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/raid1/www/Hosts/bankrupt/TCR_Public/021003.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, October 3, 2002, Vol. 6, No. 196 Headlines 360NETWORKS INC.: U.S. Court Confirms Plan of Reorganization 360NETWORKS: Inks New Jersey Turnpike Settlement Pact ACME METALS: BofA Extends DIP Financing until November 29, 2002 ADVANCED GLASSFIBER: Sr. Lenders Agree to Forbear Until Oct. 31 AGWAY INC: Voluntary Chapter 11 Case Summary AIR CANADA: Closes Sale-Leaseback Transaction at about C$100MM ALLMERICA: S&P Cuts Ratings on 2 Related Synthetic Transactions AMTRADE INTERNATIONAL: Fitch Drops Ratings to Default Level ANACOMP INC: Appoints Jeff Cramer as Chief Executive Officer ANC RENTAL: Wants to Consolidate Operations at O'Hare Airport APPLE CAPITOL: Selling Certain Secured Debt to Applebee's Int'l BBVA BANCOMER: New York Agency Commences Voluntary Liquidation BEAR STEARNS: Fitch Affirms 6 P-T Certs. Ratings at Low-B Level BORDEN CHEMICALS: Wants to Extend DIP Loan Pact Until Dec. 31 BRIGHTPOINT INC: Repurchases Additional Convertible Notes BUDGET GROUP: Wants to Expand Fowler White's Scope of Engagement BURLINGTON INDUSTRIES: Plan Exclusivity Intact through Jan. 31 CANADIAN IMPERIAL: Applies for Repricing of Warrants with TSX CARBIDE/GRAPHITE: Inks Definitive Pact to Sell Unit's Assets CARIBBEAN PETROLEUM: Wants to Stretch Exclusivity to December 2 COMDISCO: Makes Initial Distribution to Shareholders & Creditors COMMUNICATION DYNAMICS: Gets Nod to Use GECC's Cash Collateral COVANTA ENERGY: Wins OK to Implement Broad-Based Severance Plan DTVN HOLDINGS: Files for Chapter 11 Protection in Dallas, Texas ENCOMPASS SERVICES: Sr. Lenders Waive Loan Financial Covenants ENRON CORP: Court Approves ENA's Merced Termination Settlement EXODUS COMMS: EXDS Pursues $19 Million Recovery from 9 Creditors FANNIE MAE: S&P Affirms Low-B Ratings on Four Classes of Notes FEDERAL-MOGUL: Court Denies Committee's Restricted Docs. Demand GE CAPITAL: S&P Affirms Ratings on Six Classes at Lower-B Levels GLOBAL CROSSING: Court Extends IRS Bar Date Until Year-End GRANITE BROADCASTING: S&P Affirms Junk Rating After Asset Sale GUILFORD MILLS: Preparing to Emerge from Chapter 11 Proceeding HADRO RESOURCES: June 30 Working Capital Deficit of $1.23 Mill. HAYES LEMMERZ: Has Until Dec. 3 to Remove Prepetition Actions HEALTHCARE INTEGRATED: Voluntary Chapter 11 Case Summary HECLA MINING: Brings-In Ronald W. Clayton as VP, U.S. Operations IBEAM BROADCASTING: Gets Approval to Delay Entry of Final Decree J.L. HALSEY: Files Form 10-K for Year Ended June 30, 2002 KINETIC CONCEPTS: S&P Keeps Watch on B Ratings After Jury Award KITTY HAWK: Successfully Emerges from Chapter 11 Bankruptcy KMART CORP: Seeks Court Approval to Expand PwC's Engagement LAIDLAW INC: Transport Board Allows Control on Seeley Bus Lines LEAP WIRELESS: Initiates Brave Steps to Streamline Operations LEHMAN BROTHERS: Fitch Affirms Class A-1 & A-2 Ratings at D/CCC LUMENON INNOVATIVE: Reports Loss for Fifth Consecutive Year MALLON RESOURCES: Black Hills Merger Deal Solves this Insolvency MARINER POST-ACUTE: MHG Wants More Time to Challenge Claims MATTRESS DISCOUNTERS: Standstill Pact Continues Until October 31 MIKOHN GAMING: Selling Lighting & Sign Unit to C.E.I. Holding MITEC TELECOM: Working Capital Deficit Reaches C$3.5M at July 31 MORGAN STANLEY: Fitch Affirms Low-B & Junk Ratings on 7 Classes NATIONSRENT INC: Signing-Up UBS Warburg for Financial Advice NODAK MUTUAL: AM Best Keeping Watch on B++ Fin'l Strength Rating NRG ENERGY: South Central Unit Defaults on Senior Secured Bonds OWENS CORNING: Court Okays EPA Bar Date Extension to December 15 PATRIOT AIR: Case Summary & 20 Largest Unsecured Creditors PCNET INT'L: Units File for CCAA Protection in British Columbia PENNZOIL-QUAKER: S&P Keeps Low-B Debt Ratings on Watch Positive PENTON MEDIA: Will Publish Third Quarter Results on October 31 PEREGRINE SYSTEMS: Asks Court to Fix December 16 Claims Bar Date PLAINS ALL AMERICAN: Closes Financing Pacts to Augment Liquidity PSINET: Goldin Resolved Dispute over Metamor Stock Sale to CIBER SAKS: Consolidating Younkers Ops. into Carson Pirie Headquarters SCIENTIFIC LEARNING: Names Jill Rutter Vice Pres. of Operations SLI INC: Seeks Nod to Sign-Up Skadden Arps as Bankruptcy Counsel SOFTCHOICE CORP: Commences Trading on Toronto Stock Exchange SPINNAKER INDUSTRIES: Lynch Transfers Shares to a Brokerage Firm STERLING BANCSHARES: Fitch Assigns BB+ Rating to $31-Mill. Trust SUNBEAM: Court to Consider Disclosure Statement on Oct. 4, 2002 SUNBEAM: Court Extends Exclusive Periods Until December 15, 2002 TCW LINC: S&P Puts BB- Classes A-3A & A-3B on Watch Negative TEMPLETON EMERGING: Completes Reorganization into a New Trust TEMPLETON VIETNAM: Completes Reorg. into Developing Market Trust TEXAS PETROCHEMICALS: S&P Hatchets BB- Corp. Credit Rating to B TEXON INT'L: Ad Hoc Committee Agrees to Recapitalization TOTAL IMAGE: TSX Knocks Off Shares for Violating Requirements TRICORD SYSTEMS: Lunar Flare NAS Product Performance Jumps 80% UAL CORP: S&P Slashes Series B Preferreds Rating to D from CC US AIRWAYS: Receives Court's Blessing to Obtain Surety Bonds USG CORP: Wants Deloitte & Touche to Render Additional Services USI HOLDINGS: S&P Keeping Watch on B+ Counterparty Credit Rating VIASYSTEMS GROUP: Files Chapter 11 Petition in S.D. New York VITESSE SEMICONDUCTOR: Reiterates Earnings Guidance for Q4 2002 WORLDCOM INC: Creditors' Committee Hires Akin Gump as Counsel XEROX CORPORATION: Appoints Three Executives to New Positions XO COMMS: Assuming Amended Lease for LA, Calif. Carrier Center * DebtTraders' Real-Time Bond Pricing ********* 360NETWORKS INC.: U.S. Court Confirms Plan of Reorganization ------------------------------------------------------------ 360networks announced that the U.S. Bankruptcy Court for the Southern District of New York has confirmed its plan of reorganization, completing the final step in 360networks' emergence plan from bankruptcy protection in the U.S. and CCAA protection in Canada. The plan had received overwhelming approval from 100% of the Company's senior lenders and 94% of the unsecured U.S. creditors, who voted their claims last week. Having previously obtained plan approval from the Supreme Court of Canada on September 4, 2002, 360networks expects to emerge from bankruptcy by the end of October. During its restructuring, 360networks completed the lighting of its U.S. and Canadian footprint and successfully grew its monthly recurring revenue from lit services, including wavelengths and private lines, while dramatically reducing its monthly recurring expenses. 360networks will emerge with approximately $100 million of cash and $215 million of bank debt (reduced from the Company's pre-filing debt level of approximately $2.7 billion). Given its strong liquidity position, the Company's business plan does not anticipate requiring additional capital prior to its debt maturing in five years. The Company's equity will be held by 360's pre-filing secured debt and unsecured trade creditors and by the Company's employees. "As the first long-haul telecommunications provider to restructure successfully, we believe that our low debt level, lean cost structure and innovative, focused product set will enable us to be a key player in shaping the industry," said Greg Maffei, president and chief executive officer of 360networks. "This has been a painful process for our employees, customers and stakeholders, but we believe that our restructuring leaves us well-positioned. Throughout the restructuring, we have maintained our operational focus and continue to deliver excellent solutions for our customers. We see organic growth opportunities in our sector and potentially in the consolidation of carriers, and are confident we have the right team in place to take advantage of these opportunities." 360networks also said that WL Ross & Co. LLC, a leading private equity firm, has purchased debt securities of 360networks that represent approximately 10% of the new equity and 13% of the confirmed debt, and that 360networks and WL Ross & Co. will partner to consider future acquisitions in the telecommunications industry. In addition, Mr. Wilbur Ross, founder and Chairman of WL Ross & Co., will join the board of directors of the reorganized company. Over more than three decades, Mr. Ross has built a strong reputation for seizing opportunities to build value in restructured companies. "After studying optical fiber network opportunities for more than a year, we have concluded that 360networks presents the most attractive combination of balance sheet strength, network map, technology, proximity to cash flow breakeven and management talent," said Wilbur Ross. "We see it as a logical base for the imminent industry consolidation." About 360networks 360networks offers telecommunications services and network infrastructure in North America to telecommunications and data communications companies. The company's optical mesh fiber network is one of the largest and most advanced on the continent, spanning approximately 25,000 miles (40,000 kilometers) and connecting 48 major cities in Canada and the United States. On June 28, 2001, certain companies in the 360networks group voluntarily filed for protection under the Canadian Companies' Creditors Arrangement Act (CCAA) and Chapter 11 of the U.S. Bankruptcy Code. Additional information is available at www.360.net. About WL Ross WL Ross & Co. LLC earlier this year organized International Steel Group with $236 million of equity to buy and reactivate the principal steel production and finishing assets of the bankrupt LTV Steel Corp. and of Acme Steel Corp. and last year invested a similar amount to acquire from the Japanese government Kansai Sawayaka Bank in Osaka, Japan as the successor to the failed Kofuku Bank. Private equity and hedge funds operated by WL Ross & Co. LLC also are the largest bondholders of Burlington Industries and recently renegotiated to a successful conclusion the debt exchange offer proposed by American Retirement Corp. Since its inception on April 1, 2000, WL Ross & Co. LLC has sponsored more than $1.6 billion of private equity and hedge fund commitments. 360NETWORKS: Inks New Jersey Turnpike Settlement Pact ----------------------------------------------------- Two years ago, 360networks inc., and its debtor-affiliates and New Jersey Turnpike Authority entered into an Agreement for Indefeasible Right of Use of Duct and Dark Fiber. Under the Agreement, the Authority granted to the Debtors the right to build and maintain a conduit containing 144 fibers along the 230 miles of the Authority's property. In exchange, the Debtors paid to the Authority a one-time user fee of $12,500,000 and agreed to pay annual user and maintenance fees of $200,000. Since the Debtors' business plan no longer requires the use of all of the Fibers, they negotiated with the Authority for lower fees. Accordingly, the Debtors seek the Court's authority to enter into a Settlement Agreement with the Authority on these terms: (a) 360 USA will transfer all of its rights and interest in 130 miles of the Duct and Fiber to the Authority. In consideration of the transfer, the Authority will grant 360 USA an IRU in 12 dark fibers within the 130 miles of Duct being surrendered to the Authority, free and clear of all liens, claims and encumbrances. 360 USA will retain all of its rights in the remaining 100 miles of Duct and Fiber; (b) 360 USA will assume the Agreement, as modified by the Settlement, which govern the Debtor's continued use of the 360 USA Fibers and Duct; (c) 360 USA shall be exempt from all user and maintenance fees associated with the 360 USA Fibers and Duct; and (d) 360 USA and the Authority will waive and mutually discharge all claims, if any, they have or may have up to the date of the execution of the Settlement Agreement. Among other things, this would result in the Authority waiving $390,000 of fees. Shelly C. Chapman, Esq., at Willkie Farr & Gallagher, in New York, contends that pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 365(a) of the Bankruptcy Code, the Settlement Agreement should be approved because: (a) it is fair, equitable and in the best interest of the Debtors' estates; (b) it will relieve the Debtors of an annual payment obligation of $200,000 while preserving the Debtors' right to use the Fibers and Duct; (c) the Debtors are able to avoid possible cure claims that otherwise would arise from the Debtors' assumption of the Agreement; (d) all claims for payments due on or before the date of the Settlement Agreement will be mutually discharged; and (e) the Debtors are able to retain interests in fibers, conduit and collation space that are essential to their business plan. (360 Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) ACME METALS: BofA Extends DIP Financing until November 29, 2002 --------------------------------------------------------------- Acme Metals Incorporated, along with its debtor-affiliates, seeks approval from the U.S. Bankruptcy Court for the District of Delaware of an extension of their existing postpetition credit facility with Bank of America, N.A., until November 29, 2002. The extension, the Debtors relate, is for the sole purpose of securing the Company's reimbursement obligation for an outstanding $1 million Letter of Credit issued under the Existing Facility. The Debtors report that Acme Steel is currently in the process of implementing its Shut-Down and production at the Acme Steel steel-making facility has ended as of December 2001. Acme Packaging on the other hand continues to generate positive cash flow and the Debtors are working with their counsel, financial advisors and key creditor constituencies toward reorganizing Acme Packaging's business through a stand-alone restructuring of that business. The proceeds of the liquidation of Acme Steel's inventories and accounts receivable have been applied to the repayment of the Existing Facility. Currently, all borrowings under the Existing Facility have been repaid except for the contingent reimbursement obligation an outstanding $1 million Letter of Credit issued in favor of Liberty Mutual Insurance Company. Bank of America agreed to reduce its non-refundable monthly amendment/extension fee from $10,000 to $7,500 each month. If the Existing Facility is not extended, the Debtors relate that the Debtors will be required to obtain a letter of credit with another financing institution on less favorable terms. The Maximum Revolver Amount will remain at $1,500,000 and further borrowings or request for the issuance of new Letter of Credit are generally precluded. Acme Metals and its debtor-affiliates are engaged in the business of steel manufacturing and fabricating. The Company filed for chapter 11 bankruptcy protection on September 28, 1998. Brendan Linehan Shannon, Esq., and James L. Patton, Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. The Debtors' consolidated balance sheet as of December 31, 2000 reports total assets of $654,421 and liabilities of $362,737. ADVANCED GLASSFIBER: Sr. Lenders Agree to Forbear Until Oct. 31 --------------------------------------------------------------- Advanced Glassfiber Yarns LLC has reached an agreement on the terms of an additional amendment and forbearance agreement with its senior secured lenders under the Company's senior secured revolving credit and term loan facility. Previously, the Company had announced that it was in discussions with its senior lenders regarding a consensual restructuring of approximately $180 million of indebtedness outstanding under such facility, and had obtained an agreement from such lenders to forbear from exercising rights and remedies under such facility until September 27, 2002. Under the latest amendment and forbearance agreement, the Company's senior lenders agreed, among other things, to extend the forbearance period until October 31, 2002 while the parties continue restructuring discussions. In connection with this agreement, the Company, among other things, will not be making an approximately $5.9 million scheduled principal repayment under its term loan facility that was due on September 30, 2002, and will be subject to a borrowing cap of $35 million under its revolving credit facility. The Company currently anticipates that it will have sufficient liquidity to satisfy its cash obligations in the foreseeable future including day-to-day trade obligations. The Company also advised that it intends to use the time afforded under the latest forbearance agreement to continue restructuring discussions with an ad hoc committee of its $150 million of 9-7/8% senior subordinated notes. The Company noted, however, that there can be no assurance that it will be successful in achieving a consensual restructuring of its senior secured or senior subordinated indebtedness, in which event, the Company will explore all viable alternatives. Advanced Glassfiber Yarns, headquartered in Aiken, SC, is one of the largest global suppliers of glass yarns, which are a critical material used in a variety of electronic, industrial, construction and specialty applications. AGWAY INC: Voluntary Chapter 11 Case Summary -------------------------------------------- Lead Debtor: Agway, Inc. aka Agway Agricultural Products aka Agway Agronomy aka Agway Bean Company aka Agway Consumer Products aka Agway Coordinated Dairy Systems Company aka Agway Country Foods aka Agway Country Products aka Agway CPG Technologies International aka Agway Feed & Nutrition Company aka Agway Financial Corporation aka Agway Flour Company aka Agway Holdings Inc. aka Agway Research Center aka Agway Retail Services aka Agway Water Treatment Systems aka Allied Seed Cooperative aka Andgrow aka Andgrow Fertilizer aka Apex Bag Company Blue Ribbon Seed Potato Company aka Central Maine Feed aka Country Best aka Country Gardens aka CPG Nutrients aka CPG Technologies aka Cultivations aka Devitts aka Empire Sweets aka G&P Fresh Pac aka Mid-State Fresh aka Mid-State Potato Distributors aka Milford Fertilizer Company aka ProPet aka ProLawn Products aka Reading Bone aka Reading Bone Fertilizer aka Respond Feed aka Salem Country Gardens aka Seedway aka Shopworks aka Sunflower aka Vanguard Nutrition Products 333 Butternut Drive DeWitt, NY 13214 Bankruptcy Case No.: 02-65872 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Agway General Agency, Inc. 02-65873 Brubaker Agronomic Consulting Service LLC 02-65874 Country Best Adams, LLC 02-65875 Country Best-DeBerry LLC 02-65876 Feed Commodities International LLC 02-65877 Type of Business: Agway, an agricultural co-op, has 69,000 members, primarily in the Northeast. The co- op's Agricultural Group sells feeds, seeds, fertilizers, and other farm supplies to members and other growers. Agway's Country Products Group processes and markets fresh produce (mostly under the Country Best label). It also invests in new agricultural technology. Agway Energy Products sells fuel and HVAC systems and markets electricity and gas in deregulated states. Agway also offers leasing services. Chapter 11 Petition Date: October 1, 2002 Court: Northern District of New York (Utica) Judge: Stephen D. Gerling Debtors' Counsel: Menter, Rudin & Trivelpiece, P.C. 500 South Salina Street, Suite 500 Syracuse, NY 13202 315-474-7541 Total Assets: $1,574,360,000 (as of June 30, 2002) Total Debts: $1,510,258,000 (as of June 30, 2002) AIR CANADA: Closes Sale-Leaseback Transaction at about C$100MM -------------------------------------------------------------- Air Canada announced the completion of an engine sale-leaseback transaction providing approximately C$100 million of new funding for the carrier, which will be used for repayment of third quarter debt maturities. In an agreement with GE Engine Leasing and Shannon Engine Support, Air Canada sold and leased-back eleven owned spare engines. "We will continue to access financing, including sale and leaseback transactions and asset sales to maintain the company's liquidity requirements in these uncertain times for the airline industry world-wide," said Rob Peterson, Executive Vice President and Chief Financial Officer. GE Engine Leasing is a joint services unit of GE Engine Services and GE Capital Aviation Services Inc. Shannon Engine Support is a wholly-owned subsidiary of CFM International. CFM is a 50/50 joint company between SNECMA Moteurs of France and General Electric of the United States. * * * As previously reported, Standard & Poor's downgraded its senior unsecured debt rating for Air Canada to 'B' from 'B+', reflecting reduced asset protection for unsecured creditors and application of revised criteria for "notching" down of such debt ratings based on the proportion of secured debt in a company's capital structure. According to the report, the rating actions did not indicate a changed estimate of default risk, but rather poorer prospects for recovery on senior unsecured obligations if the affected airline were to become insolvent. Air Canada's 10.25% bonds due 2011 (AIRC11CAN1) are trading at 50 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AIRC11CAN1 for real-time bond pricing. ALLMERICA: S&P Cuts Ratings on 2 Related Synthetic Transactions --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on two synthetic transactions related to AFC Capital Trust I to single- 'B'-minus from double-'B'-plus and placed them on CreditWatch with negative implications. The rating actions follow the lowering of Allmerica Financial Corp.'s preferred stock (AFC Capital Trust I) rating on September 27, 2002. The two transactions are swap-independent synthetic transactions that are weak-linked to the underlying collateral, AFC Capital Trust I's preferred shares. The lowered ratings reflect the credit quality of the underlying securities issued by AFC Capital Trust I. Ratings Lowered and Placed On Creditwatch Negative PreferredPLUS Trust Series ALL-1 $48 million trust certificates series ALL-1 Rating Class To From A B-/Watch Neg BB+ B B-/Watch Neg BB+ CorTs Trust For AFC Capital Trust I $36 million Allmerica corporate-backed trust securities (CorTs) certificates series 2001-19 Rating Class To From A B-/Watch Neg BB+ AMTRADE INTERNATIONAL: Fitch Drops Ratings to Default Level ----------------------------------------------------------- Fitch Ratings has downgraded its long-term issuer and long-term deposit ratings for AmTrade International Bank to 'D' from 'BB' and 'BB+', respectively. A complete list of affected ratings is included at the end of this release. The rating action is in response to the Federal Deposit Insurance Corporation being named receiver following the closure of the bank by Commissioner of Banking and Finance for the state of Georgia. At the time of the regulatory action the bank had approximately $12 million in assets and $10 million in deposits. The FDIC has approved the payout of all insured depositors. The level of uninsured deposits is not known. Fitch's assignment of a 'D' rating to the uninsured deposits and other obligations of AmTrade reflects an expected recovery rate below 50 percent. The low level of expected recovery is based on the fact that AmTrade has been actively liquidating itself in the third quarter (assets at June 30, 2002 were $92 million). Fitch previously anticipated that AmTrade would successfully complete its self- liquidation with no loss to creditors. The current situation suggests remaining assets may provide minimal additional funds to meet outstanding obligations. Ratings Downgraded AmTrade International Bank -- Long-Term Deposits to 'D' from BB+'; -- Short-Term Deposits to 'D' from 'B'; -- Long-Term Issuer Rating to 'D' from 'BB'; -- Short-Term Issuer Rating to 'D' from 'B'; -- Individual Rating to 'E' from 'C/D'. ANACOMP INC: Appoints Jeff Cramer as Chief Executive Officer ------------------------------------------------------------ Anacomp, Inc. (OTC Bulletin Board: ANCPA), a global provider of information outsourcing, maintenance support and document output solutions, announced the promotion of its president Jeff Cramer to the additional role of chief executive officer. Phil Smoot, who had been CEO of the Company since August 2000, remains chairman of the board for Anacomp. "I've worked closely with Jeff over the past two years and believe he has the experience, knowledge and, most importantly, the vision to guide Anacomp and its people to a very successful future," said Smoot. "Jeff's ideal blend of customer focus, financial experience and market knowledge will no doubt ensure an excellent environment for Anacomp and its customers, employees and shareholders." Cramer has served as Anacomp's president since March 2002. Previously, he was senior vice president and general manager of its technical services division, a position he held for over four years. He joined the Company in 1996 as senior vice president of business development. Cramer's 25-plus-year business career spans a variety of industries, domestic and international operations, and both public and private companies. Prior to joining Anacomp, he served as chief executive officer of COM Products, Inc. He has also held senior roles with Bell and Howell Company, COSCO Industries, Inc. and Grumman Corporation. "I look forward to having the opportunity to shape Anacomp's strategic direction," said Cramer. "Phil's efforts in the last two years have laid the groundwork for the Company's return to profitability. Now Anacomp is ready to accelerate the growth of its Web and Multi-Vendor Services businesses, while remaining the undisputed leader in COM [computer output to microfiche]." Smoot, who joined Anacomp in August 2000 as president and chief executive officer, was elected chairman of the board in November 2001. During his tenure as chief executive officer, he led Anacomp through a successful debt restructuring and reorganization of its worldwide operations. In his continuing role as chairman, Smoot will remain involved in overseeing Anacomp's operations and its ongoing efforts to improve its financial position. Headquartered in San Diego, Anacomp, Inc., provides information outsourcing, maintenance support and document output solutions for businesses and organizations around the globe. Anacomp offers a full range of solutions to meet end-user document capture, presentation, retrieval and archive requirements, as well as computer room and networking equipment services, output systems and supplies needs. Current service and product offerings include digital document services, document imaging services, print and micrographic services, business continuity services, multi-vendor services and support, and imaging and print systems and supplies. For more information, visit Anacomp's Web site at http://www.anacomp.com Anacomp Inc.'s June 30 balance sheets show a negative working capital of $16.3 million. The negative working capital results from the current period reclassification of its $33.5 million revolving credit facility, due June 30, 2003, from long-term to current. ANC RENTAL: Wants to Consolidate Operations at O'Hare Airport ------------------------------------------------------------- In order to acquire significant cost savings at the O'Hare International Airport in Chicago, Illinois, ANC Rental Corporation and its debtor-affiliates operate the two brand names -- Alamo and National -- on a consolidated basis. Alamo and National are each parties to a License of Terminal Space, which serves as a concession agreement, with the City of Chicago. National is also a party to a month-to-month agreement Lease of On-Airport Service Facility with the City of Chicago. Thus, the Debtors seek authority to reject the Alamo Concession Agreement and assume and assign the National Concession Agreement and the National Lease to ANC Rental Corporation. Bonnie Glantz Fatell, Esq., at Blank Rome Comisky & McCauley LLP, in Wilmington, Delaware, tells the Court that the concession agreements only permit dual branding with the airport authority's consent. As a condition for the airport authority's consent to the motion, the Debtors have agreed to increase their Minimum Annual Guarantee Fee under the National Concession Agreement from $2,474,616 to $3,700,000. The Debtors will also increase the security deposit required pursuant to the National Concession Agreement to $925,000. The Debtors, in addition, will pay any debt outstanding to the airport authority arising out of the Alamo Concession Agreement through the date of rejection. The consolidation of operations at the O'Hare Airport is expected to save the Debtors over $2,347,000 per year in fixed facility costs and other operational cost savings. (ANC Rental Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) APPLE CAPITOL: Selling Certain Secured Debt to Applebee's Int'l --------------------------------------------------------------- Applebee's International, Inc., (Nasdaq:APPB) has entered into an agreement to acquire certain secured debt of Apple Capitol Group, LLC owed to Lehman Brothers Holdings, Inc., for $34.3 million. This agreement is subject to the consummation of Applebee's International's previously announced potential acquisition of 21 franchise restaurants located in the Washington, D.C., area from Apple Capitol, an existing franchisee. The company continues to expect to close under its negotiated purchase agreement to acquire the 21 restaurants in the fourth quarter of 2002, subject to normal bankruptcy court bidding procedures, obtaining operating licenses and other third-party consents. Applebee's International, Inc., headquartered in Overland Park, Kan., develops, franchises and operates restaurants under the Applebee's Neighborhood Grill and Bar brand, the largest casual dining concept in the world. There are currently 1,459 Applebee's restaurants operating system-wide in 49 states and eight international countries. Additional information on Applebee's International can be found at the company's Web site http://www.applebees.com BBVA BANCOMER: New York Agency Commences Voluntary Liquidation -------------------------------------------------------------- NOTICE TO THE CUSTOMERS AND CREDITORS OF BBVA BANCOMER, S.A. On August 16, 2002, BBVA Bancomer, S.A., commenced the voluntary liquidation of its New York agency located at 1370 Avenue of the Americas, 21st Floor, New York, New York 10019, under the provisions of Section 605(11)(c) of the New York Banking Law. Upon completion of the liquidation, it is expected that substantially all of the business of the New York agency will be transferred to and conducted by BBVA Bancomer's Los Angeles agency at 444 South Flower Street, Suite 100, Los Angeles, California 90071. Any claims on BBVA Bancomer's New York Agency should be submitted by November 18, 2002 to Mr. Volker Mergenthaler, Vice President, at the New York agency address first listed above, telephone (212) 445-1010. Questions also may be referred to Mr. Jos Antonio Padilla, Executive Vice President & General Manager, U.S Agencies, or to Mr. Gabriel Palafox, Vice President, at the bank's Los Angeles agency, telephone (213) 489-7245. BEAR STEARNS: Fitch Affirms 6 P-T Certs. Ratings at Low-B Level --------------------------------------------------------------- Bear Stearns Commercial Mortgage Securities Inc.'s commercial mortgage pass-through certificates, series 2001-TOP2 Trust Fund, $312.3 million class A-1, $529.7 million class A-2, and interest-only classes X-1 and X-2 are affirmed at 'AAA' by Fitch Ratings. In addition, Fitch affirms the following classes: $26.4 million class B at 'AA', $30.2 million class C at 'A', $10.1 million class D at 'A-', $23.9 million class E at 'BBB', $8.8 million class F at 'BBB-', $16.4 million class G at 'BB+', $6.3 million class H 'BB', $7.5 million class J at 'BB-', $3.8 million class K at 'B+', $5 million class L at 'B' and $2.5 million class M at 'B-'. Fitch does not rate the $10.1 million class N. The affirmations follow Fitch's annual review of the transaction, which closed in May 2001. