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/raid1/www/Hosts/bankrupt/TCR_Public/021016.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, October 16, 2002, Vol. 6, No. 205 Headlines ADVANCED OXYGEN: Independent Auditors Raise Going Concern Doubt ADVANCED TISSUE: UST to Convene Sec. 341(a) Meeting on Nov. 7 ADVANCED TISSUE: Nasdaq Will Knock-Off Shares Effective Monday AETNA INDUSTRIES: Court Fixes October 23, 2002 Claims Bar Date ALLMERICA FINANCIAL: AM Best Junks Financial Strength Rating AMERICAN BUILDINGS: S&P Drops Subordinated Debt Rating to D AMERICA WEST: Q3 Earnings Conference Call Slated for Tomorrow ANC RENTAL: Wins Nod to Consolidate Ops. at Philadelphia Airport ASBESTOS CLAIMS: Disclosure Statement Hearing Set for October 31 BALLY TOTAL FITNESS: S&P Revises Outlook on B+ Rating to Stable BIRMINGHAM STEEL: Gets Go-Signal to Hire Freshfields Bruckhaus BUDGET GROUP: Secures Okay to Expand Fowler White's Engagement CALPINE: CEO Peter Cartwright Cancels Pre-Arranged Trading Plan CHARMING SHOPPES: September Total Sales Fall 9% to $198 Million CLARK RETAIL: Files for Chapter 11 Reorganization in Chicago CLARK RETAIL: Case Summary & 20 Largest Unsecured Creditors CLAXSON INTERACTIVE: Fails to Maintain Nasdaq Listing Standards COVANTA: Reaches Standstill Pact with AIG-FP Funding, et. al. CUTTER & BUCK: Regains Compliance with Nasdaq Listing Guidelines DDI CORP: Implements Additional Cost Restructuring Measures DIAL CORP: Board of Directors Declares Quarterly Dividend ELDERTRUST: Working Capital Deficit Drops to $30MM at Sept. 30 ELDERTRUST: Addresses Tenant Professional Liability Loss Issue ENCOMPASS SERVICES: Proposes Financial Workout Plan to Creditors ENRON CORP: Wants Plan Filing Exclusivity Stretched to Jan. 31 EOTT ENERGY: Taps Haynes & Boone to Prosecute Chapter 11 Case GENERAL CABLE: Lenders Relax Credit Pact's Finanical Covenants GENTEK INC: US Trustee to Convene Meeting to Form Committees GENTEK: S&P Drops Senior Secured Rating to D After Ch. 11 Filing GLOBAL CROSSING: Signs-Up Ingram Yuzek for Tax-Related Services GREAT LAKES: Revenue Passenger Miles Up 5.2% in September 2002 HEALTHAXIS INC: Nasdaq OKs Continued Listing on SmallCap Market HORNBECK OFFSHORE: S&P Affirms B+ Credit & Senior Debt Ratings ICG COMM: Pushing with Sale of Maroon Circle Property for $1.25M IMC GLOBAL: S&P Revises Outlook to Neg. on Subpar Fin'l Profile INTEGRATED HEALTH: Seeks Final Okay to Amend DIP Credit Pact INTERPLAY ENTERTAINMENT: CEO Pleased with Turnaround Progress KAISER ALUMINUM: Proposes Uniform Bar Date Notice Procedures KASPER ASL: Obtains Court Nod to Hire Ernst & Young as Auditors KMART: Court OKs Assumption of Manhattan Software License Pact LAND O'LAKES: Moody's Takes Downgrade Actions on Senior Ratings LERNOUT: SEC Files Suit for Accounting Fraud Against Debtors LUMENON: Shareholders Approve Financing Facility with Crossover MANITOWOC COMPANY: Board Declares Cash Dividend to Shareholders MARSH SUPERMARKETS: S&P Revises Low-B Ratings Outlook to Neg. METALS USA: FTI Consulting Replaces PwC as Financial Advisors METRETEK TECHNOLOGIES: Commences OTCBB Trading Effective Oct. 15 METROMEDIA FIBER: PAIX Teams-Up with Pacific Wave in Seattle, WA MILACRON: Affirms Third-Quarter Results In Line With Guidance NAPSTER: Trustee Wants to Dip into Bertelsmann's Cash Collateral NATIONSRENT INC: Wants to Include Heller Financial in Mediation NCS HEALTHCARE: Amends Solicitation Statement re Tender Offer NEON COMMS: Court Sets Plan Confirmation Hearing for October 21 NETWORK ACCESS: Wins Court Nod to Employ PricewaterhouseCoopers NEXTREND INC: Files for Chapter 11 Reorganization in Texas NORTHWEST AIRLINES: Q3 Earnings Conference Call Set for Tomorrow PICADILLY CAFETERIAS: Gets Authority to Issue 100 Million Shares PRIMIX SOLUTIONS: Plans to File for Chapter 7 Liquidation Soon PROVIDIAN FINANCIAL: Will Publish Q3 2002 Results on October 28 PUBLIC SERVICE ENTERPRISES: Moody's Reaffirms All Credit Ratings ROHN INDUSTRIES: Completes Listing Transfer to Nasdaq SmallCap RURAL CELLULAR: Will Pay Dividends on Senior & Junior Preferreds SAFETY-KLEEN CORP: Wants to Assign Trumbull Pact to EPIQ Systems SCIENTIFIC LEARNING: Will Hold Q3 Conference Call on October 24 SEPRACOR INC: PRIMECAP Management Discloses 8.54% Equity Stake SIRIUS: Interest Nonpayment Spurs S&P to Cut Credit Rating to D SOLUTIA INC: Updates Third Quarter 2002 Earnings Outlook STARBAND COMMS: Wants More Time to File Chapter 11 Plan STERLING CHEMICALS: Texas Court Confirms Disclosure Statement TOWER AUTOMOTIVE: Appoints NYLIM to Manage $100MM Pension Plan UBIQUITEL INC: S&P Junks Corporate Credit Rating at CCC+ UNITED AIRLINES: Applauds Unions Commitment to Coalition Process US DIAGNOSTIC: Will Auction-Off Assets & Contracts on Monday US UNWIRED: S&P Places Ratings on Watch Neg. Due to Slow Growth VELOCITA: Court OKs Deloitte & Touche as Reorganization Advisors VIASYSTEMS GROUP: Taps Innisfree as Notice and Information Agent WESTPOINT STEVENS: State Street Discloses 10.6% Equity Stake WNC HOUSING: Future Cash Flows Insufficient to Meet Obligations WORLDCOM: Integral Obtains Stay Relief to Pursue Oklahoma Action WORLDCOM INC: New York Court Approves $1.1 Billion DIP Financing WYNDHAM INT'L: Equity Trading Moved to American Stock Exchange XO: Pulls Plug on Investment Pact with Forstmann Little & TelMex YORK RESEARCH: SDNY Court to Consider Plan on October 30, 2002 * Jefferies & Company Hires Robert H. Lessin as Vice Chairman * Meetings, Conferences and Seminars ********* ADVANCED OXYGEN: Independent Auditors Raise Going Concern Doubt --------------------------------------------------------------- Advanced Oxygen Technologies, Inc., maintains a database of business contacts that have participated in conference events. The Database was obtained through acquisition and the Company's activities of marketing events and producing CD-ROMS for clients. The Company maintains and updates contact fields on a quarterly basis. AOXY has a database management contract with Dun and Bradstreet, and Walter Karl, Inc., a division of InfoUSA, Inc., whereby, Walter Karl, Inc., will broker the Company's Database. Walter Karl's function is to market and rent the data contained in the Database. This is available in one of two formats: on a one time basis, or a 'database' basis whereby the customer will commit to a minimum number of contact names. The majority of the customers using the Database through WK are direct business to business marketers. WK receives a fee for each sale. During the year ending June 30, 2002 Walter Karl was the Company's only source of revenue. During this period, Walter Karl is the Company's only customer. AOXY has an agreement with Dun and Bradstreet whereby DB will update, correct, append, and offer deletions to the Database. DB will evaluate the Database each time, and has the option to purchase contacts on a case by case as they see fit, in which case AOXY would receive a fee. Correspondingly, should AOXY, rent, sell or otherwise profit from registered DB information, AOXY would pay a fee to DB. To date, AOXY has not sold any registered DB information. The Company had a location in Santa Clarita, CA for operations. The Company had abandoned this facility and equipment and maintains no staff other than the sole officer of the Company. Currently, the sole officer of the Company allows the Company to maintain its books, records and operations at its office. The Company continues it efforts to raise capital to support operations and growth, and is actively searching acquisition or merger with another company that would compliment AOXY or increase its earnings potential. During this period, the Company has had discussions with candidates, and has had no success in securing negotiations or a transaction. Further, the Company's financial position makes it difficult for the Company to continue operations. The foregoing raise substantial doubt about the Company's ability to continue as a going concern. The Company's continuation as a going concern is dependent on the attainment of profitable operations and meeting its obligations on a timely basis, which during this period, the Company has not been able to do. ADVANCED TISSUE: UST to Convene Sec. 341(a) Meeting on Nov. 7 ------------------------------------------------------------- The United States Trustee will convene a meeting of Advanced Tissue Sciences, Inc.'s creditors on November 7, 2002 at 10:00 a.m. in Suite 630 of the Emerald Plaza Building in San Diego. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Advanced Tissue Sciences, Inc., is engaged in the development and manufacture of human-based tissue products for tissue repair and transplantation. The Company filed for chapter 11 protection on October 10, 2002 at the U.S. Bankruptcy Court for the Southern District of California (San Diego). Craig H. Millet, Esq., and Eric J. Fromme, Esq., at Gibson, Dunn & Crutcher LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $32,200,000 in total assets and $16,900,000 in total debts. ADVANCED TISSUE: Nasdaq Will Knock-Off Shares Effective Monday -------------------------------------------------------------- Advanced Tissue Sciences, Inc., (NASDAQ: ATIS) announced that the company's securities will be delisted from the NASDAQ Stock Market at the opening of business on October 21, 2002. As a result of the company's Chapter 11 bankruptcy filing on October 10, and in accordance with Marketplace Rules 4330(a)(1) and 4450(f), the NASDAQ has notified the company that it will delist the company's securities from the NASDAQ, subject to the company's right of appeal. The company has determined not to appeal the NASDAQ's decision but will consider, when appropriate, making application to be listed on the OTC Bulletin Board. Effective with the opening of trading on October 15, the letter Q will be appended to the company's trading symbol. Advanced Tissue Sciences is redefining tissue repair and transplantation with human-based products developed and derived from its patented tissue-engineering technology. More information on Advanced Tissue Sciences is available at http://www.advancedtissue.com AETNA INDUSTRIES: Court Fixes October 23, 2002 Claims Bar Date -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware sets October 23, 2002 as the Claims Bar Date -- the deadline for creditors of Aetna Industries, Inc., to file their proofs of claim or be forever barred from asserting that claim. All proofs of claim must be filed by mail, by hand or overnight courier with the Debtors' Claims Agent, Bankruptcy Services LLC, and must be received before 4:00 p.m. Eastern Standard Time on the Claims Bar Date. Aetna Industries, Inc., is a direct supplier of high quality modules, welded subassemblies and chassis parts used as original equipment components in the North American automobile industry. The company filed for Chapter 11 protection on February 11, 2002, reporting estimated assets and debts of more than $100 million respectively. Mark Minuti, Esq., at Saul Ewing LLP and Robert Welsberg, Esq., at Carson Fischer, PLC represent the debtor in its restructuring efforts. ALLMERICA FINANCIAL: AM Best Junks Financial Strength Rating ------------------------------------------------------------ A.M. Best Co. has downgraded the financial strength ratings from B+ (Very Good) to C++ (Marginal) of Allmerica Financial Corporation's (Worcester, MA) (NYSE:AFC) life/annuity companies and from A- (Excellent) to B++ (Very Good) of its property/casualty companies. In addition, AFC's senior debt ratings were downgraded from "bbb-" to "bb+", the capital securities rating from "bb" to "bb- ," while the commercial paper rating was lowered from AMB-3 to AMB-4. All of AFC's financial strength and long-term debt ratings remain under review with negative implications. Allmerica's life insurance operations are now being significantly restructured with a focus on distribution of third-party products. Concurrently, all proprietary products of AFC's life operations are no longer being sold. The rating actions reflect the inherent uncertainty on numerous levels caused by the precipitous decline in capital and financial condition of the life insurance subsidiaries, First Allmerica Financial Life Insurance Company (FAFLIC) and Allmerica Financial Life & Annuity Company (AFLIAC). As a result, the current financial profile and capital levels of the life companies are not consistent with a secure rating. FAFLIC is currently in need of significant improvement to its surplus in order to comply with an agreement with the Massachusetts Department of Insurance to maintain a minimum annual risk-based capital of 225%. The erosion in FAFLIC's surplus is due primarily to the operating performance of its subsidiary, AFLIAC, whose performance has been negatively impacted by the significant downturn in the equity markets. On a stand-alone basis, the property/casualty operations are adequately capitalized. However, A.M. Best is concerned that the line of separation between AFC's life operations and property/casualty operations is clouded and that a conflict exists between capital support for the run-off of the life operations and maintenance of excellent capital levels and financial strength ratings of the property/casualty subsidiaries. While there are various financial ties between the life companies and the holding company and property/casualty companies, the DOI agreement is the most significant. Management is currently exploring a number of strategic alternatives, which may provide additional capital to the life companies in the near term. The strategic alternatives include seeking reinsurance, a sale of the variable annuity or other blocks of business and other forms of capital raising. While there is merit in certain of these strategic alternatives, the level of additional capital to be realized from these transactions is limited and could be lower than the approximately $100 million immediate capital needed to meet the annual 225% RBC level under the agreement with the Massachusetts DOI. Liquidity and operating cash flows, however, are not considered an immediate concern. The surrender charges associated with the $12 billion variable annuity book should allow for an orderly run-off while the liquidity of the general account assets should be available to efficiently run off the remaining blocks of business. The operating performance of the property/casualty insurance operations has significantly improved relative to 2001, and good results are expected into 2003. However, despite the favorable trends and strength of these operations, A.M. Best is concerned about potential negative qualitative effects on the property/casualty operations due to the situation of the life business. These companies have been--and will continue to be-- the sole support of holding company obligations. Prior to any adjustments, AFC's financial leverage--excluding funding agreements--is moderate. However, leverage increases significantly when equity and deferred acquisition costs associated with the life business are excluded. At the time of this release, there are sufficient assets at the holding company to pay fixed obligations into 2003. However, the holding company's financial flexibility is considerably lower than just a few months ago. The financial strength and debt rating downgrades partially reflect the fact that the financial profile has deteriorated, providing a cloud of uncertainty and concern over the holding company and property/casualty operations as the difficulties of the life companies play out. For a complete listing of companies with affected financial strength and debt ratings, please visit http://www.ambest.com/press/allmerica4.pdf A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com AMERICAN BUILDINGS: S&P Drops Subordinated Debt Rating to D ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its subordinated debt rating on American Buildings Co.'s C$84 million 12.5% subordinated notes due 2007 to 'D' from double-'C' and removed it from CreditWatch. The notes were issued by American Buildings subsidiary Vicwest Corp., and guaranteed by American Buildings. Standard & Poor's said that its double-'C' corporate credit rating on American Buildings Co., remains on CreditWatch with developing implications where it was placed on September 12, 2002. Standard & Poor's said that the downgrade is due to an event of default for non-payment of interest, as the 30-day grace period permitted under the bond's trust indenture has expired, although a majority of note holders have agreed not to support any exercise of remedies relating to this event of default prior to November 15, 2002. "The company continues to be in discussions with its senior lenders to rectify the event of default", said Standard & Poor's credit analyst Pamela Rice. "The ratings could be raised if the company is able to amend the bank agreement and makes the bond interest payment. Alternatively, the ratings will be lowered if the company is unable to amend the bank credit agreement, bank loan payments are rescheduled, or the lenders declare the senior debt to be due and payable". American Buildings manufactures engineered metal building products, including metal building systems, steel components, and entry systems for industrial, commercial, and other applications. AMERICA WEST: Q3 Earnings Conference Call Slated for Tomorrow ------------------------------------------------------------- America West Holdings Corporation (NYSE: AWA) will conduct a live audio webcast of its third quarter 2002 earnings conference call with the financial community on Thursday, Oct. 17, 2002 at 4:00 p.m. EDT (1:00 p.m. PDT). The webcast will be available to the public on a listen-only basis at the company's Web site, http://www.americawest.com An archive of the webcast will be available on the site through Oct. 21, 2002. Listeners to the webcast will need a current version of Windows MediaPlayer software and at least a 28.8 kbps connection to the Internet. Additionally, America West will make available on its Web site a number of charts and graphs depicting the company's financial performance and operational improvements. These visuals will be available at the public/investor relations section of the Web site after the company's earnings are released. America West Holdings Corporation is an aviation and travel services company with 2001 revenue of $2.1 billion. Wholly owned subsidiary America West Airlines is the nation's eighth- largest carrier serving 89 destinations in the U.S., Canada and Mexico. The Leisure Company, also a wholly owned subsidiary, is one of the nation's largest tour packagers. * * * As reported in Troubled Company Reporter's June 6, 2002 edition, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. ANC RENTAL: Wins Nod to Consolidate Ops. at Philadelphia Airport ---------------------------------------------------------------- To secure significant cost savings at the Philadelphia International Airport in Philadelphia, Pennsylvania while at the same time improve service to its customers, ANC Rental Corporation and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to reject: -- the August 12, 1988 Operating License between Alamo and the City of Philadelphia through its Department of Commerce, whereby Alamo was granted the right to operate a car rental concession at the Philadelphia Airport, and -- the Facility Agreement for the lease of certain premises located at the Philadelphia Airport. With the Court approval, the Debtors will assume and assign to ANC: -- the October 1, 1982 Operating License between National and Philadelphia City, and -- the Facility Agreement between National for the lease of certain premises located at the Philadelphia Airport. The consolidation of operations at the Philadelphia Airport is expected to generate savings for the Debtors up to $2,227,000 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) ASBESTOS CLAIMS: Disclosure Statement Hearing Set for October 31 ---------------------------------------------------------------- On August 19, 2002, Asbestos Claims Management Corporation filed a Plan of Reorganization and an accompanying Disclosure Statement with the U.S. Bankruptcy Court for the Northern District of Texas. A hearing to consider the adequacy of the Debtor's Disclosure Statement will be held before the Honorable Steven A. Felsenthal on October 31, 2002 at 9:30 a.m. CST or as soon thereafter as counsel can be heard. Any objections to the Disclosure Statement must be filed with the Court and received on or before October 25, 2002, with copies also sent to: (i) Counsel for ACMC Michael A. Rosenthal, Esq. Gibson, Dunn & Crutcher LLP 2100 McKinney Avenue Suite 1100 Dallas, Texas 75201 (ii) Office of the United States Trustee George McElreath 1100 Commerce Street, Room 9C60 Dallas, Texas 75242 (iii) W.D. Hilton Jr. Executive Director of the NGC Settlement Trust 2716 Lee Street, Suite 500 Greenville, Texas 75401-4107 (iv) Counsel for New NGC Garland S. Cassada Robinson, Bradshaw & Hinson 1900 Independence Center 202 North Tyron Street Charlotte, N.C. 28246 (v) the Legal Representative Sander Esserman, Esq. Stutzman & Bromberg 2323 Bryan Street, Suite 2200 Dallas, Texas 75201 (vi) Counsel for the Official Committee of Unsecured Creditors Julie W. Davis, Esq. Caplin & Drysdale, Chartered One Thomas Circle, N.W., Suite 1100 Washington, DC 20005 (vii) Counsel for the PD TAC Scott L. Baena, Esq. Bilzin Sumberg Dunn Baena Price & Axelrod LLP First Union Financial Center 200 South Biscayne Boulevard, Suite 2500 Miami, FL 33131 Asbestos Claims Management Corporation filed for chapter 11 protection on August 19, 2002 at the U.S. Bankruptcy Court for the Northern District of Texas. Michael A. Rosenthal, Esq., Aaron G. York, Esq., and Janet M. Weiss, Esq., at Gibson, Dunn & Crutcher represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors it listed debts and assets of over $100 million. BALLY TOTAL FITNESS: S&P Revises Outlook on B+ Rating to Stable --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on health club operator Bally Total Fitness Holding Corp., to stable from positive because the timeframe for a potential upgrade now appears more distant than originally expected. At the same time, Standard & Poor's affirmed its single-'B'-plus corporate credit, single-'B'-plus senior secured debt and single-'B'-minus senior subordinated debt ratings on Bally. Total debt outstanding as of June 30, 2002, was about $717 million. "Several factors are pressuring Bally's operating performance", said Standard & Poor's credit analyst Andy Liu. "These include a slower than expected ramp-up of newer clubs and flat new membership growth amid a weak economic environment". The company has lowered its earnings expectations for the second half of 2002. Mr. Liu added, "Bally is now expected to generate in 2002 roughly the same level of EBITDA as in 2001, restraining financial profile improvement". Near-term visibility is limited by the soft economy and its impact on new membership sales. Standard & Poor's said that its ratings on Chicago, Illinois- based Bally continue to reflect the company's relatively stable operating performance, offset by the financial risk of its recent club expansion and upgrade strategy, and the resulting challenge to achieve positive discretionary cash flow. BIRMINGHAM STEEL: Gets Go-Signal to Hire Freshfields Bruckhaus -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its okay to Birmingham Steel Corporation and its debtor-affiliates to employ Freshfields Bruckhaus Deringer LLP as special corporate antitrust counsel, nunc pro tunc to June 3, 2002. The Debtors' reorganization plan is based on an Asset Purchase Agreement. To consummate the proposed sale pursuant to the Asset Purchase Agreement, the Debtors will require the assistance of special corporate counsel to ensure compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and other applicable antitrust laws and regulations. To assure compliance with applicable antitrust laws, the Debtors require Freshfields Bruckhaus to: a) advise and consult with the Debtors on antitrust and other legal issues relating to the Asset Purchase Agreement and other transactions contemplated by the Debtors' plan of reorganization; b) prepare on behalf of the Debtors necessary applications, pleadings and other legal documents relating to antitrust issues, and to represent the Debtors in connection with all hearings and other procedures before the Department of Justice or any other executive or judicial forum with, jurisdiction over antitrust issues related to the Debtors; c) perform all other legal services required by the Debtors during their bankruptcy cases. The Debtors will pay Freshfields Bruckhaus its customary hourly rates: M.J. Moltenbrey Partner $545 per hour Joseph E. Hunsader Associate $380 per hour Thomas B. Ensign Associate $380 per hour Bruce C. McCulloch Associate $345 per hour Ana Petrovic Associate $345 per hour Leslie Fitzgerald Legal Assistant $195 per hour Jeffrey Brown Legal Assistant $175 per hour Diane Tuomala Legal Assistant $175 per hour Birmingham Steel Corporation manufacture and distribute steel for construction industry and merchant steel products for fabricators and distributors across North America. The Company filed for chapter 11 protection on June 3, 2002. James L. Patton, Esq., Michael R. Nestor, Esq., Sharon M Zieg, Esq., at Young Conaway Stargatt & Taylor, LLP and John Whittington, Esq., Patrick Darby, Esq., Lloyd C. Peeples III, Esq., at Bradley Arant Rose & White LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $487,485,834 in assets and $681,860,489 in total debts. BUDGET GROUP: Secures Okay to Expand Fowler White's Engagement -------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates obtained permission from the U.S. Bankruptcy Court for the District of Delaware to expand the services of Fowler White Burnett P.A., to provide these additional services: A. Counseling and providing strategic advice to the Debtors concerning litigation and corporate related services that Fowler currently provides to and requested by the Debtors in the ordinary course of their business; B. Providing counseling and strategic advice to and representation of the Debtors in connection with litigation and corporate issues arising under Florida law with respect to the Debtors' ongoing operations in Florida on an "as- needed" basis; and C. Providing litigation advice to, support and representation of the Debtors regarding the protection of their bankruptcy estates against non-bankruptcy actions brought in Florida seeking acquisition of property of the Debtors' bankruptcy estates. Although the supplemental services that Fowler will be providing are in the ordinary course of business, Fowler will be submitting its application for compensation as a supplement to their application for compensation as the Debtors' special counsel in the Ryder litigation. The $48,535 retainer that Fowler has received from the Debtors will constitute a general retainer with respect to the charges to be incurred by the Fowler for its services, including the supplemental services. (Budget Group Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) Budget Group Inc.'s 9.125% bonds due 2006 (BD06USR1), DebtTraders reports, are trading at 17 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BD06USR1for real-time bond pricing. CALPINE: CEO Peter Cartwright Cancels Pre-Arranged Trading Plan --------------------------------------------------------------- Calpine Corporation (NYSE: CPN) announced that Chairman and Chief Executive Officer Peter Cartwright has canceled his pre- arranged 10b5-1 structured sales plan. Mr. Cartwright has 565,460 options that expire December 31, 2002. He intends to exercise these options and hold the shares. Based in San Jose, California, Calpine Corporation is a leading independent power company that is dedicated to providing customers with clean, efficient, natural gas-fired power generation. Calpine also is the world's largest producer of renewable geothermal energy. