/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/021007.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, October 7, 2002, Vol. 6, No. 198 Headlines ADELPHIA COMMS: Court Okays Lazard Freres as Investment Bankers AES IRONWOOD: S&P Removes Bonds from Watch & Affirms BB- Rating AES CORP: Fitch Downs Ratings on Sr. Unsec. Notes to B from BB- ALLMERICA: Management to Discuss Strategic Alternatives Today ALTERNATE MARKETING: Nasdaq Knocks-Off Shares Effective Oct. 3 AMERICAN SKIING: Resolves Loan Defaults with Textron Financial AMES DEPT: Seeks to Implement Wind-Down Program for Employees ANC RENTAL: Wants to Consolidate Operations at St. Louis Airport ARMSTRONG: Wants Lease Decision Period Extension Until July 14 BAC FLORIDA BANK: Fitch Assigns BB+ Long-Term Deposit Rating BANYAN STRATEGIC: Extends Northlake Asset Closing Date to Oct 10 BEAR STEARNS: Fitch Rates 6 P-T Certs. Classes at Low-B Level BETHLEHEM STEEL: Wants to Enter into Insurance Program with AIG BION ENVIRONMENTAL: BDO Seidman Voices Going Concern Doubt BUDGET GROUP: Committee Signs-Up Ashby & Geddes as Local Counsel BURLINGTON: Retains Appraisers Associated for Stonewall Assets CARIBBEAN PETROLEUM: Taps Gaztambide as Real Property Appraisers CE GENERATION: S&P Cuts Rating on $356-Mill. Senior Debt to BB- CELLSTAR CORP: Expects to Redeem All 5% Conv. Notes by Oct. 15 CIRTRAN: Posts $4.6MM Working Capital Deficit at March 31, 2002 COLD METAL: Reviewing Permanent Reopening of Indianapolis Plant COMMUNICATION DYNAMICS: Seeks to Pay Prepetition Shipping Claims DADE BEHRING: Consummates Debt Workout & Exits Ch. 11 Bankruptcy DADE BEHRING: Appoints New Seven-Member Board of Directors ELEC COMMS: Annual Shareholders' Meeting to Convene on Nov. 26 EMMIS COMMS: Surpasses Fiscal Second Quarter Earnings Guidance ENCOMPASS SERVICES: Trading on Pink Sheets Under ESVN Symbol ENRON: Manatt Phelps Seeking Relief from Compensation Orders EOTT ENERGY: Interest Nonpayment Spurs S&P to Drop Rating to D ERIE MUNICIPAL: S&P Hatchets Rating to BB+ Over Credit Concerns EXTRACTION TECH.: Accepting Sealed Bids for Assets Until Oct. 24 FEDERAL-MOGUL: Equity Committee Turning to Deloitte for Advice FRUIT OF THE LOOM: Wants More Time to File Claim Objections GALEY & LORD: Cuts Undrawn DIP Facility to $75 Million GENCORP INC: Reports Improved Performance for 3rd Quarter 2002 HAYES LEMMERZ: Asks Court to Disallow 34 Added Duplicate Claims HYDROGIENE CORP: Auditors Working to Reconstruct Fin'l Records INDIA GROWTH: Board Adopts Plan of Liquidation and Dissolution LAND O'LAKES: Schedules Third Quarter Earnings Call for Oct. 24 LANGSTON CORP: Selling Real Property Assets to OPG Acquisitions LA PETITE ACADEMY: Fails to Beat Deadline for Form 10-K Filing LEGACY HOTELS: Will Release Q3 Earnings on October 17, 2002 LIFEGUARD LIFE: S&P Assigns 'R' Financial Strength Rating LOCATEPLUS: Seeking New Financing to Fund Planned Operations LODGIAN INC: DDL-Kinser Wants More Time to Make 1111(b) Election MACE SECURITY: Falls Below Nasdaq Minimum Listing Requirements MARINER: Stipulation Lifts Injunction Against Class Claims MCDERMOTT INT'L: Will Publish 3rd Quarter Results Around Nov. 6 MEDCOMSOFT INC: Reaches Agreement to Resolve Dispute with Lamsak METATEC INT'L: Selling European CD-ROM Operations to Nimbus MISSISSIPPI CHEMICAL: Fitch Junks Senior Unsecured Debt Ratings MWAVE INC: Fails to Meet Nasdaq Continued Listing Requirements NORTEL NETWORKS: Revamps Organization to Streamline Structure NOVO NETWORKS: Bankruptcy Filing Prompts Going Concern Doubt PAYLESS CASHWAYS: Wants Approval to Use CIBC's Cash Collateral PEREGRINE SYSTEMS: Appoints Berger & Associates as Claims Agent PHAR-MOR INC: Fails to Make Timely Form 10-K Filing with SEC POPE & TALBOT: Closes Exchange Offer for Debt Securities PROTECTION ONE: Westar Forms Special Committee to Conduct Probe REPEATER TECHNOLOGIES: Files for Chapter 7 Liquidation in Calif. SENTO CORP: Board of Directors Recommends 1-For-4 Reverse Split SMARTDISK CORP: Requests NASDAQ Hearing re Listing Compliance THINKPATH INC: Commences Trading on OTCBB Effective October 4 THOMSON KERNAGHAN: Morgis Appeals Ontario Court Decision re IDA US AIRWAYS: First Meeting of Creditors Set for October 22, 2002 VIRAGEN INC: Accountants Doubt Ability to Continue Operations WICKES INC: Commences Trading on Nasdaq SmallCap Effective Oct 4 WORLDCOM: Examiner Gains Court Nod to Tap Kilpatrick as Counsel XCEL ENERGY: Awaiting Temporary Equity Ratio Waiver from SEC * Jefferies Brings-In Lane Genatowski to Head Global Power Group * BOND PRICING: For the week of October 7 - October 11, 2002 ********* ADELPHIA COMMS: Court Okays Lazard Freres as Investment Bankers --------------------------------------------------------------- Judge Gerber authorizes Adelphia Communications and its debtor- affiliates to employ and retain Lazard as its investment banker provided that all of the provisions between Lazard and the Debtors concerning Lazard's services related to any transaction involving the sale of the Debtors' assets is deleted, without prejudice to Lazard or the Debtors at a later time to seek to expand the scope of Lazard's employment to include asset sales and to seek approval of a compensation structure. The Application and Engagement Letter are further modified so that commencing with the monthly fee payable on September 22, 2002, the monthly fee provided for in the Engagement Letter is increased from $225,000 to $275,000; and that the In-Court Restructuring Fee will be reduced to $13,000,000 from $15,000,000. In addition, Judge Gerber permits the Debtors to indemnify and hold harmless Lazard and its affiliates, their respective directors, officers, agents, employees and controlling persons, and each of their respective successors and assigns, pursuant to the indemnification provisions of the Lazard Agreement, subject to these conditions: -- all requests of Indemnified Persons for payment of indemnity, contribution or otherwise pursuant to the indemnification provisions of the Lazard Agreement will be made by means of an interim or final fee application and will be subject to the approval of, and review by, the Court to ensure that payment conforms to the terms of the Lazard Agreement, the Bankruptcy Code, the Bankruptcy Rules, the Local Bankruptcy Rules, and the orders of this Court and is reasonable based upon the circumstances of the litigation or settlement in respect of which indemnity is sought; provided, however, that in no event will an Indemnified Person be indemnified or receive contribution to the extent that any claim or expense has resulted from the bad-faith, self-dealing, breach of fiduciary duty, if any, gross negligence or willful misconduct on the part of that or any other Indemnified Person; -- in no event will an Indemnified Person be indemnified or receive contribution or other payment under the indemnification provisions of the Lazard Agreement if the Debtors, their estates, or the statutory committee of unsecured creditors assert a claim, to the extent that the Court determines by final order that the claim arose out of bad-faith, self-dealing, breach of fiduciary duty, gross negligence, or willful misconduct on the part of any Indemnified Person; -- Lazard agrees that, without the prior written consent of the Debtors, Lazard will not settle, compromise or consent to the entry of any judgment in any pending or threatened claim, action, or proceeding or investigation in respect of which indemnification or contribution could be sought; and -- in the event an Indemnified Person seeks reimbursement for attorneys' fees from the Debtors pursuant to the Lazard Agreement, the invoices and supporting time records from the attorneys will be annexed to Lazard's own interim and final fee applications, and the invoices and time records will be subject to the United States Trustee's guidelines for compensation and reimbursement of expenses and the approval of the Bankruptcy Court under the standards of Section 330 of the Bankruptcy Code without regard to whether the attorney has been retained under Section 327 of the Bankruptcy Code. As part of the restructuring process, the ACOM Debtors' Special Committee retained Lazard to provide general restructuring advice including but not limited to possible Sales and Financing Transactions. Lazard will perform similar services during these reorganization cases. The Engagement Letter contemplates that Lazard will provide these investment banking services to the Debtors in these chapter 11 cases: A. Reviewing and analyzing the Company's business, operations and financial projections; B. Evaluating the Company's potential debt capacity in light of its projected cash flows; C. Assisting in the determination of an appropriate capital structure for the Company; D. Determining a range of values for the Company on a going concern basis; E. Advising the Company on tactics and strategies for negotiating with the holders of the Existing Obligations; F. Rendering financial advice to the Company and participating in meetings or negotiations with the Stakeholders and/or rating agencies or other appropriate parties in connection with any restructuring, modification or refinancing of the Company's Existing Obligations; G. Advising the Company on the timing, nature, and terms of new securities, other consideration or other inducements to be offered pursuant to the Restructuring; H. Advising and assisting the Company in evaluating potential capital markets transactions of public or private debt or equity offerings by the Company, and, on behalf of the Company, evaluating and contacting potential sources of capital as the Company may designate and assisting the Company in negotiating a Financing Transaction; I. Assisting the Company in preparing documentation within Lazard's area of expertise that is required in connection with the Restructuring of the Existing Obligations; J. Assisting the Company in identifying and evaluating candidates for a potential Sale Transaction, advising the Company in connection with negotiations and aiding in the consummation of a Sale Transaction; K. Advising and attending meetings of the Debtors' Board of Directors and its committees; L. Providing testimony, as necessary, in any proceeding before the Bankruptcy Court; and M. Providing the Company with other general restructuring advice. (Adelphia Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) AES IRONWOOD: S&P Removes Bonds from Watch & Affirms BB- Rating --------------------------------------------------------------- Standard & Poor's Ratings Services removed AES Ironwood L.L.C.'s $308.5 million senior secured bonds from CreditWatch developing, where they were placed on July 26, 2002. At the same time, Standard & Poor's affirmed its double-'B'-minus rating and assigned anegative outlook on the bonds. The CreditWatch removal reflects the recent letter agreement AES Ironwood and Williams Companies Inc. (single-'B'-plus/CreditWatch negative), entered into related to Williams' compliance with the guarantee requirements of the tolling agreement. Williams is the guarantor of the payment and performance obligations of Williams Energy Marketing and Trading Company under the long-term tolling agreement with AES Ironwood. Pursuant to the letter agreement, Williams posted a $35 million one-year (evergreen) irrevocable standby letter of credit issued by Citibank N.A. AES Ironwood has accepted the letter agreement and the LOC as meeting the requirement of alternate additional security under the tolling agreement. "We do not view the additional security provided by this LOC and the letter agreement to change the project's rating," said credit analyst Elif Acar. "Mainly, the project is exposed to Williams' payment risk, since Williams is the sole off taker of the entire output of the facility. The project's ratings are supported at the double-'B'-minus level rather than at Williams' rating based on the project's ability to generate some cash flow as a merchant power plant, albeit subject to the volatility of a competitive environment," continued Ms. Acar. Standard & Poor's performed its net revenue analysis to test the plant's competitiveness in a fully merchant market and determined that the project's financial cushion is adequate for a double-'B'-minus. Standard & Poor's also examined the plant's competitiveness in the next 12 months under a pure merchant scenario using the PJM West forward electricity prices as published by Platts. The average forward prices alone over the next 12 months do not allow the project to cover debt service fully. However, in this scenario, Standard & Poor's assumes that the project will be entitled to draw on the $35 million LOC provided by Williams, which will help the project to fully cover debt service and generate additional cash flow. The weak credit quality of the project's offtaker raises the possibility of a merchant scenario and the low electricity prices in the current market lead Standard & Poor's to decide that the outlook is negative. AES CORP: Fitch Downs Ratings on Sr. Unsec. Notes to B from BB- --------------------------------------------------------------- Fitch Ratings lowered the ratings of The AES Corp.'s senior unsecured notes to 'B' from 'BB-' in response to the announced launch of a $1.6 billion multi-tranche three-year senior secured credit facility (senior credit facility) and offer to exchange up to $500 million of senior notes with a combination of cash and secured notes. Fitch also lowered the ratings of AES's senior subordinated notes to 'B-' from 'B' and convertible junior debentures and trust preferred convertible preferred securities to 'CCC+' from 'B-' while leaving the ratings of its senior subordinated and junior subordinated notes unchanged at 'B-'. AES's ratings remain on Rating Watch Negative. Due to Fitch's policy regarding the linkage of ratings of subsidiaries with those of a lower-rated parent, Fitch has also lowered the ratings of AES's subsidiary IPALCO Enterprises and but left unchanged the ratings of Indianapolis Power and Light (IP&L), as shown in the table below. These ratings are also placed on Rating Watch Negative, reflecting the companies' ongoing exposure to AES. The ratings of CILCORP and Central Illinois Light Company remain unchanged and on Rating Watch Evolving pending completion of their committed sale to Ameren Corporation, subject to certain regulatory approvals. Fitch views the proposed transactions as a positive step for AES Corp. with the prospect to eliminate grave refinancing risks that currently overshadow the corporate credit. If the bank refinancing and exchange offer are successful, AES will have minimal debt maturities until the fourth quarter of 2005. Assuming that AES is successful in closing the senior credit facility and the exchange offer, Fitch expects to rate the senior secured bank facility and the senior notes 'BB-', remove the Negative Rating Watch. The Rating Outlook would then be Stable on the senior notes and bank facility. On the other hand, if these transactions fail, the newly assigned 'B' senior unsecured rating may be further reduced to reflect the company's imminent liquidity crisis and refinancing risk. Proceeds from the senior bank facility will be used to replace the following existing facilities: $850 million revolver due March 2003, $425 million term loan due August 2003, $262.5 million term loan to AES subsidiary AES EDC Funding II L.L.C. with a current effective maturity date of July 2003, and the EUR$52.3 million letter of credit facility. AES is making two exchange offers - firstly to exchange its $300 million 8.75% senior notes due December 2002 with an offer combining 50% cash redemption at par and 50% secured notes due 2005 and secondly an offer to exchange its $200 million 7.375% remarkable and redeemable securities due 2013 with its first remarketing date in June 2003 with $200 million of secured notes due 2005. Both the senior secured bank facility and the secured notes will be secured equally and ratably by all of the capital stock of each of the first tier domestic subsidiaries, which act as intermediate holding companies for AES' operating companies, and 65% of the capital stock of each material first tier foreign subsidiaries. While the revolver maintains exclusive upstream guarantees from certain subsidiaries of AES, the new senior secured notes and the new senior secured bank facility will be subject to mandatory prepayment from asset sales. AES's ratings reflect Fitch's notching policy and the relatively thin residual equity coverage expected to be afforded to the existing debt classes after paying off the senior secured noteholders and senior credit facility lenders. In the next two years, relieved from the burden of heavy debt maturities, the company plans to pay down the restructured debt using excess parent operating cash flow and proceeds from more asset sales. Barring any further unforeseen deterioration in AES' businesses worldwide, the company's credit metrics are expected to stabilize and see potential for improvement in late 2003/early 2004. The revised ratings of IPALCO are as follows: IPALCO -- Senior unsecured debt lowered to 'BB' from 'BB+'; -- Rating remains on Rating Watch Negative. Ratings of the following subsidiaries remain unchanged : IP&L -- First mortgage bonds and secured pollution control revenue bonds 'BBB-'; -- Senior unsecured debt 'BB+'; -- Preferred stock 'BB+'; -- Ratings remain on Rating Watch Negative. CILCORP -- Senior unsecured debt 'BBB-'; -- Rating remains on Rating Watch Evolving pending consummation of sale of CILCORP to Ameren. CILCO -- First mortgage bonds and secured pollution control revenue bonds 'BBB'; -- Senior unsecured debt 'BBB-'; -- Preferred stock 'BBB-'; -- Commercial paper 'F2'; -- Ratings remain on Rating Watch Evolving. The AES Corp., founded in 1981, is among the world's largest power developers. It generates and distributes electricity and is also a retail marketer of heat and electricity. AES owns or has an interest in 182 plants, with more than 63,000 megawatts, in 31 countries and also distributes electricity in 11 countries through 21 distribution companies. DebtTraders reports that AES Corporation's 10.250% bonds due 2006 (AES06USR1) are trading between 33 and 36. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. ALLMERICA: Management to Discuss Strategic Alternatives Today ------------------------------------------------------------- Allmerica Financial Corporation (NYSE: AFC) will webcast a conference call discussing the strategic alternatives for the company's life and annuity operations today, October 7 at 10:00 a.m. Eastern Time through the Allmerica Web site at http://www.allmerica.com Those who would like to listen to the conference call should go to the web site 15 minutes prior to the start of the call to register, download, and install any necessary audio software. Allmerica is the holding company for a diversified group of insurance and financial services companies headquartered in Worcester, Mass. * * * As reported in Troubled Company Reporter's October 1, 2002 edition, Standard & Poor's lowered its counterparty credit rating on Allmerica Financial Corp., to double-'B' from triple- 'B' and placed it on CreditWatch with negative implications following AFC's announcement that its life company operations are expected to report declines in statutory surplus in the third quarter because of increased guaranteed minimum death benefit reserves, lower fee income, and higher acquisition costs. Standard & Poor's also said that it lowered and placed on CreditWatch negative its ratings on various AFC operating companies. ALTERNATE MARKETING: Nasdaq Knocks-Off Shares Effective Oct. 3 -------------------------------------------------------------- The Nasdaq Stock Market, Inc., delisted the common shares of Alternate Marketing Networks, Inc., (Nasdaq: ALTM) from the Nasdaq SmallCap Market at the opening of business on October 3, 2002. Alternate Marketing Networks said that the Company's shares are fully eligible for immediate trading on the Over-the-Counter Bulletin Board -- http://www.otcbb.com-- a regulated quotation service that displays real-time quotes, last sales prices and volume for more than 3,600 securities. The Company intends to continue submitting corporate filings with the Securities and Exchange Commission. Alternate Marketing Networks said its board of directors is examining the feasibility of a future listing on the Nasdaq SmallCap Market, AMEX or the new Bulletin Board Exchange (BBX) that Nasdaq plans to launch in 2003. "Though we are disappointed about Nasdaq's ruling, we are confident in the direction we have chosen," said Phillip Miller, chairman of Alternate Marketing Networks. "Our recent acquisition of Hencie continues to present new growth opportunities for the company. We believe the OTC-BB will provide sufficient liquidity for our investors over the near term, but we are also exploring the possibility of other quotations systems and exchanges to list our stock over the long term." The Company said the delisting from Nasdaq follows a notice received earlier this year. On August 8, 2002, Alternate Marketing Networks reported that it had received a Nasdaq Staff Determination indicating that the Company's securities were subject to delisting from the Nasdaq SmallCap Market because the Staff believed that the previously announced acquisition of Hencie, Inc., constituted a "reverse merger" under Marketplace Rule 4330(f) and required the Company to satisfy Nasdaq's initial listing requirements in order to remain listed. In September 2002, the Company appealed the Staff Determination at a hearing before a Nasdaq Listing Qualifications Panel. Alternate Marketing Networks -- http://www.altmarknet.com-- is a single-source provider of technology outsourcing and marketing services that offers a broad range of products and services. The Company recently acquired Hencie, Inc., an Oracle Corp., e-business solutions and applications provider. Alternate Marketing Networks offers comprehensive services in three primary areas: advertising and marketing, logistics, and technology services. Alternate Marketing Networks serves the newspaper, consumer package goods, automotive, technology, discrete manufacturing, distribution, energy, travel and hospitality industries. AMERICAN SKIING: Resolves Loan Defaults with Textron Financial -------------------------------------------------------------- American Skiing Company (OTC Bulletin Board: AESK) has signed an agreement with Textron Financial Corporation to resolve loan defaults under its Grand Summit Resort Properties Construction Loan Facility. The agreement affects $42.6 million in outstanding real estate debt. "This agreement is a significant milestone in the restructuring of our real estate operations," said CEO B.J. Fair. "Importantly, it allows us to meet our financial obligations to the City of Steamboat Springs for agreed upon Mount Werner Rd. and Transit Center improvements. In addition, it positions us to move ahead with revitalized sales initiatives that will accelerate the sell-down of unsold quartershare inventory and further reduce real estate debt." The terms of the revised agreement relax mandatory principal amortization requirements and provide added liquidity to support ongoing sales and marketing activities of remaining quartershare units at The Canyons Grand Summit and Steamboat Grand hotels. GSRP is a subsidiary of American Skiing Company Resort Properties, the real estate development subsidiary of American Skiing Company. The Company further reported that it is continuing negotiations with lenders to its senior secured credit facility for ASCRP but has not yet come to an agreement on how this facility will be restructured. The ASCRP senior credit facility, as previously reported, remains in default pending completion of these negotiations. Until the Company makes a public announcement regarding resolution of the defaults we refer investors to disclosures made in the Company's 10-Q filing dated June 12, 2002, on file with the Securities and Exchange Commission. Headquartered in Park City, Utah, American Skiing Company is one of the largest operators of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and The Canyons in Utah. More information is available on the Company's Web site, http://www.peaks.com AMES DEPT: Seeks to Implement Wind-Down Program for Employees ------------------------------------------------------------- "In light of the critical, time-intensive employment services [Ames Department Stores, Inc., and its debtor-affiliates] while they wind down their business, the Debtors consider it vital that their employees have an incentive to continue working throughout the wind-down process," according to Deryck A. Palmer, Esq., at Weil, Gotshal & Manges LLP, in New York. To this end, the Debtors, in concurrence with the Unsecured Creditors Committee, formulated an employee severance, retention, and performance incentive program in connection with the wind down of their business. Mr. Palmer explains that the Wind-Down Severance, Retention, and Incentive Program is necessary to provide incentives to retain key employees during the Debtors' wind-down of operations and, thereby: (a) ensure an orderly monetization of assets; (b) motivate key employees to maximize the value of the estates for the Debtors' creditors; and (c) provide reasonable post-employment protection for those employees asked to remain with the Debtors and to forego current employment opportunities despite that their employment will ultimately be terminated and their positions eliminated in the near future. The Program is the Debtors' way of saying "thank you" to their employees for bearing with them through thick or thin. "It is beyond question that store-level employees are the 'lifeblood' of any retailer," Mr. Palmer remarks. In the current context of the Debtors' liquidation, Mr. Palmer tells Judge Gerber that the store-level employees are also the "backbone" of successfully running the GOB Sales. "The proposed Severance Pay Program is not only the humane action to take for these employees -- many of whom live from paycheck to paycheck -- but also will help ensure that these necessary employees remain for the duration of their required service," Mr. Palmer says. Thus, the Debtors ask Judge Gerber to permit them to implement the Program. Four Components Under the Wind-Down Severance, Retention, and Incentive Program A. Severance Pay Program The accrued vacation and severance payments covers 21,000 store-level employees, home office employees, and field staff terminated on or after August 14, 2002. This Program provides that employees will initially receive: (a) 100% of their accrued vacation; and (b) a severance payment equal to: (i) 40% of their severance amount calculated based on the Debtors' historical severance policy for non-officers; and (ii) 25% of their severance amount calculated based on the Debtors' historical severance policy or contracts, where applicable, for officers. The aggregate amount of payment obligations under the Severance Pay Program will not exceed $25,600,000. However, Mr. Palmer notes that: -- to the extent of the estate's financial capacity, at the conclusion of the wind-down process, participants to this Program will ultimately receive severance and vacation payments up to the full amount due pursuant to the Debtors' current severance plan or by contract, not to exceed $56,800,000 in total; -- to the extent the estate is administratively insolvent, the Participants will receive less than the full amount due to them. However, they will receive their pro rata portion of obligations due under the Severance Pay Program and will be treated as