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since closing. There are currently no delinquent loans. Three loans (1.9%) are being specially serviced. As of the August 2002 distribution date, the pool's aggregate certificate balance has decreased by 1.3% since closing, to $993 billion from $1.01 billion. The certificates are collateralized by 140 fixed-rate mortgage loans, consisting primarily of office (29.3% by balance), industrial (24.4%), and retail (21.7%) properties, with concentrations in California (25.2%), New Jersey (8.1%), and New York (7.6%). Wells Fargo Bank, master servicer, provided year-end 2001 borrower operating statements for 100% of the pool's outstanding balance. The weighted average debt service coverage ratio for YE 2001 remains relatively unchanged at 1.61 times compared to 1.60x at closing. Three loans (1.5%) reported YE 2001 DSCRs below 1.00x. Fitch reviewed the performance and underlying collateral of the deal's four loans which Fitch considered as having investment grade credit characteristics at closing, Westin River North (5.5%), The Summit at Westchester (2%), Mansfield Village Apartments (1.8%), and Tech Ridge (1.5%). Of these loans, Fitch no longer considers Westin River North to have investment grade credit characteristics. In general, DSCRs for these loans were derived by using the borrower net operating income less Fitch underwritten reserves and debt service payments based on the original balance and a stressed refinance constants. Westin River North is a 424 room full-service hotel located in Chicago, IL. Since origination, the property's performance has deteriorated due to economic factors and the effects of Sept. 11. The YE 2001 DSCR has decreased to 1.44x, compared to 2.03x as of trailing-twelve months ending February 2001. The Summit at Westchester is a 228,920-sf multi-tenant office building located in Valhalla, NY. The YE 2001 DSCR has decreased to 1.12x, compared to 1.28x as of YE 1999. The decrease is mostly due to an increase in utility costs, which expense was not fully reimbursed to the borrower. In addition, a number of tenants took occupancy in 2001, which could have attributed to some loss in rents and reimbursements for this period. As of March 31, 2002, the property was 100% occupied, compared to 90% at closing. Mansfield Village Apartments is an 812-unit multifamily property located in Mansfield, NJ. The YE 2001 DSCR has decreased to 0.93x, compared to 1.39x as of YE 1999. However, the most recent YE coverage reflects capital improvement expenses that were classified as operating expenses in the repairs and maintenance (R&M) line item. The DSCR increases to 1.64x when adjusting the DSCR to reflect a more normalized R&M expense. This adjusted coverage is in-line with the original reported Fitch stressed DSCR of 1.71x. As of March 2002, the property was 93% occupied, compared to 95% at closing. Tech Ridge is a 340,076-sf industrial building located in Austin, TX. The YE 2001 DSCR has increased to 1.93x, compared to 1.65x at closing. The current DSCR was derived by using Fitch's original vacancy factor of 5%, and the closing DSCR was derived by using Fitch's original underwritten net cash flow (NCF). The property is 100% occupied as of December 2001, which is in-line to the occupancy at closing. Fitch will continue to monitor this transaction, as surveillance is ongoing. BORDEN CHEMICALS: Wants to Extend DIP Loan Pact Until Dec. 31 ------------------------------------------------------------- Borden Chemicals and Plastics Operating Limited Partnership wants to extend its DIP Financing under a Modified Loan Agreement with BCP Management, Inc. The Debtors tell the U.S. Bankruptcy Court for the District of Delaware that it is in the best interest of its estates and creditors that the Company be authorized to continue to borrow money from BCPM. The Debtors wish to continue and extend the Modified Loan Agreement until December 31, 2002 and reduce available borrowing to $7,500,000. In order to prevent harm to its estate, the Debtors should be authorized to incur debt to meet its working capital needs, the Company tells the Court. The Debtors point out that continued borrowing from BCPM is consistent with the obligations of BCP to maximize the value of its assets and minimize disruption to its business. Borden Chemicals and Plastics Operating Limited Partnership, a producer of PVC resins, filed for chapter 11 protection on April 3, 2001. Michael Lastowski, Esq., at Duane, Morris, & Hecksher represents the Debtors in their restructuring efforts. DebtTraders reports that Borden Chemical & Plastics' 9.50% bonds due 2005 (BCPU05USR1) are trading at less than a penny on the dollar. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=BCPU05USR1 BRIGHTPOINT INC: Repurchases Additional Convertible Notes --------------------------------------------------------- Brightpoint, Inc., (NASDAQ:CELL) has repurchased an additional 132,381 of its 166,708 outstanding convertible, subordinated, zero-coupon Convertible Notes due 2018. The aggregate purchase price for the Convertible Notes was approximately $45 million (at an average cost of approximately $340 per Convertible Note). Approximately $30 million of the purchase price was funded by cash held by Brightpoint Holdings B.V., the Company's primary foreign finance subsidiary and through a borrowing of approximately $15 million under the credit facility with General Electric Capital Corporation and the Company's primary North American operating subsidiaries, Brightpoint North America L.P. and Wireless Fulfillment Services. During the third quarter of 2002, the Company has purchased, in the aggregate, 162,706 Convertible Notes at a total cost of approximately $54 million. The Company now has an aggregate of 34,327 Convertible Notes outstanding with an accreted value of approximately $18.6 million (approximately $542 per Convertible Note) as of September 27, 2002. The timing and amount of additional repurchases, if any, will depend on many factors, including but not limited to, the availability of capital, the prevailing market price of the Convertible Notes and overall market conditions. No assurance can be given that the Company will repurchase any additional Convertible Notes. Additional information concerning the Convertible Notes can be found in the Company's filings with the Securities and Exchange Commission. Brightpoint is one of the world's largest distributors of mobile phones. Brightpoint supports the global wireless telecommunications and data industry, providing quickly deployed, flexible and cost effective third party solutions. Brightpoint's innovative services include distribution, channel management, fulfillment, eBusiness solutions and other outsourced services that integrate seamlessly with its customers. Additional information about Brightpoint can be found on its Web site at http://www.brightpoint.comor by calling its toll-free Investor Relations Information line at 877-IIR-CELL (877-447-2355). * * * As reported in Troubled Company Reporter's May 8, 2002 edition, Standard & Poor's lowered its corporate credit rating on Brightpoint Inc., to 'B+' from 'BB-'. The downgrade reflected a net loss from continuing operations for the quarter ended March 31, 2002. Outlook is negative. The ratings reflect Indianapolis, Indiana-based Brightpoint's position as a leading distributor and provider of value-added logistics services in the fragmented and highly competitive wireless communications products distribution market. Increased market saturation for wireless handsets, and global economic weakness, particularly in the U.S., has resulted in lower consumer demand and diminished near-term growth prospects for Brightpoint. RATINGS LIST RATINGS LOWERED TO FROM Brightpoint Inc. * Corporate credit rating B+ BB- * Senior secured debt BB- BB * Subordinated debt B- B BUDGET GROUP: Wants to Expand Fowler White's Scope of Engagement ---------------------------------------------------------------- Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware, tells the Court that Budget Group Inc., and its debtor-affiliates want Fowler White Burnett P.A. to provide these additional services: A. Counseling and providing strategic advice to the Debtors concerning litigation and corporate related services that Fowler currently provides to and requested by the Debtors in the ordinary course of their business; B. Providing counseling and strategic advice to and representation of the Debtors in connection with litigation and corporate issues arising under Florida law with respect to the Debtors' ongoing operations in Florida on an "as- needed" basis; and C. Providing litigation advice to, support and representation of the Debtors regarding the protection of their bankruptcy estates against non-bankruptcy actions brought in Florida seeking acquisition of property of the Debtors' bankruptcy estates. Mr. Brady informs the Court that for several years prior to the Petition Date, Fowler represented the Debtors in connection with various litigation and corporate related issues stemming from their business operations in Florida. The Debtors believe that Fowler's continued representation by rendering these supplemental services is essential to their a successful Chapter 11 process and will provide a substantial benefit to the Debtors and their estates. Although the supplemental services that Fowler will be providing are in the ordinary course of business, Mr. Brady relates that Fowler will be submitting its application for compensation as a supplement to their application for compensation as the Debtors' special counsel in the Ryder litigation. The $48,535 retainer that Fowler has received from the Debtors will constitute a general retainer with respect to the charges to be incurred by the Fowler for its services, including the supplemental services. (Budget Group Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON INDUSTRIES: Plan Exclusivity Intact through Jan. 31 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Burlington Industries, Inc., and its debtor-affiliates a second extension of their exclusive periods. The Debtors continues to maintain the exclusive right to file and propose a chapter 11 plan until January 31, 2003, and the exclusive right to solicit acceptances of that plan from their creditors until March 31, 2002. Burlington Industries, Inc., is one of the world's largest and most diversified manufacturers of softgoods for apparel and interior furnishings. Burlington Industries filed for Chapter 11 reorganization on November 15, 2001. Burlington Industries' 7.25 bonds due 2005 (BRLG05USR1), DebtTraders reports, are trading at 27 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG05USR1 for real-time bond pricing. CANADIAN IMPERIAL: Applies for Repricing of Warrants with TSX ------------------------------------------------------------- Canadian Imperial Venture Corp., has made application with the TSX Venture Exchange for the repricing of certain outstanding warrants issued in private placements which closed in October and December 2000 and February 2001. The Company is seeking Exchange approval to have 2,156,250 warrants originally issued on October 13, 2000 and 4,008,347 warrants issued on December 29, 2000 and February 2, 2001 repriced to $0.17. The original exercise price of these warrants was $0.21 for those issued in October and $0.55 for those issued in December and February. The expiry date for all the warrants will remain unchanged at October 13, 2002. * * * As reported in the September 18, 2002 edition of Troubled Company Reporter, Canadian Imperial Venture Corp.,(TSX: CQV) issued a total of 4,178,648 to four creditors in connection with its shares for debt settlement which it originally announced on July 19, 2002. The four creditors have settled debts with the Company with the aggregate value of $1,044,662. The shares were issued at a deemed price of $0.25. The issuance of shares to the four creditors was permitted under statutory exemptions to the prospectus and registration requirements of securities legislation. The shares will have a hold period expiring January 10, 2003. CARBIDE/GRAPHITE: Inks Definitive Pact to Sell Unit's Assets ------------------------------------------------------------ The Carbide/Graphite Group, Inc., announced that as part of its efforts to emerge from Chapter 11 Bankruptcy, it has signed a definitive purchase agreement with Carbide Acquisition LLC for the assets associated with C/G's carbide products business unit. The terms of the Section 363 asset sale were filed with the Western District of Pennsylvania Bankruptcy Court on September 20, 2002. Carbide Acquisition LLC was formed between JP Industries, Inc., a private investment company headquartered in Cleveland, Ohio, and Carbide Products management. The new entity will continue to operate the carbide products business in Louisville and Calvert City, KY. Walter Fowler, C/G's CEO, commented, "The sale of our Carbide business to JP is an important step to ensure uninterrupted product supply to our customers. The new company will continue operations in Louisville and Calvert City under the direction of the existing, experienced management team. This transaction is an important further step to bringing all of the assets of C/G out of bankruptcy." Consummation of transaction is subject to an auction to be conducted by the Bankruptcy Court on October 16, 2002. CARIBBEAN PETROLEUM: Wants to Stretch Exclusivity to December 2 --------------------------------------------------------------- Caribbean Petroleum LP and its debtor-affiliates want to extend their exclusive periods during which they may file a plan of reorganization and solicit acceptances of that plan from their creditors. The Debtors want the Court to give them until December 2, 2002 to propose and file a plan and until February 3, 2003 to solicit creditors' acceptances of that plan. When Caribbean filed for bankruptcy, the Debtors' primary concern was to stabilize its operations. Having done so, the Debtors next focus was on formulating a business plan that would allow the Debtors to pay a dividend to unsecured creditors and successfully emerge from bankruptcy. The preparation of that business plan involved a thorough review and analysis of the Debtors' physical and financial operations. At the same time the Debtors were formulating their business plan and negotiating for financing, they were interviewing investment bankers who could assist them in selling some or all of their assets. The Debtors need an extension of their exclusive periods in order to determine whether a standalone restructuring or a sale of the business will deliver greater value to stakeholders. Caribbean Petroleum LP distributes petroleum products and owns/leases real property on which service stations selling petroleum products are stored and sold to retail customers. The Debtors filed for chapter 11 protection on December 17, 2001. Michael Lastowski, Esq., and William Kevin Harrington, Esq., at Duane, Morris & Heckscher LLP represent the Debtors in their restructuring efforts. CHANGE TECHNOLOGY: Board of Directors Adopts Plan of Liquidation ---------------------------------------------------------------- Change Technology Partners, Inc., (OTC Bulletin Board: CTPI) announced that its Board of Directors has adopted a plan of complete liquidation and dissolution in order to maximize shareholder value. In reaching its decision, Change's Board of Directors considered principally the provisions of the Investment Company Act of 1940, which would have required the Company to register as an "investment company" in the absence of the adoption of the plan of liquidation. The plan of liquidation and dissolution adopted by Change's Board of Directors anticipates the continuation of the Company's current business activities pending an orderly wind down of its operations. Additionally, the plan provides that in the event the Company's Board of Directors determines that it would be in the best interests of the Company and its stockholders to amend, modify or abandon the plan of liquidation and dissolution, it may do so notwithstanding stockholder approval to the extent permitted by applicable law. The Company intends to seek stockholder approval of the plan of liquidation and dissolution at its next annual meeting, expected to be held in the Spring of 2003. Subject to approval of the plan by holders of a majority of the Company's outstanding shares, the Company plans to sell its assets, discharge its liabilities and distribute the net proceeds to its stockholders. COMDISCO: Makes Initial Distribution to Shareholders & Creditors ---------------------------------------------------------------- Comdisco Holding Company, Inc., (OTC:CDCO) announced that Monday it commenced its initial distribution to holders of allowed claims, as outlined in its First Amended Joint Plan of Reorganization, which became effective on August 12, 2002. Additionally, Comdisco said it established a disputed claims reserve for holders of claims that are currently disputed, but may subsequently be allowed in full or in part. In connection with the initial distribution, the company allowed claims for Class C-4 general unsecured creditors in the amount of $3.628 billion and the disputed claims reserve has been established at $450 million. As discussed in the Plan, Comdisco issued Senior Notes due 2004 in the face amount of $400 million with a variable interest rate equal to the three month LIBOR plus 3 percent and Subordinated Payment-in-Kind Notes due 2005 in the face amount of $650 million with a fixed interest rate of 11 percent. Comdisco also issued approximately 4.2 million shares of new common stock to be distributed in accordance with the Plan. In addition, the cash to be distributed totals approximately $2.2 billion. In the initial distribution, allowed general unsecured creditors will receive cash equal to approximately 55 percent of their allowed claims, and pro-rata shares of the Senior Notes, PIK Notes, and new common stock. Distributions to holders of claims that are disputed have been funded into a disputed claims reserve based on Court approved estimates for further distribution as and when their claims are resolved. Holders of convenience claims will be paid in cash at the rate of 89.8 percent of the ultimate allowed amount of their claims. The company anticipates that the new common stock will be traded on the NASDAQ OTC under the symbol CDCO. Comdisco is required to make further distributions on a quarterly basis. It may make distributions more frequently, if appropriate. The company also currently anticipates making a significant optional redemption on the Senior Notes before the end of calendar year 2002. Comdisco's old common stock was cancelled on August 12, 2002. Former common shareholders are entitled to distributions of contingent distribution rights under the Plan. In order to be eligible to receive any distribution of CDRs, former common shareholders must properly complete a transmittal form and surrender all shares of old common stock to Mellon Investors Services LLC prior to August 12, 2003. Transmittal forms and information packages describing the procedures for exchanging old common stock certificates for the CDRs are being mailed this week to holders of the old common stock. For additional information concerning the CDRs, please refer to the Plan and the Form 8-A filed with the Securities & Exchange Commission by Comdisco on August 12, 2002. The company anticipates that the CDRs will trade on the NASDAQ:OTC under the symbol CDCJ. Wells Fargo Bank will serve as the disbursing agent for all distributions, except for those to former common stockholders. Mellon Investor Services will serve as disbursing agent for distributions to former common stockholders. Comdisco's Plan calls for an orderly runoff or sale of the company's remaining assets, which is expected to be completed by the end of fiscal year 2004. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money the remaining assets of the corporation in an orderly manner. Rosemont, IL-based Comdisco -- http://www.comdisco.com-- provided equipment leasing and technology services to help its customers maximize technology functionality and predictability, while freeing them from the complexity of managing their technology. Through its Ventures division, Comdisco provided equipment leasing and other financing and services to venture capital backed companies. COMMUNICATION DYNAMICS: Gets Nod to Use GECC's Cash Collateral -------------------------------------------------------------- Communication Dynamics, Inc., and its debtor-affiliates sought and obtained interim authority from the U.S. Bankruptcy Court for the District of Delaware to use General Electric Credit Corporation's cash collateral. The Court allows the Debtors to use GECC's cash collateral until October 15, 2002 pursuant to this 4-Week Budget: Sept. 27 Oct. 4 Oct. 11 Oct. 15 -------- ------ ------- ------- Collection $3,862,184 $3,041,512 $3,091,198 $2,100,385 Total Disbursements 2,031,907 4,525,878 2,445,970 3,239,502 Net Cash $1,830,277 $(1,484,366) $645,228 $(238,952) A hearing to consider the Debtors' request for final approval to use GECC's cash collateral is scheduled for October 31, 2002. The Debtors explain that even in the event sales decline, they expect that their overall cash flow in the near term will be positive or neutral. Prior to the Petition Date, the Debtors obtained financing with General Electric Credit Corporation. To secure the obligations owing under the Senior Loan Agreements, the Debtors pledged as collateral substantially all of the Debtors' assets to the Senior Lenders. The Debtor purportedly breached certain financial covenants under this Facility. The Forebearance Agreement is terminated. Thereafter, the Debtors and the Senior Lenders attempted to negotiate the terms of a debtor in possession financing agreement and an additional period of forebearance. Around September 2002, these negotiations broke down. As a consequence to the threatened default which would have resulted in the Senior Lender's sweeping substantially all of the Debtors' cash, the Debtors were forced to seek immediate relief under Chapter 11 of the Bankruptcy Code. Given the purported encumbrances upon substantially all of the Debtors' assets, the immediate use of the Debtors' assets that may become cash collateral is required to fund the day-to-day operations of the Debtors. If not for the Cash Collateral, the Debtors will be unable to continue funding their business operations that are essential to the Debtors' existence as a going concern, all to the detriment of their creditors, including the Senior Lenders. The Debtors have determined that maintaining their operations as a going-concern will yield values far in excess of values that will otherwise be derived by a shut-down of business operations and a wholesale liquidation at distressed process. The Debtors believe that if they be given appropriate time to complete the operational restructuring, values approaching the Senior Lenders' secured claims may be obtained, resulting in value being available for distribution to general unsecured creditors. Communication Dynamics, Inc., together with its Debtor and non- Debtor affiliates, is one of the largest multinational suppliers of infrastructure equipment to the broadband communications industry. The Debtors filed for chapter 11 protection on September 23, 2002. Thomas E. Lauria, Esq., at White & Case and Jeffrey M. Schlerf, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed more than $100 million both in estimated assets and debts. COVANTA ENERGY: Wins OK to Implement Broad-Based Severance Plan --------------------------------------------------------------- Covanta Energy Corporation and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to establish and implement their Broad- Based Severance Plan for its eligible full-time employees. Eligible full-time employees are those employees terminated involuntarily Without Cause in connection with: (a) a job or department elimination; (b) office closing; (c) reduction in force; or (d) other appropriate circumstances as determined by the plan administrator. The Eligible Employee will receive continued payments of his or her Base Salary for a number of calendar weeks equal to the greater of: -- the product of two multiplied by each year of service completed prior to the Termination Date; and -- four weeks, provided that the salary pay continuation period will not exceed 26 weeks. Payments will begin no later than 10 days after the delivery of the release. In addition, participants would receive continued medical and dental coverage; provided that the participants pay the regular employee co-payments for the period the cash severance benefits are payable. A participant's right to continue to receive medical or dental coverage will cease immediately if the participant becomes eligible for the same plan of any subsequent employer. The Broad-Based Severance Plan further provides that the Company may, in its sole discretion, with prospective or retroactive effect, amend, alter, suspend, discontinue or terminate the plan at any time and for any reason, with or without notice and without the consent of any employee, stockholder or other person; provided, however, that, without the consent of an employee, no action will materially and adversely affect the right of an employee to receive severance benefits under the Broad-Based Severance Plan with respect to an Eligible Termination of Employment as of a Termination Date occurring prior to the action. (Covanta Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 609/392-0900) DTVN