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. Calpine's June 30, 2002 balance sheet shows a working capital deficit of about $369 million and a greater than 4:1 debt-to-equity ratio. Calpine Corp.'s 10.50% bonds due 2006 (CPN06USR2) are trading at 39 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for real-time bond pricing. CHARMING SHOPPES: September Total Sales Fall 9% to $198 Million --------------------------------------------------------------- Charming Shoppes, Inc., (Nasdaq: CHRS), the retail apparel chain specializing in women's plus-size apparel, reported that total sales for the five weeks ended October 5, 2002 decreased 9% to $198,100,000 from $216,700,000 for the five weeks ended October 6, 2001. Comparable store sales for Charming Shoppes, Inc. decreased 6% for the five weeks ended October 5, 2002, as previously reported on Tuesday, October 8, 2002. During the thirty-five weeks ended October 5, 2002, the Company opened 45, relocated 23, converted 40 and closed 150 stores. Sales for the thirty-five weeks ended October 5, 2002 increased 41% percent to $1,646,000,000 from $1,165,100,000 for the comparable period ended October 6, 2001. The current period's total sales include sales from Lane Bryant, which was acquired August 16, 2001. Comparable store sales for Charming Shoppes, Inc. decreased 1% for the thirty-five weeks ended October 5, 2002. For more detailed information on monthly sales, please call 1-866-CHRS-NEWS (1-866-247-7639) to listen to Charming Shoppes, Inc.'s prerecorded monthly sales commentary. This recording will be available until October 14, 2002. Charming Shoppes, Inc., operates 2,338 stores in 48 states under the names LANE BRYANT(R), FASHION BUG(R), FASHION BUG PLUS(R), CATHERINE'S PLUS SIZES(R), MONSOON(R) and ACCESSORIZE(R). Monsoon and Accessorize are registered trademarks of Monsoon Accessorize Ltd. Please visit http://www.charmingshoppes.com for additional information about Charming Shoppes, Inc. * * * As reported in Troubled Company Reporter's May 24, 2002 edition, Standard & Poor's assigned its BB- rating to Charming Shoppes' $130 million Senior Unsecured Notes. CLARK RETAIL: Files for Chapter 11 Reorganization in Chicago ------------------------------------------------------------ To alleviate short-term liquidity issues, Clark Retail Enterprises, Inc., and its parent, Clark Retail Group, Inc., filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company said the filing should assure the continued flow of products to its stores and allow the Company to continue to serve its customers. Concurrently, Clark announced that it has received a sizeable commitment for $56.2 million in debtor-in-possession (DIP) financing from Clark's largest shareholder, Apollo Investment Fund IV, L.P., to support the payment of post- petition operating, vendor and employee obligations. "Our stores and offices will continue to operate without interruption. Our management team will remain in place, and our company's commitment to provide customers with consistent quality, selection and great value remains unchanged. Our $56.2 million DIP should assure all of our vendors that we are committed to a continued supply of all post-petition goods and services," said Clark's President and Chief Executive Officer Brandon K. Barnholt. Excluded from the filing is Clark's White Hen Pantry, Inc. subsidiary, a premier convenience store chain in the greater Chicago area with approximately 250 outlets. This stand-alone entity, which was purchased in 2000, has a highly developed fresh food program, strong brand recognition and excellent franchise program. Its exclusion from this filing should ensure that White Hen's franchise operations will continue as normal, and its vendors will be paid without interruption. Like the rest of the industry, Clark has been hurt by steep declines in gasoline margins, a weak economy, decreased consumer spending in the aftermath of September 11 and intense competition. These unprecedented industry conditions created the need for the company to seek a Chapter 11 reorganization. "The Chapter 11 process will provide the Company with the time and means to resolve its financial issues. This action will represent a new beginning that will allow a financially stable Clark to put the liquidity challenges of the past behind it, so that management can focus on operating the business and providing customers with even better levels of service and availability of product," Mr. Barnholt said. The Company filed its Chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division in Chicago. The Company is being advised in its Chapter 11 cases by Stutman, Treister & Glatt as its reorganization counsel, and FTI Consulting as its financial advisor. CLARK RETAIL: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Clark Retail Enterprises Inc 3003 Butterfield Road Oak Brook, IL 60523 Bankruptcy Case No.: 02-40045 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Clark Retail Group Inc. 02-40046 Chapter 11 Petition Date: October 15, 2002 Court: Northern District of Illinois Judge: John H. Squires Debtors' Counsel: Timothy A. Barnes, Esq. Richard Levy, Esq. Latham & Watkins Sears Tower, Suite 5800 233 South Wacker Drive Chicago, IL 60606 312-876-7700 and Robert A. Greenfield, Esq. Eve H. Karasik, Esq. Marina Fineman, Esq. Stutman, Treister & Glatt PC 3699 Wilshire Boulevard, Suite 900 Los Angeles, California 90010 Telephone: 213-251-5100 Fax: 213-251-5288 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ McLane Company, Inc. Distributor $17,000,000 Terry McElroy 4747 McLane Parkway Temple, TX 76503 Tel: 254-771-7575 Fax: 254-771-7566 Exxon Mobil Oil Corp Fuel Supplier $7,500,000 James S. Carter 3225 Gallows Road Room 6D0203 Fairfax, VA 22037 Tel: 703-846-4246 Fax: 703-846-4293 RLI Insurance Surety Bond $6,500,000 James Gordon 300 S. Wacker Drive #950 Chicago, IL 60606 Marathon Ashland Fuel Supplier $2,500,000 Steven W. Poehler 539 So. Main Street Findley, OH 45840-3295 Tel: 419-421-2172 Fax: 419-421-3153 Pepsi Americas Convenience Products $2,000,000 Keith Mclaragno 1400 W. 35th Street Chicago, IL 60609 Tel: 773-893-2054 Fax: 773-893-2074 Pepsi USA Convenience Products $1,000,000 Mike Joyce 300 Park Boulevard, Suite 315 Itasca, IL 60143 Tel: 630-250-6920 Fax: 630-773-4318 Equiva Services LLC Fuel Supplier $1,000,000 Donald J. Hayes 910 Louisiana, #2038 Houston, TX 77002 Tel: 713-277-3696 Fax: 713-277-3688 Martin Oil Fuel Supplier $700,000 Robert D. Ryan 940 South Frontage Road, Suite 2000 Woodridge, IL 60517 Tel: 630-427-0190 Fax: 630-427-3688 Kraft Convenience Products $690,000 Thomas Sampson One Kraft Court Glenview, IL 60025 Tel: 847-646-8796 Fax: 847-646-2251 Coca Cola Convenience Products $500,000 Robert Tarkington 2500 Windy Ridge Parkway Atlanta, GA 30339 Tel: 770-989-3567 Fax: 770-989-3565 American Bottling Convenience Products $350,000 Stanton Parsons 400 N. Wolf Road Northlake, IL 60164 Tel: 708-947-5027 Fax: 708-562-0071 ATC Associates Environmental $330,000 Bobby Toups 2020 W. Pinhook Suite 303 Lafayette, LA 70508 Tel: 337-234-8777 Fax: 337-235-6777 Center Oil Fuel Supplier $300,000 Gary Parker 600 Mason Ridge Center Drive St. Louis, MO 63141 Tel: 314-682-3600 Fax: 314-682-3596 Prairie Farms/Muller Convenience Products $290,000 Pineburst Edward Mullins 1800 Adams Street Granite City, IL 62040 Tel: 618-451-5600 Fax: 618-451-7251 Retalix Software $240,000 Interstate/Wonder Convenience Products $230,000 Wallace Supplies/Forms $210,000 ADS Alliance Data Systems Credit Card Processing $180,000 Petroleum Traders Corp. Fuel Supplier $160,000 Sunset Sales Convenience Products $160,000 CLAXSON INTERACTIVE: Fails to Maintain Nasdaq Listing Standards --------------------------------------------------------------- Claxson Interactive Group Inc., (Nasdaq: XSON) announced that on October 9, 2002, it received a letter from the Nasdaq Listing Qualifications Department indicating that the Company is subject to delisting because of its failure to comply with Marketplace Rule 4320(e)(2)(B), which requires a minimum of (i) U.S.$2,500,000 stockholders' equity or (ii) a market capitalization of U.S.$35,000,000 or (iii) net income of U.S.$500,000, unless the Company requests a hearing prior to the opening of business on October 15, 2002. The Company has requested an oral hearing before the Nasdaq Listing Qualifications Panel to review the determination reached by the Nasdaq Listing Qualifications Department. The hearing is expected to be scheduled within 45 days of the filing of the hearing request. Under applicable rules, the hearing request will stay the delisting of the Company's securities, pending a decision by the Nasdaq Panel. The Company intends to present a plan to the Nasdaq Panel for achieving and sustaining compliance with Marketplace Rule 4320(e)(2)(B), but there can be no assurance the Nasdaq Panel will grant the Company's request for continued listing. If delisted, the Company would attempt to have its Class A common stock traded in the over-the-counter market via the Electronic Bulletin Board. Claxson (Nasdaq: XSON) is a multimedia company providing branded entertainment content targeted to Spanish and Portuguese speakers around the world. Claxson has a portfolio of popular entertainment brands that are distributed over multiple platforms through its assets in pay television, broadcast television, radio and the Internet. Claxson was formed in a merger transaction, which combined El Sitio, Inc., and other media assets contributed by funds affiliated with Hicks, Muse, Tate & Furst Inc., and members of the Cisneros Group of Companies. Headquartered in Buenos Aires, Argentina, and Miami Beach, Florida, Claxson has a presence in all key Ibero-American countries, including without limitation, Argentina, Mexico, Chile, Brazil, Spain, Portugal and the United States. COVANTA: Reaches Standstill Pact with AIG-FP Funding, et. al. ------------------------------------------------------------- Covanta Energy Corporation and Ogden Facility Management Corporation of Anaheim, seeks to enjoin prospective actions of AIG-FP Funding (Cayman) Limited, AIG-FP Special Finance (Cayman) Limited and Bankers Commercial Corporation. Pursuant to Section 362(a), 365(e) and 105(a) of the Bankruptcy Code and Rule 65 of the Federal Rules of Bankruptcy Procedure, as incorporated by Bankruptcy Rule 7065, the Debtors ask the Court to: (1) declare that AIG-FP has violated the automatic stay imposed by Section 362 of the Bankruptcy Code; (2) declare that the Default Notice is void as a matter of law under Sections 362 and 365 of the Bankruptcy Code; (3) hold AIG-FP in civil contempt for its willful violation of the automatic stay; (4) grant a temporary restraining order, a preliminary injunction and permanent injunctive relief enjoining AIG- FP from issuing a Temporary Value Notice or exercising remedies under the Sublease Agreement and enjoining AIG-FP Finance from taking any action to enforce or act upon a Termination Value Notice or exercising remedies under the Sublease Agreement; and (5) grant a temporary restraining order, a preliminary injunction and a permanent injunction enjoining BCC from causing the Trustee to issue a Termination Value Notice or from issuing a draw notice on the Equity Letter of Credit. Arrowhead Pond Transaction Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that in 1993, Covanta and Ogden FMCA entered into the Second Amended and Restated Arena Management Agreement between the City of Anaheim and Ogden FMCA. By virtue of the Management Agreement, Arrowhead Pond of Anaheim was financed, constructed and turned over to Ogden FMCA to control for 30 years. Ms. Buell explains that the financing was undertaken by issuance of Certificate of Participation by an entity of the City. The Certificates were enhanced by the issuance of a letter of credit, the credit support for which was the undertaking of Ogden FMCA to provide unlimited working capital, in the event of cash shortfalls, to assure that operating expenses and debt service on the Certificates were timely paid. In exchange for Covanta's participation in the financing and management of the Arena, the City granted to Ogden FMCA management rights to the Arena for 30 years. Pursuant to the Management Agreement, Ogden FMCA receives a management fee equivalent to 10% of gross revenues generated by the Arena and is responsible for payment of Arena expenses, leaving Covanta with economic benefits and burdens of the transaction. The LILO Transaction In 1999, Covanta entered into a lease-in and lease-out transaction -- LILO Transaction -- with the City and Ogden FMCA in connection with the Arena. The LILO Transaction was structured as a lease of the Arena by the City to an investment trustee and a subsequent sublease of the Arena back to the City. The LILO Transaction was executed pursuant to the Participation Agreement between Covanta, AIG-FP, the Trustee, the City and other parties. The Participation Agreements integrates the transaction documents -- the Operative Documents -- that are part of the LILO Transaction. In connection with the LILO Transaction, the Trustee obtained debt financing from AIG-FT as Lender under a Loan Agreement and equity financing from BCC -- the Equity Investor. The financing was applied to an advance payment of the rent owed by the Trustee to the City under the Head Lease. The City, in turn, escrowed most of the advance rent with debt and equity payment undertakers to secure the City's own rent obligations back to the Trustee pursuant to the Sublease Agreement. The City's sublease rental obligations are defeased and paid in part by AIG-FP Finance as the Debt Payment Undertaker and by an Equity Payment Undertaker, another AIG affiliate. In consideration for the Loan Agreement, the Trustee pledged its assets and assigned its rights, privileges and remedies under the Sublease Agreement and certain of the other Operative Documents to the Lender. By means of an agreement with the City, its remaining principal obligations under the LILO Transaction are directly undertaken or guaranteed by Covanta, including coverage of shortfall payments in the event of early termination of the Sublease Agreement by means of letter of credit draws of $26,000,000 and $1,543,616. Thus, Covanta is legally a direct obligor under the Operative Documents for all principal obligations of the City relating to the Sublease Agreement that are not defeased by means of the Debt Payment Undertaking Agreement or the Equity Payment Undertaking Agreement. Ms. Buell informs the Court that on April 4, 2002, the Lender served a Default Notice to Covanta advising that Covanta's bankruptcy filing constitutes an event of default under the Sublease Agreement, which further created a cross default on the Loan Agreement. The Default Notice further advised that the Lender intended to exercise remedies under the Loan Agreement by April 12, 2002. Remedies include requiring the City and Covanta to pay an amount equal to the Termination Value as liquidated damages for loss of bargain as of the Termination Value Determination Date specified under a written notice. According to Ms. Buell, Covanta will bear the financial responsibility to the Defendants for an anticipated shortfall purportedly exceeding $37,500,000, $26,000,000 of which is secured by a letter of credit, in order to pay the full termination Value. Upon issuance of the Termination Value Notice, Ms. Buell continues, the Lender may also seek payment from AIG-FP Finance under the Debt Payment Undertaking, the effect of which would be to unwind the LILO Transaction. The Termination Value Notice would also allow the Equity Investor to make a draw under the Equity Letter of Credit. If a draw on the Equity Letter of Credit is not sufficient to pay the full amount of the Equity Portion of the Termination Value, the Equity Investor may proceed against Covanta pursuant to the Participation Agreement and Ogden Guaranty. As a consequence, Ms. Buell fears, if the Lender is permitted to send the Termination Value Notice to the City and Covanta, the LILO Transaction will be termination and the Debtors' estates will be at risk. Moreover, Ms. Buell adds, the Lender's notice could trigger a draw notice to Covanta under the Equity Letter of Credit. "Both prospective actions are prohibited by Section 362 of the Bankruptcy Code," Ms. Buell points out. A Termination Valuation Notice sent by the Trustee under Section 17 of the Sublease Agreement would have the same consequences. Furthermore, Ms. Buell notes, the Default Notice plainly states that the purported event of default of the Loan Agreement was triggered by an ipso facto clause in the Sublease Agreement. This clause, Ms. Buell explains, provided that any bankruptcy filing by Covanta would constitute an event of default of the Sublease Agreement. Under the LILO documentation, Covanta is for all purposes legally and economically an obligor under the Sublease Agreement. A Default Notice then, on the basis of this ipso facto provision, is invalid and void pursuant to Section 365(e) of the Bankruptcy Code. By these facts, Ms. Buell contends that the relief requested is warranted. * * * The Parties agreed to: -- a stay of the Action and of certain other actions, and -- a standstill of the delivery of certain notices and the exercise of certain remedies of the Defendants. Moreover, the parties wish to preserve their ability and right to assert, initiate and pursue their claims or defenses after the termination of the Standstill Period and Stay Period to the extend permitted by the Court. With the consent of the Parties, Judge Blackshear orders that: 1. Until October 21, 2002 -- the Standstill Period -- none of the Defendants will assert, initiate or pursue and cause any other person to assert, initiate or pursue against the Debtors the giving of any notice, the making of any demand or the exercise of any remedy based upon any Standstill Event of Default. A Standstill Event of Default means any existing or future event of default under the Participation Agreement, the Sublease Agreement or the Loan Agreement based upon any action: -- primarily related to the financial condition of the Debtors, including but not limited to: (a) the failure of either of the Debtors under the Bankruptcy Code; (b) the failure of either of the Debtors or the City to fulfill its obligations pursuant to the Participation Agreement; or (c) actions that constitute an event of default under the Sublease Agreement, the Participation Agreement and the Loan Agreement, in each case as the actions relate to the financial condition of the Debtors; or -- related to the failure of the Debtors or the City, for any reason, to cause to be covered by the Equity Letter of Credit or Debt Letter of Credit, as applicable, as of the date hereof, or to cause the Ogden Letter of Credit to be issue. This paragraph shall not stay any action in response to a breach of this Order; 2. Until December 20, 2002, the Debtors will not take any action against the Defendants in furtherance of the Action or any similar proceeding, and will not take any action to enjoin, prevent or prohibit the giving of notice or making of a demand required under the Operative Documents or the exercise of remedies in each case based upon any Standstill Event of Default; 3. The Parties' obligations under this Order will terminate if Westdeutsche Landesbank Girozentrale issues a notice that it elects not to renew the Equity Letter of Credit or the Debt Letter of Credit. The Parties have requested West LB not to issue a notice electing not to renew the letters of credit, but to either permit them to be renewed, on a prepetition basis, or to issue substitute Letters of Credit, in the same form and amounts as the Equity Letter of Credit and Debt Letter of Credit, on a prepetition basis, in either case pursuant to the Letter of Credit and Reimbursement Agreement dated June 24, 1999 between Covanta and West LB; 4. During and after the expiration of the Stay Period, the Debtors shall not cause any other person to: -- interfere with or restrain, or seek to interfere with or restrain, in any manner, the respective rights and obligations of the Lender, the Debt Payment Undertaker, the Debt Issuing Bank, the Equity Investor, the Trustee, the Equity Payment Undertaker and the Equity Issuing Bank under the Operative Documents, including the obligation of the Debt Payment Undertakers to make payments to the Lender in accordance with the terms of the Debt Payment Undertaking Agreement, the obligation of the Equity Payment Undertaker to make payments to the Trustee or BCC and the obligation of the Equity Issuing Bank to make payments to BCC; and -- claim or seek declaratory relief or take other similar action that the Debt Payment Undertaking Agreement, the Debt Letter of Credit, the Equity Payment Agreement, the Custody Agreement, the Account Pledge and Security Agreement and the Equity Letter of Credit or the proceeds of any constitute property of the Debtors' estate; 5. After the expiration of the Standstill and Stay Periods, no party shall assert the passage of time during the Standstill or Stay Period as a defense or objection to the assertion of any claim or defense any other party may have against it by reason of, arising out of, or relating to the Operative Documents or the breach or interpretation thereof. This prohibition shall apply, without limitation, to defenses on the basis of and alleged failure to comply with any statute of limitations or repose, estoppel, waiver, laches or other defenses, objections or arguments based upon the timeliness of the assertion of any claim or defense. It is expressly agreed that the running of all limitation periods with respect to any and all claims or defenses is deemed tolled during the Standstill or Stay Period, as applicable; 6. During the Standstill Period, each party will use reasonable commercial efforts to cooperate with all reasonable requests of the other parties related to the execution and implementation of this Order and to a restructuring of the LILO Transaction; provided, however, that the obligation of the AIG Defendants to cooperate shall only apply to a LILO Restructuring which provides for a replacement or take-out of the AIG Defendants; 7. Without limitation of any right which the parties may have under the Operative Documents, the Debtors will indemnify the AIG Defendants for all reasonable costs and expenses incurred by them relating to the events surrounding the Default Notice and continuing throughout the Standstill Period in connection with this Order and any proposed LILO Restructuring, subject to a $175,000 maximum. Payment to these costs and expenses shall be made promptly as practicable after the submission of invoices; and 8. During the Stay Period, the Action is stayed for all purposes, including any obligation of the Defendants to move or answer with respect to the Complain and the time for the Defendants to move or answer is tolled. (Covanta Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) CUTTER & BUCK: Regains Compliance with Nasdaq Listing Guidelines ---------------------------------------------------------------- Cutter & Buck Inc., (Nasdaq: CBUKE; formerly CBUK) announced that a NASDAQ Listing Qualifications Panel has decided that the company's stock will continue to be listed on the NASDAQ National Market and that the delisting proceedings have been closed. On Wednesday October 16, 2002, the trading symbol for the company's common stock will once again be CBUK. This decision follows the company's October 9 filing of its restated financial reporting documents with the Securities and Exchange Commission. The NASDAQ Panel noted that the company has remedied its filing delinquencies, has taken appropriate steps to identify accounting issues, and has instituted sufficient remedial measures to ensure that those issues will not likely recur. "I want to thank everyone who has supported us during these past few weeks," said Fran Conley, the company's Chief Executive Officer. "The uncertainty about our listing, as well as the enormous workload of our internal investigation and the restatement, have required extraordinary effort by everyone involved. We are extremely pleased to get our restatement completed, our filings current and our ticker symbol back where it belongs." As previously reported, filing of the Company's 10-K and 10-Q had been delayed because of the Company's decision to restate its historical financial results. On August 15, 2002, the Company received a notice from the Nasdaq National Market indicating that the Company's common stock no longer met the requirements for listing as a result of violations of Marketplace Rules 4310(C)(14) and 4330. The Company appealed the decision to delist its common stock in a hearing on September 20, 2002. Pending the outcome of that hearing, the Company's common stock has been trading under the symbol CBUKE. Cutter & Buck designs and markets upscale sportswear and outerwear under the Cutter & Buck brand. The Company sells its products primarily through golf pro shops and resorts, corporate sales accounts and specialty retail stores. Cutter & Buck products feature distinctive, comfortable designs, high quality materials and manufacturing and rich detailing. DDI CORP: Implements Additional Cost Restructuring Measures ----------------------------------------------------------- DDi Corp. (Nasdaq: DDIC), a leading provider of time-critical, technologically advanced, interconnect services for the electronics industry, announced the implementation of additional restructuring measures aimed at improving cost absorption. Management estimates that it will record a third quarter pre-tax restructuring charge of $8 million to $10 million comprised of $1 million to $2 million in cash charges and the remainder in non-cash charges. DDi's restructuring actions include the write-down of unutilized assets to their net realizable value, the streamlining of facilities aimed at improving manufacturing efficiency within the Company's Anaheim, California campus, and the elimination of certain sales offices including the office based in Tokyo, Japan. The Company anticipates that the restructuring activities will have a nominal impact on future cash flows. Additionally, DDi will record a third quarter goodwill impairment charge of $10 million to $15 million reflective of the recent decline in the Company's market capitalization. Chief Executive Officer Bruce McMaster commented, "These restructuring charges are taken in connection with the Company's plans for improved operating efficiencies and cost control given continued economic weakness. While consolidating underutilized facilities and removing unutilized assets, we are maintaining the resources necessary for continued penetration of all of our target regions and sustained emphasis on technology and service innovation." Commenting on third quarter 2002 outlook, McMaster noted, "We expect net sales in the high end of our previously specified range of $55 million to $60 million and a net loss between $0.08 to $0.12 per share, excluding restructuring and related charges and goodwill impairment." DDi is a leading provider of time-critical, technologically advanced, design, development and manufacturing services. Headquartered in Anaheim, California, DDi and its subsidiaries, with design and manufacturing facilities located across North America and in England, service approximately 2,000 customers worldwide. DDi Corp., common stock trades on the Nasdaq National Market. As previously reported, Moody's downgraded DDi's low debt ratings to junk level in April, while in early May, Standard & Poor's downgraded the company's low-B ratings down a single notch due to weakening financial results. DIAL CORP: Board of Directors Declares Quarterly Dividend --------------------------------------------------------- The Board of Directors of The Dial Corporation (NYSE: DL) declared a quarterly dividend of $0.04 per share on the Company's common stock. The dividend is payable on January 23, 2003 to stockholders of record at the close of business on December 17, 2002. The Dial Corporation is one of America's leading manufacturers of consumer products, including Dial soaps, Purex laundry detergents, Renuzit air fresheners and Armour Star canned meats. Dial products have been in the American marketplace for more than 100 years. For more information about The Dial Corporation, visit the Company's Web site at http://www.dialcorp.com * * * As reported in Troubled Company Reporter's September 3, 2002 edition, the union at The Dial Corporation's Aurora, Illinois manufacturing plant voted down a four-year contract that had been unanimously recommended by the union negotiating committee. The Aurora plant manufactures Dial's personal cleansing products. This union's contract expired at the end of August 2002 and the approximate 300 covered employees currently are working without a contract. While Dial is disappointed that the union voted against this contract, it is continuing to work with the union to try to reach agreement on a mutually acceptable four-year contract. Based on continuing talks with the union, the positive tone of those talks and Dial's belief that there are no significant issues that would preclude from reaching an agreement, Dial currently does not believe that there will be any work stoppage at the Aurora plant. If unable to reach a mutually acceptable agreement however, Dial could experience a work stoppage. Sales have steadily declined since 1999 and losses have followed. At June 29, 2002, this billion-dollar company's balance sheet showed $72 million in total shareholder equity. Standard & Poor's rates the Company's $250,000,000 of 7% Notes due August 15, 2006, and $250,000,000 of 6-1/2% Notes sue September 15, 2008, in low-B territory. ELDERTRUST: Working Capital Deficit Drops to $30MM at Sept. 30 -------------------------------------------------------------- ElderTrust (NYSE:ETT), an equity healthcare REIT, reported results for the third quarter ended September 30, 2002. Funds from operations for the third quarter ended September 30, 2002, totaled $3.2 million on revenues of $5.7 million. In comparison, FFO for the third quarter of 2001 totaled $2.8 million on revenues of $6.2 million. Net income for the third quarter of 2002 totaled $0.7 million from continuing operations and $0.7 million after results of discontinued operations. For the comparable quarter of 2001, the net income from continuing operations and net income after discontinued operations was $0.4 million. For the nine months ended September 30, 2002, FFO totaled $9.4 million on revenues of $17.1 million. The net income for the nine months ended September 30, 2002 was $1.9 million from continuing operations and net income after discontinued operations was $1.6 million. For the comparable period in 2001, FFO totaled $7.4 million on revenues of $18.9 million. The net loss from continuing operations and after loss on discontinued operations for the nine months ended September 30, 2001 was $0.2 million. The Company's average balance of one-month LIBOR based floating rate debt for the third quarter 2002 was approximately $33.1 million and for the nine months ended September 30, 2002 was approximately $34.6 million. Of this amount, an average balance of $30.0 million is assessed interest at one-month