having allowed claims for any unpaid balance; and -- should additional severance payments be made, those officers who initially received 25% of severance will first be brought to the 40% level before additional pro rata payments are made to other participating employees. B. Key Employee Retention Program This Program provides for cash payments to 120 Key Employees in the form of enhanced base salary, calculated on a weekly basis, commencing on November 1, 2002. Mr. Palmer explains that these 120 Key Employees are considered the Debtors' wind-down team and work in areas like: * Asset Protection * Finance * Information Technology * Human Resources * Real Estate * Legal -- for salaried employees, compensation under this Program will be one week's base salary for each week worked during the wind-down period; and -- for hourly employees, compensation under the Program will be 1/2 week's base salary for each week worked during the wind-down period, not to exceed a 40-hour work week. Retention Payments will vest upon the earlier of: (a) employment termination, other than for cause; or (b) completion of the wind-down period. Payments will be made upon termination. Mr. Palmer also relates that any Key Employee who voluntarily leaves the Debtors' employ prior to his release date will forfeit his rights under the Key Employee Retention Plan and Severance Pay Program. But if a Key Employee is released by the Debtors for any reason other than cause prior to his original release date, that Key Employee will be paid his severance and retention award earned to the earlier release date. The Key Employee will receive half of the retention amount that would have been earned for the period not actually worked. The base pay would not continue but would cease at the termination date. Under this Program, Key Employees, if any, who are asked to stay beyond August 31, 2003 will be entitled to receive on September 1, 2003 half of the amount of Retention Payment then accrued. The balance of the Retention Payment will be payable when the Key Employee's services are no longer required and employment is terminated by the Debtors. To the extent applicable, the Debtors will ensure that the Key Employees retained after November 1, 2002 will continue to receive their medical benefits or have available substantially similar medical benefits to those that were in effect prior to August 14, 2002. In addition, Mr. Palmer says, those officers terminated whose contracts entitle them to one year of continued medical benefits will have the right to similar medical benefits as provided in their respective employment agreements. C. Performance Incentive Program The Performance Incentive Program is designed for a limited number of Key Employees to provide additional incentive awards to maximize the recovery for unsecured claimholders. The Program will provide for a pool of funds based on the expected recovery percentage for administrative and general unsecured creditors. The pool will be administered solely by the President of Ames Department Stores, Inc., who will determine what awards are to be made subject to agreed upon targets and goals to be set by the Committee. The program will be submitted for Court approval as promptly as possible. D. Key Management Executives Program Key management employees will be guaranteed to receive a minimum of one year's base salary plus a retention bonus equal to an additional year's base salary, regardless of the date on which they are terminated. The key management employees are: -- Rolando de Aguiar, President of Ames Department Stores Mr. de Aguiar's employment is guaranteed for a minimum of one year commencing September 1, 2002. Upon termination, other than for cause or voluntary resignation, Mr. de Aguiar's severance arrangement will be the greater of: (a) 25% of the severance to which he is currently entitled pursuant to his Employment Agreement with the Debtors dated March 23, 1999, as amended; or (b) the level of severance paid to other officer-level executives. Mr. de Aguiar also will be paid Retention Payments on a weekly basis. Additionally, Mr. de Aguiar will be entitled to an incentive payment based on the Debtors' expected recovery percentage, to be determined based on objectives to be set by the Committee. Mr. Palmer informs the Court that this incentive payment will be separate and apart from the pool of funds to be established. Mr. de Aguiar will not participate in the Performance Incentive Program. Mr. de Aguiar's outstanding loan with the Company -- as of September 1, 2002, with a balance of $106,857.17 plus principal and interest -- will be amortized and forgiven over a one-year period commencing September 1, 2002. Any and all tax consequences as a result of loan forgiveness will be the sole obligation of Mr. de Aguiar. Should Mr. de Aguiar's employment be terminated for cause or as a result of his voluntary resignation, any then outstanding loan balance will become due and payable. -- David H. Lissy, Esq., Senior Vice President and General Counsel of Ames Department Stores, Inc. Mr. Lissy's employment is guaranteed for a minimum of one year, commencing on November 1, 2002. He will be paid Retention Payments on a quarterly basis based on the weeks worked each quarter. Upon termination, other than for cause or voluntary resignation, Mr. Lissy's severance arrangement will be the greater of: (a) 25% of the severance to which he is currently entitled; or (b) the level of severance paid to other officer-level executives. Mr. Lissy will participate in the Performance Incentive Program. -- Joseph Ettore, Chairman and CEO Effective November 3, 2002 through November 2, 2003, Mr. Ettore will become a consultant to the Debtors. He will provide services as required at a $160,000 fee for one year, payable monthly. The Debtors will be entitled to apply those monthly payments to offset Mr. Ettore's outstanding loans. The amount of his loans outstanding as of September 1, 2002, including principal and interest, is $169,678. Through November 3, 2003, Mr. Ettore will also be entitled to receive medical benefits substantially similar to those to which he was entitled pursuant to the Employment Agreement dated as of June 1, 1998, as amended. Beginning November 3, 2002, Mr. Ettore will be entitled to severance equal to the greater of: (a) 25% of the severance to which he is entitled pursuant to his Employment Agreement; or (b) the level of severance paid to other officer-level executives. The Debtors are currently negotiating a new financing with Kimco Funding LLC, which would provide funds for their wind down, including the payments contemplated in the Wind-Down Retention, Severance and Incentive Program. Absent approval of that financing, Mr. Palmer says, that the payments suggested in the Program will not be realized. (AMES Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANC RENTAL: Wants to Consolidate Operations at St. Louis Airport ---------------------------------------------------------------- As part of their reorganization efforts, ANC Rental Corporation and its debtor-affiliates seek to consolidate their operations at airports nationwide where they have car rental operations. The St. Louis Airport in Missouri, is no exception. The Debtors sought and obtained the Court's authority to: -- Reject the Passenger Vehicle Rental Concession, dated February 19, 1999, between Alamo and the City of St. Louis, which granted Alamo the non-exclusive right to operate a car rental concession and lease certain premises at the St. Louis Airport; and -- Assume and assign to ANC Rental Corporation the Passenger Vehicle Rental Concession, dated January 25, 1999 between National and the City, granting National the non-exclusive right to operate a car rental concession and lease certain premises at the St. Louis Airport. Currently, the Debtors pay Minimum Annual Guarantee Payments under the National Concession and Lease Agreement and the Alamo Concession and Lease Agreement totaling $3,300,000. Upon assignment, Debtors will increase their MAG Payment under the National Concession and Lease Agreement from $2,103,000 to $2,500,000 for the remainder of the 2002 Contract Year. The Debtors will pro-rate the increased MAG Payment from the effective date of the consolidation at the St. Louis Airport. For the 2003 Contract Year, the Debtors will pay an increased MAG of $3,000,000 to the airport authority. The Debtors will issue a replacement bond in accordance with the formula set forth in the National Concession and Lease Agreement in the name of ANC, based upon the increased 2003 MAG Payment of $3,000,000. The consolidated operations at the St. Louis airport is expected to result in savings for the Debtors up to $3,500,000 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) ARMSTRONG: Wants Lease Decision Period Extension Until July 14 -------------------------------------------------------------- For the fourth time, Armstrong World Industries and its debtor- affiliates ask the Court to extend the deadline to decide whether to assume, assume and assign, or reject unexpired non- residential real property leases. The Debtors ask for an extension to July 14, 2003. Stephen Karotkin, Esq., and Debra A. Dandeneau, Esq., at Weil Gotshal & Manges LLP, in New York, and Mark D. Collins, Esq., and Rebecca Booth, Esq., at Richards Layton & Finger, in Wilmington, Delaware, report that AWI has only 17 real property leases left, with ten separate landlords, on which no decision has been made on assumption or rejection. These 10 landlords and 17 leases are: Landlord Type of Lease -------- ------------- Alabama & Gulf Coast Railway Railway leases (2) 906 Olive Street St. Louis, Missouri Area Jobs Development Association Warehouse lease 231 East Broadway Bradley, Illinois Blake Development Corporation Office lease 1150 Connecticut Avenue NE Suite 1200 Washington, DC Briarwood Center Partnership Warehouse lease Dba Mississippi Warehousing Company P. O. Box 23309 Jackson, Mississippi City of Pensacola Sign agreement P. O. Box 1991 Pensacola, Florida Illinois Central Gulf Railroad Spur track agreement P. O. Box 91644 Chicago, Illinois National Railroad Passenger Siding agreements (5) Group #5 P. O. Box 1582 Washington, DC Norfolk Southern Corporation Park lot lease (1) P. O. Box 277531 land lease, track Atlanta, Georgia crossing agreement, Well/water line agreement Perdido Bay Holdings, Inc. Warehouse lease 36 Mussey Road Scarborough, Maine The Lancaster Airport Authority Hangar lease Airport Manager, Lancaster Airport 500 Airport Road, Suite G Litiz, Pennsylvania Ms. Booth explains that these 17 leases include land use agreements and lease agreements regarding warehouse space, office space, land, and parking lots located throughout the United States. Since the Petition Date, these leases have remained in effect and continue to be effective according to their own terms. Accordingly, each of these 17 leases is an "unexpired lease" which may be assumed or rejected by the Debtors under the terms of the Bankruptcy Code. Various courts have discussed what constitutes sufficient cause for to extend the time period within which a debtor may determine to assume or reject an unexpired lease. The Debtors suggest that these factors should be considered in determining whether "cause" exists: (a) whether the leases are important assets of the estates such that a decision to assume or reject would be central to a plan of reorganization; (b) whether the case is complex and involves large numbers of leases; or (c) whether the debtor has had insufficient time to intelligently appraise each lease's value to a plan of reorganization. AWI stores many of its products, which are shipped throughout the United States, in the warehouses included in the leases subject to this Motion. In addition, AWI uses its leased railway space to transport many of its products and carries out essential functions out of its leased offices. Consequently, the unexpired leases are important assets of AWI's estate and are integral to the continued operation of AWI's business. Accordingly, decisions to assume or reject these unexpired leases are central to any plan of reorganization. Given the importance of these leases to AWI's ongoing operations and the number of leases AWI must consider in deciding whether to assume or reject each lease, it is unreasonable to require that AWI choose whether to assume or reject each lease by November 8, 2002. AWI, however, does not want to forfeit any lease that could be potentially valuable as a result of the "deemed rejected" provision of the Bankruptcy Code effective whenever the period for assumption or rejection expires with leases still in effect but upon which the debtor has not made a decision. An extension is therefore appropriate to allow AWI to review the remaining unexpired leases in the context of developing a comprehensive business plan, and ultimately a plan of reorganization. AWI has been consumed with: -- handling a vast number of crucial administrative and business decisions, and -- working diligently to continue to operate its business. Moreover, AWI has been actively working with its legal and financial advisors in an effort to propose a viable plan of reorganization that ultimately will be accepted by all of the principal creditor constituencies in these Chapter 11 cases. As a result, AWI simply has not had an adequate opportunity to determine the economics of each of these leases, whether or not it is burdensome to the estates, and how it will fit in with AWI's ongoing business operations. Accordingly, without an extension of the November 8 deadline, AWI runs the risk of prematurely and improvidently assuming unexpired leases that AWI could later discover to be burdensome, thus creating large and uncapped potential administrative claims against these estates. AWI also risks of prematurely and improvidently rejecting leases that could later be discovered as critical to AWI's reorganization efforts. Ms. Booth assures Judge Newsome that the Debtors continue to pay all amounts due under the unexpired leases in the ordinary course of its business, and will do so until an appropriate decision is made. Thus, Ms. Booth asserts, the extension will not result in any harm or prejudice to the other parties of the unexpired leases, but will relieve AWI of having to make a premature decision with respect to the leases. (Armstrong Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Armstrong Holdings Inc.'s 9.000% bonds due 2004 (ACK04USR1) are trading between 58.5 and 60. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for real-time bond pricing. BAC FLORIDA BANK: Fitch Assigns BB+ Long-Term Deposit Rating ------------------------------------------------------------ Fitch Ratings has assigned a 'BB+' long-term deposit rating to BAC Florida Bank. The Rating Outlook is Stable. BAC Florida Bank, headquartered in Miami, was established in 1973 and is privately owned by members of the Pellas and Chamorro families of Nicaragua. These individuals also own substantial financial service companies, including BAC International Bank (Panama), BAC International Bank (Grand Cayman), Credomatic International Corporation, and numerous industrial holdings throughout Central America and the Caribbean. BAC Florida Bank is FDIC insured and regulated by the state of Florida and the FDIC. Total assets as June 30, 2002 were $617 million. BACFL's business focuses on mortgage and real estate lending in the Florida market, primarily Miami-Dade and Broward Counties. In addition, BACFL offers private banking and investment management services to its customers and has a small brokerage operation. BACFL caters to the increasingly large population of Latin Americans who purchase homes in south Florida. Typically, the homes in Florida are purchased as a primary or secondary residence by middle and upper class individuals from throughout the various Latin American countries. In addition to having the perfected lien on the residential property in south Florida, BACFL also benefits from somewhat more conservative underwriting which helps compensate for other factors which are more difficult to assess (such as income verification and tax returns) as compared to a conventional mortgage loan. Statistically, when compared to conventional mortgages, this portfolio tends to run somewhat higher early stage delinquency levels but later stage delinquency rates, such as 90 or 120 days past due, are relatively comparable to most conventional portfolios. BACFL is careful to manage the portfolio such that it is diversified by nature and location of the property, as well as by domicile of the borrower. During the past five years, BACFL's residential mortgage losses have been zero. Residential mortgages comprise approximately 70% of BACFL's loan portfolio. The remainder consists primarily of commercial real estate and commercial lending, again in the south Florida market. The vast majority of the commercial real estate lending is secured by multi-family residential rental properties. Although BACFL had exited much of its trade finance activities and significantly scaled back its correspondent banking business with Latin American banks, it still has some remaining exposure including approximately $9 million to Argentina as of June 30, 2002. Management has indicated that as of the end of 3Q02, the gross exposure to Argentina has been reduced to $7 million, which has been reserved 69%, leaving a net exposure of $2.17 million. Fitch's rating considers the success that BACFL has had in shifting its focus over the past five years, moving toward lending primarily in the Florida market and less so in Latin America. The bank has assembled a track record of relatively stable profitability since shifting its strategy. The rating also considers BACFL's capital ratios which significantly exceed regulatory requirements (Tier I totaled 12.78% at 6/30/02). Further, BACFL's customer base provides it with a stable base of core deposits, which is supplemented by FHLB advances, and the bank derives a portion of its funding from other BAC entities for which it provides U.S. payment services. Constraining the rating are several factors including the bank's relatively limited diversification, its residual exposure to emerging markets (Latin America) and the relatively high, albeit improving, expense to revenue ratio. BANYAN STRATEGIC: Extends Northlake Asset Closing Date to Oct 10 ---------------------------------------------------------------- Banyan Strategic Realty Trust (OTC Bulletin Board: BSRTS) has entered into an amendment with the proposed purchaser of Banyan's ground lease interest in the Northlake Tower Festival Mall (suburban Atlanta, Georgia), extending the closing date from October 2, 2002 to October 10, 2002. The extension was necessitated by, among other things, the fact that the purchaser had not yet obtained all of the approvals of the required rating agencies necessary for closing. In addition, formal consent to the transaction has not yet been received from the owner of the land upon which the shopping center is situated. Rating agency approval is required for the purchaser's assumption of the first mortgage debt that encumbers the property, and the land owner's consent is required by the applicable ground lease. Banyan stated that it has been advised that all issues have been resolved between the purchaser and the ground lessor, and a proposed amendment to the existing ground lease has been tendered to the rating agencies for approval. The review of this amendment has delayed the approval from the rating agencies. Banyan indicated that both the company and the purchaser intend to work together to accomplish the remaining steps in order to close on or prior to the October 10, 2002 closing date. If the rating agency approvals are not received by such time, or other conditions precedent to closing are not satisfied, the purchaser may terminate the contract without penalty. Banyan Strategic Realty Trust is an equity Real Estate Investment Trust that adopted a Plan of Termination and Liquidation on January 5, 2001. On May 17, 2001, the Trust sold approximately 85% of its portfolio in a single transaction. Other properties were sold on April 1, 2002 and May 1, 2002. Banyan now owns a leasehold interest in one (1) real estate property located in Atlanta, Georgia, representing approximately 9% of its original portfolio. This property is subject to a contract of sale, currently scheduled to close on October 10, 2002. Since adopting the Plan of Termination and Liquidation, Banyan has made liquidating distributions totaling $5.45 per share. As of this date, the Trust has 15,496,806 shares of beneficial interest outstanding. BEAR STEARNS: Fitch Rates 6 P-T Certs. Classes at Low-B Level ------------------------------------------------------------- Bear Stearns Commercial Mortgage Securities Trust 2002-PBW1, commercial mortgage pass-through certificates are rated by Fitch as follows: -- $371,811,000 class A-1, 'AAA'; -- $385,855,000 Class A-2, 'AAA'; -- $921,174,883 Class X-1, 'AAA'; -- $839,869,000 Class X-2, 'AAA'; -- $26,483,000 Class B, 'AA'; -- $31,089,000 Class C, 'A'; -- $8,060,000 Class D, 'A-'; -- $9,211,000 Class E, 'BBB+'; -- $13,817,000 Class F, 'BBB'; -- $13,817,000 Class G, 'BBB-'; -- $16,120,000 Class H, 'BB+'; -- $10,363,000 Class J, 'BB'; -- $3,454,000 Class K, 'BB-'; -- $5,757,000 Class L, 'B+'; -- $9,211,000 Class M, 'B'; -- $2,302,000 Class N, 'B-'; -- $13,824,883 Class P, 'NR'. All classes are privately placed pursuant to Rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 126 fixed rate loans having an aggregate principal balance of approximately $921 million, as of the cutoff date. BETHLEHEM STEEL: Wants to Enter into Insurance Program with AIG --------------------------------------------------------------- Months before Bethlehem Steel Corporation's and its debtor- affiliates' workers' compensation policies with Old Republic Insurance Company was set to expire on August 23, 2002, the Debtors negotiated with six different insurance companies to replace the prepetition policies of their employees. But due to the commencement of the bankruptcy cases and other factors, most of the insurance companies were unwilling to provide coverage. Fortunately, according to Jeffrey L. Tanenbaum, Esq., at Weil, Gotshal & Manges LLP, in New York, the Debtors obtained one favorable proposal from American International Group, Inc. Under the AIG Insurance Program, Mr. Tanenbaum explains that AIG has agreed to provide primary workers' compensation coverage for the Debtors' employees in Pennsylvania. The annual premium is based on a fixed rate of the Debtors' estimated annual workers' compensation costs. In addition to the annual premium, the Debtors must pay a $2,000,000 deductible for each claim asserted under the workers' compensation policies. The Debtors' obligation to pay any deductible amounts under the workers' compensation policies, among other obligations under the Insurance Program, is secured by a security deposit. However, AIG conditioned the coverage under the Insurance Program on the Debtors obtaining entry of a Court order containing these provisions: 1) The Insurance Program is effective as of August 23, 2002 and the Debtors are directed to execute all agreements under the Insurance Program and any amendments or schedules thereto; 2) The Debtors are authorized to execute further renewals of the Insurance Program without further order of the Court; 3) The Debtors are authorized to pay their obligations under the Insurance Program, including premiums and deductibles, in the ordinary course of business, without further order of the Court; 4) All prior payments under the Insurance Program are approved; 5) AIG may adjust, settle and pay insured claims, utilize funds provided for that purpose, and otherwise carry out the terms and conditions of the Insurance Program, without further order of the Court; 6) The Insurance Program will not, without the written consent of AIG, be altered by any plan of reorganization approved in these cases and, absent the consent of AIG, will survive any plan; and 7) In the event of a default due to any failure by the Debtors to make a payment or provide security as required by the Insurance Program, AIG may cancel the Insurance Program without further order of the Court and draw on the Security Deposit, including any letters of credit. However, AIG must provide the Debtors with five prior written notice of any default and an opportunity to cure the default. The automatic stay will be modified for the limited purpose of enabling AIG to effect the remedies. AIG retains the right to cancel the coverage if the Debtors fail to secure approval for its implementation from Bankruptcy Court. Mr. Tanenbaum contends that the Insurance Program is essential to the continuation of the Debtors' businesses. Failure to maintain workers' compensation insurance would expose the Debtors to significant liability for damages resulting from injuries sustained by the Debtors' employees in Pennsylvania. The Debtors seek the Court's authority to enter into the Insurance Program with AIG. In addition, the Debtors also ask the Court for permission to enter into a payment agreement with National Union Fire Insurance Company of Pittsburgh, PA, for all postpetition premiums, administrative fees and other obligations to AIG in connection with the Insurance Program. The Debtors want to pay their insurance dues in the ordinary course and as administrative expenses of their estates. National Union Fire Insurance Company of Pittsburgh, PA, is a member company of AIG. The Debtors also seek the Court's approval of certain preauthorization payments made to AIG. According to Mr. Tanenbaum, the Debtors did not complete their negotiations with AIG until shortly before the expiration of the prepetition insurance policies. Therefore, in order to initiate the coverage under the binder pending court approval of the Insurance Program, AIG required that the Debtors pay, in full, the annual premium due under the Insurance Program and a substantial loss fund deposit. On August 23, 2002, the Debtors shelled out $5,145,025 as required. The amount comprised of: * a $800,025 in premiums and other expenses for the period August 23, 2002 through August 23, 2003; and * a $4,345,000 deposit for the underlying "loss fund" through which premiums, deductibles and certain other expenses under the Insurance Program will be paid. "The amount the Debtors have agreed to pay for the Insurance Program is minimal in light of the size of the Debtors' estates and the potential exposure of the Debtors, absent the insurance coverage," Mr. Tanenbaum asserts. (Bethlehem Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) BION ENVIRONMENTAL: BDO Seidman Voices Going Concern Doubt ---------------------------------------------------------- Bion Environmental Technologies, Inc., provides waste management solutions to the agricultural industry, focusing on livestock waste from confined animal feeding operations, such as large dairy and hog farms. It is currently engaged in two main areas of activity: * waste stream remediation and reduction of atmospheric emissions and * organic soil and fertilizer production. Its waste remediation and reduction of atmospheric emissions service business provides CAFOs (primarily in the swine and dairy industries) with treatment for the animal waste outputs. In this regard, it microbiologically treats their entire waste stream reducing air emissions and nutrient discharges, while creating value-added organic soil and fertilizer products. Bion's soil and fertilizer products are being used for a variety of topdressing applications including school athletic