HOLDINGS: Files for Chapter 11 Protection in Dallas, Texas --------------------------------------------------------------- DTVN Holdings, Inc., (OTC Bulletin Board: DTVN), a nationwide provider of packet-switched information services through its wholly owned subsidiary DataVoN, Inc., announced that DTVN, DataVoN, and two other affiliated companies filed Chapter 11 bankruptcy petitions in Dallas, Texas. Mr. Birdwell, the CEO of the Company, said, "DTVN and DataVoN have been operating in a very difficult environment for the past eighteen months and have managed to turn the corner from an operational perspective. Preliminary unaudited results indicate that in August 2002 the consolidated enterprise was profitable. However, prior to August the Company operated at a loss and accumulated a substantial amount of secured and unsecured debt that is currently past due. The Company does not have the ability to pay all past due obligations at this time and due to pressure exerted by several creditors it was decided that orderly reorganization under Chapter 11 is in the best interest of the Company and its various interest holders. We are hopeful that a plan of reorganization can be filed quickly and confirmed in a relatively short time frame." In connection with these filings, the Company also announced that Michael Donohoe has been appointed to the newly created position of Chief Restructuring Officer. Mr. Donohoe is General Counsel of each of the debtor entities and will continue to perform those functions. Mr. Donohoe can be contacted at (972) 792-3711 or by e-mail at mdonohoe@datavon.com . DataVoN, Inc. ( http://www.datavon.com), Video Intelligence, Inc. and Zydeco Exploration, Inc. are wholly owned subsidiaries of DTVN Holdings, Inc. DTVN and DataVoN have headquarters and DataVoN's Network Operations Center is in Richardson, Texas. ENCOMPASS SERVICES: Sr. Lenders Waive Loan Financial Covenants -------------------------------------------------------------- Encompass Services Corporation (NYSE: ESR) has received a waiver from its senior lenders relieving it from compliance with the financial covenants contained in its senior credit facility through October 15, 2002. Encompass stated that because it considers the successful completion of its previously announced Rights Offering highly unlikely, and in order to provide the Company with additional flexibility and liquidity, it has elected not to reduce the amount drawn under its revolving credit facility as of September 30, 2002. As a result, the Company believes it would not have met the financial covenants contained in its senior credit facility measured as of September 30, 2002 without the waiver the Company has obtained, and without the waiver would have been in default under its senior credit facility. As of September 30, 2002, the Company had approximately $118 million in cash. "We appreciate the continued support of our senior lenders," said Joe Ivey, President and Chief Executive Officer of Encompass. "We also appreciate the ongoing support that we have received from our employees, vendors, customers and surety providers. We remain committed to finding an appropriate solution to strengthen our financial position." A major component of the Company's Rights Offering is an investment of $35 million in the Company to be made by Apollo Management IV, L.P. and Apollo Overseas Partners IV, L.P. Apollo's obligation to close its investment is subject to several conditions precedent, including the absence of a material adverse change in the Company's business and the absence of any default, amendment or waiver of its senior credit facility. Further, the Apollo investment is an affirmative covenant under the senior credit facility. In the event the Apollo investment does not close, without a waiver of that covenant, the Company will be in default under the senior credit facility. Encompass stated that it is exploring certain strategic options to restructure and/or reduce total debt levels and improve its balance sheet in order to enhance the Company's prospects for future growth and increased profitability. It has retained Houlihan Lokey Howard Zukin Capital as its financial advisor to assist in evaluating these strategic options. Some of those options would result in the termination of the Rights Offering and the cancellation of the upcoming Encompass Special Meeting of Shareholders scheduled for October 15, 2002, at which shareholder approval of the Apollo investment is being requested. In light of these events, the Company announced that it is withdrawing all forecasts and financial guidance, including its revenue and EBITDA guidance, and has terminated its Employee Stock Purchase Plan, whereby employees purchase Encompass common stock through payroll withholding, as well as the ability of employees to purchase Encompass common stock through its 401(k) plan. Encompass Services Corporation is one of the nation's largest providers of facilities systems and services. Encompass provides electrical technologies, mechanical services and cleaning systems to commercial, industrial and residential customers nationwide. Additional information and press releases about Encompass are available on the Company's Web site at http://www.encompass.com ENRON CORP: Court Approves ENA's Merced Termination Settlement -------------------------------------------------------------- Edward A. Smith, Esq., at Cadwalader Wickersham & Taft, in New York, relates that Enron North America Corp., and Merced Irrigation District entered into an ISDA Master Agreement on March 25, 1999. Pursuant to the Agreement, ENA and Merced entered into financially settled swap transactions concerning natural gas and power. With ENA's filing for bankruptcy, Merced sent a notice to ENA on April 24, 2002, terminating the Agreement and the transactions entered into. Mr. Smith explains that under the terms of the Agreement, an early termination requires: (a) the payment of all outstanding accounts payable; and (b) payment of the forward value of the Agreement to the in-the-money party. The forward value, Mr. Smith says, represents the difference between the prices set in the transactions under the Agreement and the prices at which like transactions could be entered into as of the termination date. Upon negotiation, Mr. Smith reports, ENA and Merced have reached, and reduced into writing, an agreement as to the termination payment, including the forward value of the Agreement and any outstanding payables. The Settlement Agreement requires: -- Merced to pay ENA an $8,448,652 termination payment, and -- the parties to exchange mutual releases of all obligations related to the Agreement. Mr. Smith contends that the Settlement Agreement is within the range of reasonableness because: (a) it is fair, reasonable and in the best interests of the Debtors' estate; (b) it resolves any disagreement as to the forward value of the Contract; (c) it will allow ENA to realize a value for the estate; and (d) it avoids potential future disputes and litigation regarding the termination payment. Accordingly, ENA sought and obtained the Court's authority to enter into the Settlement Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. (Enron Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) EXODUS COMMS: EXDS Pursues $19 Million Recovery from 9 Creditors ---------------------------------------------------------------- EXDS Inc., asks the Court to render judgment against nine creditors for the recovery of transfers totaling $19,436,714. EXDS has filed separate adversary proceedings against these creditors: Creditor Transferred Amount ------------------ -------------------- Pacific Bell Telephone Co. $1,180,520 ISR Solutions 1,400,583 The Goldman Sachs Group Inc. 2,500,000 CompuCom Systems Inc. 3,000,000 Comstor Corporation 1,284,637 Credit Suisse First Boston Corp. 1,000,000 Standard Electronics Inc. 1,937,558 Sprint Corporation 1,746,130 XO Communications 5,387,286 ----------- Total: $19,436,714 Jeremy W. Ryan, Esq., at Saul Ewing LLP, in Wilmington, Delaware, tells the Court that EXDS is entitled to recover the transfers because: -- the transfers were each made on account of a debt owed by EXDS to the creditors, -- the transfers were made on or within 90 days prior to the Petition Date, -- EXDS was insolvent at the time it made each of the transfers to the creditors, and -- the transfers enabled the creditors Pacific Bell receive more than they would have received if: * this case were a Chapter 7 of the Bankruptcy Code, * the transfers were not made, or * if Pacific Bell received payment of its debt to the extent provided under the provisions of the Bankruptcy Code. Mr. Ryan relates that EXDS had sent initial demand letters on July 22, 2002 to each of the creditors demanding the return of the transferred amounts. No response was made. EXDS then sent out a second set of demand letters. Yet again, the demand fell on deaf ears. As a result, EXDS have no choice but to seek the Court's interference. Mr. Ryan points out that the creditors' indifference could be used as basis for the disallowance of any claim that each may have against EXDS since Section 502(d) of the Bankruptcy Code provides that: "[n]otwithstanding subsections (a) and (b) of this section, the court shall disallow any claim of any entity from which property is recoverable under section 542, 542, 550, or 553 of this title or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 547, 548, 549, or 724(a) of this title, unless such entity or transferee has paid the amount, or turned over any such property, for which such entity or transferee is liable under section 522(i), 542, 542, 550, or 553 of this title." [sic] The disallowance of the claim of each of the creditors may only be lifted upon the return of the transfers. EXDS, thus, specifically asks the Court to: -- enter judgment in favor of EXDS and against the creditors, -- enter judgment in favor of EXDS and against the creditors in the amounts that were transferred to each of them, plus pre- judgment interest from the date of EXDS' initial demand letter and post-judgment interest, fees and costs to the extent provided by law, and -- disallow any claims the creditors may have against EXDS. (Exodus Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) Exodus Communications Inc.'s 11.625% bonds due 2010 (EXDS10USR1) are trading at 5 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDS10USR1 for real-time bond pricing. FANNIE MAE: S&P Affirms Low-B Ratings on Four Classes of Notes -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on four classes of Fannie Mae's REMIC pass-through certificates series 1998-M6. The affirmations reflect the improved financial performance of the multifamily and cooperative collateral, the expected loss on a delinquent multifamily property in Dallas, Texas, and low debt service coverage on the watchlisted loans. This Dallas property (representing 0.97% of the pool's principal balance) is currently being operated by a court-appointed receiver following the borrower's bankruptcy filing. The property, which was in very poor condition, was closed down, with the remaining tenants evicted. Currently, it is under contract for $1.4 million. If this amount is ultimately realized, losses of approximately 50% of the principal balance will occur. There are no other specially serviced or delinquent loans outstanding. In addition, there have been no losses or appraisal reductions taken to date. The multifamily servicer, Orix Capital Markets LLC, has four multifamily loans (representing 3.77%) on its watchlist. In 2002, the loans experienced DSC declines. Softening local market conditions have affected two of the loans, while the other two have experienced higher operating expenses. Based on discussions with Orix, these loans and the Dallas property were stressed by Standard & Poor's in its loss analysis. The current principal balance is $278.9 million, down from $304.3 million at issuance. The collateral pool is concentrated in New York due to the underlying mortgage cooperative collateral (representing 35%). The remaining principal balance is collateralized by multifamily properties located in 21 states. At Dec. 31, 2001, the DSC for the multifamily properties was 1.75 times as compared to 1.47x at issuance. The loan-to-value for the cooperative pool is 8.0% as compared to 23.3% at issuance. This is based on a cooperative valuation analysis that Standard & Poor's conducted, with cooperative resale information provided by the cooperative servicer, National Consumer Cooperative Bank. The New York City cooperative market has experienced significant price appreciation since the securitization of these loans. Based on a study by Insignia Douglass Elliman/Miller Samuel Inc., the average value of a cooperative apartment has increased by 52% from the time the loans were securitized through June 30, 2002. For the second quarter, the average price increased by 2.75% from that of the previous quarter. The cooperative market has benefited from low mortgage interest rates and limited supply. Standard & Poor's will continue to monitor the liquidation of the Dallas property and the operating performance of the watchlist loans. If realized losses on the Dallas property exceed those that are expected, or if the watchlist loans exhibit further deterioration, rating actions may be necessary on one or more classes of the subordinate certificates. Ratings Affirmed Fannie Mae REMIC pass-thru certs series 1998-M6 Class Rating Credit Support (%) B BB 3.27 C BB- 2.73 D B 2.18 E B- 1.64 FEDERAL-MOGUL: Court Denies Committee's Restricted Docs. Demand --------------------------------------------------------------- The Official Unsecured Creditors Committee, in the chapter 11 cases involving Federal-Mogul Corporation and its debtor- affiliates, is conducting an investigation whether certain liens established in a December 2000 transaction between the Debtors and their bank creditors and sureties under the Fourth Amended and Restated Credit Agreement should be set aside. Accordingly, the Committee demanded production of pertinent documents from the National Economic Research Associates, Credit Suisse First Boston Corporation and PricewaterhouseCoopers. The Committee intends to use those documents and any information they unearth to prosecute a fraudulent conveyance proceeding they want to initiate against the banks and sureties. However, the Debtors asserted that the documents the Committee is requesting are subject to work product and privilege protection. The Bankruptcy Court finds that the NERA report the Committee wants to put its hands on is subject to the work product doctrine. However, the Bankruptcy Court had not ruled whether the doctrine can be overcome based upon substantial need or whether it has been waived. Thus, in an informal application -- by way of a letter dated September 5, 2002 -- to the District Court, the Creditors' Committee asked Judge Alfred Wolin to rule whether those documents claimed by the Debtors to be covered by the attorney client privilege should be turned over to the Committee. The Committee also asked Judge Wolin to issue a Protective Order to govern: 1) the Disputed Documents; 2) all copies or versions of the Disputed Documents which the Debtors inadvertently produced in unredacted form; 3) all confidential interrogatory answers, responses to requests to admit and other discovery materials produced or provided by the parties or third parties in connection with the investigation relating to the Disputed Documents; and 4) all confidential testimony given in connection with the investigation relating to the Disputed Documents. The Creditors Committee further proposed procedures with respect to "Confidential Attorneys' Eyes Only" Documents. But Judge Wolin denied the Creditors Committee's application. "[The] Committee's primary ground is that it would be easier and more time-efficient if the debtors' attorney-client privilege were set aside. This is patently not sufficient justification for overruling the privilege," according to Judge Wolin. Judge Wolin further rules that although the Committee's argument that it is entitled to a limited waiver of the privilege because it seeks to prosecute a claim on behalf of the estate is at least intelligible, it falls short. Judge Wolin notes that the Committee cites no authority for the proposition that a creditor is entitled to the debtors' privileged documents when the creditor prosecutes a fraudulent conveyance action. Judge Wolin was not convinced that prosecuting a claim on behalf of a debtor's estate truly puts a party in the debtors' shoes to the extent claimed by the Committee. "Even if one were to assume that the Committee were acting in loco the debtor, this would not automatically entitle the Committee access to such sensitive areas as the debtors' privileged attorney-client communications," Judge Wolin explains. Judge Wolin points out that if the Debtors do not believe that producing these documents pursuant to the protective order is in their interest, then the hope of saving time by the procedure suggested by the Committee was apparently in vain. (Federal- Mogul Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) GE CAPITAL: S&P Affirms Ratings on Six Classes at Lower-B Levels ---------------------------------------------------------------- GE Capital Commercial Mortgage Corp.'s commercial mortgage pass- through certificates, series 2000-1, $102.1 million class A-1, $429.2 million class A-2 and interest only class X are affirmed at 'AAA' by Fitch Ratings. Fitch also affirms the following classes: $28.3 million class B at 'AA', $31.8 million class C at 'A', $8.8 million class D at 'A-', $23 million class E at 'BBB', $8.8 million class F at 'BBB-', $23.9 million class G at 'BB+', $6.2 million class H at 'BB', $5.3 million class I at 'BB-', $7.1 million class J at 'B+', $6.2 million class K at 'B' and $6.2 million class L at 'B-'. Fitch does not rate the $10.6 million class M. The rating affirmations follow Fitch's annual review of the transaction, which closed in December 2000. The rating affirmations are the result of stable performance of the mortgage pool. The weighted average debt service coverage ratio (DSCR) for the pool as of year-end (YE) 2001, based upon collected financial statements (95%), is 1.38 times, which is up slightly from a 1.36x at issuance. The certificates are collateralized by 100 commercial and multifamily mortgages. There are significant concentrations in retail (24%), office (22%), multifamily (21%), hotel (14%) and Industrial (10%). The properties are located in 28 states including California (17%), Texas (19%), Tennessee (7%) and Louisiana (5%). As of the September 2002 distribution date, the pool's aggregate balance has been reduced by 1.3% to $697.5 million at issuance. The Equity Inns Portfolio is a $35.8 million loan secured by nine cross-collateralized and cross-defaulted limited service hotels. Fitch considers this loan to have investment grade credit characteristics. Eight of the hotels are flagged as Hampton Inns and one is flagged as a Residence Inn. As of YE 2001 the Fitch stressed DSCR was 1.76x up from 1.74x at issuance. The properties reported a weighted average revenue per available room of $52.46, which up from $49.63 at issuance. The Fitch stressed DSCR is based on cash flow adjusted for capital expenditures and a 10.09% constant. There is currently one loan in special servicing. The Equitable Office building located in Des Moines, Iowa was transferred to special servicing in April 2002 due to a drop in occupancy to approximately 82%. The $11.5 million dollar loan, representing 1.7% of the pool, remains current and is being monitored while the borrower continues attempts at leasing up the property. Fitch will continue to monitor this transaction, as surveillance is ongoing. GLOBAL CROSSING: Court Extends IRS Bar Date Until Year-End ---------------------------------------------------------- Global Crossing Ltd., its debtor-affiliates, and the Internal Revenue Service sought and obtained an extension of the deadline for the Government to file proofs of claims in these Chapter 11 cases until December 31, 2002 at 5:00 p.m., prevailing Eastern Time. (Global Crossing Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) GRANITE BROADCASTING: S&P Affirms Junk Rating After Asset Sale -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its triple-'C' corporate credit rating, on TV station owner Granite Broadcasting Corp., and removed all ratings from CreditWatch following completion of the $230 million sale of its San Jose, California. Station, KNTV, which provides a modest short-term boost to liquidity. The current outlook is negative. "Even after the station sale, Standard & Poor's remains concerned about mounting financial pressure due to weak cash flow and an onerous debt burden," said Standard & Poor's credit analyst Alyse Michaelson. She added, "the company's cash cushion is thin given that its high-cost preferred stock requires cash dividends in October 2002." New York-based Granite had about $232.7 million of debt and $197.9 million of preferred stock, net of offering costs, outstanding at June 30, 2002. Standard & Poor's said that its ratings on Granite reflect very high financial risk from debt-financed TV station acquisition activity, an expensive capital structure, a prolonged ramp-up period for the WB affiliates, diminished cash flow, and widening discretionary cash flow deficits. Tempering factors include ownership of major network affiliated stations that are profitable and have relatively good margin potential, decent discretionary cash flow generation capability of the business, and station asset values. Revenue momentum is benefiting from revenue gains at Granite's NBC affiliates and stronger than expected political, auto, and movie advertising. Still, sustaining positive revenue trends could be difficult in 2003 given election cycles. Ratings could be lowered if liquidity tightens and prohibits the company from meeting its near-term financial obligations. GUILFORD MILLS: Preparing to Emerge from Chapter 11 Proceeding -------------------------------------------------------------- As previously announced, following the satisfaction of various conditions, Guilford Mills, Inc., (OTC Bulletin Board: GFDMQ) will emerge from bankruptcy on the effective date of its plan of reorganization. The Company and its senior lenders are in the process of finalizing loan and other documentation. The Company will issue a press release announcing the effective date and currently expects that it will be in the next few days. Guilford Mills is an integrated designer and producer of value- added fabrics using a broad range of technologies. Guilford Mills serves a diversified customer base in the automotive, industrial and apparel markets. HADRO RESOURCES: June 30 Working Capital Deficit of $1.23 Mill. --------------------------------------------------------------- Investrend analyst J. Damien Kolb has issued the previously- scheduled report on Hadro Resources, Inc. (OTCBB:HDRS - news), and Investrend has simultaneously announced a suspension of further coverage due to the company's failure to respond to analyst inquiries or otherwise comply with the terms of the enrollment. The full report, along with the company's policies and guidelines, is available at http://www.investrend.comThe Investrend Research rating system may be viewed at http://www.investrend.com/iciratings.htm "The investor's rearview mirror reveals an emerging oil and gas exploration and production company seeking capital to pursue low-risk petroleum prospects," said Kolb, adding, "as of this report, some potential investors may prefer to consider the liquidation value of net assets, a few may see a candidate for a reverse-merger into a public shell, while others may prefer the status quo. "As of the date of the Company's most recent 10Q filing, there was substantial doubt regarding the Company's ability to continue operating as a going concern. As of June 30, current liabilities of $1.28 million offset current assets of $56 thousand to yield a working capital deficit of approximately ($1.23 million). Through August 12, HDRS had never generated sufficient cash flow to fund its operations. The Company's continuance of operations as a going concern and its realization of the carrying value of oil and gas properties are dependent on Management's ability to: i.) Raise additional capital; ii.) Meet outstanding debt obligations; iii.) Successfully develop existing oil and gas properties; and iv.) Develop new business prospects." he concluded. Mr. Kolb is a member of AIMR and the Boston Security Analysts Society. He is a Level III Candidate for the CFA designation and a candidate for the American Society of Appraisers' Business Valuation certification. Mr. Kolb served as Investment Banking Analyst at a boutique investment-banking firm, and previously held Associate positions at Lehman Brothers and Morgan Stanley. Mr. Kolb received an MBA in Finance from the Weatherhead School of Management at Case Western Reserve University and a Master of International Management degree in Global Finance and Latin American Emerging Markets from Thunderbird, The American Graduate School of International Management. Mr. Kolb is president and founder of the Commonwealth Holding Company, Inc. Investrend Communications, Inc., has provided shareholder empowerment platforms - including broadcast, research, forums and information - for the benefit of the shareholders of more than 400 companies since its founding in 1996. Investrend Research has been the leading independent equity research publishing and distribution program, with over 65 AIMR-qualified professional analysts posting more than 450 reports to date. Investrend Broadcast has been a leading provider of webcast solutions for the shareholders of more than 250 public companies. Enrollment fees for the Investrend Research Institutional (continuous) coverage is listed at $1,950 per month, which had been paid by the company prior to its suspension. Analysts are in turn paid by Investrend in advance for their initiation of coverage to eliminate or reduce pecuniary conflict. Anyone interested in receiving alerts regarding Hadro Resources should e-mail info@investrend.com with "HDRS" in the subject line. HAYES LEMMERZ: Has Until Dec. 3 to Remove Prepetition Actions ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware granted Hayes Lemmerz International, Inc., and its debtor-affiliates' motion to extend the date on which they can remove actions through the longer of: -- December 3, 2002 or -- 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be removed. Hayes Lemmerz International, Inc., is one of the world's leading global suppliers of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 46 facilities and 3 joint ventures and 14,000 employees worldwide. Of the total, 22 plants in the United States and one plant in Nuevo Laredo, Mexico are included in the Chapter 11 filings. The Company filed for chapter 11 reorganization on December 5, 2001. HEALTHCARE INTEGRATED: Voluntary Chapter 11 Case Summary -------------------------------------------------------- Lead Debtor: HealthCare Integrated Services, Inc. 733 Highway 35 Ocean Township, NJ 07712 Bankruptcy Case No.: 02-19320 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- HIS Imaging 02-19319 Type of Business: A multi-disciplinary provider of healthcare services, currently specializing in diagnostic imaging operations and clinical research trials. Chapter 11 Petition Date: September 25, 2002 Court: District of New Jersey (Camden) Judge: Judith H. Wizmur Debtors' Counsel: Brian L. Baker, Esq. Ravin Greenberg, PC 101 Eisenhower Parkway Roseland, NJ 07068 (973) 226-1500 Total Assets: $12,000,000 Total Debts: $23,700,000 HECLA MINING: Brings-In Ronald W. Clayton as VP, U.S. Operations ---------------------------------------------------------------- Hecla Mining Company (NYSE:HL)(NYSE:HL-PrB) announced that Ronald W. Clayton has joined Hecla as Vice President -- U.S. Operations. Clayton has more than 22 years of operational and management experience in the mining industry. He returns to Hecla after working for Stillwater Mining Company for two years. Prior to that, Clayton had spent 13 years with Hecla as general manager of the Rosebud, Republic and Lucky Friday mines. Before leaving the company in 2000, Clayton had been appointed as Hecla's Vice President -- Metals Operations. Clayton will report to Tom Fudge, Hecla's Vice President -- Operations, who in turn reports to Hecla's president, Phil Baker. Baker said, "I think it's great that Ron is able to return to Hecla. He is a first-class mining operator, with excellent skills in mine economics and margin analysis, which will be very valuable as we continue to grow this company through new acquisitions and projects. And of course, he's very familiar with Hecla and our operations." Clayton will be responsible for operations at Greens Creek, Lucky Friday and the Hollister Block development project in Nevada. He will also participate in the due diligence and analysis necessary for potential new acquisitions in the United States and Canada, working with Hecla's Vice President -- Corporate Development, Mike Callahan. Baker said, "Someone of Ron's caliber further strengthens Hecla's already established expertise in the niche of high- grade, narrow vein, underground hardrock mining. He will be a great asset in building Hecla's inventory of operations." Clayton holds a BS in Mining Engineering from Colorado School of Mines. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 111-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB. Hecla's Home Page can be accessed on the Internet at http://www.hecla-mining.com * * * As reported in Troubled Company Reporter's June 13, 2002, Standard & Poor's revised its outlook on Hecla Mining Co., to positive from negative based on the company's improved cost position. Standard & Poor's said that its ratings on the company, including its triple-'C'-plus corporate credit rating, are affirmed. Standard & Poor's preferred stock rating on Hecla remains at 'D', as the company is not current on its dividends. Hecla, headquartered in Coeur d'Alene, Idaho, has about $19 million in total debt. Standard & Poor's ratings on Hecla continue to reflect its well below average business position due to its limited reserve base, operating diversity, and tight liquidity. IBEAM BROADCASTING: Gets Approval to Delay Entry of Final Decree ---------------------------------------------------------------- The iBEAM Broadcasting Corporation Liquidating Trust, as successor in interest to the iBEAM Broadcasting Corporation, sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to extend the time to file a consolidated final report until February 7, 2003 and delay entry of a final decree in until a month thereafter. Since the Confirmation Date, the Liquidating Trust has engaged in substantial analysis and reconciliation of claims and has begun the claim objection process by evaluating claims, and by filing objections to certain individual claims and a first set of omnibus objections to claims. Despite these efforts, the Liquidating Trust is still in the process of reviewing the many claims filed in this case. The Liquidating Trust filed its motion to extend the claim objection deadline through January 31, 2003 so as to provide ample time to resolve the claims filed in this case. The Trust's attorney, Mr. Aaron A. Garber believes that adequate time for resolution of these claim objections is required in order to determine the correct distribution amounts to these claimants and other creditors. It would be premature to close this Chapter 11 case at this time, Mr. Garber says. iBeam Broadcasting Corporation delivers streaming media over the Internet. The Company filed for chapter 11 protection on October 11, 2001. J.L. HALSEY: Files Form 10-K for Year Ended June 30, 2002 --------------------------------------------------------- J. L. Halsey Corporation (OTCBB:JLHY) (formerly NAHC, Inc.) announced the filing of its Form 10-K for the year ended June 30, 2002. As part of the filing, the Company has revised its range of estimated values for its assets, liabilities and costs of liquidation. The revised range of estimated realizable value of funds available for distribution to stockholders (liquidation estimates) is an amount between $0.08 and $0.24 per share of common stock. The increase in these estimates is primarily due to the Company's estimate of a settlement in its claim for overpayment of federal taxes. Without the refund, the assets available for distribution upon liquidation of the Company were estimated at ($0.06) and $0.10 per share. The Plan of Restructuring was adopted by the Company's stockholders at a special meeting held on September 21, 1999. The Company currently anticipates that liquidation pursuant to the Plan of Restructuring will not occur, if at all, until December 31, 2003. Details concerning the estimated liquidation values are discussed in the company's Form 10-K for the year ended June 30, 2002, filed yesterday with the Securities and Exchange Commission. KINETIC CONCEPTS: S&P Keeps Watch on B Ratings After Jury Award --------------------------------------------------------------- Standard & Poor's Ratings Services placed its single-'B' corporate credit and senior secured ratings on hospital supplier Kinetic Concepts Inc., on CreditWatch positive, following the announcement that a Texas jury has found in KCI's favor. KCI was awarded $173.5 million in damages relating to its antitrust lawsuit against Hillenbrand Industries Inc. and Hillebrand's Hill-Rom Co. Inc. unit. Under Federal law, the damages would automatically be trebled, which would raise the award to about $520 million. The jury verdict and damage award is subject to judicial review by the U.S. District court in San Antonio, Texas. "Although the appeal of any judgment would take some time to resolve, the potential for a settlement of the litigation, which charged Hillenbrand with attempting to monopolize the specialty hospital bed market, brightens prospects for KCI to improve its liquidity and address near-term debt maturities," said Standard & Poor's credit analyst Jordan Grant. KCI has approximately $30 million of term-loan debt due in 2003, with additional tranches of $86 million and $113 million maturing in 2004 and 2005. Total debt outstanding as of June 30, 2002 was about $570 million. KCI is a leading manufacturer of specialty hospital surfaces and noninvasive medical devices, many of which are proprietary. Standard & Poor's will monitor developments in this case as they affect KCI's business and financial strategy. KITTY HAWK: Successfully Emerges from Chapter 11 Bankruptcy ----------------------------------------------------------- Haynes and Boone, LLP announced that its client Kitty Hawk, Inc. emerged from Chapter 11 bankruptcy effective Sept. 30, 2002. Haynes and Boone attorneys represented Kitty Hawk throughout its reorganization efforts, including obtaining confirmation of its Final Plan of Reorganization that was announced July 24, 2002. In May 2000, Kitty Hawk, Inc., and its nine subsidiaries filed voluntary petitions for protection under Chapter 11 of the Bankruptcy Code. The petitions were filed the U.S. Bankruptcy Court, Northern District of Texas, Fort Worth Division. "This case challenged us in every way imaginable," said John Penn, one of the Haynes and Boone partners leading the firm's Kitty Hawk team. "We even had to help the client deal with the aftermath of the unimaginable when the U.S. became a 'no fly zone' in September 2001. We had to deal with a myriad of issues that are rarely faced by many practitioners over their careers but were all addressed successfully by Kitty Hawk." Since filing in May 2000, the company endured the recession in 2000, the U.S. Postal Service terminating its contract to award the largest contract in its history for mail transportation services to Federal Express during 2001, and numerous other disputes. According to Sarah Foster, partner with Haynes and Boone's Kitty Hawk team, over the past twelve months, each of Kitty Hawk's primary interest groups sought to have the company liquidated. Nevertheless, Kitty Hawk steered through all of the adversities in the economy, the airline industry and reorganization process. In doing so, Kitty Hawk saved hundreds of jobs, reorganized its finances and transferred ownership to its creditors. "With the current economic conditions of the airline industry, we are proud to be moving forward and out of bankruptcy," said Jim Reeves, Kitty Hawk's Chairman and CEO. "While in bankruptcy, Kitty Hawk reduced its overhead and operations to the size required in today's environment while always delivering the excellent service our customers expect. We would not have survived that process without our legal team's assistance." According to Bob Albergotti, partner with Haynes and Boone's Kitty Hawk team and the lead Haynes and Boone partner on the California Deregulation team, Kitty Hawk is emerging from bankruptcy protection at an exciting time. With its financial restructuring, the company will have more options than it did before it filed for bankruptcy protection. Haynes and Boone, LLP is an international law firm with nine offices throughout Texas, Washington, D.C., and Mexico City providing a full spectrum of legal services to clients around the world. With more than 400 attorneys, Haynes and Boone is ranked among the largest law firms in the nation by National Law Journal. AmLaw Tech Magazine Scoreboard ranked Haynes and Boone first in law firm technology in 2001. The firm has been recognized as one of the 25 "Best U.S. Law Firms at Which to Work" (Of Counsel, 2000), one of the "Best Corporate Law Firms in America" (Corporate Board Member Magazine, 2002) and recipient of the Minority Corporate Counsel Association's 2002 Thomas L. Sager Award for commitment to diversity. Kitty Hawk provides scheduled overnight air freight services to approximately 47 U.S. cities operating through its Fort Wayne, Ind. hub. For more information on the Kitty Hawk, visit its site at http://www.kha.com KMART CORP: Seeks Court Approval to Expand PwC's Engagement ----------------------------------------------------------- Kmart Corporation's Chief Restructuring Officer Ronald Hutchison relates that PricewaterhouseCoopers LLP is presently employed to provide routine audit, audit-related and tax services to the Debtors as an ordinary course professional. However, the U.S. Trustee, the statutory committees and the Debtors' audit committee have requested the Debtors to formally and publicly disclose the terms of PwC's engagement. Therefore, the Debtors decided to amend the scope of the retention and employment of PwC to include additional audit- related and certain tax services on an as-needed basis in these Chapter 11 cases: (1) Audit-Related Services PwC has been engaged to audit the Debtors' consolidated financial statements as of January 29, 2003 and for the year then ending. Upon completion of the audit, Mr. Hutchison says PwC will provide the Debtors with an audit report on the financial statements for the year ending January 29, 2003. In conjunction with the annual audit, PwC will perform reviews of the Debtors' unaudited consolidated quarterly financial statements and related data for each of the first three quarters in the year ending January 29, 2003. PwC estimates that its fees for this audit engagement will be $1,900,000, exclusive of out-of-pocket expenses while the out- of-pocket expenses and internal charges with respect to the audit-related services will reach $100,000. According to Mr. Hutchison, PwC may provide additional audit- related services as the Debtors and PwC deem appropriate, including, but not limited to: (a) other related accounting services; (b) restructuring activities; (c) controls testing of System changes; and (d) implementation of new accounting standards. These additional services will be the subject of separate written agreements. Mr. Hutchison further notes that the additional services will be billed at an agreed upon rate, not to exceed PwC's Audit Standard Hourly Rates: Professional Rate ------------ ---- Sr. Mgr. -- Partner $515 - 680 Managers 425 - 460 Sr. Associates 280 - 315 Associates 180 - 215 Interns 145 Additionally, depending upon the nature of the additional services, Mr. Hutchison tells the Court that the audit professionals may seek other expertise within the firm. In this regard, Mr. Hutchison says, PwC's Global Risk Management Solutions practice is currently assisting the audit professionals in a controls review of the Debtors' new general ledger package. GRMS's services will also be billed at an agreed upon rate, not to exceed the GRMS Standard Hourly Rates: Professional Rate ------------ ---- Director -- Partner $645 - 890 Manager -- Sr. Manager 475 - 670 Sr. Associates 315 - 470 Associates 200 - 290 (2) Tax Services From time to time, PwC also may perform tax services for the Debtors on an hourly basis or pursuant to a fixed-fee arrangement at the direction of the Debtors' tax or human resources departments. In view of that, Mr. Hutchison maintains that the fees for tax consulting matters will typically be established on an hourly basis at an agreed upon rate, not to exceed PwC's Tax Standard Hourly Rates: Professional Rate ------------ ---- Director -- Partner $563 - 720 Manager -- Sr. Manger 463 - 666 Sr. Associates 309 - 425 Associates 219 - 282 Intern 142 - 229 Administrator 103 - 140 On the other hand, fees for most tax compliance matters and certain tax consulting matters will be on a fixed-fee basis. However, fixed-fee projects and significant hourly fee projects will be the subject of an engagement letter requiring the approval of the Debtors' Vice President of Tax or other appropriate representative of the Debtors, and all agreements and fees related to tax services will be subject to the review and objection rights of the United States Trustee, the Statutory Committees and the Debtors' Audit Committee. PwC also will separately bill the Debtors for reasonable out-of- pocket expenses and internal charges for certain support activities related to the provision of tax compliance and tax consulting services to the Debtors. (3) Non-Audit Services On July 24, 2002, PwC publicly announced that it has entered into a definitive agreement to sell its Business Recovery Services practice to FTI Consulting, Inc. This transaction closed effective August 31, 2002 and the BRS Practice has concluded its work with the Debtors as of the Closing Date. However, PwC will continue to provide other non-audit services, such as bankruptcy tax and other financial advisory services, to the Debtors. (4) Other Services Mr. Hutchison further informs Judge Sonderby that PwC may be requested or authorized by the Debtors or required by government regulation, subpoena, or other legal process to produce its working papers or its personnel as witnesses with respect to the audit engagement, including the pending investigations of the Debtors, so long as PwC is not a party to the proceeding in which the information is sought. In that event, the Debtors will pay PwC for its professional time and expenses, as well as the fees and expenses of PwC's counsel. Notwithstanding, PwC will reimburse the Debtors' payment to the extent that PwC will become a named party to the proceedings and it is ultimately determined in those proceedings that PwC's intentional wrongdoing is responsible for the liabilities arising in connection with those proceedings. By this application, the Debtors ask the Court to include the audit, audit-related and tax services to PwC's scope of employment. (Kmart Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAIDLAW INC: Transport Board Allows Control on Seeley Bus Lines --------------------------------------------------------------- The Surface Transportation Board of the Department of Transportation approved on September 18, 2002 Laidlaw Inc.'s application to acquire indirect control of C. Seeley Bus Lines Ltd. Seeley's Bus is a motor passenger carrier that is authorized to provide special and charter operations pursuant to federally issued authority. Under a voting trust agreement dated May 31, 2002, Laidlaw Inc.'s indirectly controlled subsidiary -- Laidlaw Transit Inc. -- acquired all of C. Seeley's outstanding shares of stock. As a result, C. Seeley is able to offer its Ontario-originated passengers with tour and sightseeing services over an expanded area. Moreover, C. Seeley's addition to the Laidlaw family will promote efficient use of buses and ensure that C. Seeley and other Laidlaw affiliates will have an adequate number of buses to serve the public. After reviewing the merits of Laidlaw's application, the Transportation Board finds that the application is consistent with the interest of the general public. The effect of the transaction will improve the adequacy of transportation to the public. The board also considered the total fixed charges that would result and the interest of affected carrier employees. The Transportation Board approved Laidlaw's proposed acquisition of control of C. Seeley, subject to the filing of opposing comments. If timely opposing comments are filed, the Board will reconsider its decision. The Board's decision will be effective on November 4, 2002, unless timely opposing comments are filed. (Laidlaw Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEAP WIRELESS: Initiates Brave Steps to Streamline Operations ------------------------------------------------------------- Leap Wireless International, Inc., (Nasdaq: LWIN) has taken aggressive steps to streamline operations in order to size its business to meet current market conditions and the overall slowdown of the wireless industry. This action, which includes both staffing reductions and the consolidation of the Company's five operating regions into three, eliminates approximately 130 positions across the business and reduces the total number of employees currently employed by Leap to approximately 1,500. "Our business is built on a model that requires one of the lowest cost structures in the industry and necessitates that prompt action be taken to maintain our cost leadership, especially in today's economic environment," said Harvey P. White, Leap's chairman and CEO. "We have therefore realigned our organization and made operating cost and staffing reductions across all areas of the Company in order to maintain the overall efficiency of our business operations. We believe that these actions will allow us to attain our financial goals without compromising our commitment to customer service. We regret the impact this will have on those affected and will work to help them transition to new opportunities." As a result of this staffing reduction, Leap expects to record a one-time charge of approximately $0.75 million in the third quarter. While this reduction only affects approximately eight percent of the Company's workforce, it is expected to reduce costs by approximately $2.2 million for the remainder of the year after Leap records this one-time charge. This, and other actions the Company has taken over the past 12 months to streamline its business, is expected to result in cost savings of approximately $8.8 million for fiscal year 2002 and annualized savings of approximately $20.0 million. Leap, headquartered in San Diego, Calif., is a customer-focused company providing innovative communications services for the mass market. Leap pioneered a wireless service that lets customers make all their local calls from within their local calling area and receive calls from anywhere for one low, flat rate. Leap has begun offering new services designed to further transform wireless communications for consumers. For more information, please visit http://www.leapwireless.com * * * As reported in Troubled Company Reporter's Sept. 12, 2002 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on wireless carrier Leap Wireless International Inc., to double-'C' from triple-'C'-minus following the company's September 6, 2002, 8-K filing indicating that it had defaulted on interest payments under its vendor facilities at operating subsidiary Cricket Communications Inc. The senior unsecured debt, which is rated single-'C', and the corporate credit rating remain on CreditWatch with negative implications. As of June 30, 2002, San Diego, California-based Leap had $2.1 billion of debt outstanding. LEHMAN BROTHERS: Fitch Affirms Class A-1 & A-2 Ratings at D/CCC --------------------------------------------------------------- LB Multifamily Mortgage Trust's, multiclass pass-through certificates, series 1991-4, are affirmed by Fitch Ratings as follows: $13.8 million class A-1 at 'D' and $1,856 class A-2 at 'CCC'. The remaining $15,427 class R certificates are not rated by Fitch. The rating actions follow Fitch's annual review of the transaction, which closed in July 1991. The certificates are collateralized by adjustable-rate mortgage loans, secured by multifamily properties in California. As of the September 2002 distribution date, the pool's collateral balance has been reduced by 87% to $13.8 million from $105.8 million at issuance. Of the original 139 loans in the pool, 28 remain outstanding. No loans are currently delinquent or being specially serviced and none are on the watchlist. Realized losses total $34.1 million or 32% of the pool's original principal balance, including the $9.2 million loss allocated to class A-1. Class A-2 should never experience a realized principal loss, due to a reserve fund in place, tied to this class. Realized losses of principal allocated to class A-2 certificates will be offset by distributions to the class A-2 certificates from the reserve fund. The largest loan in the pool currently represents 12% of the pool's outstanding principal balance, while the top ten loans represent 61% (by balance). At issuance, the net operating income and the debt service coverage ratio figures were not available. No loans reported year-end 2001 financials. Fitch will continue to monitor this transaction, as surveillance is ongoing. LUMENON INNOVATIVE: Reports Loss for Fifth Consecutive Year ----------------------------------------------------------- Lumenon Innovative Lightwave Technology, Inc. (NASDAQ SC: LUMM), a manufacturer of high-quality optical devices for the global telecommunications, data communications and cable markets, announced its results for the fiscal fourth quarter and year ended June 30, 2002. Lumenon's five-year pattern of net losses continued in the fiscal fourth quarter ending June 30, 2002. The latest quarterly loss totaled C$4.3M (US$2.8M), compared with C$15.2M for the same period in 2001. As of June 30, 2002, Lumenon had a cash position of C$7.0M (US$4.6M), compared with C$22.3M as of June 30, 2001. For the fiscal year ended June 30, 2002, the loss was C$23.9M (US$15.7M), compared with C$58.4M for the fiscal year 2001. Commenting on this year's activity, Gary Moskovitz, President and Chief Executive Officer said, "Over the past 12 months we have seen a significant decline in the overall demand for telecommunications equipment. Every company in the industry was challenged to re-examine assumptions, strategies, and expectations. Lumenon responded early to these adverse market conditions by restructuring our business operations in an effort to facilitate a realistic and measured transition to commercialization. Over the course of the year we methodically managed our cash flow and business operations, while we continued to implement our business strategies at various levels." Core Technology Dr. Mark Andrews, Lumenon's Co-Founder, Vice President and Chief Technology Officer commented, "We believe Lumenon remains in the development forefront of hybrid glasses and polymers for the manufacturing of Planar Lightwave Circuits. We have made significant progress towards the optimization and commercialization of hybrid glass/polymer optical chips. Over the course of the year we have advanced our PHASIC(TM) process and demonstrated our core technology capability through extensive testing against strict performance metrics. To date we have successfully produced AWGs with channel insertion losses of 6 dB and less and have been shipping pre-production sample devices such as our 16 channel 100 GHz DWDMs. We are also leveraging our core technology platform with the development of an Optical Channel Monitor. This device represents our first hybrid integration and the initial steps towards leveraging the full potential of our PHASIC(TM) process to produce low cost integrated components." "No one can reasonably predict when telecommunications capital spending will resume to levels more reasonably in line with past expectations. Ultimately, communications carriers must address the increasing demand for services such as video-on-demand, desktop video conferencing, and interactive games over the Internet and other, yet-to-be-developed, advanced applications. To be successful, they will need the help of technologies that lower costs and increase performance, technologies that Lumenon is now being positioned to offer," Mr. Moskovitz concluded. Conference Call Lumenon will hold a conference call and webcast in the near future to expand on the Company's Annual Report on Form 10 K, and to provide a business and financial update to summarize recent actions the Company has taken. The date and time of the conference call will be announced shortly. Lumenon Innovative Lightwave Technology, Inc., designs, develops and builds optical components and integrated optical devices in the form of packaged compact hybrid glass and polymer circuits on silicon chips. These photonic devices - based upon Lumenon's patented PHASIC(TM) design process and manufacturing methodology - offer communications providers the ability to dramatically boost bandwidth for today's burgeoning telecommunication, data communication and cable industries. For more information about Lumenon Innovative Lightwave Technology, Inc., visit the Company's Web site at http://www.lumenon.com * * * As reported in Troubled Company Reporter's June 10, 2002, Lumenon Innovative Lightwave Technology, Inc., received approval from the Nasdaq Stock Market, Inc., to transfer the listing of the Company's common stock from The Nasdaq National Market to The Nasdaq SmallCap Market effective at the opening of business Friday, June 7, 2002. The Company's common stock will continue to trade under its current symbol "LUMM". MALLON RESOURCES: Black Hills Merger Deal Solves this Insolvency ---------------------------------------------------------------- Black Hills Corporation (NYSE: BKH) has entered into a definitive merger agreement to acquire Denver-based Mallon Resources Corporation (OTC Bulletin Board: MLRC). The total cost of the transaction is estimated at $52 million, which includes the acquisition today by Black Hills of Mallon's debt to Aquila Energy Capital Corporation and the settlement of outstanding hedges, amounting to $30.5 million. The merger agreement, which has been approved by both companies' Boards of Directors, provides that Mallon shareholders will receive 0.044 of a share of Black Hills common stock for each share of Mallon. Completion of the acquisition, which is subject to customary conditions, including approval by the shareholders of Mallon, is expected in the first quarter of 2003. Mallon's proved reserves, as reported at December 31, 2001, were 53.3 billion cubic feet of gas equivalent. Black Hills believes that Mallon's current proved reserves could be substantially higher based on its review of the reserves and current oil and gas prices. The reserves are located primarily on the Jicarilla Apache Nation in the San Juan Basin of New Mexico and are comprised almost entirely of natural gas in shallow sand formations. The oil and gas leases of the acquisition total more than 66,500 gross acres (56,000 net), most of which is contained in a contiguous block that is in the early stages of development. Black Hills also believes it could recover additional gas reserves from the shallow sands. Further, more gas could be recoverable from deeper horizons that have yet to be explored, but are productive elsewhere in the San Juan Basin. Daniel P. Landguth, Chairman and CEO of Black Hills Corporation, said "This acquisition is an outstanding strategic fit for us. In one transaction, we have advanced several of our long-term objectives by dramatically increasing our natural gas reserves and production. We believe that natural gas is the fuel of choice and that U.S. gas demand will remain strong. Our integrated energy strategy seeks balance and integration among our business lines." Current daily net production of the Mallon properties is nearly 13 million cubic feet of gas equivalent. Mallon operates 149 of 171 total gas and oil wells, with working interests averaging 90 to 100 percent in most of the wells and undeveloped acreage. Landguth added, "These operated properties provide us with control over the exploration and development program, allowing flexible capital deployment as market conditions dictate. Moreover, our Denver marketing subsidiary, Enserco Energy, can add gas marketing and transportation expertise. We also look forward to working in partnership with the Jicarilla Apache Nation to responsibly develop the portion of their gas resources contained beneath these leases." Landguth continued, "This deal demonstrates our commitment to long-term earnings growth. Upon closing, the acquisition is expected to increase gas and oil production immediately by approximately 60 percent and more than double our proven oil and gas reserves at a very attractive acquisition cost. Combined with our other integrated energy activities, this acquisition will solidify our presence in Western markets." George O. Mallon, Jr., Chairman and CEO of Mallon Resources Corporation, stated, "We feel that this transaction is both prudent and exciting for our shareholders. After pursuing several corporate strategies, we concluded that this merger with Black Hills Corporation was the most attractive for our shareholders. With Mallon's unique fit into the Black Hills strategy, this combination will give all shareholders the opportunity to grow with a solid, well run energy company that has the desire, knowledge and financial capability to develop our significant undeveloped gas reserves in the San Juan Basin." After the acquisition is closed, Black Hills plans to initiate an expanded development and exploratory drilling program on the properties. As a result, Black Hills expects to increase gas production, reserves and cash flow from fuel operations in late 2003 and beyond. Black Hills expects the acquisition to have a nominal earnings-per-share impact until production levels can be increased. Black Hills Corporation -- http://www.blackhillscorp.com-- is a diverse energy and communications company. Oil and gas operations, conducted in nine states with a concentration of resources in the Rocky Mountain region, are part of Black Hills Energy, the integrated energy business unit which generates electricity and produces and markets natural gas, oil and coal; Black Hills Power, an electric utility serving western South Dakota, northeastern Wyoming and southeastern Montana; and Black Hills FiberCom, a broadband communications company offering bundled telephone, high speed Internet and cable entertainment services. Mallon Resources Corporation is a Denver, Colorado, based oil and gas exploration and production company operating primarily in the San Juan Basin of New Mexico. Investor Notices Investors and security holders are advised to read the joint proxy statement/prospectus that will be included in the Registration Statement on Form S-4 expected to be filed with the SEC in connection with the proposed merger. Black Hills and Mallon will file the joint proxy statement/prospectus with the SEC. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus (when available) and other documents filed by Black Hills and Mallon with the SEC at the SEC's Web site at http://www.sec.gov The joint proxy statement/prospectus and such other documents (relating to Black Hills) may also be obtained for free from Black Hills by directing such request to: Black Hills Corporation, P.O. Box 1400, 625 Ninth Street, Rapid City, South Dakota 57709, Attention: Steven J. Helmers, General Counsel; telephone: 605- 721-2300; email: shelmers@bh-corp.com The joint proxy statement/prospectus and such other documents (relating to Mallon) may also be obtained for free from Mallon by directing such request to: Mallon Resources Corporation, 999 18th Street, Suite 1700, Denver, Colorado 80202, Attn: Peter H. Blum, Executive Vice President; telephone: 303-293-2333. Mallon, its directors, executive officers and certain members of management and employees may be considered "participants in the solicitation" of proxies from Mallon's shareholders in connection with the merger. Information regarding such persons and a description of their interests in the merger and related transactions will be contained in the Registration Statement on Form S-4 when it is filed. Mallon Resources' June 30, 2002 balance sheets show a working capital deficit of about $28.8 million, and a total shareholders' equity deficit of about $7 million. MARINER POST-ACUTE: MHG Wants More Time to Challenge Claims ----------------------------------------------------------- The Mariner Health Group Debtors ask the Court to extend the deadline for filing objections to claims in their Chapter 11 cases until February 28, 2003. The MHG Debtors relate that under the Plan, the term "Claims Objection Deadline" is defined to mean the later of: (i) the 180th day after the Effective Date, (ii) with respect to a specific Claim, the 180th day after proof of the Claim is filed, (iii) with respect to a Claim that is subject to the ADR Procedure, the 90th day after the holder of the Claim either has opted out of the ADR Procedure by executing the necessary stipulation or has completed the requirements of the ADR Procedure, or (iv) the greater period of limitation as may be fixed or extended by the Bankruptcy Courts or by agreement between a Debtor and the holder of the Claim. Presently, the earliest Claims Objection Deadline is on November 8, 2002. The Debtors report that they have resolved 26,000 of the 32,000 filed and scheduled claims in the MHG and MPAN cases. The resolution of the scheduled prepetition claims has proven to be more difficult than anticipated because of: (a) the need to adjust scheduled amounts based upon payments made during the case on account of critical vendors, (b) the need to compare scheduled claims to the lists of assumed contracts, (c) the need to compare scheduled claims to orders entered during the case approving compromises, and (d) problems related to matching filed claims to scheduled claims, particularly in circumstances where numerous claims were filed of the same vendor. The Debtors explain that resolution of filed claims entails the: (a) review of trade claims by the Reorganized Debtors' accounts payable department, including the need to reconcile scheduled amounts with claims, which may have been filed by several branches of the same vendor on a regional basis, (b) review of assumed and rejected unexpired leases and executory contracts by numerous different working groups within the Reorganized Debtors, (c) analysis of damage claims arising from the rejection of unexpired leases and executory contracts, (d) review of all prior settlements in the cases for releases involving claims, (e) identification of duplicate and superseded claims, (f) identification of claims for reimbursement, contribution and indemnity, (g) identification and analysis of unliquidated and contingent claims, (h) review of asserted claims for priority or administrative status, (i) reconciliation of paid claims to taxing authorities, (j) review of claims based upon shareholders interests or damage claims relating to the purchase or sale of the Debtors' securities, (k) review and reconciliation of claims filed in one or both of the MPAN and MHG cases, that assert claims against the estates in both the MHAN and MHG cases, and (l) continuing efforts to resolve personal injury claims. The Reorganized Debtors estimate that it will take until January 2003 to complete their analysis of the remaining unresolved claims and to conclude their initial efforts to negotiate settlements without the need for filing formal objections. (Mariner Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) MATTRESS DISCOUNTERS: Standstill Pact Continues Until October 31 ---------------------------------------------------------------- Mattress Discounters Corporation announced that the standstill agreement previously reached with members of an ad-hoc committee of senior noteholders holding approximately two thirds of the Company's 12-5/8% Senior Notes will continue. Under this agreement the ad-hoc committee members have agreed to "standstill" until October 7, 2002, with a further automatic extension to October 31, 2002 upon reaching a satisfactory conclusion to ongoing negotiations with Sealy, Inc., and certain of the Company's equity holders. During this time they will refrain from exercising any rights or remedies or take any other action with respect to the Company's failure to make the interest payment that was due on July 15, 2002. The standstill agreement will provide the Company with the additional time necessary to continue to negotiate a consensual financial restructuring of its outstanding obligations. The Company entered into a similar extension agreement with its secured lenders. The secured lender extension agreement provides that the lenders will "standstill" until October 7, 2002, with a further automatic extension until October 25, 2002, provided that the senior noteholder agreement is extended to October 31, 2002. Steve Newton, the Chief Executive Officer of Mattress Discounters stated, "Everyone involved in this process is working extremely hard to find a solution. Our employees have been outstanding during this time of uncertainty and we are all looking forward to putting this period behind us." Sealy, Inc.'s Chief Executive Officer, David McIlquham stated, "Sealy is working with Mattress Discounters' Management Team and is hopeful that matters will be successfully resolved in the very near future." John J. Rapisardi of Jones Day Reavis & Pogue, the ad hoc Committee's counsel added, "The committee believes that continuing the standstill agreement will further the Company and the committee's efforts toward achieving a value maximizing restructuring." Mattress Discounters is headquartered in Upper Marlboro, Maryland, employing 1,100 people. With almost 25 years in business and more than 240 company-owned stores across the nation, they are the largest specialty mattress retailer in America and one of the world's largest retailers of Sealy mattresses. MIKOHN GAMING: Selling Lighting & Sign Unit to C.E.I. Holding ------------------------------------------------------------- Mikohn Gaming Corporation (Nasdaq:MIKN) has reached a definitive agreement to sell its exterior sign subsidiary, Mikohn Lighting and Sign, to C.E.I. Holding Inc., headed by Mark Johnson a long- time Mikohn employee. The transaction is anticipated to close no later than October 31, 2002. Johnson is joined by a group of the operation's current employees who will become co-owners of the business. Russ McMeekin, President and CEO of Mikohn Gaming commented; "we are delighted that Mark Johnson and his group have stepped forward to purchase our exterior sign business. Although this is a quality operation, the sale reflects our strategic focus on our recurring revenue products. Mark and his team have many years of experience in the exterior sign business and we wish him and his team much success". Commenting on the transaction, Mark Johnson, Chairman of C.E.I. Holding said, "We are very excited about this opportunity to continue to serve an industry which we have serviced for many years, and look forward to continuing relationships within the industry". "Consistent with our commitment to streamline our operations and focus on cash growth, we are on track to generate cash growth through business operations and divestitures and are on track to close the year at a minimum cash balance of $14 million" reiterated John Garner, Chief Financial Officer. Mikohn is a diversified supplier to the casino gaming industry worldwide, specializing in the development of innovative products with recurring revenue potential. Mikohn develops, manufactures and markets an expanding array of slot games, table games and advanced player tracking and accounting systems for slot machines and table games. The company is also a leader in exciting visual displays and progressive jackpot technology for casinos worldwide. There is a Mikohn product in virtually every casino in the world. For further information, visit the company's Web site at http://www.mikohn.com * * * As previously reported, Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings of Mikohn Gaming Corp., to single-'B'-minus from single-'B'. The ratings remain on CreditWatch where they placed on February 22, 2002, but the implication is revised to negative from developing. The actions followed the announcement by the Las Vegas, Nevada- based slot-machine manufacturer that operating performance during the June 2002 quarter was well below expectations. That weak performance resulted in a violation of bank covenants and a significant decline in credit measures. Mikohn has about $100 million of debt outstanding. The lower ratings also reflect Standard & Poor's concern that Mikohn's liquidity position could further deteriorate if operating performance during the next few quarters does not materially improve. MITEC TELECOM: Working Capital Deficit Reaches C$3.5M at July 31 ---------------------------------------------------------------- Mitec Telecom Inc. (TSX: MTM), a leading designer and manufacturer of wireless network products for the telecommunications industry, reported its results for the first quarter ended July 31, 2002. Revenues and net income for the period were adversely affected as original equipment manufacturers and service providers continued to reduce capital spending in the face of the telecommunications industry's on- going weakness. Mitec has responded decisively to this situation by implementing an aggressive cash generation and cost reduction program. First quarter sales were C$24 million, down 34.6% from C$36.7 million for the same period last year. Net loss for the period was C$6.4 million compared to a net income of C$684,000 after goodwill amortization. In addition to the effects of reduced sales and margins, the first quarter net loss includes a restructuring provision of C$0.4 million and non-cash foreign exchange losses of C$1 million. Compared to the fourth quarter ended April 30, 2002, sales decreased from C$31 million, while the net loss improved from the C$21 million reported. In anticipation of the negative industry environment, management's actions significantly reduced the cash burn which for the first quarter was C$3.5 million compared to C$8.5 million for the fourth quarter ended April 30, 2002. At July 31, 2002, Mitec Telecom's balance sheets show that its total current liabilities eclipsed its total current assets by about C$3.5 million. Ken Allstaff, interim President and interim COO said Mitec continues to face the same challenges as all other organizations in the sector. "Reduced spending continues to be the general trend. This has an obvious snowball effect throughout the supply chain. We have experienced reductions in each of our three segments. Wireless is down 32% year over year due to a reduction of orders for 2.5G products; microwave-links revenues are off almost 44% as a major customer has delayed orders due to the slowdown in the European telecom industry and satcom is off 7.5% due to lower demand for satellite ground stations, microwave backhaul equipment and flexible waveguide products." Turnaround Plan at Beve Bringing Desired Results: New Business, Cost Reductions Creating Improvement Mr. Allstaff said BEVE has undergone extensive downsizing during the past few months. "Concurrent with this has been an upturn in sales within the military area as well as new EMS contract manufacturing business. The situation in Sweden is a lot brighter and the current outlook for the second half is positive. It is anticipated that BEVE will be EBITDA positive for the year after being in a cash deficit position during the most recent fiscal year." Extensive Corporate-Wide Plan To Generate $8-$12 Million In Cash; Staff Cuts To Reduce Fixed Costs By An Additional $6 Million Keith Findlay, Executive Vice-President, Finance and CFO said several initiatives have been implemented to streamline activities in order to generate cash, rationalize operations and further reduce the Company's workforce. He cited the following details: - $5 - $7 million net cash generation (after repayment of debt) through the sale of corporate real estate. - $2 million through the sale of non-core capital assets. - $3 million through the realization of slow-moving inventory. - $6 million annual savings through additional staff reductions globally. NEW APPOINTMENT TO BOARD OF DIRECTORS Myer Bentob, Chairman of the Board, announced that Thomas A. Kaneb has been named to Mitec's Board of Directors, effective immediately. "I am delighted to welcome Mr. Kaneb to our Board. He brings us a wealth of expertise in a variety of business endeavors, as well as extensive experience as a director of a number of public and private organizations." From 1978-1999, Mr. Kaneb was the President and sole shareholder of Universal Terminals Inc., the largest independent distributor of heating oil and industrial fuels in Ontario. After selling the business to Ultramar in 1999, Mr. Kaneb was the founding shareholder of Sigma Point Technologies, a contract manufacturer of integrated circuit boards and system assemblies for optical networking, telecommunications and medical equipment. He is currently Sigma Point Technology's Chairman of the Board, and is actively engaged in private investments in young companies with a focus on proprietary technologies in chemicals, energy and high tech. Mitec Telecom is a leading designer and manufacturer of products for the telecommunications industry. The Company sells its products worldwide to network providers for incorporation into high-performing wireless networks used in voice and data/Internet communications. Additionally, the Company provides value-added services from design to final assembly and maintains test facilities covering a range from DC to 60 GHz. Headquartered in Montreal, Canada, the Company also operates facilities in the United States, Sweden, United Kingdom, China and Thailand. Mitec Telecom Inc., is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at http://www.mitectelecom.com MORGAN STANLEY: Fitch Affirms Low-B & Junk Ratings on 7 Classes --------------------------------------------------------------- Fitch Ratings affirms Morgan Stanley Dean Witter Capital I's commercial mortgage pass-through certificates, series 2000- Life2, $142.4 million class A-1, $480 class A-2, and interest- only class X at 'AAA'. In addition, Fitch affirms the following classes: $23 million class B at 'AA', $24.9 million class C at 'A', $6.9 million class D at 'A-', $18.8 million class E at 'BBB', $7.7 million class F and $3.1 million class G at 'BBB-', $9.6 million class H at 'BB+', $9.2 million class J at 'BB', $3.1 million class K at 'BB-', $4 million class L at 'B+', $6.7 million class M at 'B', $2.9 million class N at 'B-' and $1 million class O at 'CCC'. Fitch does not rate the $5.7 million class P. The rating affirmations follow Fitch's annual review of the transaction, which closed in October 2000. The affirmations are due to the steady performance of the pool and the limited amount of collateral paydown. As of the September 2002 distribution date, the transaction's collateral balance has decreased by 2.2%, to $748.7 million from $765.3 million at issuance. The certificates are collateralized by 103 fixed rate loans secured by 103 multifamily and commercial properties consisting primarily of office (30%), industrial (26%), retail (21%), and multifamily (20%). There are geographic concentrations in New Jersey (26%), California (21%), New York (7%), Maryland (5%) and Florida (5%). No loans have been delinquent or in special servicing since issuance. Wells Fargo Bank, the master servicer, collected year-end 2001 operating statements for all loans. The 2001 weighted average debt service coverage ratio is 1.62 times, compared to the 1.52x as of YE 2000 and 1.53x at issuance. The top five loans represent 21% of the collateral balance. The weighted average DSCR for all top five loans is 1.74x as of YE 2001 compared to 1.61x as of YE 2000 and 1.65x at issuance. Overall, Fitch considers seven loans (4.8%) to be of concern due to vacancy issues or difficulty collecting rental payments from tenants. Fitch reviewed the performance of the Towers at Portside loan (7.4% of the pool). The loan is secured by a 527 unit multifamily property located on the waterfront in Jersey City, NJ. Fitch's stressed DSCR was calculated using borrower reported net operating income adjusted for reserves and a Fitch stressed debt constant of 9.16%. The YE 2001 DSCR was 1.97x, compared to 1.81x as of YE 2000 and 1.78x at issuance. Even though occupancy at the property has fallen to 90% as of Dec. 31, 2001, the property is expected to continue performing well. Given the improved performance of this loan it maintains credit characteristics consistent with investment-grade obligations. Due to the overall stable performance, low number of loans of concern and limited paydown Fitch affirmed all ratings. Fitch will continue to monitor the performance of this transaction, as surveillance is ongoing. NATIONSRENT INC: Signing-Up UBS Warburg for Financial Advice ------------------------------------------------------------ NationsRent Inc., and its debtor-affiliates seek the Court's authority to employ UBS Warburg LLC as financial advisors in these Chapter 11 cases. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger PA, in Wilmington, Delaware, tells Judge Walsh that UBS Warburg is a leading financial advisory firm, comprised of professionals with exceptional experience in providing financial advice, including restructuring, merger and acquisition, capital markets and transactional advice, to financially troubled companies. The firm also has extensive experience in assisting troubled companies explore a variety of strategic alternatives, including the sale of these companies. UBS Warburg and its professionals have provided financial advice in many recent restructuring and financing transactions. According to Mr. DeFranceschi, the Debtors have already engaged UBS Warburg to perform various financial advisory services and restructuring-related activities before the Petition Date. Through these prepetition activities, UBS Warburg has worked closely with the Debtors' management, financial staff and other employees and, thus, has become well acquainted with the Debtors' business operations and financial advisory needs. Mr. DeFranceschi notes that UBS Warburg has developed significant experience and expertise that will be valuable in providing effective and efficient services in these Chapter 11 cases. Of equal importance, UBS Warburg is one of the few, if not the only, major full-service securities firm with a major restructuring practice. The Debtors anticipate UBS Warburg to assist them in: (a) identifying and evaluating potential third parties to a potential transaction as defined in the Engagement Letter; (b) contacting and meeting with potential Transaction Parties; (c) preparing a memorandum that describes the Debtors and their business operations for distribution to Transaction Parties; (d) evaluate the financial aspects of a Transaction; (e) advising the Debtors as to the structure and form of a proposed Transaction; (f) developing a general negotiating strategy with a potential Transaction Party and participating in these negotiations; (g) in any proceeding relating to regulatory approvals required for a Transaction; and (h) assisting with other matters that fall within UBS Warburg's expertise as may be mutually agreed upon by both parties. In consideration for its services, the Debtors propose to pay UBS Warburg: -- an initial fee of $175,000, payable promptly upon entry of an order approving the Motion; provided that this will be offset against the Transaction Fee; and -- a Transaction Fee payable at the closing of the Transaction, equal to the greater of: (1) $1,000,000; or (2) 1% of the Transaction Value. The Transactions must be consummated during the term UBS Warburg's engagement or within 12 months thereafter unless UBS Warburg chooses to terminate its engagement; A Transaction includes: (a) any merger, consolidation, reorganization or other business combination under which the business of the Debtors is combined with that of the Transaction Party; or (b) the sale, transfer or other disposition of 50% or more of the capital stock or assets of the Debtors by way of tender or exchange offer, option, negotiated purchase, leveraged buyout, minority investment or partnership, joint or collaborative venture or otherwise; This does not include a reorganization or recapitalization of the Debtors wherein the Debtors' creditors and other parties in interest surrender their debt and equity claims against the Debtors in exchange for new debt or equity claims as reorganized without a material new investment by any third party, creditor or other party in interest. The Debtors will also reimburse UBS Warburg for reasonable out- of-pocket expenses not to exceed $15,000 without the Debtors' prior written approval. The Debtors will indemnify, hold harmless, and defend UBS Warburg and its affiliates, directors, agents, employees or principals under certain circumstances. In particular, Mr. DeFranceschi says, these Parties will be indemnified by the Debtors for any losses, claims, damages, liabilities and expenses relating to or arising out of matters contemplated by UBS Warburg's engagement. This includes any legal proceeding in connection with matters relating to or referred to in the parties' Engagement Letter or arising out of issues in which UBS becomes involved in any capacity. Jorge G. Mora, executive director in the M&A Group of UBS, assures the Court that UBS Warburg does not hold or represent any interest adverse to these Chapter 11 cases. However, Mr. Mora relates that UBS Warburg or an affiliate has provided or is providing services to interested parties in matters unrelated in these cases. The interested parties are: Amsouth Leasing Ltd.; Apollo Advisors; Bank of America Securities; Bank of Montreal; The Bank of New York; Bingham McCutchen LLP; Bombardier Capital, Inc.; Citizens Bank of Massachusetts; Financial Group; David L. Babson & Co., Inc.; Deere Credit, Inc.; Delaware Management Company; Deutsche Financial Services Corporation; Ernst & Young LLP; Fleet National Bank; Ford Motor Credit Company. Other parties include: General Electric Capital Corporation; Heller Financial Leasing Inc.; ING Pilgrim; Investcorp S.A.; J.P. Morgan Capital Corporation; KeyCorp Leasing; Kroll Zolfo Cooper, LLC; Lowes Companies, Inc.; Muzinich & Co., Inc.; New Holland Credit Company; PPM America, Inc.; Provident Investment Management LLC.; Richards, Layton & Finger, P.A.; Seneca Capital Management; Skadden, Arps, Slate, Meagher & Flom LLP; South Trust Bank NA; Textron Financial Corporation; Transamerica Business Credit. (NationsRent Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders says that NationsRent Inc.'s 10.375% bonds due 2008 (NRNT08USR1) are trading at a penny on the dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NRNT08USR1 for real-time bond pricing. NODAK MUTUAL: AM Best Keeping Watch on B++ Fin'l Strength Rating ---------------------------------------------------------------- A.M. Best Co., has placed the financial strength rating of B++ (Very Good) of Nodak Mutual Group (Fargo, ND) under review with negative implications. The rating action reflects the September 23, 2002, announcement by the North Dakota Department of Insurance placing Nodak Mutual Insurance Company under administrative supervision. The order was issued at the request of the senior management of Nodak Mutual. The action is wholly related to the instability between the Board of Directors and management and was not related to the financial condition of Nodak Mutual Insurance Company. The order of administration requires prior approval by the Department for material transactions of Nodak Mutual's management. The negative implications of the under review status reflect A.M. Best's concerns regarding the uncertainties associated with the future direction of the group. The group will remain under review pending the completion of the Department's investigation and A.M. Best's discussions with management. The following property/casualty members of the Nodak Mutual Group have been placed under review with negative implications: - American West Insurance Company - Nodak Mutual Insurance Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com NRG ENERGY: South Central Unit Defaults on Senior Secured Bonds --------------------------------------------------------------- As previously announced, NRG South Central LLC (a wholly owned subsidiary of NRG Energy) on September 16, 2002, did not make approximately $47 million in combined principal and interest payments on 8.962 percent series A-1 senior secured bonds due 2016 and 9.479 percent series B-1 senior secured bonds due 2024. The South Central bondholders hired advisors and formed a committee to represent them in negotiations with NRG. NRG is continuing to negotiate with this committee of bondholders, as well as with all of its other lenders, in the context of a comprehensive restructuring plan. The fifteen-day grace period to make payment ended October 1, 2002 and NRG South Central Generating LLC did not make the required payments. As a result, NRG South Central is in default on these bonds. NRG