LIBOR plus 3%. The remainder is assessed interest at one-month LIBOR plus 3.25%. Average one-month LIBOR for the third quarter 2002 and the nine months ended September 30, 2002 was approximately 1.88% and 1.88%, respectively. The LIBOR rate applicable to these loans for October 2002 is 1.87%. During the second quarter of 2002 the Company recognized an impairment loss of $250,000 on an asset that has been offered for sale, which is included in loss on discontinued operations for the nine months ended September 30, 2002. At September 30, 2002, ElderTrust's balance sheet shows that its total current liabilities exceeded its total current assets by about $30 million. "We are pleased with our operating results during the third quarter of 2002" said D. Lee McCreary, Jr., ElderTrust President and Chief Executive Officer. ElderTrust is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States. Since commencing operations in January 1998, the Company has acquired 32 properties. ELDERTRUST: Addresses Tenant Professional Liability Loss Issue -------------------------------------------------------------- ElderTrust (NYSE:ETT), an equity healthcare REIT, addressed tenant/borrower professional liability loss issues, particularly in Florida. The Company noted that on October 11, 2002, Genesis Health Ventures, Inc. (NASDAQ:GHVI), the Company's most significant tenant, addressed its belief that it has adequately provided for professional liability losses. In addition, the Company noted that the Company's only Florida exposure is through its investment in ET Capital Corp. ETC has a $7.8 million second mortgage loan secured by 11 skilled nursing facilities with 1,219 beds. This loan is nonperforming, was written off by ETC in 2000 and no income has been recognized on this investment since that time. "Last week's announcement by an operator in the long-term care industry regarding professional liability insurance issues, particularly in Florida, has clearly caused concern," said D. Lee McCreary, Jr., ElderTrust's President and Chief Executive Officer. "The Genesis announcement is comforting and we suggest our investors refer to it for more information on this significant tenant. As to Florida, our only exposure is a mortgage through our investment in ETC, a mortgage that was written off some time ago. Our public disclosures and our website continue to note these beds as the mortgage lien is still in place even though we have recognized no income from that investment for quite some time." ElderTrust is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States. Since commencing operations in January 1998, the Company has acquired 32 properties. For more information on ElderTrust visit ElderTrust's Web site at http://www.eldertrust.com ENCOMPASS SERVICES: Proposes Financial Workout Plan to Creditors ---------------------------------------------------------------- Encompass Services Corporation (Pink Sheets: ESVN) is proposing a financial restructuring plan designed to strengthen the Company's financial condition. The Company will solicit approval of its restructuring plan from its creditors. The Company also announced it has cancelled its Special Meeting of Shareholders, originally scheduled for October 15, 2002, and terminated its previously announced Rights Offering. The Company said it will file a request with the Securities and Exchange Commission to withdraw the related Registration Statement. "With the proposed restructuring, we are pursuing a significant improvement to our capital structure and substantially strengthening our business prospects," said Joe Ivey, President and Chief Executive Officer of Encompass. "This plan, if approved, will significantly reduce our total debt and improve our financial flexibility. Moving forward quickly with this plan should provide Encompass and our stakeholders with the best prospects for realizing the value of the business." The proposed financial restructuring plan would eliminate all of the Company's subordinated debt, all of its mandatorily redeemable preferred stock, and a significant portion of its senior debt. It would significantly reduce annual cash interest payments and eliminate dividend obligations. Ivey continued, "We believe that this restructuring plan, if approved, will allow the Company to operate its business in the ordinary course, with minimal disruption to our customers, suppliers and employees, and will provide the company with the opportunity to reach its full potential." Terms of the Proposed Restructuring The key components of the Company's proposed restructuring plan include: (i) Trade claims to the Company's vendors would be paid in the ordinary course, consistent with the Company's normal business practices and current credit terms; (ii) The Company's senior secured lenders would restructure a portion of their loans into a new $200 million term loan and exchange the remaining amount for 80% of new Common Stock; (iii) The Company's 10 1/2% Senior Subordinated Notes due 2009 would be exchanged for 20% of new Common Stock; (iv) The Company's Junior Subordinated Notes, mandatorily redeemable convertible preferred stock, common stock and all outstanding options and warrants would be cancelled and current holders would receive no value in exchange therefore. If its solicitation is successful, Encompass intends to implement the restructuring transaction through a "pre-packaged" Chapter 11 filing in order to complete its restructuring in an expedient manner. The proposal contemplates a debtor-in- possession loan facility for the Company during the Chapter 11 proceeding. Upon completion of the proposed restructuring, the Company expects to receive a new revolving credit facility to fund general corporate purposes and working capital needs, including the issuance of letters of credit. Although the Company has not received any indication of support from its creditors for the proposed restructuring, it believes this expedited restructuring process will preserve the most value for its creditors and other constituencies, if approved. The Company stated that in the event it does not receive the support required from its creditors to implement this plan, it would explore alternate courses of action to preserve the value of the Company. The Company intends to commence the solicitation of approvals of the proposed plan shortly. The solicitation of approvals would expire 30 days after commencement. Status of Senior Lender Waiver The Company also said that the waiver it received from its senior lenders relieving it from compliance with the financial covenants contained in its senior credit facility will expire on October 15, 2002. With the termination of the Company's Rights Offering, the Company will not make a $31 million principal payment on its senior debt due October 15, 2002. The Company does not expect to receive a new waiver before the expiration of its existing waiver. Encompass Services Corporation is one of the nation's largest providers of facilities systems and services. Encompass provides electrical technologies, mechanical services and cleaning systems to commercial, industrial and residential customers nationwide. Additional information and press releases about Encompass are available on the Company's Web site at http://www.encompass.com ENRON CORP: Wants Plan Filing Exclusivity Stretched to Jan. 31 -------------------------------------------------------------- Enron Corporation and its debtor-affiliates ask the Court to extend their exclusive period to file a plan to January 31, 2003 and to solicit acceptances of that plan to March 31, 2003. Section 1121 of the Bankruptcy Code provides that a Chapter 11 debtor with time to prepare and solicit acceptances of a reorganization plan without the disruption and distraction that would result were competing plans files by other parties-in- interest. In Enron's cases, Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in New York, argues, the factors that militate in favor of extending the exclusive periods weigh in the Debtors' favor: 1. The Size And Complexity Of The Debtors' Chapter 11 Cases The Debtors have bank debt, bond debt, inter-company debt, derivative debt, overhead allocation issues and guaranty issues that bear on the workings of any Chapter 11 plan. Moreover, as of the Petition Date, the Debtors employed 25,000 people throughout the world and were ranked seventh on the Fortune 500 list of the largest U.S. corporations. Given the scope and complexity of the Debtors' business operations currently necessitating huge time, expense and litigation to maximize the value from terminated and non-terminated derivative contracts, it is not possible to resolve all of the issues necessary to form confirmable plans prior to the current expiration. 2. Although Substantial Progress Has Been Done, More Work Is Required Before Plans Can Be Proposed. Mr. Bienenstock reports that the Debtors need additional time to: -- finish their analysis of assets and liabilities to allocated costs by and among the Debtors and, where appropriate, non-debtors entities; -- finish their investigation into the appropriateness of substantive consolidation and analysis of the Debtors' books and financial records; -- finish their analysis of claims after the Bar Date will lapse on October 15, 2002; -- finish the investigation into special purpose entities possibly holding the Debtors' estates; and -- test the process to determine how to obtain the most value for creditors from each of their estates. 3. An Extension Will Not Harm The Creditors Mr. Bienenstock contends that extending the exclusivity period will afford the Debtors and all other parties-in- interest an opportunity to fully develop consensual plans while minimizing the need for lengthy and expensive litigation over competing plans. Moreover, the extension will encourage all parties-in-interest to focus on negotiating their differences and working toward consensus, rather than on accentuating conflict through a multiplicity of alternative plans and litigation over arguable peripheral issues. On the other hand, Mr. Bienenstock says, terminating the Exclusive Periods will virtually ensure that the estates' resources will be spent on needless and protracted plan litigation rather than in the development of a workable plan. * * * The Court will convene a hearing on October 24, 2002 to consider the Debtors' request. In the meantime -- seeing the handwriting on the wall that exclusivity may become a bloody battleground -- Judge Gonzalez makes it clear that the Debtors' exclusive periods will remain intact until he enters an order extending, modifying or terminating the exclusive periods. Any responses or objections to the Debtors' request must be made in writing, conform to the Federal Rules of Bankruptcy Procedure and the Local Bankruptcy Rules for the Bankruptcy Court, be filed with the Bankruptcy Court electronically, and served as to be actually received no later than 5:00 p.m. (New York City Time) on October 21, 2002, on: (a) Weil, Gotshal & Manges LLP 767 Fifth Avenue, New York, New York 10153 Attention: Martin J. Bienenstock, Esq. and Brian S. Rosen, Esq. Facsimile: 212-310-8007 Attorney for the Debtors; (b) The Office of the United States Trustee 33 Whitehall Street, 21st Floor, New York, New York 10004 Attention: Mary Elizabeth Tom, Esq.; (c) David, Polk & Wardell 450 Lexington Avenue, New York, New York 10017 Attention: Donald S. Bernstein, Esq. and Marshall S. Huebner, Esq. Facsimile: 212-450-3800 Attorneys for JP Morgan Chase Bank, as Agent; (d) Shearman & Sterling 599 Lexington Avenue, New York, New York 10022 Attention: Douglas Bartner, Esq. and Fredric Sosnick, Esq. Facsimile: 212-848-7179 Attorneys for Citicorp, as Agent; (e) Milbank, Tweed, Hadley & McCloy LLP One Chase Manhattan Plaza, New York, New York 10005 Attention: Luc A. Despins, Esq. Facsimile: 212-530-5219 Attorneys for the Creditors' Committee; and (f) Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas, New York, New York 10036-7798 Attention: James A. Beldner, Esq. Facsimile: 212-479-6275 Attorneys for the Employee-Related Issues Committee (Enron Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) EOTT ENERGY: Taps Haynes & Boone to Prosecute Chapter 11 Case ------------------------------------------------------------- EOTT Energy Partners and its debtor-affiliates need bankruptcy lawyers to prosecute their Chapter 11 plan to confirmation. Dana R. Gibbs, President and Chief Executive Officer of EOTT Energy Corp. (as general partner for EOTT Energy Partners, L. P.) tells Judge Schmidt that the Debtors chose Haynes and Boone because of the Firm's extensive experience, knowledge and established reputation in corporate reorganizations and debt restructurings under Chapter 11 of the Bankruptcy Code. The Debtors believe that Haynes and Boone possesses the requisite resources and is both highly qualified and uniquely able to represent the Debtors' interests in these cases going forward. The Debtors contemplate that Haynes and Boone will render specialized legal services to the Debtors as needed throughout the cases. Generally, without limiting the scope of Haynes and Boone's work, the Firm will be: (a) advising Debtors of their rights, powers and duties as debtors-in-possession under the Bankruptcy Code; (b) advising Debtors concerning, and assisting in, the negotiation and documentation of financing agreements, debt restructurings, and asset securitization; (c) reviewing the nature and validity of agreements relating to Debtors' interests in real and personal property and advising Debtors of their corresponding rights and obligations; (d) reviewing the nature and validity of liens or claims asserted against Debtors' property and advising Debtors concerning the enforceability of those liens or claims; (e) advising Debtors concerning preference, avoidance, recovery, or other actions that they may take to collect and to recover property for the benefit of the estates and their creditors, whether or not arising under Chapter 5 of the Bankruptcy Code; (f) preparing on behalf of Debtors all necessary and appropriate applications, motions, pleadings, draft orders, notices, schedules, and other documents and reviewing all financial and other reports to be filed in the bankruptcy cases; (g) advising Debtors concerning, and preparing responses to, applications, motions, complaints, pleadings, notices, and other papers that may be filed and served in the bankruptcy cases; (h) counseling Debtors in connection with the formulation, negotiation, and promulgation of a plan of reorganization and related documents; (i) performing all other legal services for and on behalf of Debtors that may be necessary or appropriate in the administration of the bankruptcy cases and Debtors' respective businesses; (j) working with and coordinating efforts among other professionals, including co-counsel and other special counsels retained by Debtors, to attempt to preclude any duplication of effort among those professionals and to guide their efforts in the overall framework of Debtors' reorganizations; and (k) working with professionals retained by other parties-in- interest in these bankruptcy cases to attempt to structure a consensual plan of reorganization for the Debtors. The Haynes and Boone attorneys who will primarily be providing services for the Debtors in connection with these cases, and their standard hourly rates are: Professional Position Hourly Rate ------------ -------- ----------- Robert D. Albergotti Partner $550 George G. Young III Partner 450 Kenric D. Kattner Partner 385 Trey A. Monsour Partner 385 Doug H. Edwards Associate 315 Meredyth A. Purdy Associate 250 Linda Breedlove Paralegal $160 In the year preceding the Petition Date, Haynes and Boone received a $100,000 retainer from EOTT for consultation and advice regarding corporate law and restructuring issues. This $100,000 retainer was in Haynes and Boone's trust account at the time of filing these bankruptcy cases. In addition, EOTT paid Haynes and Boone $1,037,458.79 over the retainer amount during the year prior to the Petition Date. Mr. Albergotti assures the Court that he, his partners and Haynes and Boone do not represent or hold any interest adverse to the Debtors, their estates, creditors, equity security holders, or affiliates, and are "disinterested persons" within the meaning of 11 U.S.C. Sec. 101(14). Out of an abundance of caution, Mr. Albergotti discloses that: (1) Haynes and Boone and certain of its partners, counsel and associates may have in the past, may presently or may in the future represent creditors or stockholders of the Debtors in matters unrelated to this case. Haynes and Boone has had a relationship with certain creditors and parties-in-interest in matters unrelated to the Debtors or its estate; (2) Credit Suisse First Boston may be a creditor of the Debtors. Haynes and Boone currently represents CSFB or one or more of its subsidiaries or affiliates in a litigation matter unrelated to the Debtors' cases. Haynes and Boone has never represented CSFB with respect to any matter related to these Debtors. Haynes and Boone obtained a conflict waiver from CSFB related to its representation of the Debtors in their restructuring efforts. Haynes and Boone, in accordance with its usual firm policy and procedures, when representing a Chapter 11 debtor with regard to which a firm client is a creditor, will implement an ethical wall so that no attorneys that are working on any CSFB matter will be assigned work on this bankruptcy matter, nor given access to the files in this matter, and no attorney working on this matter will simultaneously represent CSFB on any unrelated matters, nor given access to CSFB files; (3) From time to time, Haynes and Boone represents clients who may be creditors of these Debtors or affiliates of these creditors or may represent clients who enter into transactions with creditors of these Debtors or affiliates of such creditors of these Debtors. Under no circumstances has Haynes and Boone agreed to nor will it represent any creditors of these Debtors or affiliates of creditors in connection with the Debtors' cases; and (4) Haynes and Boone is a large law firm with over 450 attorneys. Consequently, Haynes and Boone has "connections" with most, if not all, of the attorneys and other professionals involved in this case. Haynes and Boone has referred matters to professionals involved in this case and has been referred to matters by the parties. Haynes and Boone has, from time to time, represented one or more of the professionals involved in this case. It is conceivable that one or more of the attorneys at Haynes and Boone are married, or otherwise related to, members of professional firms involved in this case. (EOTT Energy Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) Eott Energy Partners' 11% bonds due 2009 (EOT09USR1), DebtTraders reports, are trading at 57 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for real-time bond pricing. GENERAL CABLE: Lenders Relax Credit Pact's Finanical Covenants -------------------------------------------------------------- General Cable Corporation (NYSE:BGC) announced that the Company has successfully completed an amendment to its credit facility. The amendment, which is effective through the first quarter of 2004, substantially relaxed the Company's financial covenants primarily in response to the ongoing weakness in its Communications business segment. Among other provisions, the amendment adjusted the size of the Company's revolving credit facility to $200 million, added a new financial covenant tied to minimum earnings levels and established a contingent payment to the lenders if the total facility commitments are not reduced by a specified amount by December, 2003. As part of the amendment, the Company's Board of Directors approved the suspension of its quarterly cash dividend of $0.05 per common share for the term of the amendment. The Company will incur one-time costs of approximately $4 million for the amendment and will pay incremental annualized interest costs of approximately the same amount during the amendment period. "I greatly value the unanimous support we have received from our lenders, enabling the Company to manage through the trough in telecom and industrial project demand," said Gregory B. Kenny, President and Chief Executive Officer. "I believe our lenders drew confidence from the strength of our 'one company' business model, diverse geographic and product mix and industry leading cost structure. We should now have both the liquidity and financial flexibility to capitalize on opportunity created by customer and supplier consolidation in difficult market conditions," concluded Kenny. General Cable (NYSE: BGC), headquartered in Highland Heights, Kentucky, is a leader in the development, design, manufacture, marketing and distribution of copper, aluminum and fiber optic wire and cable products for the communications, energy, industrial and specialty markets. The Company offers competitive strengths in such areas as breadth of product line, brand recognition, distribution and logistics, sales and service and operating efficiency. Communications wire and cable products transmit low-voltage signals for voice, data, video and control applications. Energy cables include low-, medium- and high- voltage power distribution and power transmission products. The Industrial and Specialty Segment is comprised of application- specific cables for uses such as electrical power generation (traditional fuels, alternative and renewable sources, and distributed generation), the oil, gas and petrochemical industries, mining, industrial automation, marine, military and aerospace applications, power applications in the telecommunications industry, and other key industrial segments. Visit its Web site at http://www.GeneralCable.com GENTEK INC: US Trustee to Convene Meeting to Form Committees ------------------------------------------------------------ The United States Trustee for Region III will contact each of GenTek Inc., and its debtor-affiliates' largest unsecured creditors at the addresses provided by the Debtors to invite them to an organizational meeting for the purpose of forming one or more official committees of unsecured creditors. Official creditors' committees, organized by the U.S. Trustee under 11 U.S.C. Sec. 1102, ordinarily consist of the seven largest creditors who are willing to serve on a committee. Those committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the chapter 11 cases to a liquidation proceeding. Typically, the U.S. Trustee convenes the organizational meeting within a week to 10 days following the commencement of a chapter 11 case. Creditors who do not send a representative to the organizational meeting typically are not appointed. Members of active prepetition noteholder and other ad hoc committees are frequently appointed to fill seats on official committees. Contact the U.S. Trustee's office at (302) 573-6491 to ascertain the time, date and place of this meeting. Immediately following the U.S. Trustee's determinations about how many official committees will be appointed and who will be appointed to each committee, the newly formed committees convene their initial meeting. The first order of business is to listen to the U.S. Trustee explain the powers and duties of the committee as a whole and members' individual responsibilities. The Committee will generally elect a chairman. Thereafter, the Committee typically conducts beauty pageants to select their legal and financial advisors. (GenTek Bankruptcy News, Issue No. 1; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENTEK: S&P Drops Senior Secured Rating to D After Ch. 11 Filing ---------------------------------------------------------------- Standard & Poor's Ratings Services it lowered its double-'C' senior secured rating on GenTek Inc., to 'D' after the company's announcement that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. At the same time, Standard & Poor's changed its corporate credit rating to 'D' from 'SD' on GenTek, reflecting the company's bankruptcy filing. Hampton, New Hamphsire-based GenTek is a manufacturer of industrial components, telecommunications equipment, and performance chemicals. "GenTek's challenges are due to very weak end-market demand, severe pricing pressures, a high cost structure, and poor working capital management," said Standard & Poor's credit analyst Eric Ballantine. He added, "These issues, combined with a very aggressive financial profile, led to financial distress and, ultimately, the bankruptcy filing." GLOBAL CROSSING: Signs-Up Ingram Yuzek for Tax-Related Services --------------------------------------------------------------- Mitchell C. Sussis, the Debtors' Vice President, informs the Court that Global Crossing Ltd., and its debtor-affiliated retained Ingram Yuzek Gainen Carroll & Bertolotti LLP as an ordinary course professional as of the Petition Date to perform certain tax-related services. Ingram, however, projects that its fees and expenses will exceed the $30,000 per month and $100,000 in-the-aggregate cap for ordinary course professionals. By this application, the Debtors seek the Court's authority to employ Ingram to provide certain tax-related services to the Debtors. Ingram will provide these tax services: A. New York State Sales Taxes and Gross Receipt Taxes: The New York State Department of Taxation and Finance has alleged substantial liabilities for sales taxes and gross receipts taxes allegedly owing by the Debtors. Ingram has been representing the Debtors in discussions with the NYSDTF and will assist the Debtors in negotiating agreements with NYSDTF to resolve any alleged tax liabilities; B. New York State Tax Refunds: Ingram has been assisting the Debtors pursue significant tax refunds for New York State sales taxes paid on various telecommunications equipment; C. New York State Tax Filings: Ingram is assisting the Debtors with the filing of their New York State tax returns and is providing research and technical support in connections with those returns; D. Connecticut Sales Taxes: The Connecticut Department of Revenue has proposed the audit of certain Debtors with a view to assessing sales tax liabilities. Ingram is negotiating with the CDR to resolve any sales tax liabilities; and E. Pursuit of Other Sales Tax Refunds: Ingram will be assisting the Debtors pursue refunds for sales taxes erroneously paid on certain exempt telecommunications equipment in several state and local taxing jurisdictions. Mr. Sussis contends that the Tax Services to be performed by Ingram are necessary for the Debtors to execute their duties as debtors and debtors-in-possession. Ingram has been involved with certain state and local tax matters for the Debtors for over five years. As an ordinary course professional, Ingram continues to handle a large number of day-to-day tax matters for the Debtors including the resolution of alleged tax liabilities and the pursuit of tax refunds. Ingram's Tax Services permits the Debtors to accumulate additional funds and preserve existing estate assets. Moreover, since the Petition Date, Mr. Sussis notes that many taxing jurisdictions have alleged substantial sales-tax and franchise-tax claims against the Debtors. The Debtors predict that other taxing jurisdictions will continue to allege similar tax liabilities. Ingram has been assisting the Debtors to negotiate and resolve many of these alleged tax liabilities. Ingram's assistance in reducing the proofs of claims filed by certain taxing authorities has and continues to benefit the Debtors' estates. Because Ingram has been performing the Tax Services for the Debtors and has developed a substantial familiarity with the Debtors' tax structure and objectives, Ingram can continue to provide the services without requiring the Debtors to incur the expense of retaining additional professionals. Ingram partner Roger Cukras assures the Court that the firm' employees do not have any connection with the Debtors, their creditors, or any other party-in-interest, or their respective attorneys. However, Ingram currently represents or has represented these parties-in-interest in unrelated matters: A. Secured Creditors: Bank of Tokyo, Mitsubishi, Dai-Ichi Kangyo Bank Ltd., and General Electric Capital Corporation, CitiGroup and JP Morgan Chase; B. Vendor Creditors: Gensler; C. Underwriters and Agents: Salomon Smith Barney, Inc.; D. Landlords: Consolidated Rail Corp.; E. Strategic Partners, Affiliations of Outside Directors and Litigation and Non-Litigation Claimants: Exodus Communications, Inc., MCI Communications Corp., and MCI Worldcom Network Services, Inc.; and F. Professionals Retained by Unsecured Creditors' Committees: Deloitte & Touche. The Debtors propose to compensate Ingram on two bases: -- on a contingency arrangement for certain services, and -- on an hourly basis. For services consisting of pursuing refunds of sales and use taxes in Arizona, District of Columbia, Indiana, Michigan, New Jersey, North Carolina, Ohio and Virginia, Ingram will be compensated on a contingent fee arrangement. The contingent fee would be 25% of realized refunds and credits resulting from Ingram's efforts. Ingram will charge the Debtors its customary hourly rates in connection with this representation: Roger Cukras $435 Associates $160 - $325 Paralegals $85 - $115 Mr. Cukras asserts that the contingency arrangement and hourly rates that Ingram seeks to charge the Debtors is consistent with the rates charged by Ingram and others in non-bankruptcy matters of this type. (Global Crossing Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) Global Crossing Holdings Ltd.'s 9.125% bonds due (GBLX06USR1), DebtTraders