fields, golf courses and home and garden applications. Currently, the majority of CAFOs dispose of their animal waste by spreading it on cropland. In some parts of the United States, such as east of the Mississippi River, CAFOs are severely restricted as to size due to the amount of land that is required for CAFOs to dispose of the animal waste at an environmentally sustainable rate. As a result, CAFOs are enormous polluters of air, water and land. CAFOs are under pressure from state and federal regulatory agencies, the media, environmental groups and the public to reduce their role as a major source of excess nutrient pollution and harmful air emissions. Although nutrient pollution from CAFOs has gone largely unregulated in the past, they are now subject to stringent regulation under the Federal Clean Water Act and are required to become zero-discharge facilities. Air emissions from these operations are being evaluated for potential regulation under the Federal Clean Air Act. The livestock industry and regulatory agencies are searching for affordable waste treatment solutions to this widespread and immediate problem. Substantially all of Bion's business and operations are conducted through two wholly-owned subsidiaries, Bion Technologies, Inc. (a Colorado corporation organized September 20, 1989), and BionSoil, Inc. (a Colorado corporation organized June 3, 1996). Bion is also the parent of Bion Municipal, Inc., (a Colorado corporation organized July 23, 1999) and Bion International, Inc. (a Colorado corporation organized July 23, 1999), which are wholly owned, presently inactive subsidiaries. Bion is also the parent of Dairy Parks, LLC (a Delaware entity organized July 25, 2001). In January 2002, Bion entered into a series of transactions, whereby the Company became a 57.7% owner of Centerpoint Corporation (a Delaware corporation organized August 9, 1995). In July 2002, Bion entered into a non-binding agreement to form a joint venture with Dr. Michael J. McCloskey and Timothy C. den Dulk with its subsidiary, Dairy Parks, LLC, to develop, own and operate a number of large dairy facilities. Bion anticipates that two to four complexes, ranging in size from 10,000 to 50,000 animals, will be developed by the joint venture over the next three years. The complexes will be turnkey, state-of-the- art facilities and will be made available to dairy producers under terms of a 10-year, triple-net lease. The Company will provide the technology for waste management, secure financing for the facilities, develop the financial lease terms and provide independent management. The primary responsibilities of the McCloskey/den Dulk partnership will be site selection and development, negotiation of lease terms, recruitment of tenants, and management of the facilities. Comparison of Fiscal Year Ended June 30, 2002 with Fiscal Year Ended June 30, 2001 Bion Environmental Technologies recorded $69,000 of BionSoil(R) sales during the fiscal year ended June 30, 2002. This compares to total sales of $84,000 for the fiscal year ended June 30, 2001, consisting of $74,000 of BionSoil(R) sales and $10,000 of system sales. The amounts remained approximately the same due to the Company's continued concentration on research and development on its second generation system for most of the fiscal year and further BionSoil(R) testing and analysis. Cost of soil was $546,000 for 2002 and $440,000 for 2001. The increase in cost of goods sold was proportionately higher than the increase in sales due to the fact that more soil was produced and sold at prices below cost to help gain market acceptance. Bion believes that this trend will reverse as the Company enters the commercial phase of system sales and revenues will increase at a higher rate. The net loss and comprehensive loss increased $1,541,000 (10%) during the year ended June 30, 2002. The increase primarily related to an increase of $5,593,000 of non-cash interest expense that was offset by a decrease in general and administrative expenses of $280,000, a decrease in non-cash expenses for services and compensation of $2,678,000, a decrease in research and development of $526,000 and a decrease in cumulative change in accounting principle of $481,000. Bion's principal sources of liquidity, which consist of cash and cash equivalents, are $1,814,000 as of June 30, 2002. Bion believes it will not generate sufficient operating cash flow to meet its needs without additional external financing during fiscal 2003. There can be no assurances that any financing will be available or that the terms will be acceptable to the Company, or that any financing will be consummated. Any failure on Bion's part to do so will have a material adverse impact on the Company and may cause it to cease operations. The Company has been successful during the year ended June 30, 2001 in raising working capital through the sale of warrants and convertible debt. During the year ended June 30, 2001 it raised $2,527,000 in a private placement in the form of convertible bridge notes. In addition, Southview, Inc., a related party, had advanced the Company funds totaling $518,000 as of June 30, 2001. During the year ended June 30, 2002 Bion raised approximately $8,500,000 of working capital as partial consideration for the issuance of the Company's common stock to Centerpoint (less cash of $3,700,000 used as partial consideration to purchase 57.7% of the outstanding shares of Centerpoint) through its transactions with Centerpoint. All outstanding convertible debt of the Company was converted into shares of the Company's common stock on January 15, 2002 due to the Centerpoint transaction and based upon agreed terms. The level of funding required to accomplish Bion's objectives is ultimately dependent on the success of its research and development efforts, which at this time is unknown. Currently, the Company estimates that no less than approximately $5,000,000 will be required during the year ending June 30, 2003. Bion anticipates spending $1,300,000 on research and development efforts and the balance on compensation and general business overhead. Going Concern In connection with their report on Bion's Consolidated Financial Statements for the year ended June 30, 2002, BDO Seidman, LLP, the Company's independent certified public accountants, expressed substantial doubt about Bion's ability to continue as a going concern because of recurring net losses and negative cash flow from operations. Bion has stockholders' equity of $2,929,000, a cumulative deficit of $56,474,000, limited current revenues and substantial current operating losses. Operations are not currently profitable; therefore, readers are further cautioned that Bion's continued existence is uncertain if it is not successful in obtaining outside funding in an amount sufficient for it to meet its operating expenses at its current level. Management plans to continue raising additional capital to fund operations until Bion system and BionSoil(R) sales are sufficient to fund operations. BUDGET GROUP: Committee Signs-Up Ashby & Geddes as Local Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Budget Group Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain, effective August 8, 2002, Ashby & Geddes P.A. as the Delaware counsel to the Committee. The services that Ashby & Geddes will be rendering these services to the Debtors will include, but will not be limited to: -- Providing legal advice as Delaware counsel regarding the rules and practices of this Court applicable to the Committee's powers and duties as an official committee appointed under Section 1102 of the Bankruptcy Code; -- Providing legal advice as Delaware counsel regarding the rules and practices of this Court applicable to any Disclosure Statement and Plan filed in these cases and with respect to the process for approving or disapproving Disclosure Statements and confirming or denying confirmation of a Plan; -- Providing legal advice as Delaware counsel regarding the Debtors' motions to establish bidding procedures and to sell assets and to obtain postpetition financing; -- Preparing and reviewing as Delaware counsel applications, motions, complaints, answers, orders, agreements and other legal papers filed on or behalf of the Committee for compliance with the rules and practices of this Court; -- Appearing in Court as Delaware counsel to present necessary motions, applications and pleadings and otherwise protecting the interests of the Committee and unsecured creditors of the Debtors; and -- Performing any other legal services for the Committee as the Committee believes may be necessary and proper in these proceedings. Ashby & Geddes will be working together with the Committee's lead counsel, Brown Rudnick Berlack Israels LLP to ensure that there will be no unnecessary duplication of effort on behalf of, or services rendered to, the Committee. Apart from being reimbursed for the actual, necessary expenses it incurs, Ashby & Geddes will be compensated on an hourly basis. The hourly rates applicable to Ashby & Geddes attorneys and paralegals that will represent the Committee are: Attorney Position Rate --------------------- ----------- ---- William P. Bowden Partner $350 Christopher S. Sonchi Partner 310 Ricardo Palacio Associate 250 Travis Vandell Associate 145 Christina M. Garvine Paralegal 130 Other professionals at Ashby & Geddes may perform services for the Committee. (Budget Group Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Retains Appraisers Associated for Stonewall Assets -------------------------------------------------------------- Burlington Industries, Inc., together with its debtor-affiliates sought and obtained the Delaware Bankruptcy Court's authority to employ Appraisers Associated in the ordinary course of business, nunc pro tunc to July 8, 2002. The Debtors requires Appraisers Associated to conduct a detailed analysis and appraisal of the buildings, structures and other real property that make up the Stonewall facility. Appraisers Associated is entitled to payment upon its completion of the appraisal of the facility. Here, Appraisers Associated will charge $125 per hour for a total amount of $10,000 in connection with its services. (Burlington Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Burlington Industries' 7.250% bonds due 2027 (BRLG27USR1) are trading between 26.5 and 28.5 . See http://www.debttraders.com/price.cfm?dt_sec_ticker=BRLG27USR1 for real-time bond pricing. CARIBBEAN PETROLEUM: Taps Gaztambide as Real Property Appraisers ---------------------------------------------------------------- Caribbean Petroleum LP and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to employ Carlos E. Gaztambide and Associates, Inc., as a real property appraiser. The Debtors explain to the Court that the purpose of the appraisals is to assist the Debtors in their efforts to obtain post-petition financing and to confirm a plan of reorganization. The Debtors arranged to obtain post-petition financing from WesternBank in conjunction with their currently pending plan of reorganization. Additionally, the Debtors are also exploring the possibility of obtaining additional post-petition financing secured by a lien on the real estate on which CPR's dock and pipeline are located. The Real Estate is currently subject to a mortgage in favor of FirstBank Puerto Rico. The Debtors believe there is equity in the Real Estate above what is owed to FirstBank which could be used to secure additional debtor in possession or exit financing. In order to proceed with the process of negotiating additional post-petition financing, the Debtors require a current appraisal of the Real Estate. Without a current appraisal, potential postpetition lenders will have no way to determine the amount of equity that may exist above the amount owed by FirstBank. Gaztambide is expected to: a) perform or update appraisals of the Real Estate in connection with various matters which may have or may arise in this proceeding, including the Debtors' efforts to obtain postpetition financing, confirmation of a plan of reorganization and other motions which may require the services of a real estate appraiser; b) prepare on their behalf as debtors-in-possession necessary appraisal reports, asset valuations, and other papers; and c) testify as an expert, in court, in deposition or otherwise, regarding any appraisal of and/or the value of any real estate appraised. Mr. Gaztambide has indicated that he intends to subcontract with David Adams, another appraiser, to complete the appraisal of the Real Estate, which includes complex mechanical structures relating to the dock and pipeline. Mr. Gaztambide points out that Mr. Adams specializes in appraising mechanical structures, and Mr. Gaztambide requires Mr. Adams' appraisal expertise to provide the Debtors with an accurate appraisal. The Debtors will pay Gaztambide $35,000 preparation of an appraisal report. To the extent Gaztambide is required to testify on behalf of the Debtors, Mr. Gaztambide will charge $125 per hour. The Debtors further otained approval from the Court to pay Gaztambide the sum of $30,000, on an interim basis. Gaztambide explains that the money is needed to defray the immediate costs of performing an appraisal of the Real Estate. 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. CE GENERATION: S&P Cuts Rating on $356-Mill. Senior Debt to BB- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on CE Generation LLC's $356 million in senior debt, due 2018, to double-'B'-minus from triple-'B'-minus. The outlook is developing. CE Generation is owned 50% by MidAmerican Energy Holdings Co. (MEHC: BBB-/Positive/--) and 50% by El Paso Energy Corp. (BBB+/Watch Neg/A-2). CE Generation is the holding company for MEHC's interests in its U.S. qualifying facilities (QF). Total capacity of CE Generation's 13-project portfolio is about 817 megawatts. "While the cash flows come from a number of projects, the portfolio effect is mitigated by the fact that the debt service at CE Generation is subordinate to approximately $566 million of project level debt," said credit analyst Peter Rigby. In addition, $368 million of the project level debt is serviced from cash flows that come from Southern California Edison Co. (SCE: BB/Developing/-). Over time, cash flows will increasingly come from the Salton Sea Funding Corp. (BB/Developing/--). In addition, CE Generation will increasingly be exposed to merchant risk as QF contracts expire in 2003 and 2009, as well as, market price exposure to SCE's avoided costs after 2007. QF projects are located in New York, Texas, California, and Arizona. Should the rating on SCE improve, the potential exists for the rating on CE Generation to also improve. CELLSTAR CORP: Expects to Redeem All 5% Conv. Notes by Oct. 15 -------------------------------------------------------------- CellStar Corporation (Nasdaq: CLST), a global value-added wireless logistics services leader, expects to redeem on or before October 15, 2002, all of its outstanding 5% Convertible Subordinated Notes due October 15, 2002. The Notes are redeemable at principal amount, plus accrued interest to October 15, 2002, of $25.00 per $1,000 principal amount, for a total redemption price per note of $1,025.00. On October 15, 2002, the redemption price and accrued interest on each outstanding note will become due and payable. Interest will cease to accrue. As of October 15, 2002, the Company will have $17.4 million outstanding in principal and interest on the Notes. "The payment to be made on October 15, 2002, represents the final step of the restructuring of our previously outstanding $150 million Convertible Subordinated Notes," said Senior Vice President and Chief Financial Officer Robert Kaiser. "Our focus on cash throughout the year allows us to retire these notes without putting a strain on our working capital needs." Noteholders who require further information should contact the Investor Relations Dept. at 972-466-5031. CellStar Corporation is a leading global provider of distribution and value-added logistics services to the wireless communications industry, with operations in Asia-Pacific, North America, Latin America and Europe. CellStar facilitates the effective and efficient distribution of handsets, related accessories and other wireless products from leading manufacturers to network operators, agents, resellers, dealers and retailers. In many of its markets, CellStar provides activation services that generate new subscribers for its wireless carrier customers. For the year ended November 30, 2001, the Company generated revenues of $2.4 billion. Additional information about CellStar may be found on its Web site at http://www.cellstar.com * * * As reported in Troubled Company Reporter's February 20, 2002, edition, Standard & Poor's said that it lowered its corporate credit rating on CellStar Corp., to 'SD' (selective default) from 'CCC-' and removed its ratings from CreditWatch, where they had been placed with negative implications on Sept. 6, 2001. The action reflects the recent completion of the exchange of the Carrollton, Texas, company's convertible subordinated notes due October 2002 for securities having a total value that is materially less then the original issue, said credit analyst Martha Toll-Reed. At the same time, Standard & Poor's lowered its rating on the subordinated debt to 'D' for the distributor of wireless communications products. As of Aug. 31, 2001, total outstanding debt was about $200 million. CIRTRAN: Posts $4.6MM Working Capital Deficit at March 31, 2002 --------------------------------------------------------------- Cirtran Corporation provides a mixture of high and medium size volume turnkey manufacturing services using surface mount technology, ball-grid array assembly, pin-through-hole and custom injection molded cabling for leading electronics OEMs in the communications, networking, peripherals, gaming, consumer products, telecommunications, automotive, medical, and semiconductor industries. Its services include pre- manufacturing, manufacturing and post-manufacturing services. Through its subsidiary, Racore Technology Corporation, the Company designs and manufactures Ethernet technology products. Its goal is to offer customers the significant competitive advantages that can be obtained from manufacture outsourcing, such as access to advanced manufacturing technologies, shortened product time-to-market, reduced cost of production, more effective asset utilization, improved inventory management, and increased purchasing power. Cirtran Corportation has sustained net losses of $425,757 and $2,933,084 for the three months ended March 31, 2002 and the year ended December 31, 2001, respectively. As of March 31, 2002 and December 31, 2001, the Company had an accumulated deficit of $13,506,249 and $13,080,492, respectively and a total stockholders' deficit of $3,884,044 and $6,942,377, respectively. In addition, the Company used, rather than provided, cash in its operations in the amounts of $677,205 and $288,724 for the three months ended March 31, 2002 and the year ended December 31, 2001, respectively. Since February of 2000, the Company has operated without a line of credit. Many of the Company's vendors stopped credit sales of components used by the Company to manufacture products and as a result, the Company converted certain of its turnkey customers to customers that provide consigned components to the Company for production. These conditions raise substantial doubt about the Company's ability to continue as a going concern. In view of the matters described in the preceding paragraphs, recoverability of a major portion of the recorded asset amounts shown in the Company's consolidated balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements on a continuing basis, to maintain or replace present financing, to acquire additional capital from investors, and to succeed in its future operations. Abacus Ventures, Inc. purchased the Company's line of credit from the lender. During the quarter ended March 31, 2002, the Company has entered into an agreement whereby the Company has exchanged common stock, issued to certain principles of Abacus, for a portion of the debt. The Company's plans include working with vendors to convert trade payables into long-term notes payable and common stock and cure defaults with lenders through forbearance agreements that the Company will be able to service. The Company intends to continue to pursue this type of debt conversion going forward with other creditors. The Company has initiated new credit arrangements for smaller dollar amounts with certain vendors and will pursue a new line of credit after negotiations with certain vendors are complete. If successful, these plans may add significant equity to the Company. There is no assurance that these transactions will occur. Cirtran's net sales decreased marginally to $641,330 for the three-month period ended March 31, 2002 as compared to $650,485 during the same period in 2001. This increase continues an upward trend started in the fourth quarter of 2001, from lower quarterly sales figures of $420,480 and $279,055 during the second and third quarters of 2001, respectively. Cost of sales decreased by 23%, from $545,478 during the three-month period ended March 31, 2001 to $419,116 during the same period in 2002. Gross profit margin for the three-month period ended March 31, 2002 was 34.6%, up from 16.1% for the same period in 2001. Cirtran believes this improvement is a reflection of its efforts to solicit higher margin business and improve inventory control procedures. The Company's overall net loss decreased 46.8% to 425,757 for the three-month period ended March 31, 2002, from $800,618 during the same period in 2001. Expenses are currently greater than revenues. Cirtran has had a history of losses. Its net loss from operations for the year ending December 31, 2001 was $2,160,262, and its net loss from operations for the three-month period ending March 31, 2002 was $298,394. The accumulated deficit was $13,080,492 at December 31, 2001 and $13,506,249 at March 31, 2002. Cirtran's current liabilities exceeded its current assets by $7,832,259 as of December 31, 2001 and by $4,661,141 as of March 31, 2002. The Company recorded negative cash flows from operations for the year ended December 31, 2001 and the three-month period ended March 31, 2002 of $288,724 and $677,205, respectively. On March 31, 2002, Cirtran had $500 cash on hand, as compared to $499 at December 31, 2001. The amount of checks written in excess of cash in bank decreased from $159,964 at December 31, 2001 to $149,677 at March 31, 2002. COLD METAL: Reviewing Permanent Reopening of Indianapolis Plant --------------------------------------------------------------- Cold Metal Products Inc., (Amex: CLQ) was investigating the possibility of permanently reopening its Indianapolis plant. Under an agreement with the United Steelworkers of America, Cold Metal has rehired 13 hourly employees and restarted manufacturing operations on a temporary basis. The agreement enables the plant to operate for 60 days as the company and union negotiate toward a new labor contract. Cold Metal secured U.S. Bankruptcy Court approval for the initiative late last week and began operations earlier this week. "This is an opportunity for us to accelerate our reorganization process," said Ray Torok, president and chief executive officer. "We'll be working with the USWA to hammer out an agreement that allows the plant to be profitable while providing a competitive compensation package for our employees. We appreciate the union's willingness to work with us in a very difficult circumstance in an effort to save jobs at the Indianapolis plant." Cold Metal permanently closed its unprofitable Indianapolis and Youngstown operations August 15, citing its inability to get continuing financing without the closures. The company filed for Chapter 11 bankruptcy protection on August 16. Torok said that while operations will be scaled back, Cold Metal would like nothing more than to keep the Indianapolis facility operating. "The long-term operation of the Indianapolis plant hinges on successful contract negotiations as well as support from our customers and lenders. If the pieces come together, Indianapolis can be a very viable operation," he said. A leading intermediate steel producer, Cold Metal Products, Inc., provides a wide range of strip steel products to meet the critical requirements of precision parts manufacturers. Through cold rolling, annealing, edge conditioning, oscillate winding, slitting, and cutting to length, the company provides value- added products to manufacturers in the automotive, construction, cutting tools, consumer goods and industrial goods markets. Cold Metal operates plants in Ottawa, Ohio; Roseville, Mich.; Hamilton, Ontario; and Montreal, Quebec. COMMUNICATION DYNAMICS: Seeks to Pay Prepetition Shipping Claims ---------------------------------------------------------------- Communication Dynamics, Inc., and its debtor-affiliates want the Court to give them authority to pay certain critical vendors' prepetition claims on account of shipping, storage and relates costs. The Debtors want to pay certain prepetition obligations owed to: A) Shipping Obligations The Debtors must pay various prepetition incidental expenses on account of transportation, storage, packaging, oversight, inspection and related services. The Debtors are current to their obligations owed to the Carriers, to the extent that any amount remain owing, the Debtors request authority to pay the Carriers up to $50,000. B) Import Charges Most, if not all of the goods imported into or exported out of the Unites States are subject to import or export charges, which includes tariffs, customs duties, excise taxes and similar charges. The Debtors want to pay such Import Charges up to $50,000 in the aggregate. c) Essential Services The Debtors pay various essential services, including security and alarm services, services related to information systems and emergency maintenance personnel. The Debtors tell the Court that they need to pay the Essential Services Provides an aggregate amount of up $50,000. d) Miscellaneous Expenditures The Debtors may determine any additional de minimis prepetition obligations which remained to be identified. The Debtors wish to pay any additional obligation up to $150,000 with no vendor receiving more than $15,000. The Debtors explain that paying prepetition obligations to the critical vendors will enable the Debtors to continue to receive and deliver the goods and services that are the lifeblood of their businesses and permit the Debtors to preserve their going concern value. 