------------------------------------------------------- Friday afternoon the United Airlines Union Coalition delivered a letter to United Airlines Chief Executive Officer Glenn F. Tilton outlining the Coalition's intention to provide United with an alternative framework that will allow the Company to access substantial near-term lending by approximately September 19, 2002. The text of the letter follows: "Dear Mr. Tilton: "Following our meeting of September 4, 2002, we have continued to work with our advisors and each other on the terms of an alternative framework that will enable the Company to access substantial near-term lending. "At this point in our process, we intend to provide the Company with an alternative framework by approximately September 19, 2002. We are confident that the alternative framework will enable the Company to provide the ATSB with supplemental materials in support of the Company's pending application before the ATSB and trust that you will take steps to ensure that the Company can file such materials after September 16th." US AIRWAYS: Court OKs KPMG's Retention as Debtor's Tax Advisors --------------------------------------------------------------- US Airways Group and its debtor-affiliates obtained Court's permission to employ KPMG LLP as its auditors and tax advisors. The Debtors anticipate that KPMG will: (a) audit and review examinations of the financial statements of the Debtors as may be required from time to time; (b) analyze accounting issues and advise the Debtors' management regarding the proper accounting treatment of events; (c) assist in the preparation and filing of the Debtors' financial statements and disclosure documents required by the Securities and Exchange Commission; (d) assist in the preparation and filing of the Debtors' registration statements required by the Securities and Exchange Commission in relation to debt and equity offerings; (e) review and assist in the preparation and filing of tax returns; (f) advise and assist the Debtors regarding tax planning issues, including assistance in estimating net operating loss carryforwards, international taxes, and state and local taxes; (g) assist regarding transaction taxes, state and local sales and use taxes; (h) assist regarding tax matters related to the Debtors' pension plans; (i) assist regarding real and personal property tax matters, including review of real and personal property tax records, negotiation of values with appraisal authorities, preparation and presentation of appeals to local taxing jurisdictions and assistance in litigation of property tax appeals; (j) assist regarding any existing or future Internal Revenue Service, state and/or local tax examinations; (k) provide other consulting, advice, research, planning or analysis regarding tax issues as may be requested; (l) advise and assist on the tax consequences of proposed plans of reorganization, including assistance in the preparation of IRS ruling requests regarding the future tax consequences of alternative reorganization structures; and (m) perform other related accounting and tax services for the Debtors as may be necessary or desirable. KPMG's compensation for professional services rendered to the Debtors will be based on the hours expended by each assigned staff member at the corresponding hourly billing rate. The Debtors have agreed to compensate KPMG for professional services rendered at its normal and customary hourly rates. In the normal course of business, KPMG revises its hourly rates on October 1 of each year. The current customary hourly rates for accounting and tax services by KPMG are: Accounting and Audit Services: Hourly Rate ------------------------------ ----------- Partners/Principals $500 - 650 Managing Directors/Directors 500 - 600 Senior Managers/Managers 325 - 600 Senior/Staff Consultants 225 - 325 Associates 175 - 200 Paraprofessionals 100 - 110 Tax Advisory Services: ---------------------- Partners/Principals/Directors $500 - 750 Senior Managers/Managers 375 - 675 Senior/Staff Consultants 175 - 350 Tax Compliance Services: ------------------------ Partners/Principals/Directors $500 - 600 Senior Managers/Managers 375 - 500 Senior/Staff Consultants 175 - 350 David N. Siegel, Chief Executive Officer of US Airways Group, believe that KPMG's fees are fair and reasonable in light of: -- industry practice, -- market rates both in and out of Chapter 11 proceedings, -- KPMG's experience in reorganizations, and -- KPMG's importance to these cases. (US Airways Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) US Airways Inc.'s 10.375% bonds due 2013 (U13USR2) are trading at 10 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for real-time bond pricing. USG: Asks Court to Extend Removal Period Until March 31, 2003 ------------------------------------------------------------- Within the constraints of the existing tort system, Paul N. Heath, Esq., at Richards, Layton & Finger, explains that USG Corporation and its debtor-affiliates have been unable to determine