says, are trading at a penny on the dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1 for real-time bond pricing. GREAT LAKES: Revenue Passenger Miles Up 5.2% in September 2002 -------------------------------------------------------------- Great Lakes Aviation, Ltd., (OTC Bulletin Board: GLUX) announced preliminary passenger traffic results for the month of September. Scheduled service generated 10,925,000 revenue passenger miles, a 5.2 percent increase from the same month last year. Available seat miles increased 7.5 percent to 30,421,000. As a result, load factor decreased less than 1 point to 35.9 percent. Passengers carried decreased 0.3 percent compared to September 2001 to 41,090. For the nine months ending September 30, 2002 compared to the same nine month period in 2001, revenue passenger miles decreased 38.0 percent to 102,629,000 while available seat miles decreased 20.7 percent to 269,162,000, resulting in a load factor of 37.2 percent for the year 2002 compared to 48.8 percent for the same nine month period in 2001. The company carried 387,360 revenue passenger for the nine month period ending September 30, 2002, a 42.5 percent decrease on a year over year basis. Traffic reflects reductions and restructuring of the company's scheduled capacity made following the events of September 11, 2001 with emphasis placed on subsidized Essential Air Service markets. As of October 1, 2002, scheduled passenger service was being provided at 47 airports in fifteen states with a fleet of Embraer EMB-120 Brasilias and Raytheon/Beech 1900D regional airliners. A total of 216 weekday flights are scheduled at four hubs, with 176 flights at Denver, 20 flights at Chicago - O'Hare International Airport, 14 flights at Minneapolis/St. Paul, and 6 flights at Phoenix. All scheduled flights are operated under the Great Lakes Airlines marketing identity in conjunction with code-share agreements with United Airlines and Frontier Airlines. Additional information is available on the company Web site that may be accessed at http://www.greatlakesav.com * * * At June 30, 2002, Great Lakes' balance sheets show a working capital deficit of $116 million and a total shareholders' equity deficit $19 million. HEALTHAXIS INC: Nasdaq OKs Continued Listing on SmallCap Market --------------------------------------------------------------- Healthaxis Inc. (Nasdaq:HAXS), a leading provider of claims and administration applications, Web-enabled software solutions and outsourced claims processing services for government and commercial benefit administrators and managed care organizations, has received notification from the Nasdaq Stock Market that its shares will continue to be listed on the NASDAQ SmallCap Market. The Company transferred to the NASDAQ SmallCap Market on July 16, 2002, and was previously afforded the remainder of that market's 180 day grace period, or until Oct. 9, 2002, to regain compliance with the minimum $1.00 bid price per share requirement, set forth in Marketplace Rule 4310(c)(8)(D). The most recent NASDAQ notification states that while the Company has not regained compliance in accordance with this Rule, the Company meets the initial requirements for the NASDAQ SmallCap Market under Marketplace Rule 4310(c)(2)(A). As a result, in accordance with Marketplace Rule 4310(c)(8)(D), the Company has been provided an additional 180 calendar days, or until April 7, 2003, to regain compliance. Healthaxis (Nasdaq:HAXS) is technology services company with almost 40 years of operating history and 1,200 years of combined expertise in healthcare benefit administration providing claims and administration solutions, outsourced claims processing, Web- enabled solutions and EDI and HIPAA consulting services exclusively for health insurance companies, commercial and government benefit administrators. For information on Healthaxis products and services, call 800/519-0679 or visit http://www.healthaxis.com For investor information, call 972/443-5115. HORNBECK OFFSHORE: S&P Affirms B+ Credit & Senior Debt Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its single-'B'-plus corporate credit and senior unsecured ratings on Hornbeck Offshore Services Inc. The ratings were removed from CreditWatch, where they were placed with positive implications on July 23, 2002, following the postponement of its proposed IPO. The outlook is stable. Mandeville, Louisiana-based oil and gas services company Hornbeck has about $175 million in outstanding debt. The ratings on Hornbeck reflect its position in the deep-water oil and gas offshore supply vessel market and the diversification provided by its tug and tank barge business. Solid near-term fundamentals are providing good financial results and cash flow generation. However, high debt leverage, contract-renewal risk, and the risks associated with a speculative new-vessel program temper these strengths. Hornbeck's near-term business prospects have improved as a result of newly signed contracts, which have increased contracted revenues for 2003 to more than 40%. If extensions and renewals are exercised, contract coverage could rise to 60%. In addition, all new vessels constructed have been on budget, and capital spending has been limited to internal cash flows. One vessel remains to be delivered from its 2001 new vessel program, the HOS Sandstorm, which was delayed in the boatyard and should be delivered on budget in the fourth quarter of 2002. The stable outlook reflects Hornbeck's limited near-term need for external financing and adequate liquidity. No positive rating actions are likely until the company reduces its contract renewal risk, makes further progress on its construction program, and ameliorates its high debt leverage. If Hornbeck finds contract work at favorable rates for its new vessels in 2003 and deleverages through an IPO or other means, a positive revision to its outlook or rating could occur. ICG COMM: Pushing with Sale of Maroon Circle Property for $1.25M ---------------------------------------------------------------- The ICG Communications, Inc.'s proposed sale of its Maroon Circle Property to MRA Meridian Greens LLC for $1.25 million is going forward. The salient terms of the sale of this Property to MRA Meridian are: Purchase Price: $1,250,000, paid in cash, with an earnest money deposit of $85,000 paid in escrow upon contract execution, and an additional $35,000 paid upon completion of an inspection period. Assets Included: The proposed sale will include all of the Debtors' right, title, and interest in the Maroon Circle Property, as well as the UPS system, emergency generator, Liebert cooling units, certain furniture, fixtures and the security system. Closing: The closing of the purchase and sale of the Maroon Circle Property shall be held no later than 15 days after the end of the inspection period upon which the remaining $1,130,000 is to be paid in cash. Conditions to Closing: This purchase and sale is subject to completion of customary due diligence. (ICG Communications Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ICG Services Inc.'s 13.50% bonds due 2005 (ICGX05USR1) are trading at 4.5 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ICGX05USR1 for real-time bond pricing. IMC GLOBAL: S&P Revises Outlook to Neg. on Subpar Fin'l Profile --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on IMC Global Inc., to negative from stable, citing the company's subpar financial profile. At the same time, Standard & Poor's affirmed its ratings, including the double-'B' corporate credit rating, on the company. Lake Forest, Illinois-based IMC is one of the largest global producers of phosphate and potash crop nutrients for the agricultural industry and has over $2.2 billion of debt outstanding. "The outlook revision reflects concerns that weaker-than- expected operating and financial performance could make it more difficult for the company to reduce debt and strengthen credit protection measures in the near term," said Standard & Poor's credit analyst Peter Kelly. Profitability and cash flow have been negatively affected by the continuation of difficult industry conditions, which constrained demand and pricing through another difficult spring planting season. Consequently, IMC's financial profile will likely remain subpar longer-than- anticipated, although the prospects for the fertilizer industry have improved. Ratings continue to reflect the company's average business profile, offset by an aggressive financial profile. IMC holds the world's leading position in the production of phosphate and is the largest supplier of potash (with the second-largest production capacity). In addition to solid positions in the mature, competitive, and very cyclical fertilizer markets, IMC benefits from an advantaged cost profile derived from plentiful, low-cost reserves, backward integration into raw materials, efficient production methods, and strong distribution capabilities. The impact of volatility in phosphate prices and seasonal bulk sales on financial performance is somewhat tempered by the more stable potash sales. A growing population, higher incomes, and improved diets support long-term prospects. In addition, the need to rebuild global grain supplies, which remain at near record low levels, should continue to spur fertilizer use. The ratings could be lowered if an expected improvement in the fertilizer sector fails to materialize or other strategic actions impair the firm's ability to restore credit protection measures to targeted levels. In addition, a deterioration in liquidity and in bank line availability would raise the likelihood of a downgrade. DebtTraders reports that IMC Global Inc.'s 10.875% bonds due 2008 (IGL08USS1) are trading at 99.828 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=IGL08USS1for real-time bond pricing. INTEGRATED HEALTH: Seeks Final Okay to Amend DIP Credit Pact ------------------------------------------------------------ Integrated Health Services, Inc., and its debtor-affiliates ask the Court for the entry of a final order authorizing and approving, pursuant to Sections 105, 363 and 364 of the Bankruptcy Code: A. an Amendment to the DIP Credit Agreement, by and among IHS, as borrower, and The CIT Group/Business Credit, Inc., as Administrative Agent and Lender, CapitalSource Finance LLC, as Collateral Agent and Lender, and the DIP Lenders; and B. the payment of a $50,000 amendment fee. The Amendment will defer the requirement for a cash collateral increase from September 30, 2002 to December 31, 2002 because certain sale transactions and the filing of a plan of reorganization have not occurred as contemplated. Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP in Wilmington, Delaware, reminds the Court that the DIP Credit Agreement, dated as of March 21, 2002, is a Secured Super- Priority DIP Revolving Credit Agreement that provides for borrowings up to $75,000,000, of which $50,000,000 is available for letters of credit. As of October 7, 2002, there is no outstanding balance under the Agreement, other than for $40,000,000 in outstanding letters of credit. The DIP Credit Agreement will terminate by its terms on the earlier of March 21, 2003 or the effective date of the Debtors' plan of reorganization. In addition, the DIP Credit Agreement requires the Debtors to maintain a $25,000,000 Required Cash Collateral Balance in a segregated bank account -- the CITBC Collateral Account -- from the closing date through September 29, 2002. The balance of this account should increase to $40,000,000 from September 30, 2002 onwards. Mr. Brady relates that at the time the provision for the increase in Cash Collateral Balance was negotiated, the Debtors, with the assistance of their financial advisors, UBS Warburg LLC, were in the process of marketing their two principal business segments -- the Long Term Care and Symphony divisions - - for sale. At that time, it was contemplated that prior to September 30, 2002, the Debtors would either have already filed a plan of reorganization contemplating the sale of one or both of the divisions, or would have sold the Symphony division through a traditional Section 363 sale process. Therefore, the Debtors believed that it would be appropriate to agree to a mandatory increase in the Required Cash Collateral Balance from $25,000,000 to $40,000,000 on September 30, 2002. However, no plan of reorganization has been filed and the Symphony Division has not been sold to date. The Debtors now prefer to negotiate a sale of both the Long Term Care division and the Symphony division as a package pursuant to a single sale agreement. The Debtors expect to finalize a sale agreement in the near future, and then file a plan of reorganization that contemplates the consummation of that sale. With these changes in their plan, the Debtors asked the DIP Lenders to agree to an amendment of the DIP Credit Agreement that would postpone the Debtors' obligation to increase the Required Cash Collateral Balance to $40,000,000 from September 30, 2002 until December 31, 2002. The DIP Lenders agreed to the postponement pursuant to a waiver agreement dated September 30, 2002, subject to negotiation and Court approval of a satisfactory amendment to the DIP Credit Agreement. The parties then further negotiated and agreed on the terms embodied in the Amendment, dated October 2, 2002. Among other things, the Amendment provides for a modification of the definition of Cash Collateral Balance to mean: A. from the Closing Date through December 30, 2002, $25,000,000 plus any amount required to be deposited into the CITBC Cash Collateral Account, and B. from the earlier of the date of the closing of the Symphony sale or December 31, 2002, $40,000,000 plus any amount required to be deposited into the CITBC Cash Collateral Account. In addition, the Amendment includes certain provisions that clarify terms already set forth in the DIP Credit Agreement. Finally, the Amendment requires that the Debtors pay to the Administrative Agent a $50,000 fee and reimburse the DIP Lenders for any out-of-pocket expenses incurred in connection with obtaining Court approval of the Amendment. Mr. Brady tells Judge Walrath that, absent Court approval of the Amendment by October 29, 2002, the Debtors will either be required to deposit several million dollars into the CITBC Collateral account or risk a default under the DIP Credit Agreement. Mr. Brady contends that the Amendment is necessary to postpone the Debtors' obligation to deposit several million dollars into the CITBC Collateral Account. The Debtors presently have sufficient cash to meet the covenants contained in the DIP Credit Agreement, but the Amendment will allow the Debtors to utilize their cash on hand to meet their working capital needs and reduce the likelihood of having to draw down funds from the revolving credit line under the DIP Credit Agreement. This, in turn, will enable the Debtors to avoid possible fees and interest obligations that would arise if the Debtors were required to access their revolving line of credit under the DIP Credit Agreement to meet their working capital needs. The Debtors insist that the Amendment Fee is reasonable. The avoidance of obligations more than justifies this $50,000 fee. Mr. Brady reminds Judge Walrath that the Court has already approved the DIP Credit Agreement and the Amendment merely modifies it for the Debtors' benefit. (Integrated Health Bankruptcy News, Issue No. 44; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERPLAY ENTERTAINMENT: CEO Pleased with Turnaround Progress ------------------------------------------------------------- Interplay Entertainment Corp., (OTC Bulletin Board: IPLY.OB) held its Annual Meeting of Stockholders in Newport Beach, Calif. Stockholders were invited to vote on three proposals: election of the current slate of directors to the Board for another year, a proposal to increase from 4 million to 10 million the number of shares of common stock that may be issued under the Company's 1997 Stock Incentive Plan, and a proposal to effect a 10-for-1 reverse stock split of the Company's common stock. The stockholders approved all of management's proposals. In addition, Interplay CEO Herve Caen made the following comments to shareholders present: "Despite these challenging times, I am pleased with the pace of the turnaround at Interplay. In less than nine months, our team has implemented aggressive cost cutting measures, dramatically improved our balance sheet with the sale of Shiny Entertainment, eliminated long-standing and distracting litigation, secured an important North American retail distribution agreement, and released some important franchise titles. Our turnaround is on pace, as we look toward the all-important third and fourth quarters and some exciting new releases from the Company. "As you know, the Company's shares were delisted from the Nasdaq Small Cap Market and moved to the Bulletin Board yesterday. Given the long-term history of the Company and current market conditions, this was not an unexpected development. While this does not make our road easier, we remain focused on execution of our business plan, which has already put us on the verge of operating profit. You have seen us work hard to trim costs and focus on what we do best -- own and develop content, while passing on the costs and responsibilities for inventory, sales, and marketing, which Vivendi is now handling as our distributor. "We believe there is genuine opportunity for a company that owns and produces superb content, without the high costs of sales, inventory or distribution associated with a 'pure publisher' model. Therefore, our plan going forward is built around content, execution, and profitability, as opposed to pure revenue growth at any cost. "I also want to provide a report on the Special Committee the Board voted to form this summer. The Committee will explore strategic options for the future, which might include a capital infusion or possible sale of the entire Company. You should know that no timetable for the committee has yet been set, and that, while additional strategic actions might be necessary for the Company to execute its long-term growth plan, the Company is not in need of immediate cash in order to continue operations. "Speaking of operations, I am pleased to report that, for the first time in the Company's history, we will have products for all platforms on retail shelves before Thanksgiving, giving us a strong sales runway for the season. This holiday, Interplay will have two titles on Sony PlayStation2, two titles on Nintendo GameCube, two titles on Microsoft XBox, and one title on PC. Of these titles, those already on the market are performing to our expectations. "Going forward, we currently have a product development plan for games through 2004, including some exciting and familiar franchises to be launched next year. This is a boom period in this cyclical gaming industry, and we realize we must take advantage of it from a content perspective." Interplay Entertainment is a leading developer and publisher of interactive entertainment software for both core gamers and the mass market. Interplay develops games for personal computers as well as next generation video game consoles, many of which have garnered industry accolades and awards. Interplay releases products through Interplay, Digital Mayhem, Black Isle Studios, its distribution partners, and its wholly owned subsidiary Interplay OEM Inc. * * * As reported in Troubled Company Reporter's October 11, 2002 edition, Interplay Entertainment received notice from The Nasdaq Stock Market, Inc., that the Company's common stock was delisted from trading on The Nasdaq SmallCap Market effective with the opening of trading on October 9, 2002, due to the Company not meeting certain minimum listing requirements. The company expects that its common stock will become eligible at that time or shortly thereafter for trading on the NASD-operated Over-the- Counter Bulletin Board (OTCBB) under the symbol IPLY. As of June 30, 2002, Interplay's balance sheet shows a working capital deficit of about $10 million, and a total shareholders' equity deficit of about $7 million. KAISER ALUMINUM: Proposes Uniform Bar Date Notice Procedures ------------------------------------------------------------ In connection with establishing a General Claims Bar Date, Kaiser Aluminum Corporation and its 16 debtor-affiliates ask the Court to approve the scope and manner of notice of the General Bar Date, the Rejection Bar Date and the Amended Schedules Bar Date. Paul N. Heath, Esq., at Richards, Layton & Finger, relates that the Debtors will serve to those entities holding potential prepetition General Claims: * a notice of the Bar Dates; and * a proof of claim form similar to Official Form No. 10. As soon as practicable, but in any event no later than November 22, 2002, the Debtors will mail the Bar Date Notice Package by first class U.S. mail, postage prepaid, to all known potential holders of General Claims Claimants. According to Mr. Heath, the Proofs of Claim must be filed with Logan & Company, Inc. -- the Debtors' claims and noticing agent -- by the applicable Bar Date. The Potential holders will include: A. all holders of claims listed on the Schedules, including all indenture trustees; B. all counter-parties to executory contracts and unexpired leases listed in the Schedules; C. the District Director of Internal Revenue for the District of Delaware; D. the Securities Exchange Commission; E. the taxing and other regulatory entities for the jurisdictions in which the Debtors do business; F. all entities that have requested notices pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure; in G. equity security holders of Kaiser Aluminum Corporation; H. all other entities listed on the Debtors' matrix of creditors except holders of claims that are not General Claims; and I. pursuant to Local Rule 2002-1(e), the General Claimants' counsel, if known. The Debtors will also mail the Bar Date Notice Package to the United States Trustee and the members of the Committees and their counsel. The Proof of Claim Form mailed to the General Claimants will state, along with the claimant's name: 1) whether the General Claimant's claim is listed in the Schedules and, if so, the Debtor against which the General Claimant's claim is scheduled; 2) whether the General Claimant's claim is listed as disputed, contingent or unliquidated; and 3) whether the General Claimant's claim is listed as secured, unsecured or priority. If a claim is listed in the Schedules in a liquidated amount that is not disputed or contingent, Mr. Heath maintains that the dollar amount of the claim as listed in the Schedules also will be identified on the Proof of Claim Form. Any entity that relies on the information in the Schedules will bear responsibility for determining that its claim is accurately listed therein. According to Mr. Heath, for any claim to be validly and properly filed, a signed original of a completed Proof of Claim Form, together with any accompanying documentation required by Rules 3001(c) and 3001(d) of the Federal Rules of Bankruptcy Procedure, must be delivered to Logan at the address identified on the Bar Date Notice so as to be received no later than 5:00 p.m., Eastern Time, on the applicable Bar Date. All filed Proofs of Claim must: * be written in English; * be denominated in lawful currency of the United States, based upon the exchange rate in effect as of 7:00 a.m. Eastern Time on: (i) February 12, 2002 for any Debtor other than Alwis Leasing, LLC and Kaiser Center, Inc.; and (ii) March 15, 2002 for Alwis and Kaiser Center; * conform substantially with the Proof of Claim Form. Mr. Heath notes that the General Claimants will be permitted to submit Proofs of Claim in person or by courier service, hand delivery or mail. Facsimile or e-mail submissions will not be accepted. A Proof of Claim will be deemed filed when actually received by Logan. If a General Claimant wishes to receive acknowledgement of Logan's receipt of a proof of claim, Mr. Heath advises, that Claimant also must submit to Logan concurrently with submitting its original Proof of Claim: * a copy of the original Proof of Claim; and * a self-addressed, stamped return envelope. With respect to claims asserted against multiple Debtors, Mr. Heath suggests that those claimants will be required to file a separate proof of claim with respect to each Debtor. The claimants also must identify on each proof of claim the particular Debtor against which their claim is asserted. Mr. Heath explains that if entities are permitted to assert claims against more than one Debtor in a single proof of claim: -- Logan may have difficulty maintaining separate claims registers for each Debtor; and -- the Debtors may be required to object to a proof of claim to clarify the proper Debtor liable for the amounts identified in the claim. "Requiring parties to identify the Debtor against which a claim is asserted will greatly expedite the Debtors' review of proofs of claim in these cases," Mr. Heath remarks. "This requirement will not be unduly burdensome on the claimants since they will know, or should know, the identity of the Debtor against which they are asserting a claim." In light of the size, complexity and extensive history of their businesses, the Debtors believe that there exist potential General Claims that they are unable to identify on the Schedules. These unknown potential General Claims may include those: (a) of trade vendors that failed to submit invoices; (b) of former employees; (c) of entities with potential unasserted causes of action against the Debtors; and (d) that, for various other reasons, are not recorded in the Debtors' books and records. The Debtors find it is necessary to provide notice of the Bar Dates to entities with these potential General Claims. The Debtors intend to publish the Bar Dates Notice by November 22, 2002, in: -- the national editions of: * The Wall Street Journal, * The New York Times; and * USA Today; and, -- as determined by the Debtors, certain local or regional newspapers in certain geographical areas in which the Debtors have, or have had in the past, substantial operations, received claims or otherwise determine that the notice would be appropriate. The Publication Notice will contain: * a website address where potential General Claimants may download the Proof of Claim Form and related instructions; and * a toll-free number where potential General Claimants can seek additional information with respect to filing General Claims. With these procedures and efforts, as well as the anticipated and ongoing public attention to the Debtors' Chapter 11 cases and the proposed establishment of the Bar Dates, Mr. Heath believes that the General Claimants will have or should have the information necessary to be able to file a proof of claim in these cases. (Kaiser Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) KASPER ASL: Obtains Court Nod to Hire Ernst & Young as Auditors --------------------------------------------------------------- Kasper A.S.L., Ltd., and its debtor-affiliates sought and obtained the U.S. Bankruptcy Court for the Southern District of New York's nod to employ Ernst & Young LLP as auditors and tax advisors, nunc pro tunc to May 1, 2002. Originally, the Debtors retained the services of Arthur Andersen LLP as their auditors, accounting and tax advisors. As of April 17, 2002, Andersen had completed the FY2001 audit work and presentation to the Audit Committee of the Board of Directors and the Debtors have filed the 2001 annual 10-K with the United States Securities and Exchange Commission. Afterwhich, the Audit Committee determined that the Debtors would not retain Andersen for FY2002, but instead would retain Ernst & Young to perform the year-end audit and quarterly review work, tax compliance and consulting, accounting consultation, and other such services as the Debtors deem necessary and appropriate to the administration of these cases. Retention of E&Y as Auditors The audit consists of services provided to both Debtor entities and a non-Debtor entity, Asia Expert Limited. The fees for the annual audit and the quarterly reviews of the Debtor entities are $200,000. The fees for the annual audit and the quarterly reviews of Asia Expert Limited are $45,000 and will be billed directly to Asia Expert Limited. In addition, fees for any special audit-related projects, such as research and/or consultation on special business or financial issues, will be billed on an hourly fee arrangement: Partners and Principals $592 - $660 Senior Manager $503 - $558 Manager $388 - $435 Senior $272 - $329 Staff $151 - $205 Retention of E&Y as Tax Consultants The Debtors have also selected Ernst & Young to provide advice concerning tax matters subsequent to the Commencement Date. Ernst & Young has been rendering services to debtors in chapter 11 cases for over twenty-one years, and is extremely familiar with chapter 11 processes and considerations and has the necessary background to assist these Debtors dealing effectively with many of the needs and problems that may arise in the context of these chapter 11 cases. The services to be rendered by Ernst & Young as tax consultants include: a) working with the Debtors' personnel and/or agents in developing an understanding of the business objectives related to the Debtors' recent Chapter 11 filing, including understanding reorganization and/or restructuring alternatives the Debtors are evaluating with its existing bondholders, or other creditors, that may result in a change in the equity, capitalization and/or ownership of the shares of the Debtors or the Debtors' assets; b) assisting and advising the Debtors in bankruptcy restructuring objectives and post-bankruptcy operations by determining the optimal tax manner to achieve these objectives, including, as needed, research and analysis of Internal Revenue Code sections, treasury regulations, case law and other relevant tax authority which could be applied to business valuation and restructuring models; c) provide tax consulting regarding availability, limitations, preservation and maximization of tax attributes, such as net operating losses and alternative minimum tax credits, minimization of tax costs in connection with stock or asset sales, if any, assistance with tax issues arising in the ordinary course of business while in bankruptcy, such as ongoing assistance with a federal IRS examination and related issues raised by the IRS agent and the mitigation of officer liability issues, and, as needed, research, discussions and analysis of federal and state income and franchise tax issues arising during the bankruptcy period; d) assist with settling tax claims and tax examinations against the Debtors and obtaining refunds of reduced claims previously paid by the Company for various taxes, including, but not limited to, federal and state income, franchise, payroll, sales and use, property, excise and business license; e) assist in assessing the validity of tax claims, including working with bankruptcy counsel to reclassify tax claims as non-priority; f) analyze legal and other professional fees incurred during the bankruptcy period for purposes of determining future deductibility of such costs; g) document, as appropriate or necessary, tax analysis, opinions, recommendations, conclusions and correspondence for any proposed restructuring alternative, bankruptcy tax issue or other tax matter described above; and h) as requested by the Debtors, provide additional tax consulting services. The standard hourly rates for tax professionals are: Partners and Principals $604 - $670 Senior Managers $572 - $583 Managers $488 - $562 Seniors $371 - $441 Staff $281 Retention of E&Y to Prepare Tax Returns The Debtors have also selected Ernst & Young to prepare the year-end tax returns (which includes the quarterly estimates) including the U.S. federal income tax return, Form 1120, and all related state and local income and franchise tax returns for the year ended December 31, 2002. The services to be rendered by E&Y as tax consultants include: a) preparation of the U.S. federal income tax returns, Form 1120, for Kasper A.S.L., Ltd. and subsidiaries for the year ended December 31, 2001; b) preparation of international as well as the state and local income franchise tax returns to the Tax Engagement Letter; and c) preparation of tax returns for any other jurisdictions as needed by the Debtors. The fees for the preparation of the income tax returns for the year ended December 31, 2001 is expected to be $70,000 plus expenses, including a processing charge of 7%. The fees for projects outside the scope of the income tax return preparation engagement letter will be based on actual time incurred at hourly rates for tax professionals. Kasper A.S.L., Ltd., one of the leading women's branded apparel companies in the United States filed for chapter 11 protection on February 05, 2002. Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $308,761,000 in assets and $255,157,000 in debts. KMART: Court OKs Assumption of Manhattan Software License Pact -------------------------------------------------------------- Kmart Corporation and its debtor-affiliates sought and obtained the Court's permission to assume a June 29, 2001 Software License, Services Support and Enhancements Agreement with Manhattan Associates, Inc., subject to certain modifications. Mark A. McDermott, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, explains that the Debtors elected to install Manhattan's software in their regional specialty distribution centers during the last week of January 2002 because the software substantially increases a distribution center's productivity and reduces store out of stock issues. Manhattan is an industry leader in warehouse management software, and the deployment was an initial step in the Debtors restructuring their operations. The deployment and subsequent use of the Software have met or exceeded the Debtors' expectations. The License Agreement has three main elements: -- A Grant of a Perpetual, Nonexclusive License for the Use of Manhattan' Warehouse Management Software The software has features important in the Debtors' reorganization efforts: (a) The software can perform physical inventories of a distribution center. The software does radio frequency rather than paper-based counts thus, significantly reducing human effort and human error; and (b) The software has real-time inventory allocation. Orders from stores arrive at a distribution center in real time making it possible to ship last minute orders. This feature significantly impacts store out-of-stock issues which serves to enhance Kmart's customers in-store experience. -- An Agreement to Provide the Debtors With Requested Technical Services on a Time and Material Base The technical services include: (a) programming; (b) consulting analysis; and (c) training. These services are used for anything -- from adjustments to existing systems to the addition of new features to the implementation of the software at additional distribution centers. -- An Agreement to Provide Telephonic Customer Support and Software Enhancements for an Annual Fee. Mr. McDermott relates that, as of the Petition Date, the Debtors owed Manhattan $3,392,001 under the License Agreement. Additional amounts also have come due subsequent to the Petition Date. However, in exchange for the assumption of the Agreement, Manhattan has agreed to: (1) reduce its Petition Date Balance by 50% to $1,696,000; (2) defer the payment of $848,000 of the Cure Payment until, for example, the effective date of the plan of reorganization; and (3) waive its claim for $142,276 in two postpetition invoices. Hence, Mr. McDermott points out, upon the assumption of the License Agreement, the Debtors have no further payment obligations to Manhattan for the continued, perpetual use of the license. Manhattan also has agreed to: (1) discount its service fees by 10% until December 31, 2003; (2) aid Kmart in the sale of certain AS/400 servers; and (3) reduce the Debtors' future customer support and software enhancement fees by at least 50% with incremental increases if the Debtors implements Manhattan's warehouse management software at additional distribution centers. The parties also agreed to a walkout clause. The Debtors can terminate the License Agreement on 30 days notice. Following notice, the Debtors have no liability for any termination fee, penalty, assessment or charge arising from their termination of the Agreement other than the fees for Manhattan's actual services through the date of termination. (Kmart Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) LAND O'LAKES: Moody's Takes Downgrade Actions on Senior Ratings --------------------------------------------------------------- Moody's Investors Service downgraded the ratings on Land O'Lakes, Inc. Outlook is stable. Rating Action To From Land O'Lakes, Inc. * Senior implied rating B1 Ba2 * Senior secured rating B1 Ba2 * Senior unsecured issuer rating B2 Ba3 * $250 million Senior secured bank facility, due 2004 B1 Ba2 * $291 million Senior secured term loan A, due 2006 B1 Ba2 * $234 million Senior secured term loan B, due 2008 B1 Ba2 * $350 million 8.75% Senior unsecured guaranteed Notes, due 2011 B2 Ba3 Land O'Lakes Capital Trust I * $191 million 7.45% Trust preferred securities B3 Ba3 The lowered ratings reflects the company's weaker-than-expected operating performance, giving rise to a constrained financial flexibility and the deterioration of credit protection measures. The stable outlook looks forward to LOL continuing to reduce leverage in the years ahead, and implements programs aimed at improving operating performance. Land O' Lakes, a branded dairy food, feed, and agricultural supply cooperative, is headquartered in Arden Hills, Minnesota. LERNOUT: SEC Files Suit for Accounting Fraud Against Debtors ------------------------------------------------------------ On October 10, 2002, the U.S. Securities and Exchange Commission office in Washington, D.C., announced it has filed a civil injunctive action with the United States District Court for the District of Columbia against Lernout & Hauspie Speech Products, N.V. alleging accounting fraud. This action is styled "Securities and Exchange Commission v. Lernout & Hauspie Speech Products, N.V." A free copy of the complaint is available at: http://bankrupt.com/misc/SEC_Complaint.pdf In the complaint, the Commission alleges that, from 1996 through the second quarter of 2000, while its common stock was listed on the Nasdaq National Market System and Nasdaq Europe, Lernout & Hauspie engaged in a variety of fraudulent schemes to inflate its reported revenue and income. The result of this conduct was an international financial scandal, the destruction of Lernout & Hauspie as an operating company, and a loss of at least $8.6 billion dollars in market capitalization, borne by investors in Belgium, the United States and elsewhere. According to the Commission's complaint: (1) The Dictation Consortium and Brussels Translation Group Transactions Between 1996 and 1999, Lernout & Hauspie improperly recorded over $60 million in revenue from transactions with two Belgian entities: -- Dictation Consortium, N.V., and -- Brussels Translation Group N.V. These entities were formed for the specific purpose of engaging in transactions to allow Lernout & Hauspie to claim revenue from its own research and development activities, which otherwise would not have resulted in reported revenue unless and until the projects resulted in marketed products. Lernout & Hauspie subsequently acquired both of these companies on terms that repaid the amounts they had previously paid to Lernout & Hauspie, plus a substantial profit. Because the transactions were, in substance, disguised loans and not sales or service transactions, Lernout & Hauspie should not have recognized revenue from those transactions under Generally Accepted Accounting Principles; (2) The Language Development Companies By late 1998, the revenue boost obtained by Lernout & Hauspie from the Dictation and BTG transactions had waned. To bolster its reported revenue, Lernout & Hauspie launched a new and elaborate fraudulent scheme to, in essence, create additional customers. These new customers, dubbed "Language Development Companies" or LDCs, enabled Lernout & Hauspie to claim revenue of $102 million in license fees and $8.5 million in prepaid royalties in 1998 and 1999 combined, giving the false impression of exponential growth. The LDC revenues were not separately identified by Lernout & Hauspie in its financial statements, but instead were buried in overall revenue figures. The LDCs were structured in a manner that masked their actual role at the time of their creation. All were private companies. Most were incorporated in Singapore, although they had no actual operations in that country. The "managing director" of many of the Singapore LDCs was a Belgian national associated with Lernout & Hauspie. Lernout & Hauspie, in its public disclosure, contended that the LDCs were formed to develop speech recognition and translation software applicable to various regional languages. In actuality, the LDCs were little more than shell companies created, like Dictation and BTG, as a means for Lernout & Hauspie to improperly fabricate revenue. The LDCs had few, if any, employees, and were dependent on Lernout & Hauspie personnel for research and development activities. None of the LDCs ever produced any significant product. Lernout & Hauspie supplied or arranged for others to supply financing for at least certain of the LDCs. For example, in late 1999, Lernout & Hauspie solicited an investment bank in Bahrain to help in the search for investors for two LDCs. The investment bank advanced Lernout & Hauspie $8 million for technology licenses for the LDCs, with the understanding that Lernout & Hauspie would repurchase the licenses at a substantial premium (representing a 25% internal rate of return) should the investment bank be unable to locate investors to fund the LDCs. Thus, to the extent Lernout & Hauspie obtained funds from the LDCs, these funds were subject to material conditions imposing significant potential liabilities on Lernout & Hauspie. Lernout & Hauspie, however, did not disclose these arrangements and did not reflect its potential liabilities to the LDCs on its balance sheet. (3) The Fraudulent Korean Transactions From September 1999 to June 2000, L&H reported approximately $175 million in sales revenue from its Korean operations -- L&H Korea. The purported dramatic growth in sales from its Korean subsidiary accompanied the inflation of the price of L&H stock. The majority of this revenue was fraudulent. L&H Korea engaged in "sales" subject to written and oral side agreements that did not appear in the L&H Korea contract files. These terms included, in some instances, agreements by L&H Korea not to pursue collection of license fees unless and until the "customer" generated sufficient revenue from use of the L&H software to cover those fees. To prevent uncollectible receivables from remaining on L&H Korea's books, thereby raising questions about the quality of the company's reported earnings, a series of transactions with four Korean banks were staged to give the impression that the receivables had been factored to those banks on a non-recourse basis. In fact, L&H Korea entered into side agreements with the banks requiring L&H Korea to maintain blocked deposits to cover the amounts of the "factored" receivables, which the banks could apply to satisfy any collection shortfalls. Thus, these transactions were essentially fully secured loans from the banks to L&H Korea, rather than sales of receivables from L&H Korea to the banks. In another scheme to disguise that its escalating accounts receivable did not reflect genuine sales, L&H Korea arranged to have third parties "purchase" the licensing agreements from the original customers. The transferees would then obtain loans, collateralized by L&H Korea assets but not reflected in L&H Korea's books, and use the proceeds to pay L&H Korea through the original customers. By this means, L&H Korea was, in effect, paying down its own receivables, while creating the appearance of successfully collecting payments from customers. (4) Subsequent Events During the last quarter of 2000, as information about the company's financial fraud became public through the press, the price of Lernout & Hauspie stock declined dramatically, falling from a high of $72.50 in March 2000 to $.76 on December 29, 2000. On December 6, 2000, the common stock of Lernout & Hauspie was de-listed by Nasdaq. Thereafter, Lernout & Hauspie voluntarily de-listed from Nasdaq Europe in March 2001. Lernout & Hauspie common stock is currently quoted on the "Pink Sheets" disseminated by Pink Sheets LLC. According to the Commission's complaint, L&H's conduct violated the anti-fraud, reporting, books and records and internal controls provisions of the federal securities laws: Section 17(a) of the Securities Act of 1933 and Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Securities Act of 1934 and Rules 10b-5, 12b-20, 13a-1, 13a-13, and 13a-16 thereunder. The Commission seeks a permanent injunction against future violations by Lernout & Hauspie of these provisions of the federal securities laws. The Commission acknowledges the assistance of the United States Attorney for the Southern District of New York; the Belgian Ministry of Justice (pursuant to the provisions of the Mutual Legal Assistance Treaty in effect between the United States and Belgium); and the Jersey Attorney General. The Commission's investigation is continuing with respect to other persons and entities. * * * The Boston Globe reported that the filing of the SEC lawsuit surprised L&H. Therese Pritchard, a Washington attorney representing L&H, told the Boston Globe that, "The company and SEC staff had reached an agreement on a resolution. The company is only waiting for the Belgian bankruptcy court to give final authority to the curator to execute the papers, and a hearing on that matter was already scheduled for the end of the month." Ms. Pritchard declined to comment further. The SEC is also silent on the alleged settlement. (L&H/Dictaphone Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) LUMENON: Shareholders Approve Financing Facility with Crossover --------------------------------------------------------------- Lumenon Innovative Lightwave Technology, Inc. (NASDAQ SC: LUMM), a manufacturer of high-quality optical devices for the global telecommunications, data communications and cable markets, announced the results of its Special Meeting of Stockholders, held October 9th, 2002. At the Special Meeting, the Company obtained stockholder approval for a private equity financing facility with Crossover Ventures, Inc., pursuant to which the Company could issue up to $14,000,000 worth of the Company's common stock and have issued warrants convertible into shares of the Company's common stock. Under the terms of the private equity financing facility with Crossover, the Company has the option to obtain a maximum of $14,000,000 by issuing shares of its common stock in a series of periodic draw downs of funds. The draw downs are subject to certain limitations and the fulfillment of certain conditions, including a provision which limits Crossover's holdings to 9.999% of the outstanding shares of Lumenon common stock at any given time and the receipt of stockholder approval, which was obtained at the Special Meeting, for draw downs which will result in the issuance of common stock in excess of 19.9% of the common stock issued and outstanding as of the date of the financing agreement. These limits and conditions will limit the amount that the Company may draw down from time to time. The Company has no obligation to draw down the full amount of the commitment. In addition, the Company received stockholder approval for an amendment to the Company's Amended and Restated Certificate of Incorporation to increase the authorized number of shares of the Company's common stock from 100,000,000 to 250,000,000. The Company's general financing proposal was withdrawn from stockholder consideration. Gary Moskovitz, Lumenon's President and Chief Executive Officer, indicated that a new proposal would be resubmitted to stockholders once a definitive investor was available. Commenting on the results of the Special Meeting, Mr. Moskovitz said, "We are very grateful to our stockholders for their support of the proposals brought before them, both of which we believe are key to our success as we work to implement our financial strategies." Lumenon Innovative Lightwave Technology, Inc., designs, develops and builds optical components and integrated optical devices in the form of packaged compact hybrid glass and polymer circuits on silicon chips. These photonic devices - based upon Lumenon's patented PHASIC(TM) design process and manufacturing methodology - offer communications providers the ability to dramatically boost bandwidth for today's burgeoning telecommunication, data communication and cable industries. For more information about Lumenon Innovative Lightwave Technology, Inc., visit the Company's Web site at http://www.lumenon.com * * * As reported in Troubled Company Reporter's June 10, 2002, Lumenon Innovative Lightwave Technology, Inc., received approval from the Nasdaq Stock Market, Inc., to transfer the listing of the Company's common stock from The Nasdaq National Market to The Nasdaq SmallCap Market effective at the opening of business Friday, June 7, 2002. Prior to that, the Company was not in compliance with Marketplace Rule 4450(a)(5) because the bid price of the Company's common stock closed at less than $1.00 per share over 30 consecutive trading days and that the Company was not in compliance with Marketplace Rule 4450(e)(2) because it had not regained compliance with Marketplace Rule 4450(a)(5) within 90 calendar days. MANITOWOC COMPANY: Board Declares Cash Dividend to Shareholders --------------------------------------------------------------- The Board of Directors of The Manitowoc Company, Inc. (NYSE: MTW), at its meeting Monday, declared a cash dividend of $0.28 per share of common stock to shareholders of record on December 2, 2002, payable on December 9, 2002. The Manitowoc Company, Inc., is a leading producer of lattice- boom cranes, tower cranes, mobile hydraulic cranes, boom trucks, and related products for the global construction industry. It is also a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment for the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * As reported in Troubled Company Reporter's July 25, 2002 edition, Standard & Poor's Ratings Services assigned its single- 'B'-plus rating to The Manitowoc Company Inc.'s proposed offering of $175 million senior subordinated notes due 2012. At the same time, the double-'B' corporate credit rating was affirmed on the Manitowoc, Wisconsin-based company. In addition, the rating was removed from CreditWatch where it was originally placed on March 19, 2002, following the company's announcement of the acquisition of Grove Investors Inc. The outlook is negative. MARSH SUPERMARKETS: S&P Revises Low-B Ratings Outlook to Neg. ------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Marsh Supermarkets Inc., to negative from stable. Standard & Poor's also affirmed its double-'B' corporate credit and unsecured bank loan ratings and its single-'B'-plus subordinated debt rating on the Indianapolis, Indiana-based company. Approximately $251 million of debt is affected by these actions. "The revised outlook reflects recent negative same-store sales trends resulting from increased promotional activity from competitors, more selective consumer spending trends, and competitive store openings in its core markets. We could consider a ratings downgrade if these trends continue to negatively impact credit measures," Standard & Poor's credit analyst Patrick Jeffrey said. Marsh operates 109 supermarkets and 187 convenience stores in Indiana and western Ohio. The company's supermarkets have a strong market position in Indianapolis, with a market share of about 29%, similar to Kroger Co., according to the 2002 Market Scope. The company has faced increased competitive store openings over the past year from Wal-Mart Stores Inc., Kroger, and others. This factor, coupled with increased promotional activity from competitors and more selective consumer shopping patterns, contributed to a 2.9% same-store sales decline in the first quarter of 2002. Standard & Poor's expects Marsh will be challenged to improve same-store sales trends significantly in 2002 if increased promotional activity and more selective consumer shopping trends continue. Marsh had experienced same-store sales increases of 2.5% in fiscal 2001 and 2.0% in fiscal 2000. METALS USA: FTI Consulting Replaces PwC as Financial Advisors ------------------------------------------------------------- On July 24, 2002, FTI Consulting Inc., publicly announced that it entered into a definitive agreement with PricewaterhouseCoopers to purchase PwC's Business Recovery Services Practice, a product line that specializes in providing services to parties in distressed corporate situations. At the onset of these Chapter 11 cases, PwC provided business recovery services to Metals USA, Inc., and its debtor-affiliates. The transaction between PwC and FTI formally closed on August 30, 2002. Len B. Blackwell, the primary PwC partner providing the business recovery services, and practically all of the other members of the BRS Practice engagement team, became FTI employees. By this application, the Debtors seek the Court's authority to employ FTI, effective August 30, 2002, to serve as their financial advisor. FTI will be providing the business recovery services to the Debtors under the same terms and conditions of PwC's retention. Zack A. Clement, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, tells the Court that the former employees of the PwC Business Recovery Practice have become intimately familiar with the Debtors' business affairs and the many issues that may arise from them. FTI, in addition, is one of the preeminent financial services firms operating in the Chapter 11 arena and, thus, is well qualified and uniquely positioned to continue to provide financial restructuring support to the Debtors. Len B. Blackwell, Senior Managing Director at FTI Consulting, relates that since working with FTI, he supervised a review -- consisting of a query of parties within an internal computer database containing names of individuals and entities that are present or former clients of FTI. From that review it was found that FTI is providing, or in the past provided, consulting services to these parties-in-interest in unrelated matters: A. Attorneys: Fulbright & Jaworski LLP, Bracewell & Patterson and Doepken, Keevican & Weiss; B. Major shareholder: Dimensional Fund Advisors; C. Secured Lenders: Bank of America, PNC Bank, The CIT Group, RZB Finance, Amsouth Bank, GMAC Commercial Credit, Fleet Capital Corp., Transamerica Business Capital Corp., Guaranty Business Credit Corp. and General Electric Capital Corp.; D. Secured Lenders' Attorneys: Winstead Sechrest & Minick and Jenkins & Gilchrist; E. Substantial Unsecured Bondholders or Lenders: Bank One NA, Bank One Texas NA, PNC Bank, Norwest Bank, Indenture Trustee and U.S. Trust Company of California; and F. Trade Creditors: National Steel, LTV Steel, Commonwealth, US Steel, Chaparral, AK Steel, ALCOA, IPSCO, Ormet, Bethlehem and Maverick Tube. Mr. Blackwell tells the Court that except for the unbilled services and uncollected billings before the Closing Date provided by the Business Recovery Practice while still under PwC, FTI is not a creditor of any of the Debtors within the meaning of Section 101(10) of the Bankruptcy Code. Based on FTI's books and records, during the 90-day period prior to the Petition Date, FTI received $347,908 from the Debtors for professional services. FTI also received unapplied advance payments of $500,000 from the Debtors. According to Mr. Blackwell, the advance payments will be used to pay for the services that FTI will be providing to the Debtors through the Business Recovery Practice. Any unused amount will be returned to the Debtors. Compensation will be payable to FTI on the same terms that was agreed-upon with PwC. (Metals USA Bankruptcy News, Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900) METRETEK TECHNOLOGIES: Commences OTCBB Trading Effective Oct. 15 ---------------------------------------------------------------- Metretek Technologies, Inc., (Nasdaq:MTEK) announced that the Nasdaq Listing Qualifications Panel had denied its request for continued listing of its common stock despite its failure to comply with the $1.00 minimum bid price requirement for continued listing on the Nasdaq SmallCap Market, as set forth in Marketplace Rule 4310(C)(4). As a result, the Company's common stock was delisted from the Nasdaq SmallCap Market effective with the opening of business on Tuesday, October 15, 2002. Consequently, the Company's common stock began trading on the OTC Bulletin Board under the symbol MTEK on Tuesday, October 15, 2002. The OTC Bulletin Board is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the counter securities. Information regarding the OTC Bulletin Board is available at http://www.otcbb.com Despite the delisting from the Nasdaq SmallCap Market, the Company will remain a public reporting company under Securities and Exchange Commission rules. The Company expects to reconsider its listing options in the future, based upon its financial condition and stock price. As previously reported, the Company received a Nasdaq Staff Determination letter on August 14, 2002, that the Company failed to comply with the $1.00 minimum bid price requirement for continued listing on the Nasdaq SmallCap Market. The Staff Determination letter informed the Company that, due to such non- compliance, the Company's common stock was subject to delisting from the Nasdaq SmallCap Market. As permitted by Nasdaq rules, the Company requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination, which was held on September 26, 2002. Although the Panel indicated continued listing might be preserved if the Company promptly effected a reverse stock split resulting in compliance with the $1.00 minimum bid price requirement, the Board of Directors of the Company determined that proceeding with a reverse stock split to obtain such compliance under present circumstances would not be in the best interests of the Company and its stockholders. W. Phillip Marcum, president and chief executive officer of the Company, stated: "While we are obviously disappointed by the Panel's decision, we strongly believe that the Company initiatives that we are undertaking, including the restructuring of operations of Metretek Florida and the continued growth and success of PowerSecure and Southern Flow, will soon start to show their effect on the Company's performance. Our management team is strongly committed to achieving growth and profitability, and we feel we are headed in the right direction." Metretek Technologies, Inc., through its subsidiaries -- PowerSecure, Inc.; Metretek, Incorporated; and Southern Flow Companies, Inc. -- is a diversified provider of