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. Jeffrey M. Schlerf, Esq., at The Bayard Firm represents 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. DADE BEHRING: Consummates Debt Workout & Exits Ch. 11 Bankruptcy ---------------------------------------------------------------- Dade Behring (OTC Pink Sheets: DBEHV), one of the world's largest clinical diagnostics companies, has successfully consummated its debt restructuring, establishing a sound capital structure to support the long term growth potential of its consistently strong operating business. Accordingly, Dade Behring exited from its August 1, 2002, pre-packaged Chapter 11 filing, and issued its first publicly tradable stock. Dade Behring enters the public marketplace with six consecutive quarters of profit and revenue growth, supported by a growing installed instrument base in all of the company's business segments. "We are very pleased to have emerged within the expected time frame, with the right capital structure and debt level, publicly tradable securities, a new Board of Directors, and an excellent and growing operating business," said Jim Reid-Anderson, President and Chief Executive Officer. "I particularly want to thank our customers, employees and suppliers for their absolute loyalty throughout this period. Their confidence in Dade Behring underscores the enduring strengths of our business and the means by which we deliver value -- service, trust, quality and 'lab-smart' innovation. The Board and management of Dade Behring are committed to building these strengths for the long term benefit of our shareholders, employees, customers and communities." Pending its future registration on the NASDAQ, Dade Behring common equity will initially be traded in the over-the-counter market, with prices appearing in the pink sheets. The Company expects to complete NASDAQ registration within six months. The National Association of Securities Dealers has assigned Dade Behring equities the symbol DBEH. This symbol may or may not change once the company is listed on the NASDAQ. "Dade Behring is an established leader in what we believe to be a resurgent diagnostics industry," said Reid-Anderson. "Proper diagnosis plays a large and increasingly important role in both early therapeutic intervention and the subsequent health care cost containment. As the world's largest pure-play clinical diagnostics company, we've structured our business to focus on the most promising clinical diagnostic categories, and to provide both the highest level of service and the most valuable solutions to laboratory professionals upon whom physicians and patients worldwide depend." DADE BEHRING: Appoints New Seven-Member Board of Directors ---------------------------------------------------------- Dade Behring (OTC Pink Sheets: DBEHV), one of the world's leading global diagnostics companies, announced a new seven- member board of directors formed upon the company's scheduled September 30 emergence from its pre-packaged Chapter 11 filing. Board members will include Leigh Anderson, founder and CEO, Plasma Proteome Institute; James G. Andress, Former Chairman, President and CEO, Warner Chilcott; Jeffrey D. Benjamin, Senior Advisor, Apollo Management; Bradley Pattelli, Director, Angelo, Gordon; Richard W. Roedel, Co-Founder and Principal, Pinnacle Ventures; Alan S. Cooper, Principal, Redwood Capital; and Jim Reid-Anderson, President and Chief Executive Officer of Dade Behring. "I am very pleased to have this impressive and respected group of business leaders provide guidance and strategic support to our management. There is no doubt in my mind that they will help us position Dade Behring for the future," said Reid- Anderson. "Dade Behring will soon be a newly public corporation, with significantly reduced debt, a very loyal and committed group of customers and employees, and enhanced growth potential following successful emergence from our pre-packaged Chapter 11. We look forward to an extremely bright future." Leigh Anderson has served in his current role with Plasma Protein Institute since 2002. Prior to that time, he held various key leadership positions at Large Scale Biology Corporation, including Chief Scientific Officer, Chief Executive Officer, and Board member. He also co-founded the Molecular Anatomy Program at the U. S. Department of Energy's Argonne National Laboratory. Anderson has a Ph. D. in Molecular Biology from Cambridge University and a B.A. in Physics from Yale University. Prior to joining Warner Chilcott, James Andress served as President, CEO and COO at Information Resources, Inc.; Chairman of Beecham Pharmaceuticals; President and CEO of Sterling Drug; and President of the Home Health Care Division of Abbott Laboratories. He also has worked as a management consultant at Booz, Allen & Hamilton. His corporate board memberships include Information Resources, Inc.; the Allstate Corporation; Option Care; Sepracor, Inc.; and Xoma Corporation. Andress graduated from the U.S. Military Academy at West Point with a B.S. in Engineering and holds an M.B.A. from the Wharton School at the University of Pennsylvania. Jeffrey Benjamin has been a Senior Advisor to Apollo Management since 2002. Before that time, he worked at Libra Securities and its predecessors in various positions including Co-CEO. Libra Securities is a broker dealer specializing in high yield and distressed securities. He also has been a Managing Director at UBS Securities, a Partner at Apollo Management and part of the high yield bond group at Salomon Brothers. Benjamin's current corporate board positions include Exco Resources, Inc.; Chiquita Brands International, Inc.; and McLeodUSA. Benjamin holds an M.S. in Management from the Sloan School of Management at MIT and a B.A. from Tufts University. Richard Roedel has been with Pinnacle Ventures, which he co- founded, since 2000. Previous positions include Chairman and CEO of BDO Seidman, the renowned U.S. accounting firm and member firm of BDO Binder. Roedel graduated from Ohio State University with a degree in Accounting and Economics and is a C.P.A. Bradley Pattelli is currently a Director with Angelo, Gordon & Co. Since 1998, he has specialized in the analysis of leveraged companies and special situations. Prior to joining Angelo, Gordon, Pattelli was a Co-Portfolio Manager for a startup long- short equity investment firm. In addition, Brad has worked as a Financial Consultant with Merrill Lynch and as a Quantitative Analyst with Salomon Brothers. Pattelli graduated from the University of Notre Dame with a B.S. in Electrical and Computer Engineering. He also holds an M.B.A. from Columbia Business School and is a Chartered Financial Analyst. Alan Cooper has spent the last ten years as a portfolio manager and research analyst for two event-driven hedge funds. For the prior eight years, Cooper practiced corporate and securities law. Previous board experience includes Hills Stores Inc., Younkers Inc., Banyan Strategic Land Fund and Specialty Catalogue Corp. Cooper has an B.S. degree in economics from the Wharton School at the University of Pennsylvania and a J.D. degree from the University of Pennsylvania Law School. "The extraordinary quality and broad business experience of this new Dade Behring board will add greatly to the company's long- term potential," said Reid-Anderson. "I am proud to be a part of this board, as well as to lead the 6,000 worldwide Dade Behring employees. Dade Behring is poised and well positioned for enhanced growth and profitability." With 2001 revenues of $1.23 billion, Dade Behring is among the world's largest clinical diagnostics companies. It offers a wide range of products and systems for diagnostics testing, making it today's best resource in this field. The company is headquartered in Deerfield, Illinois, and has operations in 43 countries. Additional company information is available on the internet at http://www.dadebehring.com ELEC COMMS: Annual Shareholders' Meeting to Convene on Nov. 26 -------------------------------------------------------------- The annual meeting of shareholders of eLEC Communications Corp., a New York corporation, will be held at the Company's executive offices located at 543 Main Street, New Rochelle, New York 10801 on Tuesday, November 26, 2002 at 10:00 A.M., local time, for the following purposes: 1. To approve the sale of substantially all of the assets of Essex Communications, Inc., eLEC's wholly-owned subsidiary, pursuant to the Asset Purchase Agreement dated September 3, 2002, between eLEC and Essex, on the one hand, and Essex Acquisition Corp., a wholly-owned subsidiary of BusinessOnline.com, Inc., on the other hand, 2. To elect three directors to eLEC's Board of Directors for the ensuing year; and 3. To consider and act upon such other business as may properly come before the meeting. The Company's Board of Directors has fixed the close of business on Wednesday, September 25, 2002 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting and at any adjournment or postponement thereof. * * * As previously reported, ELEC Communications Corp., (OTCBB:ELEC) announced that one of its wholly-owned subsidiaries, Telecarrier Services, Inc., filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. EMMIS COMMS: Surpasses Fiscal Second Quarter Earnings Guidance -------------------------------------------------------------- Emmis Communications Corporation (Nasdaq: EMMS) announced revenues and cash flow for its second fiscal quarter ending August 31, 2002. Net revenue for the quarter was $143.2 million and Broadcast Cash Flow was $57.3 million. On a pro forma basis, after giving effect to the sale of our Denver radio stations, net revenue increased 1.3% and BCF increased 2.6%. As reported, compared to the same quarter for the prior year, net revenue was down slightly, whereas BCF was up slightly. These results exceed revenue guidance of $138.8 million and cash flow guidance $54.5 million, as well as Wall Street estimates for revenues and cash flow. Earnings Per Share before accounting charge and extraordinary loss was $0.04, also exceeding Wall Street estimates. Another measure the company uses to determine performance is Free Cash Flow, which it defines as net revenues less segment operating expenses, corporate expenses, interest expense (including interest associated with its 12-1/2% Senior Discount Notes), cash taxes, capital expenditures, and preferred dividends. For the 2nd Quarter, FCF was $15.2 million compared to $7.2 million in the same quarter of the prior year. "We had a tremendous quarter -- and our next quarter looks much stronger," Emmis Chairman and CEO Jeff Smulyan said. "We exceeded the guidance we set forth in July and have continued to consistently reduce our leverage. Most importantly, our television division has made remarkable gains in audience and revenue, and our radio group has had significant gains in audience and revenue in all of our markets. Even in New York City, where we have faced considerable competition, the last ratings and revenue pacings indicate we are meeting the challenge. In an uncertain economy, our people have performed extremely well. This company owes a debt of gratitude to every one of our employees." After Tax Cash Flow for the quarter was $26.4 million or $0.50 per diluted share as compared to $22.6 million and $0.47 per share for the same quarter last year. During its 2nd quarter, the company amended its credit facility to provide for up to a $60.2 million redemption of its 12-1/2% Senior Discount Notes due in 2011. The amendment also reduced Emmis' interest cost on $500.0 million of its bank debt by at least 1%. In addition, the company announced in mid-June that it had appointed Ernst & Young LLP as the company's independent auditor, replacing Arthur Andersen LLP. Emmis Communications is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis' 18 FM and 3 AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, 15 television stations, award-winning regional and specialty magazines, and ancillary businesses in broadcast sales and publishing. * * * As reported in Troubled Company Reporter's August 5, 2002 edition, Standard & Poor's Ratings Services assigned its single- 'B'-plus bank loan rating to the $500 million senior secured term loan B of Emmis Operating Co. All other ratings on Emmis and its parent company, Emmis Communications Corp., including the single-'B'-plus corporate credit rating, are affirmed. The outlook is stable. ENCOMPASS SERVICES: Trading on Pink Sheets Under ESVN Symbol ------------------------------------------------------------ On October 1, 2002, the New York Stock Exchange, Inc., NYSE, suspended trading of the common stock of Encompass Services Corporation (Pink Sheets:ESVN) and notified the Company that it would submit an application to the Securities and Exchange Commission to delist the Company's common stock. In its decision to immediately suspend trading, the NYSE stated that it took this action due to the abnormally low selling price of the Company's common stock, which closed at $0.14 on September 30, 2002. The NYSE has also indicated that the Company's announcement on October 1, 2002 that the successful completion of the Rights Offering is considered highly unlikely also contributed to the NYSE's decision to immediately suspend trading of the Company's common stock. The NYSE had previously notified the Company on July 22, 2002 that trading of its common stock would be suspended if the sales price for the common stock remained below the NYSE's continued listing criteria through January 2003. In order to increase the per share trading price, the Company proposed to effect a reverse stock split and sought shareholder approval of a reverse stock split at the Special Meeting of Shareholders scheduled for October 15, 2002. The Company is evaluating whether to withdraw this proposal from consideration at the Special Meeting. The common stock presently trades on the over-the-counter market "pink sheets" under the symbol "ESVN". The Company is also working to have the common stock trade on the OTC Bulletin Board. The Company, its directors, executive officers and certain members of management and employees may be considered "participants in the solicitation" of proxies from the Company's shareholders in connection with the transactions being proposed at the Special Meeting. Information regarding such persons and a description of their interests in the transactions are contained in the Company's Proxy Statement and Annual Report on Form 10-K filed with the SEC. Additional information regarding the interests of those persons may be obtained by reading the proxy statement and prospectus relating to the special meeting and rights offering. 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: Manatt Phelps Seeking Relief from Compensation Orders ------------------------------------------------------------ Pursuant to the Application and Order retaining Manatt, Phelps & Phillips LLP as Rex Roger's counsel, Enron Corporation, together with its debtor-affiliates will pay its compensation in accordance with the Fee Orders, the Bankruptcy Code and local rules for the Southern District of New York. Specifically, these orders and rules require Manatt to detail the services that were provided in its fee statements and fee applications, which may be redacted to protect applicable privileges. However, Manatt contends that simply redacting fee statements, fee applications and time records are not sufficient to protect applicable attorney-client and work-product privileges and the confidentiality of the ongoing Investigations. Accordingly, Manatt asks the Court for limited relief from the Fee Orders to limit the dissemination and distribution of its time records. Michael Rauh, Esq., at Manatt, Phelps & Phillips LLP, in Washington, D.C., tells the Court that limiting the access to time records is critical to protect the confidentiality of the information conveying the Employee's roles in the Investigations, as well as the circumstances and status of the Investigations. Mr. Rauh explains that the number and nature of matters in which Manatt is acting as Special Employees' Counsel, Manatt's time records, even in redacted form, will often convey a significant amount of confidential information about the Investigations. "This is not information that the Debtors, the Employees, or the government would necessarily want to become public, and Manatt wishes to protect the confidentiality of its clients' activities," Mr. Rauh says. Many of them are or were executives at Enron and have professional and personal reputations in their communities, which should be protected. The time records also reveal a substantial number of communications with government officials, staffers and investigators from Congress, DOJ, SEC, CFTC, FERC and other governmental agencies which, if filed, may reveal highly confidential and privileged information that may harm Manatt's clients or the Debtors. Mr. Rauh points out that the sensitive nature of the substantial portion of Manatt's work for Enron's Employees necessitates the protections requested by this motion. In addition, Mr. Rauh continues, even information that first appear innocuous, may, upon examination, allow other parties to discover confidential, sensitive or privileged information. Thus, the information that is already available to the public and the public's fascination with this bankruptcy case increases the risk that filing time records would be insufficient to protect the clients' privileges and legitimate interests in confidentiality. Taking these factors into consideration, Judge Gonzalez allows Manatt to file its fee applications, fee statements and related documents and records in accordance with the Fee Orders and other applicable orders and guidelines, except: (a) Distribution of Manatt's time records will be limited to Chambers, the Chairman and Professional Staff of the Fee Committee, counsel for the Debtors, counsel for the Creditors' Committee, the U.S. Trustee and any other party specifically designated by the Court. Any party reviewing Manatt's time records will be required to maintain the confidentiality of the information and will not publicly file or provide the time records, directly or indirectly, or by any means or in any manner whatsoever, to anyone other than those allowed parties. Any recipient of Manatt's time records will limit access to the materials to Attorney Eyes Only; (b) Manatt will publicly file as part of its fee applications and fee statements a summary schedule containing the name of the professionals that worked on the case during the period covered by the fee statement or fee application, his or her position at Manatt, the year that the professional was licensed to practice, the hours worked by each professional, the hourly rate for each professional and the aggregate amount billed for the period covered by the fee statement or fee application. The requirements of the Fee Committee Guidelines will be deemed satisfied upon the filing of the Summary Schedule and the dissemination of the time records to Chambers, the Fee Committee Staff, counsel for the Debtors, counsel for the Creditors' Committee and the U.S. Trustee; (c) Any party, other than those allowed by the Court, that wish to obtain any time records will submit a written request to Manatt explaining with specificity the basis for the request. Manatt will have 10 days to respond to the request and will use its reasonable efforts to resolve any request without judicial intervention. In the event Manatt agrees to supply the requested information, the recipient will be required to maintain the confidentiality of the time records as set forth in the Order. If Manatt determines not to supply the requested information, the requesting party will then be entitled to file an appropriate motion or other pleading with the Court upon proper notice to interested parties; (d) The dissemination and disclosure of the time records in accordance with these procedures will not constitute a waiver of the attorney-client or attorney work-product privileges by Manatt, its clients or any other party; (e) Any objections to any fee application or fee statement, pleading or other filing that references the content of the time records in any manner will be filed in a form specified by the Order, with copies to the Court allowed entities; (f) All objections, pleadings or other filings will be filed with a cover sheet on the document or pleading reciting: The materials herein are filed pursuant to an Order of the Court dated August 8, 2002. Pursuant to said Order, the attached materials Are confidential and may be viewed only by The Chambers of the Honorable Arthur J. Gonzalez, Manatt Phelps & Phillips LLP, the Chairman and Professional Staff of the Fee Committee, counsel for the Debtors, counsel For the Official Committee of Unsecured Creditors and the U.S. Trustee. Copies of The attached materials are available solely From Manatt Phelps & Phillips or otherwise by Order of the Court under the procedures set Forth in the Order. (g) The cover sheet will contain the caption of the case, designated the party filing the materials and be signed by counsel for said party. Only the cover sheet will become part of the public record. The pleadings or other materials being filed will be maintained in a sealed envelope to which a copy of the cover sheet will also be affixed; and (h) With respect to any hearing concerning fee statements, fee applications, time records or related documents or records, the necessary arrangements to maintain the confidentiality of the time records will be addressed with the Court in advance of the hearing. (Enron Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) EOTT ENERGY: Interest Nonpayment Spurs S&P to Drop Rating to D -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its unsecured debt rating on Houston, Texas-based EOTT Energy Partners L.P. to 'D' from double-'C', following the failure of the company to make the bond interest payment due October 1, 2002. About $235 million of debt is affected. As the company previously indicated, it will be utilizing the 30-day grace period and a forbearance on its bank credit facilities to attempt to reach an agreement on restructuring its debt and to resolve outstanding issues with Enron Corp. A subsidiary of Enron is the general partner of EOTT. Since those efforts have been under way for months and have yet to produce any agreements, Standard & Poor's believes it is questionable whether the company will be able to successfully settle all of the necessary issues that will allow it to resume timely payments on its debt. DebtTraders reports that Eott Energy Partners/Fin.'s 11.000% bonds due 2009 (EOT09USR1) are trading between 57 and 59. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for real-time bond pricing. ERIE MUNICIPAL: S&P Hatchets Rating to BB+ Over Credit Concerns --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating to double- 'B'-plus from triple-'B'-minus on Erie Municipal Airport Authority, Pennsylvania's outstanding debt, issued for Erie International Airport, and removed the rating from CreditWatch, where it was placed with negative implications on September 20, 2001. The outlook is stable. The airport, along with all other North American airports, was placed on CreditWatch on September 20, 2001, in the wake of the terrorist attacks of September 11 and the ensuing precipitous drop in air traffic. "The rating downgrade reflects the material weakening of the airport's overall creditworthiness, while the stable outlook reflects the expectation that the airport's financial condition will recover and stabilize," said credit analyst Joseph Pezzimenti. More specific credit concerns include annual enplanements that have declined steadily in each year since 1998; a service area with stagnant population growth and below-average wealth levels; a nondiverse carrier mix and increasing reliance on US Airways; concern regarding the future operations of US Airways Inc. (corporate credit rating D/--/--) at the airport; slim cash flow coverage of about 0.79 times based on audited 2001 financials; a weak cash position; and a relatively high cost structure. These weaknesses are offset somewhat by the airport's relatively low debt burden with debt-per-enplaned passenger at $24.67 for fiscal 2001, which is expected to increase to $25.37. However, this credit strength is tempered somewhat by the airport's plan to issue $10 million in additional debt over the near term. For September 2001 through January 2002, passenger levels at Erie International faired worse than comparable facilities and the national recovery trend. However, for the months February 2002 through July 2002 passenger levels at Erie International have rebounded better then the national levels over the same period. The airport's credit fundamentals have weakened due the events of September 11, 2001, which caused the airport to rely on two carriers from predominantly three since Continental stopped service to Cleveland, causing uneven operational performance. US Airways and Northwest Airlines now pay about 80% of the airport's security costs and rent for public space. EXTRACTION TECH.: Accepting Sealed Bids for Assets Until Oct. 24 ---------------------------------------------------------------- The trustee for Extraction Technologies of Virginia, Inc., an operation now in Chapter 7, seeks buyers for premier polyethylene and pulp recycling equipment that puts the green back into the environment and allows better-funded operations to boost their bottom lines in eco-friendly ways. Tranzon Fox, of northern Virginia, is managing the absolute, sealed-bid auction for the nearly-new recycling equipment on behalf of bankruptcy trustee Keith L. Phillips. Inventory includes a Regenex Continuous Batch Fiber Recovery System, Previero/Sorema Polyethylene Recycling System, grinders, blowers, tanks, conveyors, pumps, motors, baler, drying equipment, agglomerator, screeners, silo hopper, PLC control panel and other spare parts and equipment. Previero, an Italian company, is a world leader in manufacturing polyethylene (think plastic grocery bags) recycling equipment. Deadline for sealed bids is October 24, 2002 at 4:00 p.m. (EDT). Previews of the equipment are scheduled at the plant's Lawrenceville, VA location on October 16 and October 17 from 9:00 a.m. - 3:00 p.m. (EDT). On the plastics side, the equipment is of particular interest to the wood preservative, landscaping and homebuilding industries in need of alternatives to a type of pressure-treated lumber full of an arsenic-based pesticide the Environmental Protection Agency (EPA) plans to ban starting in January of 2004, according to Dale Daniel, former E.T. plant manager. Now groups are scrambling for safer alternatives. "With the demand for recycled polyethylene expected to explode after the beginning of next year, the buyer of this equipment is likely to be in a very favorable position, especially considering that the replacement cost of the Previero 'poly line' is well in excess of $1 million," says Douglas W. Zeisel, of the McShane Group in Timonium, MD, which is overseeing the liquidation of Extraction Technologies. According to Stephen Karbelk, executive vice president of Northern-VA based Tranzon Fox, "Extraction Technologies offers industries using recycled paper and plastics an opportunity to become more self sufficient by supplying their own raw materials. Or, another recycler may buy this equipment in anticipation of the high demand for quality recycled plastics for the composite wood industry." For more information about the auction contact Tranzon Fox's Stephen Karbelk at (888) 621-2110 or skarbelk@tranzon.com FEDERAL-MOGUL: Equity Committee Turning to Deloitte for Advice -------------------------------------------------------------- After considering the merits of the case, the U.S. Bankruptcy Court for the District of Delaware under Judge Newsome permits the Equity Committee in the Chapter 11 cases of Federal-Mogul Corporation and its debtor-affiliates to retain Deloitte & Touche, LLP as their consultant and financial advisor effective as of July 12, 2002. Judge Newsome, however, reduces Deloitte's fees to $30,000 for any single calendar month. Judge Newsome believes that Deloitte will not be taking up much task in these cases as the Equity Committee's financial advisor because the firm can use the work product of the other financial advisors. The Equity Committee originally proposed to compensate Deloitte $200,000 for the first five months of its engagement and $125,000 per month for the subsequent periods. Specifically, Deloitte is expected to: (a) Assist and advise the Equity Committee in its consultations with the