which of its asbestos claims have merit and which do not. The Debtors doubt they have enough funds to satisfy claims of bona fide asbestos claimants to whom U.S. Gypsum has any legitimate liability. The Debtors are parties to tens of thousands of prepetition asbestos personal injury lawsuits pending in various courts throughout the country. Various asbestos and non-asbestos related lawsuits have also cropped up since the Petition Date. All the parties are involved in a variety of non-asbestos prepetition litigation "The sheer number and complexity of these Proceedings require time to determine which, if any, should be removed and, if appropriate, transferred to this District," Mr. Heath relates. By this motion, the Debtors ask the Court to further extend their removal period to March 31, 2003, without prejudice to any position the Debtors may take regarding whether Section 362 of the Bankruptcy Code applies to stay any Proceedings and their right to seek further extension regarding any and all Proceedings. By extend the removal period, Mr. Heath says, the Debtors' right to economically adjudicate lawsuits under 28 U.S.C. Section 1452 will be protected, as well as the best interests of the Debtors' estates and creditors. (USG Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) WARNACO: Wants to Conduct 26 Calvin Klein Store Closing Sales ------------------------------------------------------------- The Warnaco Group, Inc., and its subsidiary debtors operate retail and outlet stores, including a chain of 26 Calvin Klein outlet stores. During the course of these Chapter 11 cases, the Debtors have been working diligently to cut costs and increase the efficiency of their various businesses. In this regard, the Debtors have increased the efficiency of their production and have established a procedure for managing their inventory levels, resulting in a greatly diminished need to operate outlet stores to sell excess inventory. J. Ronald Trost, Esq., at Sidley Austin Brown & Wood LLP, in New York, reports that majority of the Calvin Klein stores are either unprofitable or are marginally performing. After considering the increase in per store management costs for the marginal stores that would occur if the unprofitable stores are closed, it is likely that the marginal stores would also become unprofitable. Thus, the Debtors have decided that all Calvin Klein Stores should be closed and their inventories sold. By this motion, the Debtors seek the Court's authority to: (a) sell inventory and fixtures and conduct store closing sales to the 26 Calvin Klein Stores pursuant to a Sale Guidelines either by way of an independent facilitator or by the Debtors themselves; and (b) conduct the Store Closing Sales without complying with any applicable state and local statutes, rules or ordinances governing store closing, liquidation or "going-out-of- business" sales, and notwithstanding any provisions in the leases of the Stores restricting the Debtors' ability to conduct the sales. The Debtors also want the Court to enjoin any action by any lessor or any federal, state or local agency, department or governmental authority or any other entity to prevent, interfere with, or otherwise hinder consummation of the Store Closing Sales or advertisement of the sale. During the Debtors' initial discussions with various facilitators interested in submitting bids for the rights to assist in the sale of the inventory in the Stores -- the Sale Rights -- the Debtors were informed that the bids were likely to be significantly higher if the Store Closing Sales commenced by the end of October 2002 so as to occur during the crucial holiday selling season. Mr. Trost relates that the Debtors will send to proposed facilitators, who have entered into confidentiality agreements, a book containing information on the Debtors' proposed sale of the Sale Rights. To reduce the likelihood of receiving bids containing terms and conditions that are dissimilar and difficult to compare, the Debtors have prepared a Term Sheet and Store Closing Sale Agreement. The Debtors anticipate completing the analysis of the bids submitted by the facilitators by September 25, 2002. If in the Debtors' sole business judgment and in consultation with their constituents, the highest and best bid is sufficient, the Debtors will file a motion on October 3, 2002 to approve the sale of the Sale Rights to the highest bidder, subject to overbids at an auction to be conducted on October 15, 2002. The Debtors further propose to the Court to hear the Sale Rights Motion on October 17, 2002 to be able to commence the Store Closing Sales by October 23, 2002. Mr. Trost notes that Section 363(b) of the Bankruptcy Code provides that a debtor "after notice and a hearing, may use, sell or lease, other than in the ordinary course of business, property of the estate." In support, Mr. Trost relates that the Debtors have conducted an analysis of the financial performance of the stores and have determined that their continued operation is no