energy technology products, services and data management systems to industrial and commercial users and suppliers of natural gas and electricity. METROMEDIA FIBER: PAIX Teams-Up with Pacific Wave in Seattle, WA ---------------------------------------------------------------- PAIX.net, Inc., the leading neutral commercial Internet exchange and a subsidiary of Metromedia Fiber Network, announced an agreement with Pacific Northwest Gigapop to interconnect the Pacific Wave and PAIX Seattle ISO Layer 2 switch fabrics, thereby bringing together two of the most respected peering infrastructure providers in the nation. This collaborative effort essentially creates one of the most robust Internet exchange points in the Pacific Northwest. The immediate benefits that will be realized by each party's customer base are exceptional, adding to the number and variety of customers accessible through each of the respective switch fabrics. PAIX's Seattle participants, which include several major ISPs and network providers, will have the ability to interconnect and exchange traffic with the numerous research, education, and development networks connected to PNWGP's Pacific Wave international peering facility. The cumulative result is a robust peering network with access to over 20 separate educational and research networks, 4 major government networks, and a multitude of ISPs, ASPs and other Internet-centric companies from the U.S. and the Pacific Rim. In addition to each party being a recognized leader in the Internet exchange community, the two share very strict neutral business models and sophisticated business controls on the quality of their Layer 2 switch fabrics. This commonality serves as a great foundation on which to build this type of expanded connectivity. "PAIX is very selective in establishing these types of relationships," said Shelly Fishman, VP of Sales, Marketing and Business Development at PAIX.net, Inc. "Pacific Wave's neutrality, their high quality network and their deep and wide participant base make them a perfect alliance partner. By connecting our networks together, we will be adding significant value to each of our respective participant communities, and at the same time, ensuring the highest possible standards of reliability and service." "PNWGP is a strong proponent of efficient, cost-effective network design. Peering facilities such as Pacific Wave and PAIX are integral components in these designs. We believe that the Pacific Wave participants will take full advantage of this new opportunity to bring value to their networks," said Amy Philipson, Executive Director of the Pacific Northwest Gigapop. "We have already seen a demand for this type of arrangement in the Seattle metro," said PAIX's VP and General Manager Tim Guarnieri. "PAIX recently announced a similar agreement with the Seattle Internet Exchange, which our customers found valuable and brought about a frenzy of peering arrangements between our respective customers. I think we can expect an even greater response to this offering, simply because of the large number of participants on Pacific Wave's infrastructure." Pacific Northwest Gigapop is the Northwest's Next Generation Internet, Internet2/Abilene applications cooperative, test bed, point of presence, and home to the Pacific Wave International Peering Service. PNWGP and Pacific Wave connect together high- performance international and federal research networks with universities, research organizations, and leading-edge R&D and new-media enterprises throughout Washington, Alaska, Idaho, Montana, Oregon, Canada, Australia, and Japan. For more information visit http://www.pnw-gigapop.netand http://www.pacificwave.net PAIX.net, Inc., headquartered in Palo Alto, Calif., began operations in 1996 as Digital Equipment Corporation's Palo Alto Internet Exchange. Having proven itself as a vital part of the Internet infrastructure, PAIX serves as a packet switching center for ISPs and other Internet-centric customers. PAIX also offers secure, fault-tolerant co-location services to ISPs. PAIX enables its participants to form public and private peering relationships with each other and choose from multiple telecommunications carriers for circuits, all within the same facility. PAIX is a subsidiary of MFN. To ensure its neutrality, it operates as a separate entity with its own management. For additional information about PAIX call 877- PAIXnet (877-724-9638) or visit its Web site at http://www.paix.net On May 20, 2002, PAIX's parent company, Metromedia Fiber Network, Inc., and most of its domestic subsidiaries including PAIX commenced voluntary Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York. MFN is the leading provider of digital communications infrastructure solutions. The Company combines the most extensive metropolitan area fiber network with a global optical IP network, state-of-the-art data centers, award-winning managed services and extensive peering relationships to deliver fully integrated, outsourced communications solutions to Global 2000 companies. The all-fiber infrastructure enables MFN customers to share vast amounts of information internally and externally over private networks and a global IP backbone, creating collaborative businesses that communicate at the speed of light. PAIX.net, Inc., a subsidiary of MFN and the original neutral Internet exchange, offers secure, Class A co-location facilities where ISPs and other Internet-centric companies can form public and private peering relationships with each other, and have access to multiple telecommunications carriers for circuits within each facility. For more information on MFN, please visit its Web site at http://www.mfn.com Metromedia Fiber Network's 10% bonds due 2008 (MFNX08USR1) are trading at less than a penny on the dollar, DebtTraders says. For real-time bond pricing, see http://www.debttraders.com/price.cfm?dt_sec_ticker=MFNX08USR1 MILACRON: Affirms Third-Quarter Results In Line With Guidance ------------------------------------------------------------- Milacron Inc. (NYSE: MZ), a leading global supplier of plastics- processing technologies and industrial fluids, expects to report third-quarter results from continuing operations in line with company guidance issued on July 24 and has scheduled the release of its results and an open investor conference call for Thursday, November 7, 2002. As previously projected, the company expects sales from continuing operations of $185 million to $200 million and an after-tax loss of $5 million to $8 million in the September quarter. While maintaining a strong cash position of more than $100 million, Milacron also confirmed that it had reduced net debt during the quarter by approximately $300 million, thus shrinking its net-debt-to-capital ratio from the mid 50 percent range to the low 30 percent range at quarter end. "New orders have stabilized - albeit at low levels - for the past four quarters now," said Ronald D. Brown, chairman and chief executive officer. "While we have yet to see a strong recovery in our end markets, we are especially pleased that we have been able to strengthen our balance sheet significantly during the past quarter, which improves our liquidity and financial flexibility going forward." Following its usual practice, before the market opens on November 7 Milacron will release its quarterly results along with the current outlook. Later that day at 2:00 p.m. Eastern time, the company will hold a webcast conference call. The call can be accessed via Milacron's Web site at http://www.milacron.com For analysts and investors wishing to ask questions, the dial-in number will be (913) 981-4910. First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with major manufacturing facilities in North America, Europe and Asia. For further information, visit the company's Web site or call the toll-free investor hot line: 800-909-MILA (800-909-6452). * * * As reported in Troubled Company Reporter's May 8, 2002, edition, Standard & Poor's affirmed its double-'B'-minus corporate credit rating on Milacron Inc., following the company's announcement that it is selling the Widia Group, its European and Indian metalworking tools operation, to Kennametal Inc., (BBB/Negative/--) for Euro 180 million (about $170 million). NAPSTER: Trustee Wants to Dip into Bertelsmann's Cash Collateral ---------------------------------------------------------------- Hobart G. Trusdell, the Chapter 11 Trustee of Napster, Inc., and its debtor-affiliates, asks for permission to use cash collateral securing the estate's obligations to Bertlesmann AG to pay certain critical expenses. The Trustee reminds the U.S. Bankruptcy Court for the District of Delaware that Bertelsmann AG provided the Debtors with a $5.1 million DIP Financing Facility, as part of the proposed asset purchase agreement between the Debtors and Bertelsmann. The Court subsequently denied the proposed asset sale and as a result, Bertelsmann terminated its DIP financing commitment and as well as its consent to the Debtors' use of cash collateral. By this Motion, the Trustee seeks authority to consensually use a limited amount of cash collateral, subject to security interests asserted by Bertelsmann. Bertelsman agree and allow the Debtors for a limited use of cash collateral for: a) payments due to Napster employees for accrued and unpaid vacation and other paid time off; b) payments of premium due on certain health benefits to maintain coverage pursuant to Consolidated Omnibus Budget Reconciliation Act; and c) a prepetition bonus due to Carolyn Jensen. In the case of Carolyn Jensen, the Debtors' CFO, she was advised that she would be paid a $40,000 bonus to continue her employment and help out in preparing for bankruptcy. Ms. Jensen is the only employee that has remained with the Debtors since September 3, 2002, and her knowledge of the Debtors' businesses and assets is unique and irreplaceable. The Trustee and Bertelsmann both believe that Ms. Jensen has earned the bonus and are concerned that if Ms. Jensen is not paid, she will likely seek employment elsewhere. The Trustee wants to pay the Accrued Vacation Pay due to the employees through the Bertelsmann Cash Collateral: Employee Name Title Amount ------------- ----- ------ Cooney, Manus VP for Corp/Public Policy $12,620 Gatmen, Thelma Project Manager, F&A 6,038 Huang, Molly Accountant 3,016 Jensen, Carolyn CFO 15,578 Kremer, Aomsub Accounting Manager 3,180 Kulberg, Inga Sr. Director Staffing & HR 6,865 Piibe, Mark Assist General Counsel 2,692 Rafnel, Bruce Release Engineer 1,971 Rhough, Gene Assist, General Counsel 3,699 Vietvu, Johnny Sr. Support Engineer 2,192 Villalobos, Hector Server Engineer 795 Villarta, Antonette Sr. Server Engineer 4,673 Napster, Inc., and its debtor-affiliates own and operate the peer-to-peer music service known as Napster. The Napster service has provided music enthusiasts with an easy-to-use, high quality service for finding and discovering music and communicating their interests with other members of the Napster community. The Company filed for chapter 11 protection on June 6, 2002. Daniel J. DeFranceschi, Esq., Russell C. Silberglied, Esq., at Richards, Layton & Finger and Richard M. Cieri, Esq., Michelle Morgan Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debts of more than $100 million. NATIONSRENT INC: Wants to Include Heller Financial in Mediation --------------------------------------------------------------- NationsRent Inc., and its debtor-affiliates want to include the motion filed by Heller Financial Leasing, Inc. in the Mediation Proceedings. On March 13, 2002, Heller filed a motion to compel the Debtors to: (a) assume or reject an unexpired lease; (b) pay certain postpetition lease obligations; and (c) allow and pay administrative expense claim with respect to the parties' lease agreement. The Debtors and Heller are parties to an unexpired Master Equipment Lease Agreement, dated September 1, 1998. Heller succeeded the interests in the lease from Genie Financial Services, Inc. Although the Debtors have not filed an adversary proceeding seeking to re-characterize the particular equipment Master Lease and Schedule with Heller, Joanne P. Pinckney, Esq., at Bouchard Margules & Friedlander, in Wilmington, Delaware, explains that in order to resolve the Heller Motion, the Court will need to address many of the same issues to be addressed in the Mediation Proceedings. These issues include, inter alia: -- Whether Heller is entitled to an administrative priority claim for any postpetition scheduled payments that the Debtors did not make during the 60-day grace period provided by Section 365(d)(10) of the Bankruptcy Code; -- Whether and to what extent Heller has a security interest in the equipment and the proceeds of the equipment rentals; and -- To the extent Heller is deemed to have a security interest, whether Heller has a first priority perfected security interest in the equipment and the proceeds of the equipment rentals. A hearing on the Heller Motion, originally set for October 18, 2002, has been continued to February 2003 by the parties' agreement, before which date the Debtors intend to conduct the Mediation Proceedings. Ms. Pinckney asserts that the mediation of Heller's Motion will be beneficial in resolving the issues encompassed in that Motion and will preserve judicial resources. (NationsRent Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) NCS HEALTHCARE: Amends Solicitation Statement re Tender Offer ------------------------------------------------------------- NCS HealthCare, Inc., has filed Amendment No. 5 to a Schedule 14D-9 to amend and supplement the Solicitation/Recommendation Statement originally filed by NCS HealthCare, Inc., on August 20, 2002 and amended on August 21, 2002, August 22, 2002, September 12, 2002 and September 30, 2002 relating to the tender offer by NCS Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Omnicare, Inc., a Delaware corporation, for all of the outstanding shares of Class A common stock, par value $0.01 per share, of NCS and Class B common stock, par value $0.01 per share, of NCS, at a price of $3.50 per share, net to the seller in cash. Item 7 of the Schedule 14D-9 is amended to add the following at the end: After obtaining the Waiver, NCS instructed its financial and legal advisors to meet with representatives of Omnicare to discuss the Omnicare Proposals. Accordingly, on September 13, 2002, Glenn Pollack of Candlewood Partners, LLC, financial advisor to the Company, together with NCS's legal advisors, met with Joel F. Gemunder, President and Chief Executive Officer of Omnicare, and Omnicare's legal and financial advisors to discuss the terms of the Omnicare Proposals. Subsequent to the September 13th meeting, NCS's advisors engaged in discussions with Omnicare's advisors on a few occasions. On October 6, 2002, NCS received by facsimile a letter from Omnicare that was signed by Mr. Gemunder and a proposed Agreement and Plan of Merger to be entered into among Omnicare, NCS Acquisition Corp. and NCS, executed by Omnicare and NCS Acquisition Corp. The Offer Letter indicates that by executing the Omnicare Merger Agreement, Omnicare has irrevocably committed itself to a transaction with NCS. The Offer Letter further provides that the Omnicare Offer may be accepted by NCS by executing the Omnicare Merger Agreement at anytime prior to the earliest of: - the effective time of the Genesis Merger; - two calendar days after the date on which: - the Genesis Merger Agreement is declared illegal, invalid, void or otherwise unenforceable or is otherwise terminated by NCS or Genesis in accordance with its terms; or - NCS stockholders fail to adopt the Genesis Merger Agreement and approve the transactions contemplated by the Genesis Merger Agreement at a meeting called for such purpose; - the date of any amendment or waiver of any of the provisions of the Genesis Merger Agreement; - January 31, 2003. The Omnicare Merger Agreement provides that as promptly as practicable after the date that NCS executes the Omnicare Merger Agreement, Omnicare and NCS Acquisition will amend the Offer to reflect the terms and conditions set forth in the Omnicare Merger Agreement, which include NCS Acquisition's offer to purchase all of the outstanding Class A common shares and Class B common shares at a purchase price of $3.50 per share, net to the seller in cash (or such higher price as may subsequently be paid in the Offer). Following completion of the Offer, NCS Aquisition Corp., would be merged into NCS, subject to the approval of NCS' stockholders, if required by applicable law. As a result of the Omnicare Merger, NCS would become a wholly owned subsidiary of Omnicare and each outstanding share of Class A common stock and Class B common stock would be converted into the right to receive the Offer Price, except for treasury shares and shares held by Omnicare or its subsidiaries, which would be cancelled, and shares held by stockholders of the Company who have perfected their appraisal rights under Section 262 of the Delaware General Corporation Law, which would be subject to the rights afforded thereunder. The obligation of NCS Acquisition to accept for payment and pay for shares tendered pursuant to the Offer would be subject to the satisfaction or waiver of each of the following conditions: - there shall have been validly tendered and not withdrawn that number of shares of Class A common stock and Class B common stock which represent at least a majority of the total voting power of the outstanding securities of NCS entitled to vote in the election of directors or in a merger, determined on a fully diluted basis; - the accuracy of NCS's representations and warranties in the Omnicare Merger Agreement, provided that this condition would be deemed to be satisfied unless all such inaccuracies would, individually or in the aggregate, reasonably be expected to have a material adverse effect on NCS; - the performance by NCS in all material respects of its obligations, covenants and agreements in the Omnicare Merger Agreement; - the absence of any law, order or injunction prohibiting the completion of the Offer or the Omnicare Merger; - the absence of any governmental action - challenging or seeking to restrain or prohibit the consummation of the Offer, the Omnicare Merger or any of the other transactions contemplated by the Omnicare Merger Agreement; - seeking to impose any prohibition or limitation, or to require any divestiture, disposal or similar action by Omnicare; - seeking to impose limitations on the ability of Omnicare to acquire or hold any shares of the surviving corporation's capital stock; or - seeking to prohibit Omnicare or any of its subsidiaries from effectively controlling in any material respect the business or operations of Omnicare or any of its subsidiaries; - the receipt of non-governmental third-party consents or approvals that are necessary in order to permit the completion of the Offer, the Omnicare Merger or any of the other transactions contemplated by the Omnicare Merger Agreement, except for any such consents or approvals that would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on the Company if the closing of the Omnicare Merger were to occur; or - the receipt of any required governmental or regulatory approvals, the failure of which to be obtained would reasonably be expected to have a material adverse effect on the Company. The Omnicare Merger Agreement would require Omnicare to make a cash payment to NCS in the amount of any termination payment required to be made by NCS to Genesis pursuant to the Genesis Merger Agreement, except that NCS would be required to refund this amount to Omnicare in the event that the Omnicare Merger Agreement is terminated under certain circumstances. In addition, Omnicare would also be required to cause NCS to redeem the NCS Notes in accordance with their terms and discharge all amounts outstanding under the NCS senior credit facility as soon as practicable on the date on which the Offer is consummated. The Company is in the process of thoroughly reviewing the terms and conditions of the Offer Letter and the Omnicare Merger Agreement with its financial and legal advisors in light of the Company's current contractual commitments with Genesis. Neither the NCS Board nor the Independent Committee has taken any action with respect to the Offer Letter or the Omnicare Merger Agreement and, accordingly, their respective recommendations to holders of Shares to reject the Offer and not tender their Shares pursuant to the Offer as originally proposed by Omnicare remains unchanged. The Independent Committee and the NCS Board, however, each reserve the right to revise their respective recommendations as a result of the Offer Letter, the Omnicare Merger or any other changed circumstances. NCS HealthCare, Inc., is a leading provider of pharmaceutical and related services to long-term care facilities, including skilled nursing centers, assisted living facilities and hospitals. NCS serves approximately 206,000 residents of long- term care facilities in 33 states and manages hospital pharmacies in 14 states. NCS Healthcare's June 30, 2002 balance sheet shows a total shareholders' equity deficit of about $108 million. NEON COMMS: Court Sets Plan Confirmation Hearing for October 21 --------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware dated September 20, 2002, the Disclosure Statement for Neon Communications, Inc.'s and its debtor-affiliates' Chapter 11 Plan of Reorganization was approved by the Honorable Peter J. Walsh. Judge Walsh finds that the document contains adequate information regarding the Debtors' Plan. A hearing to consider confirmation of the Plan will be held on October 21, 2001 commencing at 4:00 p.m. in Wilmington. NEON Communications, Inc., owns certain rights to fiber and all of the outstanding stock of NEON Optica, Inc., which owns and operates a fiber optic network services. The Company filed for chapter 11 protection on June 25, 2002. David B. Stratton, Esq., at Pepper Hamilton LLP and Madlyn Gleich Primoff, Esq., at Richard Bernard, Esq., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $55,398,648 in assets $19,664,234 in debts. NETWORK ACCESS: Wins Court Nod to Employ PricewaterhouseCoopers --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave a favorable nod to Network Access Solutions Corporation and NASOP, Inc., to retain and employ PricewaterhouseCoopers LLP for auditing and accounting services during the Company's chapter 11 cases. PriceWaterhouseCoopers is expected to: a. audit financial statements and assist in preparing and filing financial statements and disclosure documents required by regulatory authorities and the SEC; b. review unaudited quarterly financial statements of the Debtors; c. provide other tax consulting and preparation services; d. assist in preparing financial disclosures required by the Court, including the schedules of assets and liabilities, the statements of financial affairs and monthly operating reports; e. consult with Debtors' management on business matters relating to their chapter 11 reorganization efforts; f. assist Debtors' reorganization counsel with the analysis of and revisions to the Debtors' plan(s) of reorganization; g. prepare state and local personal property tax returns; h. prepare sales and use tax voluntary disclosure agreements; and i. assist with such other matters as Debtors and PriceWaterhouseCoopers may agree. The Debtors will pay PriceWaterhouseCoopers at its current hourly rates: Partners $400 per hour Staff members $110 to $325 per hour Network Access Solutions Corporation is a provider of broadband network solutions and internet service to business customers. The Company filed for chapter 11 protection on June 4, 2002. Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $58,221,000 in assets and $84,946,000 in debts. NEXTREND INC: Files for Chapter 11 Reorganization in Texas ---------------------------------------------------------- NexTrend, Inc., and NexTrend Technologies, Inc., providers of direct access trading and financial market decision support technologies, have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas. The Chapter 11 filing provides NexTrend the ability to continue to conduct business as usual while it develops a reorganization plan to maximize recovery for the company's stakeholders. NexTrend's licensed broker/dealer subsidiary, NexTrend Trading, Inc., is not included in these proceedings. "This Chapter 11 filing will enable NexTrend to continue to deliver uninterrupted services to our customers, maintain our day to day operations and create the greatest possible value for our creditors and shareholders." said Mark Cherlin, president and chief executive officer of NexTrend. "We believe that the long-term success of our company is best served thru a strategic alliance, merger or sale and have hired the investment banking firm of GEM Advisors to assist with this process." NexTrend is based in Dallas, Texas, and has customers in over 85 countries worldwide. NexTrend's integrated trading and financial market decision support services offer proprietary direct access trading, streaming real-time Level II, charts, tickers, hot keys, account positions, buying power, time & sales, LiveScan, market scan, most actives, quote boards, financial news, and much more. NexTrend also offers complete back office integration with a full suite of streaming real-time risk management, compliance, and monitoring tools. NORTHWEST AIRLINES: Q3 Earnings Conference Call Set for Tomorrow ---------------------------------------------------------------- Northwest Airlines (Nasdaq: NWAC) will conduct a live audio webcast of its conference call with the financial community and news media tomorrow, October 17, 2002 at 11:30 a.m., EDT to discuss the company's third quarter financial and operating results. The webcast can be accessed at http://www.ir.nwa.com The webcast replay will be available through October 24, 2002. Northwest Airlines is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam and more than 1,700 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents. * * * As reported in Troubled Company Reporter's March 22, 2002, edition, Fitch Ratings assigned a rating of 'B+' to the $300 million in senior unsecured notes issued by Northwest Airlines Corp. The privately placed notes carry a coupon rate of 9.875% and mature in March 2007. The Rating Outlook for Northwest is Negative. The 'B+' rating reflects the signs of stabilization in Northwest's cash flow position. Northwest Airlines Inc.'s 9.875% bonds due 2007 (NWAC07USR2) are trading at 45 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NWAC07USR2 for real-time bond pricing. PICADILLY CAFETERIAS: Gets Authority to Issue 100 Million Shares ---------------------------------------------------------------- Picadilly Cafeterias, Inc., is authorized to issue up to 100,000,000 shares of common stock, no par value per share. As of September 15, 2002, the Company had issued 10,880,807 shares of common stock. As of that date, it also had approximately 1,950,000 shares of common stock reserved for issuance upon exercise of options or in connection with other awards outstanding under various employee or director incentive, compensation and option plans. The outstanding shares of its common stock are fully paid and nonassessable. The holders of its common stock have no preemptive, subscription, cumulative voting, conversion or redemption rights, and its common stock is not subject to mandatory redemption. Dividends Subject to any preferences accorded to the holders of its Preferred Stock, if and when issued by the Board of Directors, holders of its common stock are entitled to dividends at such times and amounts as the Board of Directors may determine. Voting Rights Each holder of its common stock is entitled to one vote for each share of common stock held of record on all matters as to which shareholders are entitled to vote. Holders of its common stock are not allowed to cumulate votes for the election of Directors. Rights upon Liquidation In the event of Picadilly's voluntary or involuntary liquidation, dissolution or winding up, the holders of its common stock will be entitled to share equally in any of its assets available for distribution after the payment in full of all debts and distributions and after the holders of all series of outstanding Preferred Stock have received their liquidation preferences in full. Certain Provisions of Picadilly Cafeterias, Inc.'s Articles of Incorporation and By-laws Certain provisions of its Articles and By-laws and certain Louisiana statutes may have the effect, either alone, in combination with each other and the Rights Agreement, or with the existence of authorized but unissued capital stock, of making more difficult or discouraging an acquisition of its Company that its Board of Directors deems undesirable. Piccadilly is a leader in family dining restaurants and operates in 216 locations in the Southeastern and Mid-Atlantic states. As previously reported, the Listing Qualifications Panel of the American Stock Exchange approved Piccadilly Cafeteria's common shares for listing on the Exchange. The Panel authorized the Listing pursuant to Section 1203(C) of the American Stock Exchange Company Guide, notwithstanding the fact that the Company did not fully satisfy all of the regular initial listing standards, specifically, a minimum $3 per share stock price or minimum $50 million total market capitalization. The Panel's authorization is subject to the Company's compliance with the minimum $2 per share price Alternative Listing Standard and all other applicable initial listing standards set forth in Part 