Debtors and other statutory committees regarding the administration of the cases; (b) Assist and advise the Equity Committee in connection with its investigation of the financial condition of the Debtors and their affiliates, the operation of the Debtors' businesses and other matters relevant to the case or to the formulation of a reorganization plan; (c) Assist the Equity Committee in connection with its evaluation of any valuations prepared by the Debtors and other statutory committees and in performing any alternative valuation calculations; (d) Assist the Equity Committee in connection with the formulation or negotiation of a reorganization plan; (e) Assist the Equity Committee in connection with the analysis of the Debtors' asbestos liabilities; (f) Assist the Equity Committee in the analysis of the Debtors' business plan; (g) Assist the Equity Committee in analyzing other reports or analysis prepared by the Debtors or its professionals; (h) Assist the Equity Committee in analyzing the financial ramifications of any proposed transactions for which the Debtors seek Bankruptcy Court approval; (i) As deemed appropriate by Deloitte and the Equity Committee, attend and advise at meetings with the Equity Committee and its counsel and representatives of the Debtors and other interested parties; (j) As deemed appropriate by Deloitte and the Equity Committee, render expert testimony on behalf of the Equity Committee; and (k) Provide other necessary services, as may be requested by the Equity Committee and as agreed by Deloitte. The firm's standard hourly billing rates are: Partner $550 - 650 Senior Manager 475 - 550 Manager 425 - 475 Senior Consultant 325 - 375 Consultant 250 - 300 Paraprofessional 100 - 150 (Federal-Mogul Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) FRUIT OF THE LOOM: Wants More Time to File Claim Objections ----------------------------------------------------------- The FOL Liquidation Trust and the Unsecured Creditors Trust ask Judge Walsh to extend the deadline to file objections against various claims. Risa M. Rosenberg, Esq., at Milbank, Tweed, Hadley & McCloy, counsel for the FOL Trust, and Kay Standridge Kress, Esq., at Pepper Hamilton, counsel for the Unsecured Creditors Trust, remind Judge Walsh that the Trusts are required to complete the claims analysis and objection process for all Claims under the Plan. Specifically, the FOL Trust is charged with making and filing objections and paying allowed claims, on all claims except for Class 4B Claims and those reserved exclusively for resolution by the Unsecured Creditors Trust. On the other hand, the Unsecured Creditors Trust is charged with receiving distributions intended for holders of Allowed Class 4A Claims and distributing the funds when their claims are deemed allowed. The Unsecured Creditors Trust is also responsible for prosecuting, settling or otherwise resolving objections to Class 4A Claims. Ms. Rosenberg and Ms. Kress assure the Court that both the FOL Liquidation Trust and the Unsecured Creditors Trust are busy reviewing claims. Both parties have filed Omnibus Objections to Claims and have or are preparing distributions. Additionally, the Court recently established uniform procedures for objecting to claims. Ms. Rosenberg explains that the FOL Liquidation Trust is unable to complete its review or make distributions to Class 5 Claims until the Unsecured Creditors Trust has completed its Class 4 Claims objection process. Clingman & Hanger Management Associates, the Trust Administrator of the Unsecured Creditors Trust, filed its First Omnibus Claims Objection last month. The objected claims include: no amount owed claims; workers' compensation claims; benefit plan claims; no liability claims; claims to be reclassified; claims to be liquidated; amended claims; duplicate claims; no equity interest claims; and reduced amount claims. Pursuant to the Plan, the last date objections to claims are due, with the exception of NWI Claims, is October 30, 2002. The FOL Liquidation Trust and the Unsecured Creditors Trust believe that they will not be finished reviewing the claims by that date. Thus, the parties ask Judge Walsh for an extension until April 30, 2003 to effectively evaluate, prepare, file and resolve the claims. The Trusts request that the Order should be without prejudice to their right to seek further extensions to file objections. (Fruit of the Loom Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 609/392-0900) GALEY & LORD: Cuts Undrawn DIP Facility to $75 Million ------------------------------------------------------ As previously reported, on February 19, 2002, Galey & Lord, Inc., and each of its domestic subsidiaries filed voluntary petitions under Chapter 11 of Title 11, United States Code in the United States Bankruptcy Court for the Southern District of New York (Case Nos. 02-40445 through 02-40456 (ALG)). The Company and the subsidiaries remain in possession of their assets and properties and continue to operate their businesses and manage their properties as debtors-in-possession pursuant to Sections 1107(a) and 1108 of the Bankruptcy Code. On February 19, 2002, the Company and the subsidiaries filed a motion seeking to enter into a credit facility of up to $100 million in debtor-in-possession financing with First Union National Bank and Wachovia Securities, Inc. On February 21, 2002, the Bankruptcy Court entered an interim order approving the facility and authorizing immediate access to $30 million. On March 19, 2002, the Bankruptcy Court entered a final order approving the entire $100 million DIP financing. As permitted under the terms of the final DIP financing agreement, the Company has exercised its right to permanently reduce the Total Commitment (as defined in the DIP Agreement) under the DIP Agreement from $100 million to $75 million, effective September 24, 2002. At September 24, 2002, the Company had no outstanding borrowings under the DIP Agreement (except for an outstanding standby letter of credit of approximately $3.9 million) and the Company had domestic cash on hand of approximately $34.5 million. GENCORP INC: Reports Improved Performance for 3rd Quarter 2002 -------------------------------------------------------------- GenCorp Inc., (NYSE: GY) reported earnings per share of $0.19 for the third quarter compared to $0.07 for the comparable 2001 quarter, as operating profit margins increased. Third-quarter segment operating profits increased 16% to $22 million versus $19 million in the third quarter 2001. Revenue for the third quarter totaled $266 million versus $356 million for the comparable 2001 quarter, which included $107 million of revenue from Aerojet's Electronic and Information Systems business that was sold in October 2001. "I am very pleased with the progress that GenCorp is making," said Terry Hall, CEO. "We are seeing a trend of increased earnings from operations and we have initiated the first step in our growth plan for our Aerojet unit by acquiring General Dynamics Space Propulsion and Fire Suppression Unit." "We are also moving forward with our real estate strategy. The Company has commenced negotiations on potential joint ventures related to the commercial development of some of its entitled land in Sacramento, and hopes to conclude these negotiations soon," he continued. "Also during the quarter, the Company completed an extensive review of its estimated future environmental costs on existing sites. This review was based upon updated technical, legal and cost analyses. As a result of this review, the Company increased its environmental reserves to $346 million from $253 million at May 31, 2002. The Company also increased the estimated amounts expected to be recovered from the U. S. Government to $235 million from $142 million at May 31, 2002. The adjustment to the environmental remediation reserves and estimated future cost recoveries did not affect net income for the quarter. Our net environmental remediation liability, the excess of environmental reserves over expected cost recoveries, was $111 million at August 31, 2002 and May 31, 2002," concluded Mr. Hall. Operations Review GDX Automotive Operating profit for the third quarter was $5 million compared to a loss of $5 million for the prior year quarter. The improvement in earnings is a direct result of restructuring which took place after the Draftex acquisition in December 2000. Since that time, the Company has closed four facilities and reduced headcount by 1600 positions. In September, GDX initiated plans to further improve its cost structure by closing a facility in Germany and reducing the size of its headquarters organization. Total costs of this restructuring will be $2 million. The restructuring charge will be included in the fourth quarter 2002 results. Third quarter operating margins were 3% compared to year-to-date margins of 4%. Operating margins are historically lower in the third quarter and reflect shutdown and retooling efforts by GDX's major automotive customers. Historically, GDX has experienced higher margins in its second and fourth quarters. The Company expects that trend to continue in the fourth quarter of 2002. Aerojet Aerojet's sales for the third quarter were $63 million as compared to $161 million for the comparable quarter in 2001. The change is primarily attributable to the divestiture of Aerojet's EIS business in October 2001. Excluding EIS, sales increased 17% over the prior year quarter. Third-quarter income from operations, excluding EIS and the decrease in income from employee benefit plans, increased slightly from the same quarter in 2001. Highlights since the last earnings release include: the acquisition of GDSS; the successful demonstration of Lockheed Martin's Atlas V core launch vehicle which will eventually be powered by Aerojet's Solid Rocket Motors; and a $43 million sole source contract award from Boeing Phantom works to develop "HyFly" dual combustion ramjet test flight engines for the Defense Advanced Research Projects Agency and Office of Naval Research. Contract backlog totaled $563 million and funded backlog totaled $350 million at August 31, 2002. Aerojet Fine Chemicals Sales at Aerojet Fine Chemicals increased to $13 million in the third quarter, up substantially from the $5 million reported in the prior year, reflecting higher production volumes. AFC's operating profit for the third quarter totaled $3 million compared to a loss of $6 million in the prior year. The improved operating performance reflects operational improvements and the realization of cost savings from restructuring programs completed in 2001. Prior year results were also negatively affected by inefficiencies caused by start-up production for several new products. Contract backlog totaled $43 million at August 31, 2002. The Company expects that AFC will be profitable in the fourth quarter of 2002. Other Information and Unusual Items Third-quarter interest expense was $4 million versus $10 million in the prior year quarter due to lower average outstanding debt balances and lower interest rates. Debt outstanding at November 2001 of $214 million reflected debt reduction in the fourth quarter of 2001 from the sale of EIS. During 2002, debt increased to $292 million at the end of the third quarter due primarily to working capital requirements, including needs for Aerojet's Atlas V Solid Rocket Motor contract. During the third quarter, the Company contributed property located in Michigan to the County of Muskegon. The Company will receive a tax deduction for this contribution that has decreased the Company's year-to-date effective tax rate by two percentage points. In October, the Company amended its existing credit facilities to include a new $115 million term loan which will mature in March 2007. Proceeds of the term loan were used to finance the acquisition of GDSS and to reduce amounts outstanding under its existing revolving credit facility. Third quarter income from retiree benefit plans, net of tax, totaled $5 million. Three senior management appointments were announced: Gregory Kellam Scott joined the Company as senior vice president, Law and general counsel and secretary. Mr. Scott replaces William Phillips who retired in accordance with previously announced plans. Also, Douglas Jeffries joined the Company as vice president and controller and Kari Van Gundy was hired as vice president and treasurer. Outlook The Company expects diluted earnings per share for fiscal year 2002 to be at the lower end of the guidance given previously of $0.90 to $1.00 per share, excluding unusual items and restructuring charges. Although the Company's forecasts are subject to numerous variables and uncertainties, the main risks in achieving the forecasted results include: (1) automotive production rates; (2) the timing of potential real estate transactions; (3) our ability to successfully complete testing and qualification of the Atlas V Solid Rocket Motor -- currently a test is scheduled for late October and absent any unforeseen delays, testing should be completed by fiscal year end; and (4) the ability of Aerojet Fine Chemicals to sustain targeted product delivery levels. GenCorp is a multi-national, technology-based manufacturer with leading positions in the automotive, aerospace, defense and pharmaceutical fine chemicals industries. Additional information about GenCorp can be obtained by visiting the Company's Web site at http://www.GenCorp.com * * * As reported in Troubled Company Reporter's July 11, 2002 edition, Standard & Poor's assigned its preliminary double-'B' and single-'B'-plus ratings to senior unsecured and subordinated debt securities, respectively, filed under GenCorp Inc.'s $300 million SEC Rule 415 shelf registration. At the same time, Standard & Poor's affirmed its existing ratings on GenCorp, including the double-'B' corporate credit rating. The outlook is stable. HAYES LEMMERZ: Asks Court to Disallow 34 Added Duplicate Claims --------------------------------------------------------------- Michael W. Yurkewicz, Esq., at Skadden Arps Slate Meagher & Flom LLP, in Wilmington, Delaware, asserts that a Claimant is not entitled to multiple recoveries for a single liability against a single Debtor. A Claimant is entitled only to a single satisfaction, if at all, of any particular claim of liability against a Debtor. By allowing the Claimants to assert their claims of liability under duplicate or multiple Proofs of Claims, Hayes Lemmerz International, Inc., together with debtor- affiliates and their estates risk multiple recoveries by a Claimant for a single claim or liability against a Debtor. In order to confirm that the Claimants have only a single claim of liability, to clarify the claims register in these cases and to simplify the claims allowance/disallowance process, the Debtors want the Court to disallow any duplicate claims filed by a Claimant. The Debtors have identified 34 additional duplicate Proofs of Claim totaling $17,851,153 since they filed their first omnibus objection to duplicate claims. Some of these claims include: Claim To Be Surviving Claimant Expunged Claim Amount -------- ----------- --------- ------ Amplicon Inc. 3416 2739 $70,186 Department of Treasury 718 419 17,039 Department of Treasury 710 513 119,708 Department of Treasury 709 514 414,609 Department of Treasury 4111 4061 35,038 E&R Industrial Sales Inc. 4070 3141 499,430 Industrial System Associates 7071 3048 5,755,301 National Refractories 112 97 80,573 Ohio Worker's Compensation 620 564 9,339,429 Oram Material Handling 4090 4089 97,799 Peacock Industries 1771 1770 59,379 PPG Industries Inc. 4075 3252 153,882 PPG Industries Inc. 4077 3115 611,275 PPG Industries Inc. 4078 3116 36,490 PPG Industries Inc. 4076 3117 129,625 PPG Industries Inc. 4074 3118 163,040 PPG Industries Inc. 4114 3119 108,841 PPG Industries Inc. 4079 3120 $134,584 Mr. Yurkewicz assures the Court that the disallowance of the Duplicate Claims will not prejudice the Claimants or their substantive rights or claims against the Debtors. (Hayes Lemmerz Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) HYDROGIENE CORP: Auditors Working to Reconstruct Fin'l Records -------------------------------------------------------------- A Hydrogiene Corp., (PinkSheets:HICS) company spokesperson stated activities have commenced by the company's accountants, Acheson and Carnago, CPA, to bring current the company's financial records prior to giving these records and documents to the company's outside auditors, who will then independently audit and certify preparatory to filing with the SEC. This action is required to bring the company back to a fully reporting status on the OTCBB, where it was situated prior to being delisted to the Pink Sheets as a result of not filing the required SEC quarterly and annual reports by the now-ousted former board of directors. Active steps, including Las Vegas Municipal law enforcement involvement, have been instigated and the company has been successful in locating and taking physical possession of the company books, records and other physical assets removed from the company's California headquarters and taken to the now identified storage facility in Las Vegas by the former chairman of the board, J. Christopher Kennedy and former President John Bailey, according to Hydrogiene Corp. Hydrogiene, the spokesperson added, has now taken another large step on its way back to full operations and recovery. INDIA GROWTH: Board Adopts Plan of Liquidation and Dissolution -------------------------------------------------------------- The India Growth Fund Inc., announced that at a meeting of the Board of Directors of the Fund held on October 3, 2002, the Board decided to submit to the Fund's stockholders a proposal to liquidate the Fund. It is anticipated that a plan of liquidation and dissolution will be submitted to stockholders at a meeting of stockholders expected to be held in December 2002. The decision by the Board to submit a plan of liquidation and dissolution to the stockholders follows consideration by the Board of various alternatives to allow the stockholders to realize net asset value for their shares. The Fund is a closed-end management investment company that seeks long-term capital appreciation through investment primarily in equity securities of Indian companies. The Fund is traded on the New York Stock Exchange under the trading symbol "IGF". The Fund's investment adviser is Unit Trust of India Investment Advisory Services Limited. LAND O'LAKES: Schedules Third Quarter Earnings Call for Oct. 24 --------------------------------------------------------------- Land O'Lakes, Inc., scheduled its third quarter earnings call for investors. The call will begin at 1:00 p.m., Eastern Time on Thursday, October 24, 2002. The call will be preceded by an earnings release that morning. The dial-in numbers are: USA - 1-888-928-9524 International - 1-712-271-0081 Passcode: "Land O'Lakes" A replay of the conference call will be available through October 31, 2002, at: USA - 1-800-945-7621 International - 1-402-220-3573 The replay access ID is #8654985 In a September 10th meeting with investors, Land O'Lakes said it expects EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization as calculated under the Land O'Lakes bond indenture) for the 2002 third quarter to be approximately $31 million. The company today re-affirmed this estimate. Actual monthly bond EBITDA for July and August was $13 million and $10 million, respectively. September bond EBITDA is expected to be approximately $9 million. The September figure is a preliminary estimate; final numbers will be made available in the October 24 news release. The company also commented on the recent announcement that Agway Inc., an unrelated cooperative, is filing petitions for reorganization under Chapter 11. Land O'Lakes sells Agway approximately $4.5 million in feed and seed products annually, which represents less than 0.1 percent of the company's total sales. Land O'Lakes current credit exposure to Agway amounts to approximately $330,000. Land O'Lakes -- http://www.landolakesinc.com-- is a national, farmer-owned food and agricultural cooperative, with sales of $6 billion. Land O'Lakes does business in all fifty states and more than fifty countries. It is a leading marketer of a full line of dairy-based consumer, foodservice and food ingredient products across the U.S.; serves its international customers with a variety of food and animal feed ingredients; and provides farmers and local cooperatives with an extensive line of agricultural supplies (feed, seed, crop nutrients and crop protection products) and services. For complete financial information, please refer to http://www.landolakesinc.com/OurCompany/PressRoomIndex.cfm * * * As reported in Troubled Company Reporter's August 2, 2002 edition, Moody's Investors Service placed the ratings of Land O'Lakes, Inc., and its trust subsidiary, Land O'Lakes Capital Trust I, under review for likely ratings downgrade. Ratings placed under review are: Land O'Lakes, Inc. * Senior implied rating of Ba2; * Senior secured rating of Ba2; * Senior unsecured issuer rating of Ba3; * Senior unsecured rating at Ba3. Land O'Lakes Capital Trust I * Trust preferred securities at Ba3. The action reflects the company's lower than expected operating performance and its weakening credit measures. Land O'Lakes core dairy business began generating operating losses as it continually faces stiff competition from market overcapacity and lower prices. LANGSTON CORP: Selling Real Property Assets to OPG Acquisitions --------------------------------------------------------------- Representing the bankruptcy trustee for the estate of the Langston Corporation, Binswanger/CBB recently negotiated the sale of a 373,000 square foot building on 32 acres to a partnership consisting of OPG Acquisitions, LLC and Strategic Realty Investments. The property is located at 111 Woodcrest Road. Sale price was $6,350,000. The principal buyer, OPG Acquisitions, LLC, is a subsidiary of O'Neill Properties Group, LP. The privately-owned suburban Philadelphia-based real estate development company specializes in the development and leasing of high-quality, cost-effective, state-of-the-art commercial office and industrial space. O'Neill is currently developing and leasing over four million square feet in the Greater Philadelphia market. Strategic Realty Investments is a full-service commercial real estate development company based in Malvern, PA. Langston Corporation was formerly a recognized leader in the pulp and paper industry, specializing in the design and manufacture of equipment used to produce and convert corrugated board. Headquartered in Philadelphia, PA, Binswanger/CBB is a member of Chesterton Blumenauer Binswanger, a global, full-service real estate organization with over 160 offices worldwide throughout the U.S.A., Canada, Mexico and South America, the U.K. and Europe, the Middle East, Asia, South Africa and Australia. LA PETITE ACADEMY: Fails to Beat Deadline for Form 10-K Filing -------------------------------------------------------------- La Petite Academy, Inc., is unable to file its Annual Report on Form 10-K for the fiscal year ended June 29, 2002 without unreasonable effort or expense due to the inability of management and the Company's independent auditors to complete the preparation of the required audited financial statements for the fiscal year for the reasons discussed below. As previously disclosed in the Company's Current Report on Form 8-K filed on September 16, 2002, the Company expects to take cumulative charges to earnings, which based on preliminary estimates are expected to be material. The charges are expected to include adjustments to be reflected in the Company's fourth fiscal quarter financial statements. The charges also may be reflected as a restatement of certain of the Company's historical financial statements and also may include a write-down of assets resulting from an analysis of the carrying value of certain long-term assets, including goodwill and other intangibles and deferred tax assets. The unaudited financials statements for the Company's quarterly periods in fiscal 2002 and the audited financial statements for the fiscal year ended June 30, 2001 and prior periods might need to be restated. To determine the scope, magnitude, timing and cause of the charges and to improve internal accounting controls, the audit committees of the boards of directors of the Company and its parent, LPA Holding Corp., are conducting an internal review. The audit committees have retained independent outside advisors, including legal counsel and accountants, to participate in the review. The audit committees and their advisors are still in the process of performing their internal review of the Company's financial statements. Until the audit committees and their advisors have completed their internal review, it is not feasible for management and the Company's independent auditors to complete the preparation of the Company's audited financial statements for the fiscal year ended June 29, 2002 and for the Company to file its Annual Report on Form 10-K in a timely manner without unreasonable effort or expense nor can a reasonable estimate of the Company's results for the period be made. With headquarters in Chicago, Illinois, La Petite Academy is the nation's largest privately held early childhood education company with over 725 schools in 36 states and the District of Columbia. Under the La Petite Academy umbrella, the Montessori Unlimited preschool represents the largest (32) chain of schools offering the Montessori approach to learning. * * * As previously disclosed in the Quarterly Report for the quarter ended April 6, 2002, La Petite Academy was not in compliance with certain of the financial covenants contained in the Credit Agreement for that quarterly period and had received on May 20, 2002 a limited waiver through the period ended August 15, 2002. On August 15, 2002, the Company and its parent, LPA Holding Corp., obtained another limited waiver of non-compliance with those financial covenants for that quarter from the requisite lenders under the Credit Agreement. The limited waiver received on August 15 provides that the lenders will not exercise their rights and remedies under the Credit Agreement with respect to such financial covenant non-compliance during the period through September 30, 2002. Consistent with its prior disclosure, the Company continues to expect that it will not be able to comply with certain of the financial covenants contained in the Credit Agreement for the fourth quarter of fiscal 2002. The Company and LPA Holding Corp. expect to continue discussions with the lenders under the Credit Agreement (a) to obtain a permanent waiver of the financial covenant non-compliance for the quarterly period ending April 6, 2002 and (b) to amend its financial covenants, commencing with the quarterly period ending on June 29, 2002, based on the Company's current operating conditions and projections. There can be no assurance that the Company and LPA Holding Corp., will be able to obtain such a permanent waiver and/or amendment to the Credit Agreement. The failure to do so would have a material adverse effect on the Company and LPA Holding Corp. LEGACY HOTELS: Will Release Q3 Earnings on October 17, 2002 ----------------------------------------------------------- Legacy Hotels Real Estate Investment Trust (TSX: LGY.UN) will release its third quarter earnings on October 17, 2002 to be followed by a conference call that day at 1:30 p.m. Eastern Time. Participating on the call will be members of Legacy's senior management. Investors are invited to access the call by dialing 416-641-6682 or 1-800-387-2917. You will be