intends to submit to its lenders and bondholders a comprehensive restructuring plan by late October. As a part of this process, NRG continues to work with certain of NRG's bank lenders to obtain an extension of the deadline by which it must post approximately $1.0 billion of cash collateral in connection with certain bank loan agreements. The prior extension expired September 13, 2002 and NRG has been working with its bank lenders since then to obtain an extension. Unless and until an extension can be agreed upon, the banks have the right to demand posting of the cash collateral. "NRG remains hopeful that it will be able to reach an arrangement for the benefit of all stakeholders," said Richard C. Kelly, NRG president and chief operating officer. NRG Energy develops and operates power-generating facilities. Its operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. The company provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth- largest combination natural gas and electricity company in the U.S. Company headquarters are located in Minneapolis. OWENS CORNING: Court Okays EPA Bar Date Extension to December 15 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware approved the Stipulation between the United States Environmental Protection Agency and the Owens Corning Debtors extending the General Claims Bar Date by which the EPA must file any proofs of claim arising to December 15, 2002. Owens Corning is one of the world's top makers of fiberglass and composite materials. The company, which uses the Pink Panther cartoon character as its pitchman, sells fiberglass and foam insulation. Owens Corning's building-materials unit also manufactures roofing materials, vinyl windows, patio doors, vinyl siding, and rain gutters and downspouts. The company's composite-materials segment makes composites used in the automotive, electronics, and telecommunications industries. Owens Corning operates manufacturing facilities in the US and about a dozen other countries. The company has filed for bankruptcy protection to help it cope with billions of dollars in asbestos-related lawsuits. PATRIOT AIR: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: Patriot Air, LLC Two Lincoln Centre 5420 LBJ Freeway #1450 Dallas, Texas 75240 Bankruptcy Case No.: 02-38187 Chapter 11 Petition Date: September 18, 2002 Court: Northern District of Texas (Dallas) Judge: Harold C. Abramson Debtor's Counsel: Donald R. Rector, Esq. Glast, Phillips & Murray 2200 One Galleria Tower 13355 Noel Rd., LB 48 Dallas, Texas 75240-6657 972-419-8300 Estimated Assets: $1 to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ AIS Trade $10,976 ASA Trade $10,000 Aegis Aviation Services Trade $24,094 Aegis Service Co., LLC Trade $47,152 American Airlines Trade $13,357 Amtex Corporation Trade $5,328 Avfuel Corporation Trade $6,587 Dalfort Aerospace Trade $47,039 Delta Airlines Trade $16,198 Eagle Jet, Inc. Trade $5,445 Embassy Suites Trade $3,416 Ivyport Logistical Trade $11,261 Services, Ltd. Northwest Airlines Trade $4,335 Orlando Sanford Trade $5,935 Pace Airlines Contract $2,402,630 PO Box 525 (S-305) Winston Salem, NC 27102-0525 Piedmont Hawthorne Trade $34,740 South Jersey Trade $38,745 Transportation Swissport Trade $82,354 Triton Aviation Aircraft Lease Paymnets $1,646,167 55 Green Street San Francisco, CA 94111 Worldwide Flight Service Trade $19,435 PCNET INT'L: Units File for CCAA Protection in British Columbia --------------------------------------------------------------- PCNET International Inc., (TSX-V: PCT) announced its subsidiaries, PCN Ventures Inc., and Pacific Coast Net Inc., together with their respective subsidiaries have successfully applied for and obtained protection under the Companies' Creditors Arrangement Act pursuant to an Order from the British Columbia Superior Court of Justice. The initial Order, as is customary in these matters, is for a period of 30 days. "Along with filing for protection we have aggressively reshaped the company, and are pleased to have what we believe is a comprehensive restructuring solution," says Peter Casson, CEO. Mr. Casson emphasized the CCAA process will have no impact on the company's abilities to fulfill its obligations to its employees or its customers. "Daily operations of our facilities will continue as usual, and our employees will continue to be paid without interruption," says Mr. Casson. PCN's customers will remain unaffected by this announcement and the company confirmed it has sufficient funds on hand to enable it to continue normal operations during the CCAA process, and to make payments to suppliers and others for authorized goods and services received after the Initial Order was issued. PCN is committed to maintaining its usual high service levels to customers during this period. "During the restructuring period and beyond, we will continue our commitment to provide the highest quality product and service that our customers have come to expect," Mr. Casson said. "Our vendors will be paid for all goods and services provided after the filing date and transactions that occur in the normal course of business will continue as before." He said that the company has been operating under challenging conditions during the past two years due to reduced margins prevalent in the ISP sector, increased competition and other factors. "Despite this pressure, our company continued to maintain strong growth until supply far outpaced demand. After careful consideration, we determined that the CCAA process presents the best means to complete our restructuring," Mr. Casson stated. "[Tues]day's announcement should reassure all interested parties, including our employees, clients, and suppliers that PCN can emerge from the current period as a strong competitor in the Internet Service Provision industry. We are committed to working with our Creditors to achieve a fair disposition of funds, and a positive working relationship for the future." said Mr. Casson. PENNZOIL-QUAKER: S&P Keeps Low-B Debt Ratings on Watch Positive --------------------------------------------------------------- Standard & Poor's said that its double-'B'-plus corporate credit and senior secured debt ratings and its double-'B'-minus senior unsecured debt ratings on Pennzoil-Quaker State Co., remain on CreditWatch with positive implications. PQS ratings were placed on CreditWatch on March 26, 2002, following the announcement that Shell Oil Co., (AAA/Stable/A-1+) entered into a definitive agreement to acquire PQS. The transaction was valued at about $2.9 billion, which included the assumption of about $1.1 billion in debt. On Friday, September 27, 2002, PQS announced that the Federal Trade Commission had cleared its acquisition by Shell. In addition, PQS announced that it had entered into a consent order with the FTC that resolves the agency's concerns regarding the U.S. group II base oil marketplace. "PQS ratings will remain on CreditWatch with positive implications until after the closing of the transaction," said Standard & Poor's credit analyst Jean C. Stout. Standard & Poor's credit analyst John Thieroff added, "The timing and magnitude of such an upgrade will depend on PQS' placement within the Royal Dutch/Shell Group of companies and the presence or absence of credit support from Royal Dutch/Shell." PQS, based in Houston, Texas, is a worldwide automotive consumer products company with a leading market share in branded motor oils, holding the No. 1 and No. 2 selling motor oils in the United States. PENTON MEDIA: Will Publish Third Quarter Results on October 31 -------------------------------------------------------------- Penton Media, Inc., (NYSE: PME) expects to release its third- quarter results before the market opens on Thursday, October 31. The Company plans to hold a conference call to discuss the results and its business outlook at 10 a.m. Eastern Time that same morning. The call dial-in number is 973-633-1010. A telephone replay of the conference call will be available beginning the afternoon of October 31 until 6 p.m. Eastern Time, Thursday, November 7, by calling 1-402-220-1156 (no access code is necessary). A live audio webcast of the phone call will be available through the Investors section of Penton's Web site at http://www.penton.com The call also will be archived on the site. Penton Media is a leading, global business-to-business media company that produces market-focused magazines, trade shows and conferences, and Web sites. Penton's integrated media portfolio serves the following industries: Internet/broadband; information technology; electronics; natural products; food/retail; manufacturing; design/engineering; supply chain; aviation; government/compliance; mechanical systems/construction; and leisure/hospitality. For more information, visit http://www.penton.com * * * As reported in Troubled Company Reporter's May 13, 2002, edition, Standard & Poor's revised its outlook on business-to- business media company Penton Media Inc., to negative from developing due to additional concerns about the company's profitability in light of continued revenue declines and the operating difficulties of key end markets. Standard & Poor's also affirmed its existing ratings on Penton, including its single-B-minus corporate credit rating. Outlook Ratings could be lowered if Penton fails to maintain adequate liquidity to fund its operations during this difficult operating environment. Ratings List: To: From: Penton Media Inc. * Corporate credit rating B-/Negative/-- B-/Dev/-- * Senior secured debt rating B- * Subordinated debt rating CCC PEREGRINE SYSTEMS: Asks Court to Fix December 16 Claims Bar Date ---------------------------------------------------------------- Peregrine Systems, Inc., and its affiliated debtor Peregrine Remedy, Inc., move the U.S. Bankruptcy Court for the District of Delaware to fix December 16, 2002 as the Claims Bar Date -- the deadline by which creditors must file their proofs of claims. The Debtors also want to fix bar date for all governmental units at March 6, 2003. The Debtors point out that establishing Bar Dates will help to ensure that the Debtors' chapter 11 plan can be implemented fairly -- using better estimates for total liabilities. A Dec. 16 deadline provides all creditors ample time to prepare and file their claims, the Debtors suggest. Holders of: i) administrative claims of professionals retained pursuant to a Court order, ii) claims arising from goods or services provided to the Debtors subsequent to the Petition Date, and iii) claims for which specific deadlines are fixed by the Court. are excluded from the Bar Date. The Debtors will publish notice of the Bar Date in the Los Angeles Times and the national edition of The Wall Street Journal. Furthermore, the Debtors assure the Court that they will file the Schedules of Assets and Liabilities and Statements of Financial Affairs on or before November 6, 2002. Accordingly, the proposed Bar Date will provide more than 45 days after the filing of the Debtors' Statements and Schedules. Peregrine Systems, Inc., the leading global provider of Infrastructure Management software, filed for chapter 11 protection on September 22, 2002. Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young & Jones represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. PLAINS ALL AMERICAN: Closes Financing Pacts to Augment Liquidity ---------------------------------------------------------------- Plains All American Pipeline, L.P., (NYSE: PAA) recently completed several transactions designed to enhance the Partnership's financial position, augment its liquidity and financial flexibility and position it for future growth: -- In July, the Partnership amended its senior secured credit facilities to enable it to increase the size of its Letter of Credit and Hedged Inventory Facility by $150 million and also extend the maturity of that facility to April 2005; -- In August, the Partnership completed a public offering of 6,325,000 common units, raising net proceeds of approximately $145 million; and -- In September, the Partnership completed a private offering of $200 million of senior notes due 2012 raising net proceeds of approximately $196 million. "These past three months have been extremely active for the Partnership," said Greg L. Armstrong, Chairman and Chief Executive Officer of the Partnership. "In that time period, we completed the acquisition of Shell's West Texas business units, continued to execute our financial growth strategy by completing these financing transactions under less than optimum market conditions, and obtained upgrades or were placed on positive credit watch by each of the ratings agencies." Armstrong noted that in September, Moody's Investors Service upgraded the Partnership's senior implied credit rating to Ba1 (stable outlook), while Standard & Poor's reiterated the Partnership's BB corporate credit rating and had in June placed the Partnership on CreditWatch with positive implications. "With over $400 million of immediate liquidity available under our revolving credit facilities, we believe we are well- positioned to take advantage of one of the most attractive acquisition markets in recent history." As of the end of the third quarter, the Partnership estimates that it will have approximately $15 million outstanding on its $450 million of revolving credit facilities that mature in 2005, approximately $297 million of senior secured term loans with final maturity dates in 2006 and 2007 and $200 million of Senior Notes which mature in 2012. Plains All American Pipeline, L.P., is engaged in interstate and intrastate crude oil transportation, terminalling and storage, as well as crude oil gathering and marketing activities, primarily in Texas, California, Oklahoma, Louisiana and the Canadian Provinces of Alberta, Saskatchewan and Manitoba. The Partnership's common units are traded on the New York Stock Exchange under the symbol "PAA". The Partnership is headquartered in Houston, Texas. * * * As previously reported, Standard & Poor's Ratings Services assigned its double-'B' rating to Plains All American Pipeline L.P.'s $150 million senior unsecured notes due 2012. In accordance with Standard & Poor's criteria on notching for unsecured debt, the notes are rated one notch lower than Plains All American's corporate credit rating because of the substantial amount of secured bank debt the partnership has outstanding. Ratings on Plains All American remain on CreditWatch, where they were placed with positive implications on June 27, 2002, following the announcement by its 29% owner Plains Resources Inc., of its plans to restructure. PSINET: Goldin Resolved Dispute over Metamor Stock Sale to CIBER ---------------------------------------------------------------- The closing of transactions for the sale of the Industry Solutions Stock by the Debtors, both PSINet, Inc., entities and Consulting, to CIBER occurred on October 15, 2001. Prior to September 2001, PSINet and Consulting directly or indirectly owned the stock of Metamor Industry Solutions, Inc. and its wholly owned subsidiary, Metamor Government Solutions, Inc. The Industry Solutions Entities were engaged in the business of providing consulting services principally to state and local government agencies. The Stock Purchase Agreement provides for certain amounts to be held in escrow pursuant to the Escrow Agreement by and among Consulting, CIBER and Wells Fargo Bank, the escrow agent. After the sale, certain final closing balance sheet adjustment issues arose between the Trustee and CIBER, particularly with respect to the disposition of $1,920,840.00 being held in escrow as of July 1, 2002. After negotiations, the Trustee and CIBER agreed to resolve all disputes arising out of, or related to, the Sale Transaction Agreements and the Escrow Agreement. The parties were able to obtained the Court's approval of their Settlement Agreement. Salient Terms of the Settlement Agreement a. The Escrow Amount will be distributed: * $875,003.35 to CIBER, * $50,000.00 retained in escrow, and * the balance (Escrow Balance) to Consulting; b. Indemnification Consulting agrees to defend the litigation captioned Price McNabb v. PSINet Consulting Solutions. Inc., Case No. 00-CV- 570(MU) now pending in the United States District Court for the District of North Carolina, and to indemnify CIBER with respect to any and all liabilities arising in, or related to the Price McNabb Litigation including reasonable attorneys' fees and other costs of defense against the Price McNabb Litigation. However, Consulting will not be liable for any liabilities under the Settlement Agreement in excess of $50,000 (the Cap). Besides, Consulting will not be liable to CIBER for any Liabilities unless written notice of the incurrence of Liabilities has been received by Consulting prior to the Cut- Off Date. The Cut-Off Date means the earliest of: (i) October 15, 2003; (ii) the effective date of a plan of confirmation in Consulting's Chapter 11 Case; (iii) in the event that Consulting's case is converted into a proceeding under Chapter 7, the date of final distribution under that plan; (iv) the bar date under Consulting's Chapter 11 Case in the event that Price McNabb has failed to submit a claim following receipt of notice; and (v) the date that CIBER receives written notice that Price McNabb has acknowledged that Consulting and/or one or more of its wholly owned subsidiaries is the sole proper defendant in the Price McNabb Litigation. CIBER will have an administrative claim under Section 507(b) of the Bankruptcy Code to the extent that any indemnification obligation under the Settlement Agreement remains due and payable as of the Cut-Off Date, but only to the extent of the Cap, less amounts previously paid under Consulting's indemnification obligation under the Settlement Agreement; c. Consulting agrees to cooperate with CIBER in connection with CIBER's election under section 338(h)(10) of the Internal Revenue Code including, to execute Form 8023-Elections Under Section 338 For Corporations Making Qualified Stock Purchases, in accordance with the terms of Section 10.6 of the Stock Purchase Agreement; d. CIBER agrees to provide to Consulting reasonable access to its records, and to former Metamor employees currently employed by CIBER, concerning receivables owing to Consulting arising out of the Master Services Agreement between Consulting and General Electric Capital Corporation, provided that CIBER will not be required to incur any material expense in doing so. CIBER acknowledges that: (i) no receivables in respect of the Master Services Agreement were transferred pursuant to the Sale Transaction Agreements, and (ii) neither CIBER nor any of its direct or indirect subsidiaries claims any interest in any of the accounts receivable; e. The Parties release each other from any causes of action or liabilities arising from the Sale Transaction and the Settlement Agreement. The Trustee notes that, absent this Settlement Agreement, CIBER would have been entitled to require that $600,000 of escrowed funds be retained in escrow. With the Settlement Agreement, this is reduced to $50,000. It also creates certainty that CIBER will not claim entitlement to funds in excess of the $50,000 retained in escrow. Besides, the Settlement Agreement resolves all disputes between the Trustee and CIBER with respect to the Sale Transaction Agreements and the Escrow Agreement, thus avoiding possible protracted litigation. (PSINet Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) PSINET Inc.'s 11% bonds due 2009 (PSIX09USS1), DebtTraders reports, are trading at 10 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=PSIX09USS1 for real-time bond pricing. SAKS: Consolidating Younkers Ops. into Carson Pirie Headquarters ---------------------------------------------------------------- In order to streamline its organizational structure and reduce overhead expenses, retailer Saks Incorporated (NYSE:SKS) plans to consolidate its Younkers' home office operations into its Carson Pirie Scott headquarters. The consolidation is scheduled for completion in the fiscal fourth quarter ending February 1, 2003. The merchandising, advertising/marketing, and various support functions of the 50-unit, Des Moines, Iowa-based Younkers division will be absorbed into the 96-unit, Milwaukee, Wisconsin-based Carson Pirie Scott division. This division currently operates stores under the Carson Pirie Scott, Boston Store, Bergner's, and Herberger's nameplates. The majority of Younkers stores will continue to operate under the Younkers nameplate. In certain markets, store names may be changed where nameplates overlap. "The planned Younkers consolidation is a result of a thorough review of our organizational structure," commented George Jones, President and Chief Executive Officer of Saks Department Store Group. "This action will strengthen our management focus, enhance our competitive cost structure, and increase productivity, while still allowing us to customize our merchandise offerings and services to specific markets consistent with our ``hometown' strategy." Jones continued, "While this is a good business decision, it was certainly a difficult one to make. We are very appreciative of the service, dedication, and many contributions of the Younkers team. We know this is a challenging time for the associates who are being affected. We are committed to offering these associates other opportunities within the organization where appropriate and to ensuring that all associates are treated fairly and provided assistance during this time of transition." The consolidation will eliminate approximately 270 positions at the Younkers home office in Des Moines and a total of approximately 25 positions in Younkers' furniture warehouse and in Younkers' distribution center, both located in Green Bay, Wisconsin. Associates who are affected by this action who do not take new opportunities within the Company will be offered appropriate severance packages, outplacement services, and other transition assistance. Jones also noted, "We remain very committed to Younkers' hometown of Des Moines and home state of Iowa, and we will continue our support of the many charitable organizations and philanthropic causes supported by Younkers. We will still have a very meaningful presence in Des Moines and in the state, with over 1,200 associates serving the four Des Moines area stores and more than 3,000 associates serving our nineteen Younkers locations throughout Iowa." Management expects this restructuring will reduce operating expenses by approximately $12 million (pre-tax) annually, beginning in 2003. Charges relating to the consolidation primarily will relate to severance and property write-offs and are expected to total approximately $10 million (after-tax). The majority of the charges will be cash charges for severance and will be incurred in the fourth quarter of 2002. Saks Incorporated operates Saks Department Store Group (SDSG) with 243 department stores under the names of Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store. The Company also operates Saks Fifth Avenue Enterprises, which consists of 61 Saks Fifth Avenue stores and 52 Saks Off 5th stores. * * * As reported in Troubled Company Reporter's July 30, 2002 edition, Fitch Ratings affirmed its 'BB+' rating of Saks Incorporated's $700 million bank facility and its 'BB-' rating of the company's senior notes. Approximately $1.2 billion of senior notes are affected by the action, which follows Saks' announcement that it has agreed to sell its credit card receivables to Household International. The Rating Outlook remains Negative. The ratings reflect Saks' solid position within its markets balanced against its weak operating results and high financial leverage. Saks' operations have been pressured by soft apparel sales and growing competition from specialty and discount retailers. SCIENTIFIC LEARNING: Names Jill Rutter Vice Pres. of Operations --------------------------------------------------------------- Jill Rutter has joined Scientific Learning Corporation (OTCBB: SCIL) as officer and vice president of operations. Previously, Ms. Rutter was vice president of professional and technical services for NCS Learn, a provider of educational software for the K-12 school market. NCS Learn is a unit of Pearson Education. Ms. Rutter brings to Scientific Learning more than two decades of experience in the educational software business, including leadership and direction in educational consulting, technical services, and customer support to school districts nationwide. She has a consistent track record of creating successful, innovative offerings, using a combination of internal, technology-based services and contract services, while simultaneously growing revenue, improving profit, and increasing customer satisfaction. Robert C. Bowen, Chairman and Chief Executive Officer of Scientific Learning, said, "Jill brings to us substantial experience, allowing us to build on our current foundation. She has proven ability to manage teams as well as develop and grow profitable professional service and support organizations, while maintaining extremely high customer satisfaction. Jill will also work closely with Sherrelle Walker, our Chief Education Officer, to ensure that Fast ForWord(R) products meaningfully connect with classroom teachers and increase the number of students served." Ms. Rutter began her career as an elementary and middle school teacher and was a master of teacher training for her school district. She holds a bachelor of science in elementary education and a bachelor of science in special education and learning disabled K-12 from the University of Arizona. Headquartered in Oakland, CA, Scientific Learning (OTCBB: SCIL) sells the Fast ForWord(R) patented family of products, which develop and enhance cognitive abilities critical to language and reading for learners of all ages. Significant gains are frequently achieved in as few as 20 to 40 instructional sessions. To learn more about Scientific Learning's neuroscience-based products, visit the Company's Web sites at http://www.ScientificLearning.comand http://www.BrainConnection.comor call toll-free 888-665-9707. At June 30, 2002, Scientific Learning Corp.'s total shareholders' equity deficit reaches a little over $5 million, and its working capital deficit tops $4 million. SLI INC: Seeks Nod to Sign-Up Skadden Arps as Bankruptcy Counsel ---------------------------------------------------------------- SLI, Inc., along with its debtor-affiliates, requests authority from the U.S. Bankruptcy Court for the District of Delaware to employ and retain Skadden, Arps, Slate, Meagher & Flom LLP and its affiliated law practice entities as counsel. The Debtors will look to Skadden Arps to: a) advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in chapter 11; c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning all litigation in which the Debtors may be involved and objections to claims filed against the estates; d) prepare on behalf of the Debtors all motions, applications, answers, orders, reports and papers necessary to the administration of the estates; e) negotiate and prepare on the Debtors' behalf plan(s) of reorganization, disclosure statement(s) and all related agreements and/or documents and take any necessary action on behalf of the Debtors to obtain confirmation of such plan(s); f) advise the Debtors in connection with any sale of assets; g) appear before this Court, any appellate courts, and the U.S. Trustee, and protect the interests of the Debtors' estates before such courts and the U.S. Trustee; and h) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these chapter 11 cases. Under an Engagement Agreement, Skadden Arps and the Debtors agree that Skadden Arps' bundled rate structure will apply to these chapter 11 cases and, therefore, Skadden, Arps will not be seeking to be separately compensated for certain staff, clerical, and resource charges for which it previously charged. Presently, the hourly rates under the bundled rate structure range from: partners and of-counsel $480 to $695 per hour associates and counsel $265 to 470 per hour legal assistants and support staff $80-160 per hour SLI, Inc., and its affiliates operate in multi-business segments as a vertically integrated manufacturer and supplier of lighting systems, which includes lamps, fixtures and ballasts. The Company filed for chapter 11 protection on September 9, 2002 in the U.S. Bankruptcy Court for the District of Delaware. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $830,684,000 in total assets and $721,199,000 in total debts. SOFTCHOICE CORP: Commences Trading on Toronto Stock Exchange ------------------------------------------------------------ Softchoice Corporation (TSX: SO), a premier North American software and hardware direct marketer, announced that the Company's common shares have been listed and posted for trading on the Toronto Stock Exchange, Canada's senior stock exchange effective Tuesday, October 1, 2002. Softchoice's common shares have been delisted from the TSX Venture Exchange, but the Company will maintain the same trading symbol "SO" on the TSX. "Softchoice initially became a public company through a reverse take-over in May 2002, thereby obtaining a listing on the TSX Venture Exchange," said David MacDonald, President, Softchoice Corporation. "Our game plan was then to make the move to the more senior exchange and we are extremely pleased by the quick migration, as the TSX is a more suitable exchange for Softchoice given our profile in terms of revenues and profits." Softchoice recently reported revenues of $152.3 million and net income of $4.8 million for its second quarter in 2002. Complete financial results are available on http://www.sedar.com Softchoice provides businesses and organizations of all sizes with a fast, flexible, and cost-effective way to research, buy and manage their software and hardware technology resources. Softchoice is a single source for a vast selection of industry leading technology brands -- offering more than 200,000 software titles and a wide range of IT hardware products. Softchoice delivers exceptional service through a network of highly trained outbound sales and customer service representatives, technical product specialists, licensing experts, eBusiness tools and strategic partnerships with leading technology manufacturers. Headquartered in Toronto, Softchoice currently has 32 branches in operation with 27 branches located in the U.S. and five branches in Canada. Visit Softchoice at http://www.softchoice.com SPINNAKER INDUSTRIES: Lynch Transfers Shares to a Brokerage Firm ---------------------------------------------------------------- Lynch Corporation has transferred all of its remaining shareholdings in Spinnaker Industries, Inc., to an independent, international brokerage firm in New York City. The transfer was made on September 23, 2002, without consideration because Lynch Corporation determined that the Spinnaker shares have no value, as a result of Spinnaker's on-going reorganization under Chapter 11 of the bankruptcy code. As a result of this transfer, Lynch Corporation will record a $19,420,000 non-cash gain and consequently an increase in shareholders' equity of $19,420,000 in the third quarter of calendar-fiscal 2002. This action will increase Lynch Corporation's total shareholder equity to approximately $11 million for the third quarter of 2002 from a deficit of $7,615,000 on June 30, 2002. Lynch Corporation is listed on the American Stock Exchange under the symbol LGL. For more information on the company, contact Raymond H. Keller, Vice President and Chief Financial Officer, Lynch Corporation, 50 Kennedy Plaza, Suite 1250 Providence, RI 02903-2360, (401) 453-2007, ray.keller@lynch-mail.com, or visit the company's Web site at http://www.lynchcorp.com STERLING BANCSHARES: Fitch Assigns BB+ Rating to $31-Mill. Trust ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to the $31.3 million Sterling Bancshares Capital Trust III. The Rating Outlook is Positive. SBIB's ratings are based on the company's strong niche serving a well-defined customer base of owner/operator businesses in Texas. While concentrated in Houston, the company has focused on diversifying into the key markets of San Antonio and Dallas through acquisitions and de novo branching. Overall performance is characterized by elevated, yet generally stable chargeoffs reflective of the higher risk lending to small businesses. Strong margins compensate for asset quality and have contributed to stable returns. Capital has been adversely impacted by acquisitions, and remains a constraining factor to ratings. SBIB issued earlier in September 2002 $20 million in trust preferred through a private placement to fund the acquisition of ENB Bankshares, Inc. and other general corporate purposes; however, the company intends to use the net proceeds from the issuance of Capital Trust III's securities to replace $28.8 million outstanding under Capital Trust I securities that were issued in 1997. As a result, leverage and capital are not expected to be materially impacted upon the completion of this transaction. Rating Assigned: Sterling Bancshares Capital Trust III -- Trust preferred 'BB+'. SUNBEAM: Court to Consider Disclosure Statement on Oct. 4, 2002 --------------------------------------------------------------- On September 5, 2002, Sunbeam Americas Holdings, Ltd., and its debtor-affiliates filed their Third Amended Chapter 11 Reorganization Plan, along with a corresponding Disclosure Statement pursuant to Section 1125 of the Bankruptcy Code. The U.S. Bankruptcy Court for the Southern District of New York will convene a hearing to consider the approval of the Proposed Disclosure Statement for October 4, 2002, at 9:00 a.m. The Honorable Arthur J. Gonzalez presides over Sunbeam's chapter 11 cases. Sunbeam Corporation, the largest manufacturer and distributor of small appliances, sells mixers, coffeemakers, grills, smoke detectors, toasters and outdoor & camping equipment in the United States, filed for chapter 11 protection on February 6, 2001 in the Southern District of New York. Lori R. Fife, Esq., and George A. Davis, Esq., of Weil Gotshal & Manges LLP, represent the Debtors in their restructuring effort. As of filing date, the company listed $2,959,863,000 in assets and $3,201,512,000 in debt. SUNBEAM: Court Extends Exclusive Periods Until December 15, 2002 ---------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Southern District of New York, Sunbeam Americas Holdings, Ltd. and its debtor- affiliates obtained an extension of their exclusive periods. The Court gives the Debtors until December 15, 2002 the exclusive right to file their plan of reorganization and to solicit acceptances of that Plan. Sunbeam Corporation, the largest manufacturer and distributor of small appliances, sells mixers, coffeemakers, grills, smoke detectors, toasters and outdoor & camping equipment in the United States, filed for chapter 11 protection on February 6, 2001 in the Southern District of New York. George A. Davis, Esq., of Weil Gotshal & Manges LLP, represents the Debtors in their restructuring effort. As of filing date, the company listed $2,959,863,000 in assets and $3,201,512,000 in debt. In their June 30, 2002 form 8-K report filed with SEC, the Debtors account $1,594,787,000 in assets and $2,498,065,000 in liabilities. TCW LINC: S&P Puts BB- Classes A-3A & A-3B on Watch Negative ------------------------------------------------------------ Standard & Poor's Ratings Services placed its ratings on the class A-1F, A-1, A-2L, A-2, A-3A, and A-3B notes issued by TCW LINC III CBO Ltd., an arbitrage CBO transaction originated in July of 1999, on CreditWatch with negative implications. At the same time, the triple-'A' rating assigned to the class A- 1L notes is affirmed. The ratings assigned to the class A-2L, A- 2, A-3A, and A-3B notes were previously lowered on June 10, 2002. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the June 10, 2002 rating action was undertaken. These factors include erosion of the par value of the collateral pool securing the rated notes and deterioration in the credit quality of the performing assets within the pool. Standard & Poor's noted that, as a result of asset defaults and sales of credit risk assets at distressed prices, the par value of the collateral pool has deteriorated since the previous rating action. As of the most recent available monthly report (Sept. 17, 2002), the class A overcollateralization ratio was 108.97%, versus a minimum required ratio of 110.0% and a ratio of approximately 113% at the time of the June 2002 rating action. The credit quality of the collateral pool has also deteriorated. According to the Sept. 17, 2002 monthly report, three of the transaction's five required ratings distribution tests are failing. Currently, 30.3% of the performing assets in the collateral pool come from obligors rated single-'B'-plus or higher (versus the minimum required 36%), 45.9% come from obligors rated single-'B' or higher (versus the minimum required 73%), and 58.3% come from obligors rated single-'B'-minus or higher (versus the minimum required 95%). Standard & Poor's will be reviewing the results of current cash flow runs generated for TCW LINC III CBO Ltd., to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared to the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement currently available. Ratings Placed On Creditwatch Negative TCW LINC III CBO Ltd. Rating Class To From Current Balance (Mil. $) A-1F AAA/Watch Neg AAA 15.00 A-1 AAA/Watch Neg AAA 96.00 A-2L A+/Watch Neg A+ 21.50 A-2 A+/Watch Neg A+ 82.00 A-3A BB-/Watch Neg BB- 34.00 A-3B BB-/Watch Neg BB- 45.00 Rating Affirmed TCW LINC III CBO Ltd. Class Rating Current Balance (Mil. $) A-1L AAA 126.00 TEMPLETON EMERGING: Completes Reorganization into a New Trust ------------------------------------------------------------- Templeton Emerging Markets Appreciation Fund, Inc., (NYSE:TEA) a closed-end management investment company, announced the completion of its reorganization into Templeton Developing Markets Trust, a registered open-end management investment company. In accordance with the Agreement and Plan of Acquisition between the Fund and Developing Markets Trust, Developing Markets Trust acquired substantially all of the assets of the Fund in exchange solely for shares of Developing Markets Trust-Advisor Class to be distributed to the Fund's shareholders. The transaction, which is a tax-free reorganization, was effective as of the close of business on September 26, 2002. Trading of the Fund's shares on the NYSE was suspended after the close of business on September 26, 2002. The Fund's shareholders are entitled to receive shares of Developing Markets Trust- Advisor Class having the same aggregate net asset value as their shares of the Fund held on September 26, 2002. The exchange of shares was based on each fund's relative net asset value per share as of the close of business on September 26, 2002. For six months following the reorganization, former Fund shareholders who redeem their Advisor Class shares of Developing Markets Trust received in the reorganization, will pay a 2% redemption fee. Questions regarding the exchange of shares in connection with the reorganization should be directed to Mellon Investor Services, LLC, the Exchange Agent, toll-free at 1-800-777-3674. Templeton Asset Management Ltd., the investment adviser for the Fund and Developing Markets Trust, is an indirect wholly owned subsidiary of Franklin Resources, Inc. (NYSE:BEN), a global investment organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management services through its Franklin, Templeton, Mutual Series and Fiduciary Trust subsidiaries. The San Mateo, CA-based company has over 50 years of investment experience and more than $259 billion in assets under management as of August 31, 2002. For more information, please call 1- 800/DIAL BEN(R) (1-800-342-5236). * * * As reported in Troubled Company Reporter's August 29, 2002 edition, Templeton Emerging Markets Appreciation Fund, Inc.'s shareholders, at the August 26 meeting, approved an Agreement and Plan of Acquisition between the Fund and Templeton Developing Markets Trust. The Agreement provided for the acquisition of substantially all of the assets of the Fund by Developing Markets Trust in exchange solely for shares of Developing Markets Trust-Advisor Class, the distribution of these shares to the Fund's shareholders, and the complete liquidation and dissolution of the Fund. TEMPLETON VIETNAM: Completes Reorg. into Developing Market Trust ---------------------------------------------------------------- Templeton Vietnam and Southeast Asia Fund, Inc., (NYSE:TVF) a closed-end management investment company, announced the completion of its reorganization into Templeton Developing Markets Trust, a registered open-end management investment company. In accordance with the Agreement and Plan of Acquisition between the Fund and Developing Markets Trust, Developing Markets Trust acquired substantially all of the assets of the Fund in exchange solely for shares of Developing Markets Trust-Advisor Class to be distributed to the Fund's shareholders. The transaction, which is a tax-free reorganization, was effective as of the close of business on September 26, 2002. Trading of the Fund's shares on the NYSE was suspended after the close of business on September 26, 2002. The Fund's shareholders are entitled to receive shares of Developing Markets Trust- Advisor Class having the same aggregate net asset value as their shares of the Fund held on September 26, 2002. The exchange of shares was based on each fund's relative net asset value per share as of the close of business on September 26, 2002. For six months following the reorganization, former Fund shareholders that redeem their Advisor Class shares of Developing Markets Trust received in the reorganization will pay a 2% redemption fee. Questions regarding the exchange of shares in connection with the reorganization should be directed to Mellon Investor Services, LLC, the Exchange Agent, toll-free at 1-800-777-3674. Templeton Asset Management Ltd., the investment adviser for the Fund and Developing Markets Trust, is an indirect wholly owned subsidiary of Franklin Resources, Inc. (NYSE:BEN), a global investment organization operating as Franklin Templeton Investments. Franklin Templeton Investments provides global and domestic investment management services through its Franklin, Templeton, Mutual Series and Fiduciary Trust subsidiaries. The San Mateo, CA-based company has over 50 years of investment experience and more than $259 billion in assets under management as of August 31, 2002. For more information, please call 1- 800/DIAL BEN(R) (1-800-342-5236). * * * As reported in Troubled Company Reporter's August 30, 2002 edition, Templeton Vietnam and Southeast Asia Fund, Inc.'s shareholders approved, at August 27 meeting, an Agreement and Plan of Acquisition between the Fund and Templeton Developing Markets Trust. The Agreement provided for the acquisition of substantially all of the assets of the Fund by Developing Markets Trust in exchange solely for shares of Developing Markets Trust-Advisor Class, the distribution of these shares to the Fund's shareholders, and the complete liquidation and dissolution of the Fund. TEXAS PETROCHEMICALS: S&P Hatchets BB- Corp. Credit Rating to B --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Texas Petrochemicals Corp., to single-'B' from double- 'B'-minus and its subordinated debt rating to triple-'C'-plus from single-'B', citing the specialty chemicals company's negative financial results and increased refinancing risk. At the same time, Standard & Poor's placed all ratings on CreditWatch with negative implications. The Houston, Texas-based company had about $323 million in total debt outstanding as of June 30, 2002. "The ratings downgrade and CreditWatch placement reflect deterioration in the company's credit profile and heightened concerns regarding the refinancing of the company's bank credit facility, which matures on December 31, 2002," said Standard & Poor's credit analyst Franco DiMartino. Disappointing operating results and challenging industry conditions, and restrictive capital markets have made the task of refinancing the credit line more difficult. The CreditWatch placement highlights the importance of obtaining a line of credit and the increased risk of default if the company is unable to refinance its bank debt beyond the expiration of the current credit agreement. The current ratings incorporate the expectation that this process will be completed in a timely fashion. Profitability and cash flow have been negatively impacted by higher raw material costs and weaker pricing in key product lines, and several recent operational disruptions at the company's sole manufacturing facility in Houston. The shortfall in earnings, reflected by operating margins and funds from operations to total debt in the mid-single-digit area, will make it more difficult for the company to strengthen credit protection measures in the near term. Future demand for methyl tertiary-butyl ether, which is subject to legislative bans, could begin to decline as some gasoline refiners and retailers curtail their usage of the product ahead of these legislative mandates. In addition, the company faces significant costs required to reduce the emissions of nitrogen oxide at its manufacturing facility as mandated by clean air legislation and substantial capital expenditures that will be needed to convert production assets currently used for MTBE to other products. Together, these costs could prove to be a significant drain on operating cash flow, which will make the reduction of the company's sizable debt burden more difficult over the intermediate term. Texas Petrochemicals is the largest North American merchant producer of butadiene and specialty butylene chemicals, which are key ingredients for synthetic and specialty rubber, plastics, lubricant additives and coatings. The company also is the third-largest producer of MTBE, a commodity gasoline additive used as an oxygenate in clean-burning fuels and as an octane enhancer. TEXON INT'L: Ad Hoc Committee Agrees to Recapitalization -------------------------------------------------------- Texon International Limited announced that, following discussions with an ad hoc committee of holders of the DM 245 million Senior Notes of the Company due 2008, the Company has finalized the terms of a recapitalization of the Company. Holders of over 74% of the Senior Notes have committed to support the Recapitalization, subject to certain conditions. The Recapitalization will be implemented by means of a scheme of arrangement under Section 425 of the English Companies Act 1985, a process voluntarily initiated by the Company. The Board of Directors of the Company has approved the terms of the Recapitalization, which would eliminate the debt burden associated with EUR 93,949,883 of outstanding Senior Notes which are to be converted to equity under the Recapitalization, reducing the Company's interest expense on the Senior Notes to EUR 3,131,663 a year. Details of the Recapitalization The Recapitalization provides that 75% of the outstanding Senior Notes, 50% of the coupon that fell due for payment in August 2002 and is presently unpaid, any interest on such overdue interest, and 75% of the accrued interest on the Senior Notes between 1 August 2002 and the date the Recapitalization becomes effective, will be exchanged for ordinary and redeemable preference shares in the Company. Upon completion of the Recapitalization, the holders of Senior Notes will own 90% of the share capital of the Company and the Consenting Noteholders will be entitled to appoint three or more directors to the Board, who will then constitute a majority of the Board. The residual 25% of the outstanding Senior Notes will remain in place subject to certain amendments to their terms, including an extension of the final redemption date for the remaining Senior Notes to 1 February 2010, and to provide that the Company will be allowed to redeem the remaining Senior Notes at any time after the Scheme has taken effect. 50% of the August Coupon will be paid by the Company within 90 days of the Recapitalization becoming effective. The proposed Recapitalization will involve exclusively the Company, which is the holding company for the Texon Group's operations world-wide. None of the Company's operating subsidiaries in the United Kingdom or internationally would be involved in the Recapitalization. The claims of trade creditors and other vendors to the Company and its operating subsidiaries will be unaffected by the proposed Recapitalization. Noteholders will also have the option to elect to receive from the Company a cash payment of EUR 90 per EUR 1,000 in face value of Senior Notes held, instead of shares. The cash payment will be funded by MatlinPatterson Global Opportunities Partners LP, the largest Noteholder, who will subscribe for new shares in the Company for a total monetary value, including the appropriate share premium, equal to the cash payment to be made by the Company. The successful implementation of the Scheme is subject to a number of conditions being satisfied. The main conditions are (i) approval of the Scheme by a majority in number and 75% in value of the voting holders of Senior Notes, (ii) the subsequent sanctioning of the Scheme by the High Court in London, (iii) the approval of resolutions required to implement the Scheme by the shareholders of the Company, (iv) the entering into by certain of the Company's main operating subsidiaries of an amended credit facility agreement on terms satisfactory to the Committee, (v) obtaining a court order in New York recognizing the effect of the Scheme, and (vi) no material adverse change having occurred. The Company's Board believes that, in the absence of the proposed Recapitalization, the Company will not be in a position to meet its financial obligations under the Senior Notes. The Company was due to pay the August Coupon on 1 August 2002 but has not yet made this payment. The grace period of 30 days has expired and therefore an event of default has occurred pursuant to Section 6.01 of the Indenture governing the Senior Notes. In addition, Texon Australia Pty Limited, a subsidiary of the Company is in default of a facility agreement with National Australia Bank Limited. The Company has guaranteed Texon Australia's obligations to NAB. The Board believes that after 30 September 2002, it is open to NAB to take action against Texon Australia and under the Company's guarantee at any time. Against this background, the Board believes that the Recapitalization is the best alternative available to the Company to ensure its continuity and, once the process is implemented, to allow the Company to emerge as a going concern. Over the last 18 months the Company has been operating under payment plans with a number of its suppliers and, as at 25 September 2002, had payment plans in place with 10 suppliers. The Company believes that, upon completion of the Recapitalization, it will be able to resume normal payment terms. Commenting on the terms of the Recapitalization, the Company's Chief Executive, Peter Selkirk, said: "We are very pleased to have reached this binding agreement with the bondholder committee. This step signals the start of the completion of the restructuring process that we initiated at the start of the year. The Recapitalization will significantly reduce our interest burden and long term debt and will improve our liquidity. Our customers, suppliers, partners and employees will all greatly benefit from this recapitalization and I would like to thank all of them for their continued support." Implementation of the Recapitalization The Company has applied for a hearing before the High Court in London, to be held on Friday, 4 October 2002. At this hearing, the Company expects a date to be set for a meeting in London at which the holders of Senior Notes will be asked to approve the proposed Scheme. Under the terms of a Restructuring Agreement entered into with the Company, holders of over 74% of the Senior Notes have committed to vote in favor of the Scheme at the meeting of the holders of the Senior Notes, subject to the satisfaction of certain conditions. Following the hearing, the Company's Board of Directors proposes to send out written resolutions to shareholders in connection with the Scheme. The Company has received undertakings from shareholders accounting for at least 75% of each class of the Company's existing issued share capital to vote in favor of the resolutions. If the terms of the Scheme are approved by the requisite majority of the holders of the Senior Notes and the resolutions put to shareholders are passed, the High Court will be asked to sanction the Scheme. If the Scheme is sanctioned, it will become binding on all holders of Senior Notes, provided that the conditions contained in the Scheme have been satisfied. A permanent injunction is expected to be obtained from the US Bankruptcy Court under Section 304 of the US Bankruptcy Code soon after the High Court sanctions the Scheme, so as to ensure that the effect of the Scheme is recognized under US law. The Company expects to close the Recapitalization by the first week of November. Post Restructuring Share Capital Upon completion of the Recapitalization the Company's share capital will be divided into four classes of shares: ordinary shares, deferred shares, redeemable preference shares and non- redeemable preference shares. The holders of Converting Notes will receive an aggregate of 12,376,926 Preference Shares and 2,475,369 Ordinary Shares in exchange for their Converting Notes. Each EUR 1,000 principal amount of Converting Notes will be converted into 26.348 Ordinary Shares and 131.740 Preference Shares, with all fractional entitlements being rounded down to the nearest whole number. In aggregate the holders of Converting Notes shall, upon completion of the Recapitalization, hold approximately 90% of the Company's share capital. The residual 10% of the post-Recapitalization shares of the Company will be split between the existing shareholders and the Company's CEO and CFO. The existing holders of the preferred redeemable cumulative preference shares of (pound)1.00 each pre- Recapitalization will hold 6.0% of the Shares after conversion at a ratio of five Preference Shares to one Ordinary Share. In addition, the existing shareholders, other than the CEO and the CFO, will hold 2.0% of the Shares pro rata (giving effect to dilution pursuant to the Recapitalization) to their pre- Recapitalization equity holdings (excluding the Series II Preference Shares) as follows: (i) existing shareholders, other than the CEO and the CFO, who hold redeemable cumulative preference shares of (pound)1.00 each pre-Recapitalization will hold 1.98% of the Company's shares after conversion at a ratio of five Preference Shares to one Ordinary Share; (ii) existing shareholders, other than the CEO and the CFO, who do not hold Series I Preference Shares pre-Recapitalization will hold 0.02% of the Company's shares after conversion at a ratio of five Non-redeemable Preference Shares to one Ordinary Share; and (iii) the CFO and the CEO will each hold 1.0% of the Company's shares after conversion at a ratio of five Non- redeemable Preference Shares to one Ordinary Share. To the extent that the pre-Recapitalization equity holdings of existing shareholders need to be adjusted to effect the post- Recapitalization equity structure, the surplus shares held by Current Shareholders will become Deferred Shares. The Deferred Shares carry no entitlement to vote or participate in the profits of the Company and may be purchased by the Company at any time. The Redeemable Preference Shares and Non-redeemable Preference Shares carry the same voting rights as the Ordinary Shares. The Redeemable Preference Shares may be redeemed at the Company's discretion or upon a listing, sale or liquidation. In order to facilitate the Recapitalzation, the Company's shareholders have agreed by way of written resolution to re- register the Company as a private company limited by shares. This resolution was passed on 20 September 2002 and the Company was re-registered as a private limited company on 20 September 2002. Advisors: Talbot Hughes LLP are acting as financial advisers to the Company on the recapitalization. Cadwalader, Wickersham and Taft and Dickson Minto W.S. are acting as legal advisers to the Company. Bingham McCutchen LLP are acting as legal advisers to the Committee. Numerica Business Services Limited are the financial advisers to the Committee. The Company recommends that holders of Senior Notes wishing to obtain additional information regarding the terms of the recapitalization contact the legal advisers to the Committee, Bingham McCutchen LLP, on + 44 20 7661 5300 (attention: James Roome and Ian Wenniger). For further information, contact James Douglas at Cadwalader, Wickersham & Taft, telephone +44 20 7170 8628, e-mail: james.douglas@cwt-uk.com. The Company believes that the Texon Group is the world's largest, in terms of sales, manufacturer and marketer of structural materials footwear that are essential in the manufacture of footwear. It supplies over 7,500 customers in 90 countries, including most of the world's major footwear manufacturers, with products from its fifteen manufacturing sites strategically located in Europe, the United States, Brazil, China and Australia. As of 31 July 2002, the Company forecasted