longer justified. Moreover, the Debtors believe that conducting the sale throughout the holiday season will maximize the ultimate return on their assets to be sold. Mr. Trost contends that the Sales should be declared free and clear of all liens pursuant to Section 363(f) of the Bankruptcy Code. To the extent that the Debtors' secured lenders or any other party assert a security interest in the assets to be sold in the Store Closing Sales, the Debtors believe that they will obtain the consent of these parties to the sale free and clear of liens, claims and encumbrances. In their request to waive the state and local laws, Mr. Trost notes that Section 959(b) of the Judiciary Procedures Code provides that a debtor-in-possession must "manage and operate the property according to the requirements of the valid laws of the state in which the property is situated." However, Courts have held hat a debtor-in-possession that is selling assets outside the ordinary course of business does not "manage and operate" the property for the purposes of Section 959(b). Since the Debtors seek to sell the inventory and close the Stores completely, Mr. Trost concludes that Section 959(b) does not require compliance with these state and local licensing procedures and other regulations, especially when the Debtors will conduct the Store Closing Sales with the knowledge and oversight of the creditors and this Court. Moreover, Mr. Trost insists, state and local licensing requirements, time limits or bulk sale restrictions on final closing sales would undermine the fundamental purpose of Section 363(b) of the Bankruptcy Code by placing constraints on the Debtors' ability to marshal and maximize estate assets for the benefit of the creditors. Craig Realty Objects Craig Realty Group objects to the use of the signage in connection with a going-out-business sale in conflict with Section 6.03 of the Lease. Craig also objects to any attempt by the Debtors to conduct a going-out-business sale beyond the termination date of the Lease, which is January 31, 2003. Thus, Craig asks the Court to direct the Debtors to comply with the Lease in all respect in conducting a going-of-business sale at their store. (Warnaco Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) WARPRADIO.COM: Brings-In Bill Hogan as Management Consultant ------------------------------------------------------------ WarpRadio.com (OTC:WRPR), currently a debtor in possession in a chapter 11 bankruptcy, and one of the nation's largest streamers of radio stations that aggregates approximately over 3 million hours per month for more than 200 radio stations, has hired Bill Hogan as a Management Consultant. Bill Hogan has more than twenty years of experience in Radio and executive level management. Mr. Hogan currently is consultant for Business Talk Radio. He held the position of President for BuySellBid.com. Before joining them, Mr. Hogan was Executive Vice President of Metromedia International Inc., overseeing thirteen international joint ventures and nineteen radio stations in Russia and in six Eastern European countries. Prior to Metromedia, Mr. Hogan was President and board member at Westwood One Radio Network and President of UNISTAR Radio Network. Mr. Hogan was also President of RKO Radio Network, where he supervised all network departments including Sales, Programming, Affiliate Relations, News, Engineering, and Administration. "WarpRadio provides an advertising opportunity in a unique and inviting streaming radio environment. WarpRadio has a loyal audience and I am very excited to be able to deliver this audience to WarpRadio's advertisers. WarpRadio's growing and committed roster of streaming radio stations has a measurable audience that traditional media is able to grow non-traditional revenue from," said Mr. Hogan. "Bill Hogan is a valuable asset to our firm and we are excited that he is joining our management consulting team. His knowledge and experience in advertising and radio will enhance our ever growing Internet presence," said Denise Sutton, President. WarpRadio.com provides users with a complete directory listing of many radio stations across the USA. WarpRadio.com serves as the real time 'connection' for listeners to the favorite program, format, or radio station. WarpRadio.com is headquartered in Denver, Colorado. WORLDCOM INC: Intends to Pay Former Employees' Severance Claims --------------------------------------------------------------- According to Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, during the ordinary course of business, Worldcom Inc., and its debtor-affiliates maintain a severance policy for eligible employees providing for severance pay benefits and extended medical and dental benefits for a period of time based generally upon an employee's level and years of service with the Debtors. Historically, Severance Benefits were paid in the form of a one-time, lump-sum payment on or about the termination date. In addition, the Debtors' Severance Program provides for the payment of accrued