required to identify yourself and the organization on whose behalf you are participating. A recording of this call will be made available beginning at 3:30 p.m. on October 17, 2002 through to 3:30 p.m. on October 24, 2002. To access the recording please dial 1-800-633-8625 and use the reservation number 20932957. A live audio webcast of the third quarter conference call will be available via Legacy's website -- http://www.legacyhotels.ca . An archived recording of the webcast will remain available on the website until the next quarterly earnings conference call. Legacy is Canada's premier hotel real estate investment trust with 22 luxury and first class hotels across Canada with approximately 10,000 guestrooms. The portfolio includes landmark properties such as Fairmont Le Ch�teau Frontenac, The Fairmont Royal York and The Fairmont Empress. The management companies of Fairmont Hotels & Resorts Inc. operate all of Legacy's properties. * * * As previously reported in the June 21, 2002 issue of the Troubled Company Reporter, Standard & Poor's lowered its long- term corporate credit and senior unsecured debt ratings on Legacy Hotels Real Estate Investment Trust to double-'B'-plus from triple-'B'-minus. At the same time, the ratings on the Toronto, Ontario-based company were removed from CreditWatch, where they were placed February 14, 2001. The outlook is stable. LIFEGUARD LIFE: S&P Assigns 'R' Financial Strength Rating --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'R' financial strength rating to Lifeguard Life Insurance Co., after learning that the California Insurance Commissioner put the company into conservation on Sept. 27, 2002, to protect California policyholders and creditors. Lifeguard Life's parent company, Lifeguard Inc., an HMO, was seized and conserved by the California Department of Managed Health Care on Sept. 13, 2002, because of its weak financial position and inadequate financial reserves. Lifeguard Life is a California-domiciled life and disability insurance company, which mainly administers preferred provider organization benefit programs. An insurer rated 'R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. The rating does not apply to insurers subject only to nonfinancial actions such as market conduct violations. LOCATEPLUS: Seeking New Financing to Fund Planned Operations ------------------------------------------------------------ LocatePLUS Holdings Corporation was initially incorporated in Massachusetts in 1996 as Worldwide Information, Inc. In July 1999, the Company reincorporated in Delaware and changed its name to LocatePLUS.com, Inc. On August 1, 2001, the Company changed its name from LocatePLUS.com, Inc., to LocatePLUS Holdings Corporation as part of a corporate restructuring. As part of the restructuring, the Company created two wholly-owned subsidiaries, LocatePLUS Corporation and Worldwide Information, Inc. The restructuring was completed by commonly-controlled entities and, accordingly, was accounted for based on historical cost. The Company provides access to public information such as bankruptcies, real estate transactions and motor vehicles and drivers' licenses to commercial, private sector and law enforcement entities in the United States. In 1999 and prior periods, this information was delivered to customers on compact disks. In March 2000, the Company began providing information through the Internet. The Company has incurred an accumulated deficit of approximately $16.2 million through June 30, 2002 and used approximately $3.1 million of cash in operations during 2001 and $2.0 million during the six months ended June 30, 2002. The cash required to fund planned operations for the next twelve months exceeds the cash anticipated to be generated from the Company's planned operations by an average of approximately $150,000 per month, and thus management estimates that the Company will require approximately $1.8 million in additional cash to fund its planned operations for the next twelve months. As a result, management believes that additional financing will be required during 2003 to fund the Company's planned operations. There can be no assurance that such financing will be available to the Company on favorable terms, or at all. In the event that the Company's operations are not profitable or do not generate sufficient cash to fund the Company's business, or if the Company fails to obtain additional financing, the Company will have to substantially reduce its level of operations. These circumstances raise substantial doubt about the Company's ability to continue as a going concern. Revenue from the Company's Worldwide InformationTM CD-ROM product increased to $149,025 for the six months ended June 30, 2002 from $118,182 for the six months ended June 30, 2001, an increase of 26%. During 2002, LocatePLUS shipped more CD-ROM products including data from states for which it had no shipments in 2001. Revenue from its Internet-based product, LocatePLUS(TM), increased to $597,177 for the six months ended June 30, 2002 as compared to $317,875 for the six months ended June 30, 2001, an increase of 88%. This increase is attributable to an increase in customers and usage. The number of users of its Internet-based product increased to 8,190 on June 30, 2002 from 3,680 on June 30, 2001, an increase of 123%. The Company also realized $388,187 of revenue during the six months ended June 30, 2001 from certain database engineering services that it provided to a third party. It recognized no engineering service revenue during the six months ended June 30, 2002, and does not anticipate that it will recognize material engineering service revenue in the future. On August 12, 2002, LocatePLUS commenced its initial public offering of securities. The terms of the initial public offering, which began on August 12, 2002, provide that the Company will offer a minimum of $1,800,000 and a maximum of $3,600,000 (each before payment of underwriting commissions, expenses and other costs of the offering) in "Units". Each Unit consists of one share of the Company's Class B Non-voting common stock and a redeemable three year warrant to purchase one share of its Class A Voting common stock at an exercise price of $0.50 per share. As a result of this offering, the Company anticipates that it will raise approximately $1,514,000 (if the minimum number of Units is sold) to $3,188,000 (if the maximum number of Units is sold) after payment of underwriting commissions, expenses and other costs of the offering. In the event that its escrow agent fails to receive at least $1,800,000 in subscriptions from this offering by October 11, 2002, its escrow agent will return all subscriptions without interest or deduction. In the event that its escrow agent receives at least $1,800,000 in subscriptions on or before October 11, 2002, the Company may close on those subscriptions in one or more closings. As of September 26, 2002, it has not raised the minimum threshold in the offering. Management estimates that, if the minimum number of Units are sold in the initial public offering, the proceeds from the offering (together with income from operations) will be sufficient to permit the Company to continue operations for at least the next twelve months. LODGIAN INC: DDL-Kinser Wants More Time to Make 1111(b) Election ---------------------------------------------------------------- David A. Rosenzweig, Esq., at Fulbright & Jaworski LLP, in New York, informs the Court that DDL-Kinser Partners LLC holds a valid and perfected first mortgage on debtor Kinser Motel Enterprises' sole asset, a hotel located in Bloomington, Indiana. DDL is owed $2,500,000 in principal, plus default interest of $300,000, and costs since the case commenced. DDL's loan matured on August 5, 2002. The Hotel is in poor physical condition. As a result, substantial capital expenditures are needed for repairs and renovations necessary to regain a mid-scale franchise and a competitive market share and otherwise extend the economic life of the Hotel. These necessary capital expenditures could reach as much as $3,000,000. On August 21, 2002, Mr. Rosenzweig recounts that Lodgian, Inc., and its debtor-affiliates filed a proposed a plan under which the matured DDL secured loan would receive a treatment, which has yet to be determined by the Debtors. In that regard, the proposed disclosure statement states that the Debtors are negotiating with the various hotel lenders and hope to reach agreements. Thus, the proposed treatment of the hotel lenders is left unclear. The plan and disclosure statement expressly provide that a hotel lender will receive, at the relevant debtor's option, either cash equal to 100% of its allowed claim, the net proceeds of the sale of the collateral, the return of its collateral, a new note in the amount of its allowed claim, or any other treatment allowed by the Bankruptcy Code. Furthermore, the plan provides that if a lender rejects the plan, the Debtors may then seek to have the Court determine the value of the collateral, bifurcating the lender's claims under Section 506(a). Mr. Rosenzweig contends that a hotel lender like DDL cannot reasonably analyze this plan. DDL does not know what it will receive. In the disclosure statement, DDL is "anticipated" to be forced to a two-year extension of the loan on a physically deteriorating asset without any amortization of principal, and with interest payable at a below market rate given the risks involved. Mr. Rosenzweig observes that the Debtors do not appear to recognize any accrued default interest or costs in the amount of DDL secured claim. Most distressing is the fact that the Debtors make no provision for the substantial capital improvements that are necessary to obtain a new franchise and salvage the value of this hotel property. The risk remains squarely with DDL. If this "anticipated" treatment takes form, it will be unacceptable to DDL. In the event that a secured creditor is found to be undersecured after a valuation of its collateral for purposes of a particular proposed plan, Mr. Rosenzweig notes that Section 1111(b) of the Bankruptcy Code provides two options to the secured creditor in connection with the proposed plan of reorganization. The first option is that the secured creditor may elect to retain the secured and unsecured claims that resulted from a Section 506(a) valuation. On the other hand, it may elect to forgo its unsecured claim and instead have its claim treated under the plan as fully secured by the collateral to the full extent of its allowed claim. Whether the Debtors will seek to value DDL's collateral in connection with its proposed plan, and if it does, the outcome of the Court's valuation are critical components in any secured creditor's decision under Section 1111(b) in respect of a particular plan. As presently structured, Mr. Rosenzweig points out that DDL will not know whether the Debtors will proceed in this fashion and whether the Court's valuation will result in a deficiency claim until after the disclosure statement is approved, making the present deadline under Bankruptcy Rule 3014 inapposite. Moreover, the Section 1111(b) election may not be implicated at all in the event a consensual arrangement is reached, the Debtors otherwise propose proper treatment for DDL in the plan, or the Debtors' decide not to seek to value the collateral in connection with DDL's treatment under the proposed plan. Therefore, Mr. Rosenzweig concludes that it is premature to consider issues with respect to a Section 1111(b) election. Accordingly, the Court should extend DDL's right to make an election under Section 1111(b) until 10 days after a valuation, if any, of DDL's collateral made for purposes of DDL's treatment under the Debtors' proposed plan. (Lodgian Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) MACE SECURITY: Falls Below Nasdaq Minimum Listing Requirements -------------------------------------------------------------- Mace Security International, Inc., (Nasdaq:Mace), a leading manufacturer and marketer of security products and provider of car care services, announced that on October 2, 2002, the Company was advised by Nasdaq that its stock price was below $1.00 for 30 consecutive days. If the bid price of the Company's stock is not $1.00 or more for ten consecutive days (or longer, at the discretion of Nasdaq) on or before December 31, 2002, Nasdaq has advised the Company that it may be delisted. The Company may appeal any decision to delist its stock or it may apply to transfer its securities to the Nasdaq SmallCap Market. If the Company submits a transfer application to Nasdaq by December 31, 2002 and if the application is approved, the Company will be afforded the 180 calendar day SmallCap Market grace period or until March 31, 2002. The Company may also be eligible for an additional 180-calendar day grace period provided that it meets the initial listing criteria for the SmallCap Market under Nasdaq Marketplace Rules. Furthermore, the Company may be eligible to transfer back to the Nasdaq National Market if, by September 29, 2003, its bid price maintains the $1.00 per share requirement for 30 consecutive trading days and it has maintained compliance with all other continued listing requirements on that market. The Company's net book value was $64.8 million as of June 30, 2002. In addition, Mace has $104 million in total assets including approximately $65 million of real estate in high traffic retail areas and $7.6 million in cash and cash equivalents. In light of Mace's strong financial position, the Company believes that its shares are significantly undervalued. Mace Security International, Inc., is a leading a manufacturer of less-than-lethal defense sprays and electronic security products for consumers, as well as a marketer of safety and security products worldwide. Mace is also a leading provider of car care services. Additional information about Mace is available at http://www.mace.com MARINER: Stipulation Lifts Injunction Against Class Claims ---------------------------------------------------------- Mariner Post-Acute Network, Inc., together with its debtor- affiliates and the representative creditors of the unnamed class members of the class action lawsuit pending before the District Court, City and County of Denver, Colorado, entitled, "George Salas, et al. v. GranCare, et al., Civil Action Number 96-CV-4449," agree to a limited relief from the automatic stay and discharge injunction to permit them to proceed with the State Court Action for the sole purpose of pursuing decertification. The Class Representatives initiated the State Court Action in which they asserted contract, tort and consumer protection claims individually and on behalf of 800 other nursing home residents in Cedars Healthcare Center, Inc., one of the affiliate Debtors. The Plan provides for general unsecured claims under Class UP-1 to receive pro rata distributions from the MPAN General Unsecured Claims Distribution Fund. Accordingly, the Class Representatives timely filed two proofs of claim -- MPAN Claim No. 1309 and MPAN Claim No. 2763 -- each for $170,798,018 and asserted both compensatory and punitive damages. The Class Representatives contend that $83,704,579.61 of the Class Claim should be treated in Class UP-1 under the Plan, and the remainder would be treated in Class UP-3. The Class Representatives also filed individual claims: Creditor Name Claim No. Claim Amount ------------- --------- ------------ Luanna Clapper 1305 $1,464,520 429,003 George Salas 1306 1,502,370 429,953 Norma Dougherty 1307 1,362,351 399,947 Lydia B. Dill 1308 1,469,087 435,526 Based upon the current procedural status of the State Court Action and the financial status of the Debtors, the parties have agreed that decertification of the State Court Action represents the most efficacious means for resolving claims of the Class Members. Immediately upon decertification, the Class Claims will be deemed withdrawn with prejudice. Moreover, the Trial Court has advised the parties that decertification will improperly prejudice the rights of the Class Members if they are precluded from filing individual proofs of claim in the Debtors' Chapter 11 cases. In order to address this concern, the Parties agree that individual Class Members may participate in the Alternative Dispute Resolution Procedures to Resolve Prepetition Personal Injury, Employment/Litigation and Similar Claims, provided that they timely file proofs of claim as provided herein. The parties further stipulate that: (i) the aggregate allowed amount of the Individual Class Members Claims in Class UP-1 for all purposes will in not exceed $83,704,580, and (ii) no distributions will be made on account of the Individual Class Members Claims and the Individual Class Representatives Claims from the MPAN General Unsecured Claims Distribution Fund. In the event that the allowed amount of the Individual Class Members Claims in Class UP-1 exceeds $83,704,579.61, the members' Class UP-1 allowed claims will be reduced pro rata so that the aggregate amount of the allowed claims will equal $83,704,580. (Mariner Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) MCDERMOTT INT'L: Will Publish 3rd Quarter Results Around Nov. 6 --------------------------------------------------------------- McDermott International, Inc., (NYSE:MDR) expects to report a loss for the quarter ended September 30, 2002 of approximately $0.71 per diluted share, due primarily to additional cost overruns, schedule delays and higher than expected forecasted costs to complete the three EPIC Spar projects at J. Ray McDermott. The expected loss includes the gain on the sale of Hudson Products Company of $0.17 per diluted share which was sold in July 2002. As such, McDermott is revising its guidance for the full year of 2002 from a range of $3.50 to $3.60 loss per diluted share to a loss of approximately $4.50 per diluted share. Excluding (1) the write-off of McDermott's investment in The Babcock & Wilcox Company of $3.58 per diluted share and the impairment of McDermott's investment in an Indian joint venture of $0.05 per diluted share both of which were recorded in the second quarter and (2) the gain on the sale of HPC, the Company expects a loss of approximately $1.05 per diluted share for the full year of 2002. At August 31, 2002, the Medusa EPIC Spar project was approximately 83% complete compared to a forecasted percent complete of approximately 94%. Slippage in the fabrication schedule, lower than expected productivity and a greater amount of out-of-sequence work resulted in additional cost overruns for the spar hull and the topsides as well as higher forecasted costs to complete the project. Included in the forecast are costs associated with the potential for additional delays as a result of seasonally bad weather in the Gulf of Mexico during the rescheduled installation date which now extends into the first quarter of 2003. The Devils Tower EPIC Spar project was approximately 63% complete at the end of August 2002, compared to a forecasted percent complete of approximately 66%. The additional man-hours associated with completion of the Medusa spar hull and topsides have now been factored into the current forecast for the Devils Tower project. Since the project is now in a loss position, all estimated future costs to complete will be recorded in the third quarter 2002. The Company had previously recognized approximately $8 million of operating income on this project, which will be reversed in the third quarter of 2002. At August 31, 2002, the third EPIC Spar project, Front Runner, was approximately 16% complete. At June 30, 2002, McDermott forecasted that this project would be marginally profitable at completion. As a result of changes in estimates of man-hours based on the experience derived from the Medusa and Devils Tower Epic Spar projects, McDermott now expects that this project will also be in a loss position. McDermott has not recorded any profit on this project to date. "While we believed that we had previously identified all of the major costs associated with completion of these projects, we now have a clearer picture of the amount of time and costs it will take to complete them. Compounding these issues are the additional expenses associated with schedule delays on Medusa and Devils Tower. Using the lessons learned on the first two spar projects, we are examining alternatives for the completion of Front Runner," said Bruce W. Wilkinson, Chairman and Chief Executive Officer of McDermott International. "We plan to continue our focus on the deepwater market and to further develop our spar technology, but we will not accept EPIC contracts that place a disproportionate amount of risk on the contractor without appropriate monetary incentives. While we continue our search for a President for J. Ray, we intend to review and adjust J. Ray's operating cost structure," Wilkinson said. "With respect to the B&W Chapter 11, we are working diligently with the representatives of the present and future asbestos claimants in the Chapter 11 proceedings to meet the November 19, 2002 deadline set by the Bankruptcy Court for the filing of a consensual plan of reorganization," continued Wilkinson. McDermott plans to release third quarter earnings after the close of the market on November 6, 2002. The Company plans to hold a conference call and webcast on November 7, 2002 at 9:00 a.m. central time to discuss the third quarter results and the issues described above relating to the three EPIC Spar projects. McDermott International, Inc., is a leading worldwide energy services company. The company's subsidiaries provide engineering, fabrication, installation, procurement, research, manufacturing, environmental systems, project management and facility management services to a variety of customers in the energy and power industries, including the U.S. Department of Energy. * * * As reported in Troubled Company Reporter's August 13, 2002 edition, Standard & Poor's Ratings Services revised its outlook on McDermott International Inc., to negative from developing because cash flow from Babcock & Wilcox Co. (B&W; McDermott's Subsidiary), will not become available due to potential key settlement terms of B&W's bankruptcy negotiations, eliminating upside ratings potential for McDermott. At the same time, Standard & Poor's affirmed its single-'B' corporate credit rating on McDermott and related entities. Moreover, when a settlement becomes probable, McDermott estimates that it may have to record an after-tax charge against earnings of between $100 million and $130 million, reflecting the present value of contributions and contemplated payments to the created trusts. S&P said the ratings reflect McDermott's "below-average business profile as a leading player in intensely competitive and volatile markets, poor operating performance, and weak credit measures." MEDCOMSOFT INC: Reaches Agreement to Resolve Dispute with Lamsak ---------------------------------------------------------------- MedcomSoft Inc., (TSE - MSF) and its affiliates have reached a mutual agreement with Lamsak Pty. Ltd., and its affiliates in Australia to terminate and release each other from all obligations under the Software License Agreement and related contracts executed in May 2000 and December 2000. MedcomSoft has attributed changes in market conditions and corporate strategies as key factors for the decision not to pursue commercialization of MedcomSoft's product in the Australian marketplace in the manner originally contemplated and for the termination and release, including the settlement of the dispute under such contracts, which was the subject of ongoing arbitration proceedings. MedcomSoft Inc., designs, develops and markets software solutions for healthcare providers that are changing the way the healthcare industry captures, manages and exchanges patient information. As a result of MedcomSoft innovations, physicians and managed care organizations can now easily and securely build and exchange complete, structured, and codified electronic patient medical records. * * * As reported in the March 7, 2002 issue of the Troubled Company Reporter, MedcomSoft Inc., (TSE - MSF) initiated steps to substantially reduce of its cash burn rate through temporary layoffs of a large number of employees in both of its Canadian and US operations and the implementation of severe cost reduction measures in an effort to maintain an adequate operation in all departments, align expenditures to current sale levels and preserve cash. Faced by a sluggish market after the tragic events of September 11th and longer than expected sale cycles, and after the completion of the latest release of its flagship product MedcomSoft(R) Record version 1.2, MedcomSoft decided to tailor its operation to current market conditions and eventually re- grow the Company as sales start to materialize at a faster pace. In addition, MedcomSoft has engaged several financial advisors and interested institutions in the United States to help secure additional financing for future growth. METATEC INT'L: Selling European CD-ROM Operations to Nimbus ----------------------------------------------------------- Metatec International, Inc., (OTCBB:META) announced the sale of its European CD-ROM manufacturing operations to Nimbus, a Netherlands-based private investment group. Terms of the sale, which consisted of Nimbus purchasing all the shares of Metatec's European subsidiary company, were not disclosed. "With our transformation from primarily an optical disc manufacturing company to a niche supply chain solutions company, we no longer require direct ownership of the disc manufacturing capacity available at our Breda plant," said Christopher A. Munro, Metatec president and chief executive officer. "Transferring ownership and operation of the plant further strengthens Metatec's overall financial position and enhances the on-going transition of our business to one more centered around broader supply chain solutions." The manufacturing operations, located in Breda, The Netherlands, will continue to be available to provide services to Metatec's U.S customers doing or anticipating doing business in Europe. Munro said that European and U.S.-based Metatec customers currently doing business in Europe should not see any interruption in service. Furthermore, Munro said that as part of Metatec's sale to Nimbus, the two companies plan to have a strategic relationship that leverages marketing, sales and services of both organizations. He said that U.S.