1 of the American Stock Exchange Company Guide at the time the Company's common shares begin trading on the Exchange. The Company expects that its common shares will begin trading on the Exchange on Wednesday October 9, 2002, under the symbol "PIC." At July 2, 2002, Piccadilly's balance sheets show that its total current liabilities exceeded its total current assets by about $20 million. PRIMIX SOLUTIONS: Plans to File for Chapter 7 Liquidation Soon -------------------------------------------------------------- Primix Solutions Inc., (PMIX.PK) announced that the company plans to file for protection under Chapter 7 of the Bankruptcy Code. The company expects that such a filing will be made within the next few weeks. PROVIDIAN FINANCIAL: Will Publish Q3 2002 Results on October 28 --------------------------------------------------------------- Providian Financial Corporation (NYSE: PVN) will release third quarter 2002 results on October 28, 2002 after the close of the market. The release will be available on the Company's Web site at http://www.providian.com The Company will hold its conference call shortly thereafter at 5:00 p.m. Eastern Time. The call will be broadcast live over the Internet through the Investor Relations page of Providian's Web site, http://www.providian.com. Those interested in listening to the live call should go to the Web site at least 10 minutes before the start of the call to register and download any necessary software. A replay will be available shortly after the conclusion of the call and will remain available through November 11, 2002. Investor information is available on Providian Financial's Web site at http://www.providian.com One of the top US credit card outfits, Providian Financial issues mainly secured credit cards to more than 16 million customers, most with spotty credit histories; it also issues credit cards to those with better credit. Providian solicits new customers via direct mail, phone, and online advertising. The company also offers money market accounts, CDs, and home equity loans; its GetSmart.com is an online lender and deposit institution. High charge-offs have led to a management shake-up, job cuts, and talk of putting the company up for sale; meanwhile, regulators ordered the company to stop issuing new subprime cards. * * * As reported in Troubled Company Reporter's May 27, 2002 edition, Fitch Ratings lowered the senior debt rating of Providian Financial Corp., to 'B' from 'B+' and senior debt rating of Providian National Bank to 'B+' from 'BB-.' The ratings remain on Rating Watch Negative where they were placed on December 20, 2001. Fitch's downgrade of Providian's ratings primarily reflects heightened concerns regarding performance of the Providian Gateway Master Trust, where excess spread levels have fallen over the past few months. The decline in excess spread has been driven by a sharp rise in net chargeoffs of these assets. The increase in loss rates reflects weakness in the economy that began in 2001, limitations in growth, but it is also indicative of the high-risk nature of Providian's customer base, a high percentage of which would be considered subprime under bank regulatory definitions. PUBLIC SERVICE ENTERPRISES: Moody's Reaffirms All Credit Ratings ---------------------------------------------------------------- Public Service Enterprise Group said that Moody's Investors Service has reaffirmed credit ratings but changed the outlook from stable to negative for PSEG, PSEG Power and PSEG Energy Holdings. The outlook change means Moody's will monitor the three businesses more closely with respect to developments that may impact its ratings. Moody's reaffirmed both the ratings and stable outlook for Public Service Electric and Gas Company. "PSEG's senior management has had ongoing discussions with Moody's regarding our financial, strategic and operating plans and activities," said Thomas O'Flynn, chief financial officer. "We are pleased that Moody's reaffirmed current ratings on all our businesses, but we are surprised by its outlook changes. However, we recognize that we are operating in a very difficult business environment." "PSEG and its subsidiaries have sound business fundamentals that support reasonable earnings and cash flow targets," O'Flynn added. "In September, we strengthened our balance sheet by successfully selling $460 million of participating units, which are preferred securities that are mandatorily convertible into common equity." O'Flynn also emphasized that PSEG has minimal long-term debt maturities on the horizon and has strong liquidity sources -- both important measures of financial strength. He said PSEG will continue frequent dialogue with Moody's in an effort to assure the rating agency that the company's fundamentals support the retention of the current ratings. * * * At June 30, 2002, Public Service Enterprise Group's balance sheet shows that its total current liabilities exceeded its total current assets by about $2 billion. ROHN INDUSTRIES: Completes Listing Transfer to Nasdaq SmallCap -------------------------------------------------------------- ROHN Industries, Inc. (Nasdaq: ROHN), a global provider of infrastructure equipment for the telecommunications industry, has transferred the listing of its common stock from the Nasdaq National Market to the Nasdaq SmallCap Market. The Company's common stock began trading on the Nasdaq SmallCap Market at the commencement of trading this morning. The Company's common stock continues to trade under the symbol "ROHN". Daily volume and closing price continue to be available on the same basis as previously available. ROHN Industries, Inc., is a leading manufacturer and installer of telecommunications infrastructure equipment for the wireless and fiber optic industries. Its products are used in cellular, PCS, fiber optic networks for the Internet, radio and television broadcast markets. The company's products include towers, equipment enclosures, cabinets, poles and antennae mounts, as well as design and construction services. ROHN has manufacturing locations in Peoria, Ill.; Frankfort, Ind.; and Bessemer, Ala., along with a sales office in Mexico City, Mexico. * * * As reported in Troubled Company Reporter's Sept. 3, 2002 edition, ROHN Industries entered into an amendment to its credit and forbearance agreements with its bank lenders. The amendment to the credit agreement, among other things, modifies the definition of the borrowing base to restrict the Company's access to $1,500,000 of borrowing capacity and imposes certain additional information requirements on ROHN. Under the amendment to the forbearance agreement, the bank lenders have agreed to extend until October 31, 2002 the period during which they will forbear from enforcing any remedies under the credit agreement arising from ROHN's breach of financial covenants contained in the credit agreement. If these financial covenants and related provisions of the credit agreement are not amended by October 31, 2002, and the bank lenders do not waive any defaults by that date, the bank lenders will be able to exercise any and all remedies they may have in the event of a default. RURAL CELLULAR: Will Pay Dividends on Senior & Junior Preferreds ---------------------------------------------------------------- Rural Cellular Corporation (Nasdaq:RCCC) announced that the quarterly dividends on its 11-3/8% Senior Exchangeable Preferred Stock and 12-1/4% Junior Exchangeable Preferred Stock will be paid on November 15, 2002, to holders of record on November 1, 2002. The Senior Exchangeable Preferred Stock dividend will be paid in shares of Senior Exchangeable Preferred Stock at a rate of 2.84375 shares per 100 shares. The Junior Exchangeable Preferred Stock dividend will be paid in shares of Junior Exchangeable Preferred Stock at a rate of 3.0625 shares per 100 shares. Fractional shares for both the Senior and Junior Exchangeable Preferred Stock will be paid in cash. Rural Cellular Corporation (Nasdaq:RCCC), based in Alexandria, Minnesota, provides wireless communication services to Midwest, Northeast, South and Northwest markets located in 14 states. At June 30, 2002, Rural Cellular's balance sheets show a total shareholders' of about $48 million. SAFETY-KLEEN CORP: Wants to Assign Trumbull Pact to EPIQ Systems ---------------------------------------------------------------- Safety-Kleen Corp., and its debtor-affiliates and Trumbull Services LLC are parties to the Consulting Agreement under which the Debtors retain and employ Trumbull to: (1) serve as the Court's noticing agent to mail notices to certain of the estates' creditors and parties-in-interest; (2) provide computerized claims, objection, and balloting database services; and (3) provide expertise, consultation, and assistance in claim and ballot processing and in the dissemination of other administrative information related to the Debtors' Chapter 11 cases. Trumbull and EPIQ Systems Inc. have signed an Asset Purchase Agreement dated August 1, 2002, whereby Trumbull agreed to sell all of its assets relating to its bankruptcy claims administration services business to EPIQ. This sale includes the assignment of the Consulting Agreement to EPIQ effective upon the closing of the transaction. The Debtors have consented in writing to this assignment, and the succession of EPIQ as the claims and noticing agent in these cases. The fees charges and services to be rendered by EPIQ will be the same as those previously charged and rendered by Trumbull. By this application, the Debtors ask the Court to: (a) approve the assignment of the Consulting Agreement to EPIQ by Trumbull and the succession of EPIQ as the Claims and Noticing Agent, and release Trumbull from any obligation to perform under the Consulting Agreement; provided, however, that the Assignment will be effective only upon, and subject to, the Closing; and (b) permit EPIQ, upon the Closing and the effectiveness of the Assignment, to bill for and collect fees owed by the Debtors for services rendered by Trumbull under the Consulting Agreement; provided, however, that any payments made by the Debtors to EPIQ will discharge any corresponding obligation owed by the Debtors to Trumbull. If the Court won't grant the request, the Debtors seek an order terminating the Consulting Agreement, subject to, and effective only upon: the Closing and the appointment by the Debtors of a successor Claims and Noticing Agent approved by this Court. Thomas L. Layton, EPIQ Senior Vice President, describes his firm as a company that develops, markets and licenses proprietary software solutions for workflow management and data communications infrastructures that serve the bankruptcy trustee market and the financial services market. On the closing of the Trumbull acquisition, EPIQ will add noticing, claims processing and other administrative tasks to its repertoire of services. Mr. Layton asserts that: (a) neither EPIQ nor any of its employees has any connection with the Debtors, their creditors, or any other party-in- interest; except that EPIQ and Bank of America have an exclusive national marketing agreement under which EPIQ offers it Chapter 7 bankruptcy trustee customers technology products and Bank of America offers these same customers specialty banking services and pays EPIQ a percentage fee based on the total trustee funds on deposit; (b) EPIQ is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code; and (c) EPIQ does not hold or represent any interest adverse to the Debtors' estates. EPIQ assures the Court that it is not an employee of the United States Government and will not seek any compensation from the Government for its services, nor will EPIQ be or act as an agent of the United States. EPIQ will not misrepresent any fact to the public, or employ any past or present employees of the Debtors in connection with its work in these cases. The Debtors intend to treat the fees and expenses of the Claims and Noticing Agent incurred in the performance of services as an administrative expense and will be paid in the ordinary course of business. (Safety-Kleen Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) SCIENTIFIC LEARNING: Will Hold Q3 Conference Call on October 24 --------------------------------------------------------------- Scientific Learning Corporation (OTCBB: SCIL) invites investors and members of the public to listen to a broadcast of the Company's conference call to discuss its financial results for the third quarter of 2002. The call will be broadcast live over the Internet on Thursday, October 24, 2002 at 5:00 p.m. EDT/2:00 p.m. PDT. The conference call will be available live on the Investor Information portion of the Company's Web site at http://www.ScientificLearning.com and at http://www.ON24.com. To obtain future announcements of quarterly releases and other event calls, please call the Investor Relations department of Scientific Learning at 1-888-665-9707 ext. 3 or email http://investorrelations@scilearn.com Headquartered in Oakland, California, Scientific Learning sells the Fast ForWord(R) patented family of products that develops and enhances foundational skills critical to language and reading for learners of all ages. Significant gains are frequently achieved in as few as 20 to 40 instructional sessions. To learn more about Scientific Learning's neuroscience-based products, visit the Company's Web sites at http://www.ScientificLearning.comand http://www.BrainConnection.com, or call toll-free 888-452-7323. At June 30, 2002, Scientific Learning Corp.'s total shareholders' equity deficit reaches a little over $5 million, and its working capital deficit tops $4 million. SEPRACOR INC: PRIMECAP Management Discloses 8.54% Equity Stake -------------------------------------------------------------- PRIMECAP Management Company beneficially owns 7,180,846 shares of the common stock of Sepracor, Inc., representing 8.54% of the outstanding common stock of the company. PRIMECAP holds the sole power to vote, or direct the voting of 1,823,846 shares and the sole power to dispose of, or direct the disposition of the entire amount of stock held, i.e. 7,180,846 shares. Sepracor Inc., is a research-based pharmaceutical company dedicated to treating and preventing human disease through the discovery, development and commercialization of innovative pharmaceutical products that are directed toward serving unmet medical needs. Sepracor's drug development program has yielded an extensive portfolio of pharmaceutical compound candidates, including candidates for the treatment of respiratory, urology and central nervous system disorders. Sepracor's corporate headquarters are located in Marlborough, Massachusetts. Sepracor's June 30, 2002 balance sheet shows a total shareholders' equity deficit of about $322 million. SIRIUS: Interest Nonpayment Spurs S&P to Cut Credit Rating to D --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on satellite radio provider Sirius Satellite Radio Inc., to 'D' from triple-'C', and removed it from CreditWatch following the company's failure to make a scheduled interest payment on its 8.75% convertible subordinated notes. At the same time, Standard & Poor's said that it lowered its subordinated debt rating on Sirius to 'D' from double-'C' and removed the rating from CreditWatch and lowered its senior secured ratings to triple-'C'-minus from triple-'C'. The senior secured debt rating remains on CreditWatch with negative implications. Sirius is based in New York, New York and had $599 million in debt at June 30, 2002. "Standard & Poor's views Sirius' failure to make the interest payment on these notes as scheduled as an event of default, regardless of any technical grace period," according to Standard & Poor's credit analyst Steve Wilkinson. He added, "Standard & Poor's recognizes that Sirius currently has ample cash to make this payment, but believes that the company does not have the capacity to support its current capital structure." Standard & Poor's said that it will continue to monitor the company's success in restructuring its debt and raising additional capital. SOLUTIA INC: Updates Third Quarter 2002 Earnings Outlook -------------------------------------------------------- Solutia Inc., (NYSE: SOI) indicated that third quarter underlying earnings are expected to be approximately 11 cents per share, excluding net charges of $11 million, or 11 cents per share. Included in underlying earnings is the previously reported $5 million, or 5 cents per share loss associated with the severe storms and flooding of our Integrated Nylon facility in Texas. "We continue to be encouraged by the year over year improvements we are seeing in sales and margins. However, the industry continues to be affected by uncertainty in global economies and higher raw material costs," said chairman and chief executive officer John C. Hunter. The third quarter charges resulted from two events. Solutia has reached agreement for the resolution of a complex construction dispute with Fluor Corporation. The company has agreed to pay Fluor $20 million over a three-year period. The impact to the quarter's earnings will be $3 million, or 3 cents per share. The remaining settlement amount will be realized over the remaining useful life of the plant. Additionally, as required by FASB Statement No. 88, Solutia recorded a pension settlement loss of $8 million, or 8 cents per share in the third quarter. Solutia plans to discuss its earnings in greater detail at its third quarter earnings conference call on Friday, Oct. 25, 2002, at 9 a.m. central time. The teleconference will be webcast on its Web site at http://www.solutia.com/pages/corporate/investors/investor_relations.asp under the presentations and speeches tab. Solutia -- http://www.Solutia.com-- uses world-class skills in applied chemistry to create value-added solutions for customers, whose products improve the lives of consumers every day. Solutia is a world leader in performance films for laminated safety glass and after-market applications; resins and additives for high-value coatings; process development and scale-up services for pharmaceutical fine chemicals; specialties such as water treatment chemicals, heat transfer fluids and aviation hydraulic fluid and an integrated family of nylon products including high-performance polymers and fibers. * * * As reported in Troubled Company Reporter's August 14, 2002 edition, Fitch Ratings upgraded Solutia Inc.'s senior secured bank facility rating to 'BB-' from 'B' and the rating on the senior secured notes to 'B' from 'CCC+'. The senior secured note rating applies to the new note issue completed in July 2002, as well as the notes and debentures existing prior to recent refinancing. The ratings have been removed from Rating Watch Negative. The Rating Outlook is Negative. The ratings upgrade is based in part upon the recent completion of delayed refinancing plans, Solutia's ability to handle increased interest payments, the company's leverage, and the potential for earnings recovery, as well as the company's overall business profile. The Negative Rating Outlook status reflects continuing concerns surrounding the strength and pace of an earnings recovery relative to Solutia's financial covenants, and the ultimate liability related to the polychlorinated biphenyls contamination litigation in Anniston, Alabama. STARBAND COMMS: Wants More Time to File Chapter 11 Plan ------------------------------------------------------- StarBand Communications Inc., asks from the U.S. Bankruptcy Court for the District of Delaware for additional time to file a chapter 11 plan and solicit acceptances of that plan from creditors. The Debtors want to preclude any other party-in- interest from filing a plan, so they ask the Court to preserve their exclusive plan filing period under 11 U.S.C. Sec. 1121 through January 26, 2003. The Debtors ask for a concomitant extension of their exclusive solicitation period until March 27, 2003. Although the Debtor has made significant progress towards rehabilitation, it will need more time to develop, negotiate and propose a reorganization plan. The Debtor assures the Court that it has made significant progress to stabilize its business and streamline its costs and operations. A) EchoStar Settlement The settlement brought immediate cash into the estate and removed various controls that EchoStar had over the Debtor's business, thereby making it more attractive to potential investors. Also, the settlement allowed the Debtor to deal directly with dealers selling its product and service and, as a result of the Debtor's efforts, over 2000 dealers have signed up to sell the Debtor's product and service. B) Streamlining of Business The Debtor has streamlined its business since the Petition Date and has reduced costs through workforce reductions. C) Key Employee Retention D) Working Capital Needs The Debtor obtained court approval of postpetition financing to allow it to continue to operate its business without interruption. E) Case Management The Debtor has spent considerable time and energy addressing the Debtor's chapter 11 responsibilities, specifically, the Debtor has timely filed: a) schedules of assets, liabilities and executory contracts and statement of financial affairs and b) monthly operating reports with the Office of the United States Trustee. StarBand Communications Inc., provides two-way, always-on, high- speed Internet access via satellite to residential and small office customers nationwide. The Company filed for chapter 11 protection on May 31, 2002. Thomas G. Macauley, Esq., at Zuckerman and Spaeder LLP represents the Debtor in its restructuring efforts. When the Company filed for protection form its creditors, it listed $58,072,000 in assets and $229,537,000 in debts. STERLING CHEMICALS: Texas Court Confirms Disclosure Statement ------------------------------------------------------------- Sterling Chemicals Holdings, Inc., (OTC Bulletin Board: STXXQ) and certain of their direct and indirect U.S. subsidiaries announced that the United States Bankruptcy Court for the Southern District of Texas, Houston Division, has approved the Disclosure Statement for Sterling's revised Joint Plan of Reorganization. Sterling will now begin soliciting acceptances for the Plan, with ballots for voting on the Plan expected to be mailed by October 18, 2002. The voting deadline is November 13, 2002. The confirmation hearing on the Plan is scheduled for November 20, 2002. Sterling voluntarily filed for Chapter 11 protection on July 16, 2001, and filed its original Plan of Reorganization on May 14, 2002. As a result of negotiations with key parties in interest in the bankruptcy case, modifications to the Plan of Reorganization were filed on September 13, 2002, October 7, 2002 and October 11, 2002. The final Plan corresponding to the approved Disclosure Statement was filed on October 14, 2002. The Plan contemplates that funds managed by Resurgence Asset Management, L.L.C., will underwrite or provide a $60 million infusion of new equity capital unless Sterling accepts an alternate plan pursuant to the alternate plan process discussed below. Sterling and Resurgence have entered into a related investment agreement that also provides for a customary breakup fee and expense reimbursement. The Bankruptcy Court approved the Disclosure Statement and authorized the solicitation of votes on the Plan subject to the conduct of a contemporaneous alternative plan process. As a part of that process, alternative plan proposals must be submitted by no later than October 28, 2002, at 9:00 a.m. ET. A hearing with respect to the outcome of the alternative plan process will be conducted on October 31, 2002, at 1:30 p.m. Central. Sterling believes that the most likely outcome of the alternative plan process is that the Plan will remain unchanged or that it will be modified in a manner that does not adversely change the treatment of any claim. Although Sterling believes it is unlikely that the Plan will be modified in a manner that will require transmission of a supplement to the Disclosure Statement or resolicitation of votes on the Plan, no assurances in that regard can be provided. The Plan has the support of Sterling's major creditor groups. The Official Committee of Unsecured Creditors and the Ad Hoc Committee of Holders of the Senior Secured 12-3/8% Notes due 2006 have furnished Sterling with letters to their respective constituents recommending approval of the Plan. "This is another significant step in our financial reorganization," said David G. Elkins, President and Co-CEO of Sterling. "While some challenges remain, we continue to work closely with all parties and we are on schedule to emerge from Chapter 11 by year-end." Copies of the Plan and the Disclosure Statement will be posted on Sterling's Web site at http://www.sterlingchemicals.com The entities included in Sterling's Chapter 11 proceeding own and operate Sterling's manufacturing facilities in Texas City, Texas; Pace, Florida; and Valdosta, Georgia. Sterling's foreign subsidiaries, including those in Canada, Australia and Barbados, are not included in the bankruptcy cases. Based in White Plains, New York, Resurgence is a leading global private investment firm with approximately $1.3 billion in assets under management Based in Houston, Texas, Sterling Chemicals Holdings, Inc., is a holding company that, through its operating subsidiaries, manufactures petrochemicals, acrylic fibers and pulp chemicals, and provides large-scale chlorine dioxide generators to the pulp and paper industry. Sterling has a petrochemicals plant in Texas City, Texas; an acrylic fibers plant in Santa Rosa County, Florida; and pulp chemical plants in Grande Prairie, Alberta; Saskatoon, Saskatchewan; Thunder Bay, Ontario; Vancouver, British Columbia; Buckingham, Quebec and Valdosta, Georgia. TOWER AUTOMOTIVE: Appoints NYLIM to Manage $100MM Pension Plan -------------------------------------------------------------- NYLIM Retirement Plan Services, a division of New York Life Investment Management LLC, has been appointed by Tower Automotive, Inc., (NYSE: TWR) to manage Tower Automotive's $100 million defined benefit pension plan. Tower Automotive, a maker of components and systems for automotive original equipment manufacturers based in Grand Rapids, Mich., already moved its $300 million 401(k) plan to NYLIM Retirement Plan Services in the summer of 2001. Its pension plan covers 4,000 colleagues. "We've been very impressed with NYLIM's service, technology and efficiency in managing our 401(k) plan," said Richard Burgess, who leads human resources for Tower Automotive. "NYLIM has given us the capability to provide our colleagues with a 401(k) program that is state-of-the-art in education, service and participant access. Achieving those goals on the pension side and making this important colleague benefit more visible were key factors in our decision to appoint NYLIM as the comprehensive provider of our pension and 401(k) programs." Tower Automotive's pension will move to NYLIM Retirement Plan Services' DB Complete(R) bundled platform this month. DB Complete integrates all of the traditional pension services, such as investment management, trust services, colleague communications, actuarial work, as well as ERISA compliance and government filings, under one roof. Clients with both DB and DC plans at NYLIM Retirement Plan Services receive the additional benefit of coordinated services such as: Combined Plan Statement, a one-page look at a participant's entire retirement picture, and a single Internet site and call center for all retirement information. A single relationship manager within NYLIM Retirement Plan Services will coordinate all services for Tower Automotive. The Cusack Retirement Team, Tower Automotive's independent retirement plan consultants and investment advisors, managed the request for proposal process. The Cusack Retirement Team is a group of professionals at McDonald Investments in Grand Rapids, Mich., specializing in corporate retirement plan analysis, investment advisory services, and plan communication and education for participants. "Once Tower Automotive learned of NYLIM's expertise in managing pension plans, and knowing from experience its excellent work with defined contribution plans, they became interested in pursuing a larger relationship. With both its DC and its DB plans at NYLIM, Tower can leverage the assets in both plans to help achieve cost savings and other efficiencies of scale," said Joe Horlings, a partner in the Cusack Retirement Team and a senior vice president at McDonald Investments. "Tower Automotive's colleagues will now have one point of access for all of their retirement plan information, saving them time and making retirement planning more approachable," said Susan Rose, a partner in the Cusack Retirement Team and managing director of McDonald Investments. "And since we will be responsible for educating Tower Automotive colleagues about both their defined contribution and defined benefit plans, we can provide a more complete retirement picture." "We are so pleased that Tower Automotive has chosen us to manage their pension plan," said Tom Clough, managing director of NYLIM Retirement Plan Services. "Tower Automotive is a prestigious client and it is exciting to grow our existing relationship with them." Tower Automotive, Inc., is a global designer and producer of vehicle structural components and assemblies used by every major automotive original equipment manufacturer, including Ford, DaimlerChrysler, GM, Honda, Toyota, Nissan, Fiat, Hyundai/Kia, BMW, and Volkswagen Group. Products include body structures and assemblies, lower vehicle frames and structures, chassis modules and systems, and