vacation pay and certain other accrued paid time off, earned but unpaid commissions and performance-based bonuses, reimbursable expenses and other amounts normally paid upon termination of employment, which amounts may be paid at later dates as the payments flow through the Debtors' payroll systems in the ordinary course. Prior to the Petition Date, the Debtors determined that a substantial reduction in its workforce was necessary. In the four months preceding the Petition Date, the Debtors terminated or provided notice of termination to 12,800 employees. In addition, 19 executives were terminated pursuant to severance agreements on terms different from the Debtors' typical Severance Programs. Pursuant to the Debtors' severance program then in effect, the Debtors notified and terminated the employment of 4,700 Employees between March 2002 and June 28, 2002. Ms. Goldstein states that the Employees received their Severance Benefits in the form of a one-time, lump-sum payment on or about the termination date consistent with the Debtors' existing practice. However, there are still other Severance Obligations owed to these Employees. On June 28, 2002, Ms. Goldstein adds that the Debtors notified 8,070 additional Employees that they were being or would be terminated. Of these, 3,820 Terminated Employees were laid-off on June 28, 2002 and 4,250 Terminated Employees were provided with notice of termination at a future date requiring many of them to work through a postpetition date. Due to the Debtors' liquidity crisis, the Employees were informed that their Severance Benefits would be not paid as a lump-sum payment, but rather would be spread out in the form of bi-weekly payments following termination. Converting the existing "lump-sum" Severance Program to the "biweekly" payment method occurred in the context of the Debtors' tightening liquidity at that time. Ms. Goldstein admits that the Debtors owe about $36,000,000 in Severance Obligations to 4,143 Terminated Employees in addition to amounts already authorized pursuant to the Wage Order. Outstanding Severance Obligations for Terminated Employees include: $28,500,000 in Severance Benefits, $1,900,000 in unpaid accrued PTO, $4,400,000 in Commissions, $250,000 in tuition reimbursement obligations, $1,000,000 for employees transitioned to the purchaser of a unit of the Debtors sold prior to the Petition Date, and other prepetition Severance Obligations otherwise payable by WorldCom under its prepetition Severance Programs. Ms. Goldstein relates that because of the timing of the Chapter 11 case, some Employees have not received their intended severance payments. In contrast, the Employees who will be terminated postpetition will receive their bi-weekly severance payments under company policy as administrative claims against the Debtors' estates. The payable Severance Benefits and PTO to employees terminated postpetition are $16,000,000 and $3,300,000. The Debtors believe that the payment of the Severance Obligations should be addressed as quickly as possible to remedy the inequitable result to the Terminated Employees. Despite the Terminated Employees' accusations reported in the press and to governmental officers, Ms. Goldstein assures the Court that the Debtors did not stretch the payment of Severance Obligations over time with the intention of avoiding payment. At the time the Debtors elected to modify the payment terms of its Severance Program, it did not believe Chapter 11 was imminent. Unfortunately, some Terminated Employees have not been paid their Severance Obligations. To remedy this unintended consequence, the Debtors seek the Court's authority to pay the Terminated Employees all Severance Obligations earned prior to the Petition Date consistent with their practices, programs and policies with respect to their Terminated Employees in effect as of the Petition Date. The Debtors want to correct any misperceptions of wrongdoing and restore the confidence of its employees whose cooperation and continued loyalty of current employees is essential. Ms. Goldstein contends that any delay in paying Terminated Employee obligations will adversely impact the Debtors' relationship with their current employees and will irreparably impair the current employees' morale, dedication, confidence, and cooperation. The employees' support for the Debtors' reorganization effort is critical. At this early stage, the Debtors simply cannot risk the substantial damage to their businesses that would inevitably result from a decline in their Employees' morale attributable to their failure to pay severance, benefits and other similar items or any perceived attempt to intentionally deny these benefits. (Worldcom Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) Worldcom Inc.'s 11.25% bonds due 2007 (WCOM07USA1) are trading at 22.5 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM07USA1 for real-time bond pricing. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. 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