-based companies with supply chain solution needs in Europe might benefit from the combined solutions offered by both companies. Munro said that disc manufacturing services will also continue to be part of the overall supply chain solutions offered to U.S. companies from Metatec's main facility in Dublin, Ohio. Metatec anticipates it will report a non-cash charge against earnings of $2.4 million associated with sale of the Breda operation. Metatec International enables companies to streamline the process of delivering products and information to market by providing technology driven supply chain solutions that increase efficiencies and reduce costs. Technologies include a full range of supply chain solutions, secure Internet-based software distribution services and CD-ROM and DVD manufacturing services. Extensive real-time customer-accessible online reporting and tracking systems support all services. Metatec operations are based in Dublin, Ohio. More information about Metatec is available by visiting the company's Web site at http://www.metatec.com MISSISSIPPI CHEMICAL: Fitch Junks Senior Unsecured Debt Ratings --------------------------------------------------------------- Fitch Ratings downgraded Mississippi Chemical Corporation's senior secured credit facility to 'CCC+' from 'B+' and its senior unsecured notes to 'CCC-' from 'B-'. The ratings have been placed on Rating Watch Negative. The ratings downgrade reflects heightened refinancing risk associated with the secured credit facility and continued weak financial performance. Refinancing risk has increased as the November 25, 2002 expiration of the $200 million secured credit facility draws closer. The company has $110 million outstanding on the facility as of June 30, 2002. Miss Chem has approximately $2 million cash on the balance sheet (as of June 30, 2002) and operating earnings remain weak. Miss Chem continues to struggle through the fertilizer cycle's trough. As of June 30, 2002, the company's total debt-to-EBITDA is 25.4 times and EBITDA-to- interest incurred is 0.5x. EBITDA (before unusual items) for fiscal year 2002 (ended June 30, 2002) was $12.8 million on revenue of $451 million and net free cash flow was approximately $15 million. Miss Chem is continuing its refinancing discussions with the senior secured lenders. The Rating Watch Negative status highlights the potential for additional ratings movement if refinancing activity is further delayed or unsuccessful. Miss Chem is a domestic fertilizer producer with operating segments in nitrogen, phosphorus, and potash. In fiscal year 2002, Miss Chem had $451 million in revenue and $13 million in EBITDA. MWAVE INC: Fails to Meet Nasdaq Continued Listing Requirements -------------------------------------------------------------- MWave, Inc. (Nasdaq: MWAV), a value added service provider of high performance circuit boards used in a variety of digital and high frequency applications, announced that the Company expects revenues to be between $3,500,000 and $4,000,000 for the third quarter ending September 30, 2002. Joseph A. Turek, MWave's chairman and Chief executive officer, said, "Although our third quarter has been difficult due to the continued downturn in the telecom market, it is a turning point where we believe our digital printed circuits supplied to the industrial electronics market will be an increasingly important growth vehicle for our company going forward. The industrial electronics market continues to be stable and we are seeing increased bookings compared to last quarter." MWave also announced the signing of a new Supply Chain Management Agreement under its program of Virtual Manufacturing with Lectronics, Inc., of Saline, Michigan. The contract was signed for a three-year period. MWave expects to ship approximately $750,000 per year. The products supplied to this customer represent single sided to 6-layer printed circuit board technology in industrial electronics and consumer type applications. Lectronics is a contract manufacturer of printed circuit board assemblies. "MWave has signed ten new agreements to date which the Company expects to represent approximately $12,000,000 in revenues for 2002," indicated Mr. Turek. "Virtual Manufacturing contractually supplies the printed circuit needs of our customer by managing the complete procurement process. We utilize a global base of suppliers that allows our customers to benefit from lower worldwide manufacturing prices. We deliver products when the customer needs them through either consignment inventory control or just-in-time programs. And, we reinforce our quality policy with a money-back guarantee for boards and components. To our knowledge, no other company offers the price, delivery, and quality benefits of our Virtual Manufacturing program." Mr. Turek went on to say, "We used the slower third quarter to consolidate operations into our new 50,000 square foot facility in West Chicago, IL. We were able to close our Bensenville facility, reduce staff and create an efficient operation in one building. We are now producing more products with less labor, increased yields and improved on time delivery. We worked closely with the Chicago Manufacturing Center and a grant by the state of Illinois to improve our efficiency. It is great programs like these that help us to compete effectively in the global marketplace." M~Wave also announced that it has been notified by Nasdaq National Market that the Company's common stock has not maintained a minimum market value of publicly held shares of $5,000,000 as required for inclusion by Marketplace Rule. The Company has until December 23, 2002 to regain compliance. If compliance with this Rule cannot be demonstrated by December 23, 2002, the Company's securities will be delisted. At that time the Company may appeal to a Listing Qualification Panel or apply to transfer is securities to the Nasdaq SmallCap Market. To transfer, the Company must satisfy the continued inclusion requirements for that market. The Company expects to release earnings on October 29, 2002 and plans to have its quarterly conference call on Wednesday, October 30, 2002 at 10:00 am CST. The details of the call will be announced at a later date. Established in 1988 and headquartered in the Chicago suburb of West Chicago, Ill., MWave is a value-added service provider of high performance circuit boards. The Company's products are used in a variety of telecommunications and industrial electronics applications. MWave services customers like Lucent Technologies and Motorola, Inc. with its patented bonding technology, Flexlink II(TM) and its supply chain management program called Virtual Manufacturing. The Company trades on the Nasdaq National market under the symbol "MWAV". Visit the Company on its Web site at http://www.mwav.com NORTEL NETWORKS: Revamps Organization to Streamline Structure ------------------------------------------------------------- Nortel Networks (NYSE:NT) (TSX:NT.) announced changes to its organization reflecting a more streamlined structure focused more directly around its customers in four key businesses: Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. "As we continue to position Nortel Networks for profitability, the changes we are announcing today will result in an enhanced performance-driven business model that will ensure greater accountability and customer alignment," said Frank Dunn, president and chief executive officer, Nortel Networks. "Our leadership team continues to be focused on driving the development and deployment of one of the most powerful portfolios in the industry." The leadership management team going forward for the four key businesses, who will now all be reporting directly to Frank Dunn, are as follows: -- Pascal Debon continues as president, Wireless Networks. -- Brian McFadden continues as president, Optical Networks -- Sue Spradley is named president, Wireline Networks, and is responsible for driving cost-effective packet solutions for Nortel Networks voice, data and multimedia service offerings, as well as maintaining Nortel Networks leadership position in circuit technology solutions (formerly part of Metro and Enterprise Networks). -- For the Enterprise Networks business (formerly part of Metro and Enterprise Networks), Oscar Rodriguez is named president and general manager, Enterprise Solutions, responsible for business strategy and investment, and product strategy, execution and delivery, and Robert Burke continues as president, Enterprise Marketing, responsible for Enterprise solution and channel marketing. Frank Plastina, president, Metro and Enterprise Networks, has decided to leave Nortel Networks after 15 years of service and contribution to the business. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global Company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com DebtTraders reports that Nortel Networks Corp.'s 6.000% bonds due 2003 (NT03CAR1) are trading between 66 and 68. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT03CAR1for more real-time bond pricing. NOVO NETWORKS: Bankruptcy Filing Prompts Going Concern Doubt ------------------------------------------------------------ The company now known as Novo Networks was originally incorporated in Delaware in 1987 as Adina, Inc. Adina's corporate existence was permitted to lapse in February of 1996 and was subsequently reinstated as eVentures Group, Inc., in August of 1999. During the Fall of 1999, eVentures completed a series of transactions whereby it became a holding company with two wholly-owned operating subsidiaries, e.Volve Technology Group, Inc. and AxisTel Communications, Inc., and made a strategic investment in Gemini Voice Solutions, Inc., formerly PhoneFree.com, Inc. During the Spring of 2000, eVentures acquired Internet Global Services, Inc. and made additional strategic investments. In December of 2000, eVentures changed its name to Novo Networks. Novo's common stock is currently listed on the Over the Counter Bulletin Board or OTC BB. Previously, its shares were listed on the Nasdaq National Market System. During the first six months of the fiscal year ended June 30, 2002, two of Novo's indirect wholly-owned subsidiaries, AxisTel and e.Volve, provided telecommunications services. These subsidiaries ceased operations in connection with their plan of liquidation, effective September of 2001 and December of 2001, respectively. Since that date, neither Novo nor any of its debtor subsidiaries have conducted operations or generated revenue. The Company is currently not providing any products or services of any kind (including telecommunications services) to any customers. Novo Networks is continuing to consider various investment opportunities across a broad spectrum of industry groups. Although the Company has not decided upon any particular opportunity or industry group, it has, within the past few days, elected to focus its attention on one possible opportunity in Texas. At this time, it has not conducted sufficient due diligence on the opportunity or industry group to determine whether a viable business model exists. Further, discussions with the controlling persons for such opportunity have not progressed beyond a preliminary stage; however, Novo expects that if a transaction were to proceed, it would do so quickly and without further notice to the shareholders. It is impossible to determine at this point whether Novo will be in a position to move forward with this potential opportunity. Some of the risks and difficulties Novo expects to encounter in pursuing this transaction include: * the Company's lack of industry experience; * its potential inability to conduct a thorough due diligence review in a relatively short period of time; * its ability to negotiate a transaction that will inure to the long term benefit of Novo's shareholders; and * each of the other risks and uncertainties inherent in locating, investigating and consummating a business transaction of this nature. The bankruptcy filings, combined with the fact that Novo Networks has no operations or revenues, raise substantial doubt about its ability to continue as a going concern. As of June 30, 2002, and as a result of the bankruptcy filings, the Company effectively has no operations, no sources of revenue and no profits. No change can be expected unless and until it promulgates and implements a new business plan. The Company indicates that it cannot predict when, or if, such a plan will be put into place, what it may entail or whether Novo will be successful in such a new business venture. PAYLESS CASHWAYS: Wants Approval to Use CIBC's Cash Collateral -------------------------------------------------------------- Silverman Consulting, Inc., led by Steven Nerger and Craig Graff, serving as Chapter 11 Trustees for Payless Cashways, Inc., seeks Court authority to use CIBC's Cash Collateral. The Trustee reminds the U.S. Bankruptcy Court for the Western District of Missouri that it approved a Stipulation Concerning Allowance and Payment of Portions of Fortress Trust's Claims. The Stipulation provided for the deposit of $2,000,000 of proceeds from the sale of CIBC's cash collateral in a Segregated Account at CIBC. The Stipulation further provided that the Trustee reserved the right to request that additional proceeds be set aside in the CIBC Segregated Account from the proceeds of future sales of the real estate collateral. The Trustee reports that there is currently approximately $430,000 remaining in the CIBC Segregated Account. The Trustee expects that CIBC will be paid in full on its secured lien, but the estate still has expenses to allocate to CIBC's cash collateral. The present balance in the CIBC Segregated Account will be insufficient to satisfy the obligations which are surcharged against CIBC's cash collateral until such time as CIBC is paid in full, the Trustee says. The Trustee believes that the balance in the CIBC Segregated Account must be increased to $1,500,000 to cover the remaining expenses. Accordingly, the Trustee requests Court authority to use CIBC's cash collateral and providing that the proceeds payable to the Trustee in respect of the sale of CIBC's collateral be deposited into the CIBC Segregated Account until the balance reaches $1,500,000. Payless Cashways, a retail operator of building material stores filed for chapter 11 on June 4, 2001. Kathryn B. Bussing, Esq. at Blackwell Sanders Peper Martin represents the Chapter 11 Trustee. When the Company filed for protection from its creditors, it listed $552,962,000 in assets and $473,305,000 in debts. PEREGRINE SYSTEMS: Appoints Berger & Associates as Claims Agent --------------------------------------------------------------- Peregrine Systems, Inc., and its debtor-affiliates seeks approval from the U.S. Bankruptcy Court for the District of Delaware to hire Robert L. Berger & Associates, LLC as noticing, claims and balloting agent for the Court. With the large number of creditors that the Debtors have identified, the Debtors believe it is in the best interests of their estates and their creditors to appoint Berger as agent for the Clerk of Court. Berger is expected to: a) prepare and serve required notices in these cases; b) after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, a list of persons to whom the notice was mailed and the date and manner of mailing; c) maintain copies of all proofs of claim and proofs of interest filed; d) maintain official claims registers; e) assist the Debtors in the preparation of its bankruptcy Schedules and Statements, including the creation and administration of a claims database based upon a review of the claims against the Debtors' estates and the Debtors books and records; f) implement necessary security measures to ensure the completeness and integrity of the claims registers; g) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; or, in the alternative, make available the Proof of Claim docket on- line to the Clerk's Office via the Berger claims system; h) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list shall be available upon request of a party in interest of the Clerk's Office; i) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; j) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice such transfers as required by Bankruptcy Rule 3001(e); k) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; l) provide temporary employees to process claims, as necessary; m) provide such other claims processing, noticing and relates administrative services as may be requested by the Debtors. The Debtors tell the Court that they need to employ a claims agent with proven competence, and believes that Berger qualifies the retention. Berger will bill the Debtors at their normal hourly rates, which range from $35 to $285 per hour. 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. PHAR-MOR INC: Fails to Make Timely Form 10-K Filing with SEC ------------------------------------------------------------ On September 24, 2001, Phar Mor, Inc., filed a voluntary petition under Chapter 11 of the United States Bankruptcy Code to restructure its operations in an attempt to return to profitability. The Company was unable to achieve this objective and, subsequent to a Bankruptcy Court-approved auction on July 16, 2002, Phar Mor entered into an Agency Agreement on July 18, 2002 for the sale of substantially all of its inventory, prescription files and fixed assets with a joint venture comprised of Hilco Merchant Resources, LLC and The Ozer Group, LLC. The Bankruptcy Court approved the sale and the Company is in the process of liquidating its remaining assets. Phar Mor no longer has any continuing operations. On August 22, 2002, Phar Mor submitted to the Securities & Exchange Commission a No-Action Request Pursuant to Staff Legal Bulletin No. 2 to allow "modified reporting" under the Exchange Act, which request is still pending. The Company has devoted and continues to devote substantially all of its resources and attention to the Chapter 11 case and resulting liquidation and accordingly is unable to file its Form 10-K for the fiscal year ended June 29, 2002 within the prescribed time period without unreasonable effort and expense. Phar Mor, Inc., closed 66 of its 139 stores during the fifty-two weeks ended June 29, 2002. The remaining stores were all closed by September 11, 2002. The Company will record charges during the fifty-two weeks ended June 29, 2002 for reorganization items in connection with Company's bankruptcy filing on September 24, 2001 and the closing of all the Company's stores. The reorganization items are estimated to consist of the following: Gain on sale of prescription files $ (51,506,000) Write-down of inventory to expected net realizable value 50,905,000 Impairment of long-lived assets 54,882,000 Lease rejection costs, net 32,008,000 Professional fees 6,192,000 Severance and retention costs 9,482,000 Gain on sale of lease (724,000) Other 1,066,000 --------- Total provision for reorganization $ 102,305,000 POPE & TALBOT: Closes Exchange Offer for Debt Securities -------------------------------------------------------- Pope & Talbot, Inc., (NYSE: POP) announced that all of its outstanding 8-3/8% Senior Notes due 2013 have been tendered in exchange for registered, publicly tradable notes with substantially identical terms. The exchange offer terminated at 5 p.m., New York City time, on October 2, 2002. The notes had been issued on July 30, 2002 in a Rule 144A offering to qualified institutional buyers. Pope & Talbot is dedicated to the pulp and wood products businesses. The Company is based in Portland, Oregon and traded on the New York and Pacific stock exchanges under the symbol POP. Pope & Talbot was founded in 1849 and produces market pulp and softwood lumber at mills in the US and Canada. Markets for the Company's products include the US, Europe, Canada, South America, Japan and other Pacific Rim Countries. For more information on Pope & Talbot, please check the Web site: http://www.poptal.com * * * As reported in the July 18, 2002 edition of Troubled Company Reporter, Standard & Poor's assigned its double-'B' rating to pulp and lumber producer Pope & Talbot Inc.'s $50 million senior unsecured notes due 2013. Standard & Poor's said that it has also affirmed its existing ratings on the company, including its double-'B' corporate credit rating. The outlook remains stable. Debt outstanding at the company at March 31, 2002, totaled $230 million. PROTECTION ONE: Westar Forms Special Committee to Conduct Probe --------------------------------------------------------------- On September 17, 2002, Protection One, Inc.'s indirect parent Westar Energy, Inc. was served with a federal grand jury subpoena issued to it and its subsidiaries by the United States Attorney's Office in Topeka, Kansas. The subpoena seeks documents and testimony concerning the use of aircraft leased by Protection One's parent Westar Industries, Inc., and its subsidiary AV One, Inc., and annual meetings of the shareholders of Westar Energy, Inc. Since that date, an employee of Protection One's parent company and employees of its subsidiary AV One, Inc., have received additional subpoenas seeking documents and testimony concerning use of the aircraft, the chief executive officer of Westar Energy, Inc., and Westar Energy, Inc., generally. The Company intends to cooperate with the United States Attorney's office in this matter. The Board of Directors of Westar Energy, Inc., has appointed a Special Committee consisting of Frank J. Becker, Charles Q. Chandler, IV, and John C. Nettels, Jr., to investigate certain matters relating to the grand jury investigation. The Special Committee has retained as its counsel the law firm of Debevoise & Plimpton, including Mary Jo White, the former United States Attorney for the Southern District of New York and chair of the firm's litigation department. At March 31, 2002, Protection One reported having a working capital deficit of about $164 million. REPEATER TECHNOLOGIES: Files for Chapter 7 Liquidation in Calif. ---------------------------------------------------------------- Repeater Technologies Inc., has filed a voluntary petition for protection under Chapter 7 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court in San Jose, California. The company's assets will be administered and liquidated by a Chapter 7 trustee. Further information regarding the case may be obtained from the court. Repeater Technologies also announced that four of its six directors resigned from the company's board of directors on Oct. 3, 2002. Timothy A. Marcotte, Repeater Technologies' chief executive officer, and Chris L. Branscum, the company's president, remain as the company's directors. SENTO CORP: Board of Directors Recommends 1-For-4 Reverse Split --------------------------------------------------------------- Sento Corporation (Nasdaq: SNTO) announced that its board of directors has voted to recommend a 1-for-4 reverse split of its approximately 8.4 million common shares outstanding, to become effective following shareholder approval. The board has determined to postpone the annual shareholders' meeting currently scheduled for October 16, 2002, to permit the circulation of supplemental proxy materials relating to this proposal. The board has tentatively rescheduled the annual shareholders' meeting to November 14, 2002, subject to completing required regulatory filings. Patrick O'Neal, Sento's president and chief executive officer, commented, "We intend to aggressively pursue continued listing on the NASDAQ Stock Market. This action by our board was initiated because of our firm commitment to support our loyal shareholders by providing the liquidity that a national exchange offers while we continue to execute our business plan. We are fully committed to the belief that our Services Portal concept represents the leading-edge in the delivery of outsourced customer services and our ability to develop a unique market opportunity." Mr. O'Neal continued, "Since my joining the Company in January, 2002 we've made measurable progress in a number of mission critical areas that we believe will have a profound impact on the valuation of this company in the future. What we are doing here represents a paradigm shift in the world of outsourced customer service. We have devised a way of delivering a traditional, but very important, service in a new and efficient manner and at a significantly higher margin. We are encouraged by our gains this year and with the opportunities ahead of us." Sento previously announced that it received a NASDAQ Staff Determination dated September 17, 2002 indicating that Sento failed to meet listing qualifications in regard to the $1.00 per share bid price and of its intent to delist Sento's common stock from the NASDAQ SmallCap Market. Sento will participate in a hearing on October 24, 2002 before a NASDAQ Listing Qualifications Panel to request continued listing. There can be no assurance the Panel will grant the Company's request. Sento anticipates that its common stock will continue to be quoted on the NASDAQ SmallCap Market pending the disposition of its appeal. Sento Corporation provides the latest in Web-enabled CRM (Customer Relations Management) solutions for a diversified portfolio of organizations. These services include self-help, live chat, Web collaboration, email, and telephone. Utilizing a tested and proven technology set, Sento provides an enhanced customer experience at a significant cost reduction when compared to traditional models. Sento deploys a distributed workforce strategy and customer-centric applications to provide the best in customer care and support. For more information, visit http://www.sento.com SMARTDISK CORP: Requests NASDAQ Hearing re Listing Compliance ------------------------------------------------------------- SmartDisk Corporation (Nasdaq:SMDK), a company that markets portable products for capturing, organizing, using, and preserving digital content, filed a request for hearing after receiving notification from NASDAQ that the Company does not currently comply with the minimum $1.00 per share bid price or minimum market value requirements for continued listing on the NASDAQ National Market. Michael S. Battaglia, President and Chief Executive Officer, said: "We believe we have strong arguments for continued listing and are hopeful that the progress we have made in recent months will be taken into consideration. As we work diligently to achieve further improvements to our financial performance, we remain focused on broadening our product line and serving the needs of our customers. Based on recent restructuring efforts, we believe we are a stronger company today and are fully prepared to demonstrate our achievements and improve the long- term value of SmartDisk for all of our stockholders." Thursday the Company submitted its request for a NASDAQ Qualifications Panel hearing to consider its continued listing. The hearing has not yet been scheduled. SmartDisk's common stock will continue to be traded on the NASDAQ National Market pending a final decision by the NASDAQ Qualifications Panel, which could occur as early as November. The NASDAQ Staff Determination notice cited the Company's current inability to meet continued listing standards for the minimum $1.00 per share requirement as set forth in Marketplace Rule 4450(a)(5) and for the minimum $5.0 million market value of publicly held shares as set forth in Marketplace Rule 4450(a)(2). In the event the Company's common stock is delisted from the NASDAQ National Market, the Company plans to apply to have its common stock listed on the NASDAQ SmallCap Market. SmartDisk is a leading developer, manufacturer, and marketer of a range of advanced consumer electronic products and exciting software solutions that are enabling the digital age and simplifying the digital lifestyle. The Company's innovative products help users transfer, store, manage, and share digital music, video, pictures, and data. Headquartered in the U.S., with operations in Europe and Asia, SmartDisk sells and supports its products worldwide. For more information, go to http://www.smartdisk.com THINKPATH INC: Commences Trading on OTCBB Effective October 4 ------------------------------------------------------------- Thinkpath Inc., (Nasdaq:THTH) announced that it's stock was delisted from Nasdaq smallcap to OTC bulletin board effective at the beginning of trading on Friday October 4th, 2002. In order to maintain current listing on small cap it would have required a reverse split of shares. Under current market conditions, Management of Thinkpath decided that a reverse split was not within the best interest of its shareholders. Thinkpath on OTC: BB will still be quoted under the same symbol (THTH). Thinkpath (OTCBB:THTH) is a global provider of technological solutions and services in engineering knowledge management including design, drafting, technical publishing, e-learning, technical training