its EBITDA for the year ending 31 December 2002 to be (pound)20.6 million based on total sales of (pound)139 million. This is slightly below the Company's January 2002 budget of EBITDA of (pound)21.6 million, comprising EBIT of (pound)16.4 million and depreciation and amortization of (pound)5.2 million, based on budgeted sales of (pound)152 million. The 2002 budget expected a net decrease in working capital of (pound)1.0 million leading to expected cash flow from operations for 2002 of (pound)22.6 million. The 2002 budget predicted operating cash flow of (pound)19.3 million, and operating cash flow after taxation ((pound)3.2 million) and servicing of finance ((pound)10.5 million) of (pound)5.6 million. Following completion of the Recapitalization, the Company expects to have significantly reduced finance servicing costs. TOTAL IMAGE: TSX Knocks Off Shares for Violating Requirements ------------------------------------------------------------- Effective at the close of business October 1, 2002, the common shares of Total Image Capital Corp., were delisted from TSX Venture Exchange for failing to maintain Exchange Listing Requirements. The securities of the Company have been suspended in excess of twelve months. TRICORD SYSTEMS: Lunar Flare NAS Product Performance Jumps 80% -------------------------------------------------------------- Tricord Systems, Inc. (Nasdaq:TRCDQ) -- developer of the revolutionary Illumina(TM) clustering software and Lunar Flare(TM) clustered server appliances -- announced an 80-percent performance increase in its Lunar Flare NAS product line. The significant performance jump in the Lunar Flare NAS 1200 platform --- from 110 mbs to 200 mbs in a four-appliance cluster --- represents enhancements to just the Illumina clustering software. Additional testing showed that four-appliance cluster throughput exceeded 500 mbs when Illumina was configured on new generation platforms. NetBench 7.01, an industry standard file server benchmarking tool, was used for these tests. "These performance enhancements allow Illumina-enabled NAS appliances' to maintain a price/performance advantage by a factor of two over the competition," said Bob Wilson, Tricord's vice president of sales and marketing. "After completing our major feature releases earlier this year, Tricord has focused on performance tuning, logging significant gains in the past six months," said Keith Thorndyke, president and CEO of Tricord. "Our engineers are continuing to work toward even more improvements. Pursuant to an agreement reached with our creditors and preferred stockholder in our bankruptcy proceedings, we have, subject to certain conditions, until October 31 of this year to find a buyer or investor for the company, and we believe that these improvements will assist us in these efforts." Tricord Systems, Inc., designs, develops and markets clustered server appliances and software for content-hungry applications. The core of Tricord's revolutionary new technology is its patented Illumina(TM) software that aggregates multiple appliances into a cluster, managed as a single resource. Radically easy to deploy, manage and grow, Tricord's products allow users to add capacity to a cluster with minimal administration. Appliances are literally plug-and-play, offering seamless growth and continuous access to content with no downtime. The technology is designed for applications including general file serving, virtual workplace solutions, digital imaging and security. Tricord is based in Minneapolis, Minnesota. On August 2, 2002, Tricord filed a voluntary petition for reorganization under Chapter 11 of the Federal Bankruptcy Code in the United States Bankruptcy Court for the District of Minnesota. For more information regarding Tricord, visit http://www.tricord.com UAL CORP: S&P Slashes Series B Preferreds Rating to D from CC ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on UAL Corp.'s (CCC/Watch Dev/--) 12.25% Series B preferred stock and on the UAL Corp. Capital Trust I 13.25% trust originated preferred securities to 'D' from double-'C'. Standard & Poor's said its triple-'C' corporate credit ratings on UAL Corp. and unit United Air Lines Inc. remain on CreditWatch with developing implications, where they were placed on August 15, 2002. "The rating action follows UAL's announcement [Mon]day that it had suspended the Series B dividends and also deferred subordinated debentures interest payments due December 31, 2002, that are distributed by the UAL Corp. Capital Trust I as preferred dividends," said Standard & Poor's credit analyst Philip Baggaley. United (CCC/Watch Dev/--) is in negotiations with its unions regarding labor cost concessions as part of a financial restructuring intended to help secure a $1.8 billion federal loan guaranty and avoid a threatened bankruptcy filing. United has $875 million of debt maturities in the fourth quarter, the first $350 million of which falls due on November 17, that it says it will be unable to pay without a financial restructuring. A possible U.S. attack on Iraq, which would likely cause an additional increase in fuel prices and a fall in airline industry passenger traffic, further complicate United's near- term financial outlook. Ratings could be raised if UAL and United are able to secure a federal loan guaranty, or lowered if that effort fails (in which case a bankruptcy filing would be very likely). US AIRWAYS: Receives Court's Blessing to Obtain Surety Bonds ------------------------------------------------------------ John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, informs Judge Mitchell that US Airways Group Inc., in the ordinary course of business, is required to provide surety bonds to secure the payment or performance of various obligations, including: landing fees, real estate lease obligations, workers' compensation obligations, and fuel expenses. One of these bonds, issued to the U.S. Customs Service, is set to expire on September 28, 2002. The failure to replace these bonds would jeopardize the Debtors' ability to conduct their international operations. Accordingly, the Debtors want to ensure that this bond can be replaced. In an emergency motion, the Debtors seek the Court's authority to obtain surety bonds secured by cash collateral or other collateral consisting of cash equivalents, and/or backed by letters of credit, for a maximum of $16,000,000. Prior to the Petition Date, the Debtors obtained surety bonds from Travelers Casualty and Surety Company of America under three related agreements: (1) General Contract of Indemnity dated August 31, 2001, (2) Collateralized Bond Surety Program Registered Pledge And Master Security Agreement dated September 4, 2001, and (3) Pledged Collateral Account Agreement dated August 30, 2001. As of the Petition Date, $12,000,000 in surety bonds were issued and outstanding. The surety bonds were fully collateralized by $9,100,000 of cash collateral, which includes cash equivalents, and $3,300,000 of letters of credit issued to Travelers. The Debtors have been unable to obtain surety bonds on an unsecured basis. After reviewing their options, the Debtors determined that ratification and continuation of the current surety bond program with Travelers is their best option at present. As part of the consideration to Travelers to continue to issue surety bonds to USAir, the Debtors agreed that the automatic stay of Section 362 of the Bankruptcy Code should be lifted to allow Travelers to liquidate the cash collateral, including cash equivalents and letters of credit, to repay any obligations under the Surety Documents. By providing this relief in advance of any surety bond being drawn upon, the obligations to Travelers, including accrued interest and attorneys' fees and costs incurred in filing a motion for relief from stay, will be minimized. * * * Accordingly, Judge Mitchell grants the Debtors' request. (US Airways Bankruptcy News, Issue No. 8; 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 CORP: Wants Deloitte & Touche to Render Additional Services --------------------------------------------------------------- USG Corporation and its debtor-affiliates want Deloitte & Touche to perform additional services aside from those covered by the initial engagement, nunc pro tunc to August 10, 2002. According to Paul N. Heath, Esq., at Richards Layton & Finger, the Debtors want Deloitte to perform financial and tax due diligence and related services after 2003. However, the precise term engagements cannot be determined now. But the parties' most recent Engagement Letter applies to the period of August 10, 2002 through December 31, 2003. Mr. Heath reminds Judge Newsome that, in addition to agreements identified in the Initial Application for Deloitte, the Debtors may enter into financial and due diligence agreements, including possible assistance with contract and financing issues pursuant to and consistent with the initial Engagement Letter. P.I. Committee Objects The Official Committee of Asbestos Personal Injury Claimants asks the Court to deny the Supplemental Application and the underlying Engagement Letter in present form. The P.I. Committee contends that the compensation agreement is "arbitrary and improper." The P.I. Committee asserts that prior to payment of any fee, Deloitte "must establish the reasonableness" of the fee upon application to the Court. * * * Judge Newsome will convene a hearing on the Debtors' Application on October 29, 2002 at 10:00 a.m. (USG Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) USI HOLDINGS: S&P Keeping Watch on B+ Counterparty Credit Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services' ratings on USI Holdings Corp., including its single-'B'-plus counterparty credit rating, are remaining on CreditWatch with developing implications following a recent meeting with USI's senior management. "After discussing capitalization plans with the company, Standard & Poor's expects that the IPO will likely be completed within the 90-day time frame that was expected when the ratings were initially placed on CreditWatch," said Standard & Poor's credit analyst Donovan Fraser. The ratings have been on CreditWatch since August 2, 2002. If the company successfully completes the IPO, Standard & Poor's expects the company to pay down debt significantly, thereby improving leverage and coverage substantially. Such improvements could lead to an affirmation of existing ratings or a potential one-notch upgrade. If the IPO is unsuccessful, the company's high leverage, poor operating results, and history of having to amend its bank-debt covenants to remain in compliance will likely result in Standard & Poor's lowering the ratings by one or two notches. VIASYSTEMS GROUP: Files Chapter 11 Petition in S.D. New York ------------------------------------------------------------ Viasystems Group, Inc. (OTCBB:VSGI) announced that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to achieve final approval for the company's recapitalization. The prepackaged filing was made in the U.S. Bankruptcy Court for the Southern District of New York. Terms of the recapitalization were disclosed in the company's disclosure statement filed with the Securities and Exchange Commission on September 3, 2002. The recapitalization will involve the exchange of approximately $740 million of Viasystems' debt into common and preferred stock. Upon completion of the restructuring, Viasystems' debt, net of cash, will decline from approximately $1.1 billion to approximately $380 million and interest will be reduced by approximately $70 million annually. Viasystems has received sufficient votes in favor of the restructuring plan to meet the requirements of the Bankruptcy Code for confirmation of the plan. Votes to accept the restructuring plan were tendered by holders of approximately 87% of Viasystems senior secured debt, holders of 100% of Viasystems' 14% Senior Notes and holders of approximately 77% of Viasystems' 9.75% Senior Subordinated Notes. Viasystems will continue business as usual through its operating subsidiaries, which will not be party to the reorganization proceeding. Consequently, it is anticipated that customers, employees and suppliers will not be affected by the restructuring. "With this filing, Viasystems is well on its way to recapitalizing its balance sheet," said CEO David M. Sindelar. "Customers have long recognized the value of our global footprint and low-cost, vertically integrated business model. With a balance sheet that is more reflective of today's business environment, Viasystems will be in a better position to help our customers gain a competitive advantage." Under the terms of the restructuring, Viasystems' senior secured bank debt will be reduced to approximately $450 million ($370 million net of estimated cash) through repayments from $77.4 million in proceeds from sales of senior convertible preferred stock and common stock representing in the aggregate up to 23.5% of the company's fully diluted common stock (excluding a management incentive plan and warrants issued pursuant to the plan). Viasystems' 14% Senior Notes will be exchanged for junior preferred stock with a liquidation preference of $120.1 million and 6.3% of the company's common stock, determined on a fully diluted basis (excluding a management incentive plan and warrants issued pursuant to the plan). Viasystems' 9.75% Senior Subordinated Notes will be exchanged for up to 70.2% of the company's common stock, determined on a fully diluted basis (excluding a management incentive plan and warrants issued pursuant to the plan). Subject to approval of the plan by the general unsecured creditors of Viasystems Group, Inc., such creditors will receive in exchange for their claims warrants to purchase 0.6% of the company's common stock, determined on a fully diluted basis, and the holders of Viasystems' existing Series B Preferred Stock will receive warrants to purchase 5.4% of the company's common stock, determined on a fully diluted basis (in each case excluding a management incentive plan). The exercise price of the warrants will be based on a $1.15 billion total enterprise value. Viasystems' existing common stock, options and warrants will be cancelled and will not receive any distribution in the restructuring. Viasystems has secured commitments from its senior lenders for $37.5 million of working capital financing that will be available during the reorganization proceeding. Upon completion of the recapitalization, Viasystems will have a cash balance of approximately $80 million and a new revolving credit facility of up to $62 million. About Viasystems Viasystems Group, Inc. is a leading global EMS provider with more than 18,000 employees in eight countries, supplying customers in the telecommunications, networking, automotive and consumer electronics industries. VITESSE SEMICONDUCTOR: Reiterates Earnings Guidance for Q4 2002 --------------------------------------------------------------- Vitesse Semiconductor Corporation (Nasdaq:VTSS) expects revenue for the fourth quarter of fiscal 2002 ending September 30 to be approximately $38 million, which is within the range provided during the last earnings conference call on July 18, 2002. Lou Tomasetta, President and CEO, said, "Normally we do not comment on analyst reports. However, in recent weeks a number of analyst and media reports have contained errors and misunderstandings that must be clarified for our shareholders. "First, over 80% of our revenue in the last two quarters has been from storage, enterprise and metro applications. Analysts have left the impression that we remain heavily dependent on the core transport market. While this was true several years ago, it has not been the case lately. We have discussed our strategy to expand our focus to applications outside the core on numerous occasions and have reported revenue trends to support this transition in each quarter over the last year. While there are no areas in the communication IC space that are growing at robust rates, these applications in the storage, enterprise and metro areas are showing significantly better opportunities for growth compared to core transport. "Second, operating expenses (R&D and SG&A) for the December 2002 quarter are expected to be approximately $39 million, down substantially from the $51 million reported for the June quarter, as a result of cost reductions and the restructuring discussed in the July earnings conference call. Additional cost reductions are expected in subsequent quarters as a result of the already announced restructurings. Some analysts continue to project future expenses at the June quarter levels. "Third, net cash (cash minus convertible debt) has been positive for all of fiscal 2002. On our balance sheet total cash is shown on three line items: cash and cash equivalents, consisting of cash and fixed income securities with maturities under 90 days; short term investments consisting of fixed-income securities with maturities between 90 and 365 days; and long-term investments, consisting of fixed-income securities with maturities greater than 365 days. At June 30, 2002, this balance was $472 million. While we have explained this in detail, some reports have left the impression that today we have less cash than convertible debt. We expect to utilize cash in operations at a substantially lower rate over the next few quarters and we anticipate ending fiscal 2002 and 2003 with positive net cash. "Additional details will be provided during our quarterly earnings conference call scheduled for the week of October 21, 2002. While our normal practice is not to comment on analyst reports and we do not undertake any obligation to do so in the future, we felt that it was important in this case to correct misleading information that we believe has led to confusion in the market." Vitesse Semiconductor Corporation is a leading designer and supplier of innovative, high-performance integrated circuits and optical modules used in next generation networking and optical communications equipment. The Company's products address the needs of Enterprise, Access, Metro, Core, and Optical Transport network equipment manufacturers who demand a robust combination of high-speed, high-service delivery and low-power dissipation in their products. In concert with its broad communications product portfolio, Vitesse also develops ICs for storage area networking and enclosure management. Vitesse is headquartered in Camarillo, California. Company and product information can be found on the Web at http://www.vitesse.comor is available by calling 1-800-VITESSE. * * * As reported in Troubled Company Reporter's September 6, 2002 edition, Standard & Poor's lowered its corporate credit rating on Vitesse Semiconductor Corp., to single-'B' from single-'B'- plus. The outlook remains negative. The action reflects the company's depressed operating profitability and expectations that business conditions will remain challenging in at least the intermediate term. WORLDCOM INC: Creditors' Committee Hires Akin Gump as Counsel ------------------------------------------------------------- The Official Committee of Unsecured Creditors seek the Court's authority to retain Akin Gump Strauss Hauer & Feld LLP as its counsel, in the chapter 11 cases involving Worldcom Inc., and its debtor-affiliates, nunc pro tunc to July 29, 2002. The Committee explains that it is necessary and appropriate to retain Akin Gump to provide these services: -- advise the Committee with respect to its rights, duties and powers in these cases; -- assist and advise the Committee in its consultations with the Debtors relative to the administration of these cases; -- assist the Committee in analyzing the claims of the Debtors' creditors and the Debtors' capital structure and in negotiating with holders of claims and equity interests; -- assist the Committee in its investigation of the acts, conduct, assets, liabilities and financial condition of the Debtors and of the operation of the Debtors' businesses; -- assist the Committee in its analysis of, and negotiations with, the Debtors or any third party concerning matters related to, among other things, the assumption or rejection of certain leases of non-residential property and executory contracts, asset dispositions, financing of other transactions and the terms of a plan of reorganization for the Debtors and accompanying disclosure statement and related plan documents; -- assist and advise the Committee as to its communications to the general creditor body regarding significant matters in these Cases; -- represent the Committee at all hearings and other proceedings; -- review and analyze applications, orders, statement of operations and schedules filed with the Court and advise the Committee as to their propriety; -- assist the Committee in preparing pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives; and -- perform any other legal services as may be required or are otherwise deemed to be in the best interests of the Committee in accordance with the Committee's powers and duties as set forth in the Bankruptcy Code, Federal Rules of Bankruptcy Procedures or other applicable law. Committee Chairperson Van Greenfield believes that Akin Gump possesses extensive knowledge and expertise in the areas of law relevant to these cases, and that Akin Gump is well qualified to represent the Committee in these cases. In selecting attorneys, the Committee looked for a counsel with considerable experience in representing unsecured creditors in Chapter 11 reorganization cases, other debt restructurings and telecommunication matters. Akin Gump has this experience since it is currently representing and has represented official creditors' committees in many significant Chapter 11 reorganizations including: In re Aetna Industries Inc.; In re Dairy Mart Convenience Stores Inc.; In re Exide Technologies Inc.; In re Flag Telecom Holdings Limited; in re Fountain View Inc.; In re Globalstar L.P.; In re Heilig Meyers Company; In re Kaiser Aluminum Corporation; In re Lernout & Hauspie Speech Products N.V.; In re LTV Steel Company Inc.; In re Polaroid Corporation; In re Sterling Chemical Holdings Inc.; In re Verado Holdings Inc.; and In re XO Communications Inc. Akin Gump will charge for its services in an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date the services are rendered. The current hourly rates charged by Akin Gump for professionals and paraprofessionals are: Partners $400 - 700 Special Counsel and Counsel 285 - 600 Associates 185 - 430 Paraprofessionals 55 - 165 Akin Gump's professionals currently expected to have primary responsibility for providing services to the Committee are: Name Position Hourly Rate ------------------ --------- ----------- Daniel H. Golden Partner $675 Michael S. Stramer Partner 550 Ira S. Dizengoff Partner 475 James R. Savin Associate 350 Philip C. Dublin Associate 320 Kenneth A. Davis Associate 320 Nava Hazan Associate 280 Akin Gump Partner Daniel H. Golden, Esq., assures the Court that the Firm neither holds nor represents any interest adverse to the Creditors' Committee, the Debtors, their creditors or other parties-in-interest in these Chapter 11 cases. In addition, Akin Gump is a "disinterested person" within the meaning of the Bankruptcy Code. However, Akin Gump has in the past and currently represents these companies on matters wholly unrelated to these cases: A. Unsecured Creditors: Deutsche Bank, Bank of Nova Scotia, Bank One, Electronic Data Systems, Motorola Inc., ABN Amro Bank NV, Texas State Treasurer, Citibank N.A., Credit Lyonnais, Bayerische Landesbank, AT&T Corp., Hewlett Packard, Wells Fargo Bank N.A., AMR Corp., Mellon Bank, Fleet National Bank, Banco Bilbao Vizcaya, Sprint Corp., Verizon Communications, Royal Bank of Scotland, Arab Bank PLC, Cisco Systems and Westpac; B. Bondholders: JP Morgan Chase, Bank of New York, Goldman Sachs, Deutsche Bank, Salomon Smith Barney, Merill Lynch, Bear Sterns, Morgan Stanley, Citibank, UBS Warburg, CS First Boston, BT Alex Brown, American Express, Prudential Insurance, Pershing/DLJ, First Union Bank, Lehman Bros., Bank of Nova Scotia, Barclays Capital, ABN Amro Bank N.V., State Street Bank, Northern Trust, Investors Bank & Trust, PNC Bank, Charles Schwartz, and A.G. Edwards & Sons Inc.; C. Bank Lenders: Bank of Nova Scotia, Bayerische Landesbank, Credit Lyonnais, Wells Fargo Bank, JP Morgan Chase, Bank One N.A., Citibank N.A., Deutsche Bank, ABN Amro Bank N.V., Westpac, Banco Bilbao Vizcaya, Mellon Bank, Arab Bank PLC, Fleet National Bank, and Royal Bank of Scotland; D. Underwriters: Arthur Andersen, Bear Sterns, ABN Amro Bank NV, Citibank NA, Deutsche Bank, Goldman Sachs, Salomon Bros., Paine Webber, Bank of America, BT Alex Brown, CIBC World Markets, CSFB, Donaldson Lufkin Jenrette, JP Morgan Chase, UBS Warburg, Morgan Stanley, Westdeutsche Landesbank, Legg Mason Wood Walks, Robertson Stephens, Fleet National Bank, and Nations Bank; E. Indenture Trustees: Bank of New York, Citibank NA, US Trust Company of New York, JP Morgan Chase, Wilmington National Bank, Mellon Bank, Fleet National Bank, Nations Bank, State Street Bank, and Texas Commerce Bank; F. Significant Shareholders: AXA Financial Inc., Deutsche Bank, Bank of New York, Citibank NA, and Lehman Bros. (Worldcom Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) XEROX CORPORATION: Appoints Three Executives to New Positions ------------------------------------------------------------- Xerox Corporation (NYSE: XRX) announced the following executive appointments: -- Richard F. Cerrone has been named senior vice president and general manager of Xerox's European Office Operations, reporting to Jean Noel Machon, president, Xerox Europe, and James Miller, president, Xerox Office Printing Business. Cerrone currently leads Xerox's North American Agent Operations. His new appointment is effective Jan. 1, 2003. -- D. Cameron Hyde has been named senior vice president and general manager, Xerox North American Agent Operations, also reporting to Miller. Hyde now serves as president and chief executive officer of Xerox Canada Ltd. Doug Lord moves to the president and CEO post of Xerox Canada, Ltd. Lord is currently senior vice president, North American Graphic Arts Operations. Both appointments are also effective Jan. 1. -- Gregory B. Tayler has accepted a position in Xerox Canada providing assistance during this leadership transition. As such, his appointment is effective immediately. Since joining Xerox in 1991, Tayler has held several senior finance positions in operations and planning in Xerox Canada before moving into corporate positions, including the most recently held post of corporate treasurer. Xerox Chief Financial Officer Lawrence A. Zimmerman will assume the role of treasurer in an acting capacity until a new treasurer is named. As previously reported, Fitch downgraded its rating on Xerox Corp.'s senior unsecured debt to BB- to reflect its weak credit protection measures. Xerox Corporation's 9.75% bonds due 2009 (XRX09USA1) are trading at 77 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=XRX09USA1for real-time bond pricing. XO COMMS: Assuming Amended Lease for LA, Calif. Carrier Center -------------------------------------------------------------- XO Communications, Inc., obtained permission from the U.S. Bankruptcy Court for the Southern District of New York to assume the Amended Lease Agreement with Carrier Center LA Inc. The Amended Lease provides for: Existing Lease Amended Lease -------------- ------------- Rentable Square Feet 68,000 29,000 Annual Base Rent Current through Month 36 $1,360,000 $580,000 Months 37-60 $1,428,000 $609,000 Months 61-120 $1,632,000 $696,000 Months 121-180 $1,876,800 $800,400 Tenant Share of Expenses 15.12% 7.31% The reduction in annual base rent is attributable solely to the reduction in square footage; the rental rate per rentable square foot remains unchanged. This alone will save the Debtor over $13,000,000 -- inclusive of additional rent savings -- over the remainder of the lease term. In exchange, the Amendment provides for a $1,100,000 Termination Fee. Apart from these, the Amendment also modifies certain lease provisions relating to services and utilities, supplemental equipment, signs and telecommunications device areas. (XO Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Crown Cork & Seal 7.125% due 2002 98 - 100 +2 Federal-Mogul 7.5% due 2004 24 - 26 +2 Finova Group 7.5% due 2009 28 - 30 0 Freeport-McMoran 7.5% due 2006 87 - 89 -1 Global Crossing Hldgs 9.5% due 2009 0.5 - 1.5 0 Globalstar 11.375% due 2004 3 - 5 0 Lucent Technologies 6.45% due 2029 64 - 66 +5 Polaroid Corporation 6.75% due 2002 5.5 - 7.5 0 Terra Industries 10.5% due 2005 79 - 81 0 Westpoint Stevens 7.875% due 2005 49 - 51 -1 Xerox Corporation 8.0% due 2027 38 - 40 +1.5 Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***