and staffing. Thinkpath enables corporations to reinvent themselves structurally; drive strategies of innovation, speed to market, globalization and focus in new and bold ways. We are experts in the aerospace, automotive, manufacturing and health care industries. Headquartered in Toronto, Canada, Thinkpath has 340 employees in 8 offices across North America. Further information about the company, its services and products can be found at http://www.thinkpath.com THOMSON KERNAGHAN: Morgis Appeals Ontario Court Decision re IDA --------------------------------------------------------------- Christopher Morgis has appealed a September 26, 2002 Ontario Superior Court of Justice decision to the Ontario Court of Appeal. The lower court refused to add the IDA to an existing action against one of its own members, Thomson Kernaghan and Co. Ltd., and a number of its employees. The appeal will consider whether the IDA, a non statuatory, unincorporated body should owe a duty of care to an investor. The appeal will also explore the legal status and function of the IDA. Beginning in March 2001, Mr. Morgis filed a number of complaints requesting an investigation of Thomson Kernaghan and Co. Ltd., which eventually went bankrupt in July 2002 causing a shortfall of over $18.1 million in investor accounts. Mr. Morgis alleges that the IDA was negligent in that they failed to conduct a proper investigation into the allegations of wrongdoings at Thomson Kernaghan and Co. Ltd., notwithstanding his earlier warnings that "both he and the public were at risk from the actions of this Member Firm". The IDA maintained it does not owe a duty of care and is not accountable to individual investors. The lower court upheld the IDA's assertions stating that since individual investors pay nothing to the IDA in the form of dues or fees, that they are not entitled to a duty of care, nor are they entitled to any form of legal accountability from the IDA. The Ontario Court of Appeal will consider whether the IDA should be held legally accountable to an investor who suffers a loss as a result of alleged negligence. Mr. Morgis hopes this appeal will carefully consider the integrity of this self-regulatory organization, and help to restore public confidence in the Canadian capital markets. Mr. Morgis intents to exhaust all options to obtain this goal, including recourse to the Supreme Court of Canada if necessary. US AIRWAYS: First Meeting of Creditors Set for October 22, 2002 --------------------------------------------------------------- The United States Trustee has called for a meeting of the Creditors of US Airways Group Inc., and its debtor-affiliates pursuant to Section 341(a) of the Bankruptcy Code to be held on October 22, 2002 at 11:00 a.m. at the Hilton Hotel, Crystal City in Arlington, Virginia. All creditors are invited, but not required, to attend. This Official Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtors under oath. (US Airways Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that US Airways Inc.'s 9.820% bonds due 2013 (U13USR1) are trading between 10 and 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR1for real-time bond pricing. VIRAGEN INC: Accountants Doubt Ability to Continue Operations ------------------------------------------------------------- Viragen, Inc., is a Delaware corporation organized in 1980. We are a biotechnology company engaged in the business of researching, developing and manufacturing innovative technologies for the treatment of life-threatening illnesses. We are also in the business of developing innovative technologies aimed at improving the manufacturing processes used to manufacture certain medical therapies. Specifically, we are primarily focused on three fields of research and development: human leukocyte derived interferon; avian transgenics technologies; and oncological therapies. The Company operates through Viragen, Inc. the parent company; ViraGenics, Inc. owned by Viragen, Inc.; Viragen International, Inc. (formerly Viragen (Europe) Ltd.) owned by Viragen, Inc.; Viragen (Scotland) Ltd.owned by Viragen International, Inc.; and ViraNative AB owned by Viragen International, Inc. The Company believes that its cash and cash equivalents and working capital are not sufficient to meet its operating requirements through the end of fiscal 2003. The Company's operating losses and working capital requirements continue to adversely affect cash flow. In the event of its inability to raise capital, or a lack of expanded revenue from the sale of its natural interferon product, the Company will likely be unable to meet its operating requirements through the end of fiscal 2003. In this event it would be required to significantly curtail or suspend operations. As a result of these financial conditions, the report of the Company's independent certified public accountants on its June 30, 2002 consolidated financial statements includes an explanatory paragraph indicating that these conditions raise substantial doubt about Viragen's ability to continue as a going concern. As of June 30, 2002, Viragen had on-hand approximately $766,000 in cash. As of June 30, 2002, it had a working capital deficit of approximately $270,000 compared to working capital of approximately $6,178,000 as of June 30, 2001. The decrease in working capital of approximately $6,448,000 compared to the previous fiscal year end balance was due primarily to the use of cash to fund operating activities totaling approximately $11,257,000 and cash used to purchase equipment and pay expenses incurred in connection with the acquisition of ViraNative totaling approximately $820,000. These amounts were partially offset by $5,254,000 raised through private equity placements including the issuance of common stock and convertible debentures. The Company intends to continue financing operations for the foreseeable future from cash on hand and additional private investment placements. Future capital requirements are dependent upon many factors, including: revenue generated from the sale of the Company's natural interferon product, progress with future and ongoing clinical trials; the costs associated with obtaining regulatory approvals; the costs involved in patent applications; competing technologies and market developments; and Viragen's ability to establish collaborative arrangements and effective commercialization activities. WICKES INC: Commences Trading on Nasdaq SmallCap Effective Oct 4 ---------------------------------------------------------------- Wickes Inc., (Nasdaq: WIKS) a leading distributor of building materials and manufacturer of value-added building components, announced that effective Friday, October 4, 2002, the Nasdaq has approved its application to list its common stock on the exchange's Small Cap Market, under the ticker symbol WIKS. Previously, the company traded on the exchange's National Market. Wickes Inc., is a leading distributor of building materials and manufacturer of value-added building components in the United States, serving primarily building and remodeling professionals. The company distributes materials nationally and internationally, operating building centers in the Midwest, Northeast and South. The company continues to expand its building component manufacturing facilities, which produce value-added products such as roof trusses, floor systems, framed wall panels, pre-hung door units and window assemblies. Wickes Inc.'s Web site http://www.wickes.comoffers a full range of valuable services about the building materials and construction industry. WORLDCOM: Examiner Gains Court Nod to Tap Kilpatrick as Counsel --------------------------------------------------------------- Dick Thornburgh, the Examiner appointed in the Chapter 11 cases of WorldCom Inc., and its debtor-affiliates, sought and obtained approval from the U.S. Bankruptcy Court for the Southern District of New York to retain Kirkpatrick & Lockhart LLP as legal counsel in these Chapter 11 cases, nunc pro tunc to August 6, 2002. As counsel, Kilpatrick is expected to: -- take all necessary actions to assist the Examiner in his examination; -- prepare on behalf of the Examiner all reports, pleadings, applications and other necessary documents in the discharge of the Examiner's duties; -- assist the Examiner in the other tasks that may be directed to be undertaken by the Court; and -- perform all other necessary legal services in connection with the Case. The Examiner understands that Kilpatrick will charge its standard hourly rates for the engagement, which are subject to periodic adjustments to reflect economic and other conditions. The current hourly rates for Kilpatrick attorneys and paraprofessionals range from: Partners $230 - 600 Counsel 150 - 600 Associates 130 - 325 Paraprofessionals 40 - 210 (Worldcom Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Worldcom Inc.'s 7.550% bonds due 2004 (WCOM04USR2) are trading between 13 and 13.5 . See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM04USR2 for real-time bond pricing. XCEL ENERGY: Awaiting Temporary Equity Ratio Waiver from SEC ------------------------------------------------------------ Xcel Energy (NYSE:XEL) is awaiting a temporary waiver from the Securities and Exchange Commission requirement that the company's common equity is at least 30 percent of its total consolidated capitalization, including short-term debt. Under the Public Utility Holding Company Act of 1935, compliance with the 30 percent common equity test is a condition to engage in financing transactions by Xcel Energy at the parent company level. On June 30, 2002, the ratio stood at 31%. The company filed a request for a waiver from the SEC to reduce the requirement to 24 percent through June 2003. NRG Energy, Xcel Energy's wholly owned subsidiary, is restructuring and pursuing sales of its power plants. NRG also is considering write-downs or abandonment of various projects. "Final decisions have not been made; however, these charges, if taken for the third quarter, would reduce Xcel Energy's equity ratio below the 30 percent level," said Dick Kelly, Xcel Energy's chief financial officer. "We anticipate no financing at the Xcel Energy level prior to the planned renewal of Xcel Energy's $400 million credit line in November and have adequate liquidity at the holding company, which holds approximately $250 million in cash," said Kelly. The company anticipates receipt of the waiver in the next several weeks. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. Formed by the merger of Denver-based New Century Energies and Minneapolis-based Northern States Power Co., Xcel Energy 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 nation. Company headquarters are located in Minneapolis. More information is available at http://www.xcelenergy.com NRG Energy, a wholly owned and unregulated subsidiary of Xcel Energy, develops and operates power generating facilities. NRG's operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. * * * As reported in Troubled Company Reporter's August 7, 2002 edition, Xcel Energy signed agreements with its lenders to eliminate a cross-default provision in its two bank lines-of- credit for which Bank of New York serves as agent. These agreements remove a key provision that had constrained Xcel Energy's ability to access capital markets due to NRG's financial condition. Xcel Energy has access to about $200 million remaining on its lines of credit. These lines consist of two bank facilities of $400 million each, one expiring in November 2002 and the other in November 2005. Xcel Energy renegotiated its $800 million bank credit facilities when it appeared that NRG would be unable to meet cash collateral demands in the event it were downgraded to below investment grade. NRG's debt recently was downgraded to below investment grade by three credit rating agencies. Xcel Energy continues to focus on improving NRG's financial strength. NRG is actively working with its lenders to modify the cash collateral requirements in its current arrangements. Xcel Energy's immediate goal is to obtain extensions of NRG's collateral obligations in anticipation of asset sales and other cash generating measures. As part of the agreements with its lenders, the company has agreed that its board of directors will review the company's dividend policy. * Jefferies Brings-In Lane Genatowski to Head Global Power Group ---------------------------------------------------------------- Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), announced that S. Lane Genatowski has joined as a Managing Director and will head a new Global Power Group in the firm's Investment Banking Department. The focus of the group will be on US power companies operating both globally and domestically, including regulated and unregulated utility companies and other related concerns. Mr. Genatowski will be based in the firm's New York headquarters. "Lane Genatowski is an exceptional professional with outstanding experience," commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. "As Jefferies' business continues to diversify and expand, we remain focused on hiring professionals with established relationships who are motivated by our entrepreneurial platform." John C. Shaw, Jr., President of Jefferies, added, "Lane's relationships in the global power industry, combined with our firm's expertise in the trading and research of power companies, extends an important industry focus for Jefferies." "I'm excited to be part of Jefferies' entrepreneurial culture and thriving investment banking practice," said Mr. Genatowski. "Jefferies' leading capabilities in all aspects of the capital markets, including the restructuring process, will provide real value for power companies." Before joining Jefferies, Mr. Genatowski spent approximately twenty years providing investment banking services to clients in the power industry while at Kidder, Peabody & Co., J.P. Morgan, Chase and most recently Banc of America Securities, LLC, where he was Head of the Power Group and a member of that firm's Equity Commitment Committee. Mr. Genatowski has a Juris Doctor from Fordham University School of Law and an undergraduate degree from City University of New York. Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), is a full-service investment bank and institutional securities firm focused on the middle market. Jefferies offers financial advisory, capital raising, mergers and acquisitions, and restructuring services to small and mid-cap companies. The firm provides outstanding trade execution in equity, high yield, convertible and international securities, as well as fundamental research and asset management capabilities, to institutional investors. Additional services include correspondent clearing, prime brokerage, private client services and securities lending. The firm's leadership in equity trading is recognized by numerous consulting and survey organizations, and Jefferies' affiliate, Helfant Group, Inc., executes approximately 10% of the daily reported volume on the NYSE. Through its subsidiaries, Jefferies Group, Inc., employs more than 1,300 people in 20 offices worldwide, including Atlanta, Boston, Chicago, Dallas, Hong Kong, London, Los Angeles, New York, Paris, San Francisco, Tokyo and Zurich. Further information about Jefferies, including a description of investment banking, trading, research and asset management services, can be found at http://www.jefco.com * BOND PRICING: For the week of October 7 - October 11, 2002 ------------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- ABGenix Inc. 3.500% 03/15/07 63 AES Corporation 4.500% 08/15/05 34 AES Corporation 8.000% 12/31/08 55 AES Corporation 8.750% 06/15/08 59 AES Corporation 8.875% 02/15/11 50 AES Corporation 9.375% 09/15/10 58 AES Corporation 9.500% 06/01/09 53 Adaptec Inc. 3.000% 03/05/07 72 Adelphia Communications 3.250% 05/01/21 8 Adelphia Communications 6.000% 02/15/06 8 Adelphia Communications 10.875% 10/01/10 41 Advanced Energy 5.250% 11/15/06 61 Advanced Micro Devices Inc. 4.750% 02/01/22 64 Advanstar Communications 12.000% 02/15/11 66 Aether Systems 6.000% 03/22/05 66 Agere Systems 6.500% 12/15/09 57 Akamai Technologies 5.500% 07/01/07 32 Alternative Living Services (Alterra) 5.250% 12/15/02 3 Alkermes Inc. 3.750% 02/15/07 47 Alexion Pharmaceuticals Inc. 5.750% 03/15/07 61 Amazon.com Inc. 4.750% 02/01/09 64 Amazon.com Inc. 4.750% 02/01/09 65 American Tower Corp. 2.250% 10/15/09 60 American Tower Corp. 6.250% 10/15/09 46 American Tower Corp. 9.375% 02/01/09 62 American & Foreign Power 5.000% 03/01/30 60 Amkor Technology Inc. 9.250% 05/01/06 74 Amkor Technology Inc. 9.250% 02/15/08 75 AnnTaylor Stores 0.550% 06/18/19 62 Armstrong World Industries 9.750% 04/15/08 42 AMR Corporation 9.000% 09/15/16 74 AMR Corporation 9.750% 08/15/21 75 AMR Corporation 9.800% 10/01/21 75 Asarco Inc. 8.500% 05/01/25 35 Atlas Air Inc. 9.250% 04/15/08 51 AT&T Corp. 6.500% 03/15/29 75 AT&T Wireless 8.750% 03/01/31 72 Aurora Foods 9.875% 02/15/07 61 Avaya Inc. 11.125% 04/01/09 65 Best Buy Co. Inc. 0.684% 06?27/21 66 Bethlehem Steel 8.450% 03/01/05 14 Borden Inc. 7.875% 02/15/23 60 Borden Inc. 8.375% 04/15/16 63 Borden Inc. 9.250% 06/15/19 69 Borden Inc. 9.200% 03/15/21 64 Boston Celtics 6.000% 06/30/38 65 Brocade Communication Systems 2.000% 01/01/07 69 Brocade Communication Systems 2.000% 01/01/07 69 Brooks Automatic 4.750% 06/01/08 70 Browning-Ferris Industries Inc. 7.400% 09/15/35 73 Budget Group Inc. 9.125% 04/01/06 17 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 CSC Holdings Inc. 7.625% 07/15/18 70 CSC Holdings Inc. 7.625% 04/01/18 74 CSC Holdings Inc. 7.875% 02/15/18 70 CSC Holdings Inc. 8.125% 07/15/09 74 Calpine Corp. 4.000% 12/26/06 42 Calpine Corp. 4.000% 12/26/06 46 Calpine Corp. 8.500% 02/15/11 42 Capital One Financial 7.125% 08/01/08 68 Case Corp. 7.250% 01/15/16 72 Cell Therapeutic 5.750% 06/15/08 43 Centennial Cell 10.750% 12/15/08 57 Century Communications 8.875% 01/15/07 34 Champion Enterprises 7.625% 05/15/09 32 Charter Communications, Inc. 4.750% 06/01/06 44 Charter Communications, Inc. 5.750% 10/15/05 51 Charter Communications, Inc. 5.750% 10/15/05 51 Charter Communications Holdings 8.625% 04/01/09 64 Charter Communications Holdings 9.625% 11/15/09 65 Charter Communications Holdings 10.000% 04/01/09 56 Charter Communications Holdings 10.000% 05/15/11 62 Charter Communications Holdings 10.250% 01/15/10 55 Charter Communications Holdings 10.750% 10/01/09 70 Charter Communications Holdings 11.125% 01/15/11 72 Ciena Corporation 3.750% 02/01/08 59 Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 72 Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 73 CIT Group Holdings 5.875% 10/15/08 74 Coastal Corp. 6.375% 02/01/09 74 Coastal Corp. 6.500% 05/15/06 69 Coastal Corp. 6.500% 06/01/08 73 Coastal Corp. 6.950% 06/01/28 45 Coastal Corp. 7.420% 02/15/37 55 Coastal Corp. 7.500% 08/15/06 68 Coastal Corp. 7.750% 10/15/35 53 Coeur D'Alene 6.375% 01/31/05 73 Coeur D'Alene 7.250% 10/31/05 70 Comcast Corp. 2.000% 10/15/29 19 Comforce Operating 12.000% 12/01/07 58 Commscope Inc. 4.000% 12/15/06 74 Computer Associates 5.000% 03/15/07 72 Conexant Systems 4.000% 02/01/07 27 Conexant Systems 4.250% 05/01/06 35 Conseco Inc. 8.750% 02/09/04 11 Conseco Inc. 10.750% 06/15/09 23 Continental Airlines 4.500% 02/01/07 50 Continental Airlines 7.568% 12/01/06 58 Corning Inc. 3.500% 11/01/08 56 Corning Inc. 6.300% 03/01/09 63 Corning Inc. 6.750% 09/15/13 53 Corning Inc. 6.850% 03/01/29 43 Corning Inc. 7.000% 03/15/07 74 Corning Inc. 8.875% 08/15/21 56 Corning Glass 7.000% 03/15/07 74 Corning Glass 8.875% 03/15/16 60 Cox Communications Inc. 0.348% 02/23/21 70 Cox Communications Inc. 0.348% 02/23/21 70 Cox Communications Inc. 0.426% 04/19/20 42 Cox Communications Inc. 7.750% 11/15/29 24 Critical Path 5.750% 04/01/05 63 Critical Path 5.750% 04/01/05 63 Crown Castle International 9.000% 05/15/11 63 Crown Castle International 9.375% 08/01/11 64 Crown Castle International 9.500% 08/01/11 64 Crown Castle International 10.750% 08/01/11 69 Crown Cork & Seal 7.375% 12/15/26 60 Cubist Pharmacy 5.500% 11/01/08 50 Cummins Engine 5.650% 03/01/98 63 Dana Corp. 7.000% 03/01/29 71 Dana Corp. 7.000% 03/15/28 71 Delta Air Lines 7.900% 12/15/09 73 Delta Air Lines 8.300% 12/15/29 57 Delta Air Lines 9.000% 05/15/16 67 Delta Air Lines 9.250% 03/15/22 65 Delta Air Lines 9.750% 05/15/21 68 Delta Air Lines 10.375% 12/15/22 72 Dillard Department Store 7.000% 12/01/28 70 Dobson Communications Corp. 10.875% 07/01/10 73 Dobson/Sygnet 12.250% 12/15/08 74 Dresser Industries 7.600% 08/15/96 60 Dynegy Holdings Inc. 6.875% 04/01/11 41 EOTT Energy Partner 11.000% 10/01/09 67 Echostar Communications 4.875% 01/01/07 74 Echostar Communications 5.750% 05/15/08 73 Edison Mission 7.330% 09/15/08 71 El Paso Corp. 7.000% 05/15/11 67 El Paso Corp. 7.750% 01/15/32 60 El Paso Energy 6.750% 05/15/09 67 El Paso Energy 8.050% 10/15/30 65 Emulex Corp. 1.750% 02/01/07 72 Enzon Inc. 4.500% 07/01/08 71 Equistar Chemicals 7.550% 02/15/26 68 E*Trade Group 6.000% 02/01/07 63 E*Trade Group 6.750% 05/15/08 73 Extreme Networks 3.500% 12/01/06 75 FEI Company 5.500% 08/15/08 74 Finisar Corp. 5.250% 10/15/08 55 Finova Group 7.500% 11/15/09 30 Fleming Companies Inc. 10.625% 07/31/07 62 Fort James Corp. 7.750% 11/15/23 74 Foster Wheeler 6.750% 11/15/05 58 General Physics 6.000% 06/30/04 52 Geo Specialty 10.125% 08/01/08 73 Georgia-Pacific 7.375% 12/01/25 70 Georgia-Pacific 7.250% 06/01/28 71 Georgia-Pacific 7.750% 11/15/29 73 Goodyear Tire 7.000% 03/15/28 68 Gulf Mobile Ohio 5.000% 12/01/56 63 Hanover Compress 4.750% 03/15/08 67 Hasbro Inc. 6.600% 07/15/28 74 Health Management Associates Inc. 0.250% 08/16/20 67 Health Management Associates Inc. 0.250% 08/16/20 67 HealthSouth Corp. 6.875% 06/15/05 75 HealthSouth Corp. 7.000% 06/15/08 70 HealthSouth Corp. 7.625% 06/01/12 69 HealthSouth Corp. 10.750% 10/01/08 65 Human Genome 3.750% 03/15/07 64 Human Genome 5.000% 02/01/07 70 Huntsman Polymer 11.750% 12/01/04 67 I2 Technologies 5.250% 12/15/06 58 ICN Pharmaceuticals Inc. 6.500% 07/15/08 66 IMC Global Inc. 7.300% 01/15/28 74 IMC Global Inc. 7.375% 08/01/18 70 Ikon Office 6.750% 12/01/25 70 Ikon Office 7.300% 11/01/27 74 Imcera Group 7.000% 12/15/13 70 Imclone Systems 5.500% 03/01/05 57 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 40 Inland Steel Co. 7.900% 01/15/07 57 Interpublic Group 1.870% 06/01/06 69 JL French Auto 11.500% 06/01/09 54 Juniper Networks 4.750% 03/15/07 69 Kmart Corporation 9.375% 02/01/06 20 Kulicke & Soffa Industries Inc. 5.250% 08/15/06 42 LSI Logic 4.000% 11/01/06 75 LSP Energy LP 8.160% 07/15/25 74 LTX Corporation 4.250% 08/15/06 60 Lehman Brothers Holding 8.000% 11/13/03 63 Level 3 Communications 6.000% 09/15/09 31 Level 3 Communications 6.000% 03/15/09 32 Level 3 Communications 9.125% 05/01/08 52 Level 3 Communications 11.000% 05/01/08 62 Liberty Media 3.500% 01/15/31 63 Liberty Media 3.750% 02/15/30 47 Liberty Media 4.000% 11/15/29 51 Lucent Technologies 5.500% 11/15/08 64 Lucent Technologies 6.450% 03/15/29 51 Lucent Technologies 6.500% 01/15/28 42 Lucent Technologies 7.250% 07/15/06 47 Magellan Health 9.000% 02/15/08 34 Mail-Well I Corp. 8.750% 12/15/08 48 Mastec Inc. 7.750% 02/01/08 73 Medarex Inc. 4.500% 07/01/06 64 Mediacom Communications 5.250% 07/01/06 69 Mediacom LLC 7.875% 02/15/11 64 Mediacom LLC 8.500% 04/15/08 75 Mediacom LLC 9.500% 01/15/13 68 Metris Companies 10.125% 07/15/06 75 Mikohn Gaming 11.875% 08/15/08 64 Mirant Corp. 5.750% 07/15/07 47 Mirant Americas 7.200% 10/01/08 68 Mirant Americas 7.625% 05/01/06 56 Mirant Americas 8.300% 05/01/11 63 Mirant Americas 8.500% 10/01/21 55 Mirant Americas 9.125% 05/01/31 59 Mission Energy 13.500% 07/15/08 43 Missouri Pacific Railroad 4.750% 01/01/20 71 Missouri Pacific Railroad 4.750% 01/01/30 68 Missouri Pacific Railroad 5.000% 01/01/45 61 Motorola Inc. 5.220% 10/01/21 54 MSX International 11.375% 01/15/08 65 NTL (Delaware) 5.750% 12/15/09 14 NTL Communications 7.000% 12/15/08 14 National Vision 12.000% 03/30/09 60 Natural Microsystems 5.000% 10/15/05 58 Navistar Financial 4.750% 04/01/09 75 Nextel Communications 4.750% 07/01/07 72 Nextel Communications 5.250% 01/15/10 65 Nextel Communications 6.000% 06/01/11 70 Nextel Partners 11.000% 03/15/10 70 NGC Corp. 7.625% 10/15/26 58 Noram Energy 6.000% 03/15/12 74 Northern Pacific Railway 3.000% 01/01/47 53 Northern Pacific Railway 3.000% 01/01/47 53 Nvidia Corp. 4.750% 10/15/07 74 ON Semiconductor 12.000% 05/15/08 73 ONI Systems Corporation 5.000% 10/15/05 75 OSI Pharmaceuticals 4.000% 02/01/09 65 PG&E National Energy 10.375% 05/16/11 36 Panamsat Corp. 6.875% 01/15/28 71 Pegasus Satellite 12.375% 08/01/06 49 PMC-Sierra Inc. 3.750% 08/15/06 67 Primedia Inc. 7.625% 04/01/08 67 Providian Financial 3.250% 08/15/05 64 Public Service Electric & Gas 5.000% 07/01/37 74 Photronics Inc. 4.750% 12/15/06 72 Quanta Services 4.000% 07/01/07 49 Qwest Capital Funding 7.000% 08/03/09 53 Qwest Capital Funding 7.250% 02/15/11 57 Qwest Capital Funding 7.625% 08/03/21 47 Qwest Capital Funding 7.750% 08/15/06 62 Qwest Capital Funding 7.900% 08/15/10 54 Qwest Communications Int'l 7.250% 11/01/06 48 RF Micro Devices 3.750% 08/15/05 74 RF Micro Devices 3.750% 08/15/05 74 Redback Networks 5.000% 04/01/07 32 Rite Aid Corp. 7.125% 01/15/07 67 Rockwell Int'l 5.200% 01/15/98 72 Royster-Clark 10.250% 04/01/09 70 Rural Cellular 9.625% 05/15/08 51 Ryder System Inc. 5.000% 02/25/21 74 SBA Communications 10.250% 02/01/09 58 SCI Systems Inc. 3.000% 03/15/07 59 Saks Inc. 7.375% 02/15/19 74 Sepracor Inc. 5.000% 02/15/07 47 Sepracor Inc. 7.000% 12/15/05 62 Silicon Graphics 5.250% 09/01/04 54 Skechers USA, Inc. 4.500% 04/15/07 71 Solutia Inc. 7.375% 10/15/27 72 Sotheby's Holdings 6.875% 02/01/09 74 Sprint Capital Corp. 6.000% 01/15/07 69 Sprint Capital Corp. 6.875% 11/15/28 60 Sprint Capital Corp. 6.900% 05/01/19 62 Sprint Capital Corp. 8.375% 03/15/28 74 Sprint Capital Corp. 8.750% 03/15/32 71 TCI Communications Inc. 7.125% 02/15/28 74 Tenneco Inc. 10.000% 03/15/08 74 Tenneco Inc. 11.625% 10/15/09 75 Tesoro Pete Corp. 9.000% 07/01/08 65 Time Warner Enterprises 8.375% 03/15/23 74 Time Warner Inc. 6.625% 05/15/29 75 Time Warner Inc. 6.950% 01/15/28 73 Time Warner Telecom 9.750% 07/15/08 54 Transwitch Corp. 4.500% 09/12/05 59 Trenwick Capital I 8.820% 02/01/37 74 Tribune Company 2.000% 05/15/29 67 Triton PCS Inc. 8.750% 11/15/11 70 Trump Atlantic 11.250% 05/01/06 75 Turner Broadcasting 8.375% 07/01/13 74 US Airways Passenger 6.820% 01/30/14 72 US Airways Inc. 7.960% 01/20/18 73 Ugly Duckling 11.000% 04/15/07 60 United Air Lines 10.670% 05/01/04 20 United Air Lines 11.210% 05/01/14 28 Universal Health Services 0.426% 06/23/20 62 US Timberlands 9.625% 11/15/07 54 US West Capital Funding 6.250% 07/15/05 63 US West Capital Funding 6.375% 07/15/08 53 US West Capital Funding 6.875% 07/15/28 67 US West Communications 7.250% 10/15/35 69 US West Communications 7.500% 06/15/23 71 Utilicorp United 7.625% 11/15/09 73 Utilicorp United 7.950% 02/01/11 75 Utilicorp United 8.000% 03/01/23 61 Utilicorp United 8.270% 11/15/21 63 Veeco Instrument 4.125% 12/21/08 67 Vertex Pharmaceuticals 5.000% 09/19/07 74 Vesta Insurance Group 8.750% 07/15/25 73 Viropharma Inc. 6.000% 03/01/07 35 Vitesse Semiconductor 4.000% 03/15/05 71 Weirton Steel 10.750% 06/01/05 66 Westpoint Stevens 7.875% 06/15/08 26 Williams Companies 7.125% 09/01/11 73 Williams Companies 7.875% 09/01/21 65 Williams Holding (Delaware) 6.500% 12/01/08 66 Wind River System 3.750% 12/15/06 69 Witco Corp. 6.875% 02/01/26 69 Witco Corp. 7.750% 04/01/23 74 Worldcom Inc. 6.400% 08/15/05 12 XM Satellite Radio 7.750% 03/01/06 41 Xerox Corp. 0.570% 04/21/18 57 Xerox Credit 7.200% 08/05/12 62 ********* 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. 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