suspension components. The company is based in Grand Rapids, Mich. Additional company information is available at http://www.towerautomotive.com The Cusack Retirement Team is comprised of 12 professional retirement consultants, investment advisors, and education coordinators based in Grand Rapids, Mich., dedicated to providing their corporate and individual clients with superior service and advice. They currently serve over 50 qualified plans representing over 40,000 employees and $1 billion in plan assets. The Cusack Retirement Team is backed by McDonald Investments, Inc. McDonald Investments, Inc., is a leading full-service investment banking, brokerage and investment advisory firm serving individuals, corporations, institutions and governments. Established in 1924, McDonald Investments is a subsidiary of KeyCorp, one of the nation's largest financial service companies. KeyCorp, a Cleveland-based firm, provides retail and wholesale banking, investment, financing and money management services to individuals and companies across the U.S. NYLIM Retirement Plan Services administers more than $8 billion in comprehensive defined contribution, defined benefit and deferred compensation plans as of June 30, 2002. NYLIM Retirement Plan Services oversees retirement programs for small, medium and large companies, unions, and individuals throughout the United States, and is widely recognized for its leadership in bundled defined contribution and bundled defined benefit plans. With more than $150 billion in assets under management as of June 30, 2002, NYLIM and its affiliates provide investment management and related services to a wide range of individual, corporate, public, and Taft-Hartley clients. NYLIM offers institutional asset management, retail investments, retirement plan services, guaranteed products, real estate investments, and alternative investments. Tower Automotive's June 30, 2002 balance sheets shows a working capital deficit of about $249 million. UBIQUITEL INC: S&P Junks Corporate Credit Rating at CCC+ -------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit ratings on UbiquiTel Inc., and unit UbiquiTel Operating Co., to triple-'C'-plus from single-'B'-minus. At the same time, Standard & Poor's lowered its bank loan rating on UbiquiTel Operating to triple-'C'-plus from single-'B'-minus and its subordinated debt rating on the company to triple-'C'- minus from triple-'C'. The ratings on both companies were placed on CreditWatch with negative implications. UbquiTel, a Sprint PCS affiliate headquartered in Conshohocken, Pa., provides wireless services to midsize markets in the western and midwestern U.S. As of June 30, 2002, UbiquiTel's total debt outstanding was about $445 million. "The rating downgrade reflects the continued impact of the Clear Pay customers on churn rate and cash flow measures in the near term, together with overall slower subscriber growth anticipated by Standard & Poor's. Although the company's bank covenants were modified in July 2002, the CreditWatch placement reflects the potential for the company not meeting the minimum subscribers covenant over the next six months due to high churn and lower net customer additions," said Standard & Poor's credit analyst Rosemarie Kalinowski. Bad debt expense is expected to remain relatively high as the no deposit account spending limit (ASL) customers are cleared out. In addition, challenges remain from increased competitive pricing from national service providers and execution risk related to the recent deployment of the next generation (3G) network. This tenuous business risk position is somewhat tempered by the company's relationship with Sprint PCS and its spectrum capacity position. Since the fourth quarter of 2001, net adds have slowed due to the high churn rate associated with the ASL service offered to credit challenged customers with no deposit, and the slower wireless industry growth. Net adds were 15,700 in the second quarter of 2002, a 32% decline when compared to 23,100 net adds in the first quarter of 2002. Standard & Poor's will monitor UbiquiTel's operating results and assess its capacity to meet tightening bank covenants prior to resolving the CreditWatch listing. UNITED AIRLINES: Applauds Unions Commitment to Coalition Process ---------------------------------------------------------------- United Airlines (NYSE: UAL) issued the following statement: "United Airlines applauds the ongoing commitment of the unions to the coalition process, and believes that substantial progress continues to be made with them on agreeing to a framework for updating our business plan with the ATSB on a timely basis. Agreement on the framework being discussed by the coalition and United will greatly enhance the ability to conduct bilateral negotiations on a fast-track basis with the individual labor groups. "The IAM has said that it will continue to coordinate with the other labor groups at United while pursuing its specific discussions with United, which is important since the meaningful participation by all the unions is critical to success in this process. Now is truly the moment for all of us who are committed to United to step forward and work swiftly toward a positive resolution of the issues in front of us." US DIAGNOSTIC: Will Auction-Off Assets & Contracts on Monday ------------------------------------------------------------ US Diagnostic Inc., together with its debtor-affiliates, sought and obtained the approval of the U.S. Bankruptcy Court for the Southern District of Florida to sell substantially all the Debtors' assets and to assume and assign certain related executory contracts and unexpired leases to DVI Financial Services, Inc., subject to higher and better offers. Any competing bid must be received before 4:00 p.m. on October 16, 2002 and addressed to: (i) US Diagnostic, Inc. 250 Australian Avenue 9th Floor West Palm Beach, FL 33401 Attn: Jerry Aron (ii) Greenberg Traurig, P.A. 1221 Brickell Avenue Miami, Florida 33401 Attn: James P. Leshaw, Esq. (iii) Andrews & Kurth 805 Third Avenue New York, NY 10022 Attn: Paul Silverstein, Esq. In the event timely Qualified Bids are received, the Debtors will conduct an auction for the said assets at 10 a.m. on October 21, 2002 at the offices of Greenberg Traurig. A Sale Hearing to approve the Asset Sale will commence on October 25, 2002. US Diagnostic Inc., and its debtor-affiliates, filed for Chapter 11 protection on September 13, 2002. James P.S. Leshaw, Esq., and Nathan G. Mancuso, Esq., at Greenberg Traurig, P.A. represent the debtors in their liquidating efforts. US UNWIRED: S&P Places Ratings on Watch Neg. Due to Slow Growth --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its single-'B' corporate credit ratings, on US Unwired Inc., and wholly owned subsidiary IWO Holdings Inc., on CreditWatch with negative implications. The actions are based on concern about increased business risk from heavy wireless industry competition, and slowing subscriber growth that could boost already high financial risk. The companies' ability to meet or renegotiate bank covenants that tighten in 2003 is a particular concern given still heavy negative discretionary cash flow and external liquidity needs. US Unwired and IWO, which are analyzed on a consolidated basis, are Sprint PCS Group affiliates and provide wireless services to about 539,000 subscribers as of June 30, 2002. Total debt at the Lake Charles, Louisiana-based company at June 30, 2002 was $723.8 million. "Standard & Poor's outlook for Sprint PCS affiliates has dimmed due to maturing wireless penetration and recent disclosure of third quarter subscriber losses at Sprint PCS Group. National wireless providers are introducing increasingly competitive pricing plans, intensifying pressure on all Sprint PCS affiliates, as well as Sprint PCS," Standard & Poor's credit analyst Eric Geil said. "High churn rates above 3%, partly due to termination of subprime customers, continue to challenge US Unwired. Although demand is generally strongest in the fourth quarter and recently deployed next generation (3G) services may stimulate consumer interest, the soft economy could temper these positive factors." Standard & Poor's will review US Unwired's business and financial prospects in light of the increasingly competitive environment. VELOCITA: Court OKs Deloitte & Touche as Reorganization Advisors ---------------------------------------------------------------- Velocita Corp., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of New Jersey to employ Deloitte & Touche LLP, nunc pro tunc to August 1, 2002 as tax and audit service providers and reorganization advisors. The nature of the anticipated services that Deloitte may provide are: Tax Services Tax services, including assistance regarding the preparation and review of the Debtors' federal and state income tax returns, the Debtors' property tax returns, and quarterly and monthly sales and use tax returns; Audit Services Audit and/or quarterly reviews of the consolidated financial statements of the Debtors and assistance in the preparation and review of the Debtors' Forms 10-K and 10-Q and other filings as may be required by the Securities and Exchange Commission; Reorganization Advisory Services a. Accounting and other assistance in connection with reports requested by the Court, including monthly operating reports, schedules of assets and liabilities, statements of financial affairs, and such other reports that may be requested of the Debtors in these chapter 11 cases; b. Assistance in connection with tax aspects of the reorganization process, including preservation of the Debtors' NOL carryforwards, analyzing alternative tax elections, and other related matters; and c. Assist with such other matters as the Debtors, their attorneys, or financial advisors may from time to time request, including assisting with the refinement of the Debtors' cash management and cash flow forecasting process and monitoring of actual cash flow versus projections, reviewing pre-petition and post-petition payments, assisting with assessment of executory contracts, assisting management with fresh-start accounting (SOP 90-7), and assisting with evaluating and reconciling claims asserted including potential reclamation claims. The Debtors will compensate Deloitte & Touche at its current customary hourly rates: Partner/Director $450 - $620 per hour Senior Manager $350 - $500 per hour Manager $275 - $460 per hour Senior Accountant/Consultant $175 - $340 per hour Staff Accountant/Consultant $125 - $195 per hour Paraprofessional $ 75 per hour Prior to the commencement of these cases, the Debtors paid Deloitte a $50,000 retainer for certain tax advisory services. That retainer will be applied toward Deloitte's professional fees for services rendered and expenses incurred, upon Deloitte's filing of an application for compensation and reimbursement of expenses. Velocita Corp., is in the business of building a nationwide broadband fiber-optic network aimed at serving communications carriers, internet service providers, data providers, television and video providers, as well as corporate and government customers. The Company filed for chapter 11 protection on May 30, 2002 in the U.S. Bankruptcy Court for the District of New Jersey. Howard S. Greenberg, Esq., Morris S. Bauer, Esq., at Ravin Greenberg PC and Gary T. Holtzer, Esq., at Weil, Gotshal & Manges LLP represent the Debtors in their restructuring efforts. As of March 31, 2002, the Company listed $482,807,000 in total assets and $827,000,000 in total debts. VIASYSTEMS GROUP: Taps Innisfree as Notice and Information Agent ---------------------------------------------------------------- Viasystems Group, Inc., along with Viasystems, Inc., seeks approval of the U.S. Bankruptcy Court for the Southern District of New York to employ Innisfree M&A Incorporated as their noticing and information agent. The Debtors relate that prior to the Commencement Date, they retained Innisfree as balloting agent, tabulator, and consultant to perform certain plan-related solicitation services. In these chapter 11 cases, notices will need to be forwarded to holders of the Securities at different stages. In order to ensure that these notices are timely received by the appropriate parties, the Debtors will require a noticing agent to request necessary information, coordinate mailings as efficiently and accurately as possible, assure their completion and certify the same with the Court. The successful dissemination of notices to the beneficial owners of the Securities is complex, and will require coordination with the Nominees, primarily to ensure that these entities properly forward notices and other materials to their customers. The Debtors believe that Innisfree is well-suited to assist the Debtors with this task. Innisfree is expected to: a) Work with the Debtors to request appropriate information from indenture trustees, transfer agent(s), and The Depository Trust Company; b) Mail various documents to creditors and holders of record of the Securities, including the notice of confirmation hearing and Rights Documents; c) Coordinate the distribution of documents to "street name" holders of the Securities by forwarding documents to the Nominee record holders of the Securities, who in turn will forward them to beneficial owners; and d) Provide soliciting, noticing, and advisory services, as needed, to the Debtors. Innisfree's solicitation and noticing advisory services will include participation in conference calls, strategy meetings or the development of strategy relative to the project; visits to cities outside of New York for client meetings or legal or other matters; efforts related to the preparation of affidavits, certifications, fee applications, invoices, and reports. Innisfree will bill for services at its standard hourly rates: Managing Director $350 per hour Practice Directors (e.g. Jane Sullivan) $275 per hour Account Executives $225 per hour Staff Assistants $150 per hour By separate application, the Debtors are also seeking approval to retain Bankruptcy Services LLC as their claims agent in these chapter 11 cases. The Services to be rendered by Innisfree will not duplicate or overlap the services being provided by BSI, the Debtors assure the Court. Innisfree will assist the Debtors in connection with the mailing of notices to the Debtors' bondholders and other publicly held securities and the issues attendant thereto, while BSI will assist the Debtors with noticing for the general unsecured creditor body. The Debtors believe that this division of labor enables both entities to focus on their relative core competencies in their respective areas of expertise. Inasmuch as BSI and Innisfree are performing discrete and distinct tasks, the danger of duplication of services and attendant duplicative costs is eliminated. Viasystems Group, Inc., is a holding company whose principal assets are its shares of stock of Viasystems, Inc. Viasystems, through its direct and indirect subsidiaries, is a leading, worldwide, independent provider of electronics manufacturing services to original equipment manufacturers primarily in the telecommunication, networking, automotive, consumer, industrial and computer industries. The Debtors filed for chapter 11 protection on October 1, 2002. Alan B. Miller, Esq., at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. When the Companies filed for protection from its creditors, it listed $1.6 Billion in total assets and $1.025 Billion in total debts. WESTPOINT STEVENS: State Street Discloses 10.6% Equity Stake ------------------------------------------------------------ State Street Bank and Trust Company, acting in various fiduciary capacities, holds 5,262,279 shares of the common stock of Westpoint Stevens, Inc., and disclaims any beneficially ownership of such shares. In its fiduciary capacity the Bank and Trust Co. has the sole power to vote or direct the voting of 417,632 shares; shared power to vote or direct the voting of 4,812,870 shares; sole power to dispose of, or to direct the disposition of 449,409 shares; and the shared power to dispose of, or direct the disposition of 4,812,870 shares. The aggregate amount of shares held, i.e. 5,262,279, represents 10.6% of the outstanding common stock shares of Westpoint Stevens, Inc. * * * As previously reported, Standard & Poor's placed its ratings on WestPoint Stevens Inc., including the single-'B' long-term corporate credit and triple-'C'-plus subordinated debt ratings, on CreditWatch with negative implications. Total debt outstanding at June 30, 2002, was about $1.7 billion. The CreditWatch placement follows the company's recent announcement of additional restructuring initiatives and its downward adjustment of revenues for 2002 due to weaker than expected K-Mart Corp. sales. These actions have resulted in amendments to the company's bank agreement. Furthermore, expected lower asset utilization in the third and fourth quarters will result in additional pressure on margins. WNC HOUSING: Future Cash Flows Insufficient to Meet Obligations --------------------------------------------------------------- WNC Housing Tax Credit Fund V, L.P., Series 3 is a California Limited Partnership formed under the laws of the State of California on March 28, 1995, and commenced operations on October 24, 1995. The Partnership was formed to acquire limited partnership interests in other limited partnerships or limited liability companies which own multifamily apartment complexes that are eligible for low-income housing federal and, in some cases, California income tax credits. WNC & Associates, Inc., is the general partner of the Partnership. The chairman and president own substantially all of the outstanding stock of Associates. The business of the Partnership is conducted primarily through the General Partner as the Partnership has no employees of its own The Partnership shall continue in full force and effect until December 31, 2050 unless terminated prior to that date pursuant to the partnership agreement or law. The partnership agreement authorized the sale of up to 25,000 units at $1,000 per Unit. The offering of Units concluded in January 1996, at which time 18,000 Units representing subscriptions in the amount of $17,558,985, net of $441,015 of discounts for volume purchases, had been accepted. The General Partner has 1% interest in operating profits and losses, taxable income and losses, cash available for distribution from the Partnership and tax credits. The limited partners will be allocated the remaining 99% of these items in proportion to their respective investments. After the limited partners have received proceeds from a sale or refinancing equal to their capital contributions and their return on investment (as defined in the Partnership Agreement) and the General Partner has received proceeds equal to its capital contribution and a subordinated disposition fee the remainder, any additional sale or refinancing proceeds will be distributed 90% to the limited partners (in proportion to their respective investments) and 10% to the General Partner. The Partnership has three investments accounted for under the equity method, consisting of 99% limited partnership interests in each of Alliance Apartments I, Limited Partnership, Evergreen Apartments I, Limited Partnership and Hastings Apartments I, Limited Partnership. During the year ended March 31, 2000, Alliance, Evergreen and Hastings were experiencing operational difficulties and negative cash flows from operations, and ceased paying their lenders. Foreclosure procedures were commenced by these two Local Limited Partnerships' lenders. Management performed an evaluation of the Partnership's remaining investment balances in Alliance, Evergreen and Hastings, including the cash advances and other anticipated costs and determined that an impairment adjustment was necessary. An impairment loss of $995,804 was recognized at March 31, 2000. This impairment loss included $644,589 in remaining book value of the Partnership's investments in Alliance, Evergreen and Hastings, $205,080 and $74,631 of cash advances, a $50,000 accrual for anticipated legal costs, and $21,504 of estimated accounting and other related costs. As a result of the foregoing, the Partnership, Alliance, Hastings, and a WNC subsidiary executed a work-out agreement with their lender, which was effective December 14, 2001. The balance of the indebtedness due and owing to the lender by Alliance was satisfied by the execution of two promissory notes. The first note totals $116,000, bears interest at 7% per annum, and requires principal and interest payments totaling $800 per month through February 2011, at which date the unpaid principal balance is due. The second note totals $328,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due February 2011. The balance of the indebtedness due and owing to the lender by Hastings was also satisfied by the execution of two promissory notes. The first note totals $165,000, bears interest at 7% per annum, and requires principal and interest payments totaling $1,100 per month through September 2011, at which date the unpaid principal is due. The second note totals $261,000, bears interest at 1% per annum, and has payments due monthly out of available cash flow, as defined, with the unpaid principal balance due September 2011. The Partnership and a WNC subsidiary have executed a guarantee for the payment of both notes of Alliance and Hastings. In addition, several other commitments were made. Alliance and Hastings executed a grant deed to the lender in the event that either entity defaults under the terms and provisions of the notes. The deeds are held in escrow, and if Alliance or Hastings defaults on either note, the lender may, at its option, record the respective deed. In addition, the Partnership has assigned the lender as additional collateral its residual value interests, as defined, in all of the Local Limited Partnerships. The Partnership and the Local Limited Partnerships are prohibited from selling, assigning, transferring or further encumbering the Housing Complexes retained by each Local Limited Partnership. As a result of the operating difficulties mentioned above, there is uncertainty as to additional costs, if any, that the Partnership may incur in connection with its nvestment in Alliance and Hastings and as to whether the Partnership will ultimately retain its interest in these Local Limited Partnerships. In the event the Partnership does not successfully retain its interest in Alliance and Hastings, the Partnership would be exposed to the cessation and recapture of the related tax credits. On July 19, 2001, Evergreen's Housing Complex was sold for a gross sales price of $1,300,000, which after payment of its outstanding loans and closing costs, yielded net proceeds to the Partnership of approximately $170,000 in the form of a return of advances. As the investment in Evergreen together with cash advances had been previously impaired, the entire proceeds were reflected as a gain on sale of investments in Limited Partnerships of $169,691, for the period ended March 31, 2002. Due to the sale of the property, approximately $428,000 (unaudited) of tax credits are no longer available to the Partnership's investors ($23.80 per Limited Partner Unit). In addition, there can be no assurance that tax credits and loss deductions previously taken will not be subject to recapture in the future. The Partnership's assets at June 30, 2002 consisted primarily of $26,000 in cash, a receivable of $50,000 and aggregate investments in the seventeen Local Limited Partnerships of $8,688,000. Liabilities at June 30, 2002 primarily consisted of $8,000 of accrued expenses and $107,000 of accrued fees and reimbursements due to the General Partner and affiliates. Results of Operations The Partnership's net loss for the three months ended June 30, 2002 was $305,000, reflecting an increase of $125,000 from the net loss experienced for the three months ended June 30, 2001 of $180,000. The increase in net loss is due to an increase of $130,000 in equity in losses of limited partnerships, which increased to $269,000 for the three month period ended June 30, 2002 from $139,000 for the three month period ended June 30, 2001. The increase in equity in losses of limited partnerships is offset by a decrease in operating loss of $5,000 to $36,000, for the three months ended June 30, 2002 from $41,000 for the three months ended June 30, 2001. Net decrease in cash during the three months ended June 30, 2002 was $52,000 compared to a net decrease in cash for the three months ended June 30, 2001 of $15,000. The $37,000 increase was due to a decrease in distributions from limited partnerships of $6,000 from $10,000 for the three month period ended June 30, 2001 compared to $4,000 for the three month period ended June 30, 2002 and an increase in net cash used by operating activities of $31,000 to $(56,000) for the three month period ended June 30, 2002 from $(25,000) for the three month period ended June 30, 2001. During the three months ended June 30, 2002, accrued payables, which consist of related party management fees and reimbursements due to the General Partner and accrued expenses, increased by $19,000. The General Partner does not anticipate that the accrued fees and reimbursements will be paid until such time as capital reserves are in excess of foreseeable working capital requirements of the partnership. The Partnership does not expect its future cash flows, together with its available net assets at June 30, 2002 to be sufficient to meet all currently foreseeable future cash requirements. Accordingly the General Partner has agreed to provide advances sufficient to fund the operations and working capital requirements of the Partnership through August 16, 2003. One Local Limited Partnership, Patten Towers L.P. II, in which the Partnership owns a 99% interest, has a promissory note payable aggregating approximately $6,453,000 which was funded with proceeds from the issuance of Multifamily Housing Revenue Bonds as of December 31, 2001. Patten Towers failed to make timely principal payments of approximately $233,000 for the year ended December 31, 2001 in accordance with the note payable. Consequently, the Local Limited Partnership is in default of its bond covenants and the property could be foreclosed on by the Bond Trustee to satisfy its obligations under the bonds. These conditions raise substantial doubt as to the Local Limited Partnership's ability to continue as a going concern. The Partnership has a 99% limited partnership investment in Heritage Apartments, L.P. Heritage is a defendant in several wrongful death lawsuits and related injury lawsuits. Heritage carries general liability and extended liability insurance. Discovery for these lawsuits is ongoing, but the management of Heritage and WNC are unable to determine the outcome of these lawsuits at this time or their impact, if any, on the Partnership's financial statements. Should Heritage be unsuccessful in its defense and the insurer denies coverage or the insurance coverage proves to be inadequate, the Partnership may be required to sell its investment or may otherwise lose its investment in Heritage. Loss of the Heritage investment could result in the cessation and recapture of tax credits and certain prior tax deductions. WORLDCOM: Integral Obtains Stay Relief to Pursue Oklahoma Action ---------------------------------------------------------------- Judge Gonzalez modifies the automatic stay to permit Integral to continue prosecution of its counterclaims against MCI WorldCom in the action styled, "MCI WorldCom Network Services, Inc. v. Integral Communications, Inc., Case No. 02CV 333C (C) (N.D. Okla.)" solely for the purpose of liquidating the amount of the Counterclaims. * * * To recall, Integral Communications Inc., is in the business of buying telecommunications capacity from companies, including Worldcom Inc., and its debtor-affiliates, on a wholesale basis and reselling capacity to third parties. For almost two years, the Debtors provided telecommunications services and blocks of communications capacity called Carrier Termination/Origination services to Integral on a wholesale basis. During that time period, Integral received a number of invoices charging retail instead of wholesale rates as well as charging for services not provided to Integral. Integral disputed those invoices, some of which were resolved. Those that were resolved were resolved in Integral's favor. In late 2000, the Debtors asked Integral to change account numbers to remedy the billing problems. However, the Debtors failed to close the old account and on multiple occasions, invoiced Integral on both accounts for the same services, some of which were never provided to Integral and which charged at retail rates. Integral disputed numerous invoices, but the Debtors never resolved those outstanding disputes. In February 2002, the Debtors demanded payment from Integral, and threatened to disconnect services. Integral responded that disconnection would be improper and unwarranted. Nevertheless, the Debtors disconnected services to Integral on February 22, 2002 and failed to provide reasonable notice of the disconnection. As a result of the Debtors' improper and unwarranted disconnection, Integral suffered substantial losses and expenses, including: -- refunds and credits Integral had to issue to its customers, -- expedited installation and overtime charges from alternative carriers, -- overtime for Integral personnel, -- loss of revenues due to customer cancellations, and -- other losses and expenses. On March 22, 2002, the Debtors filed a complaint before the State of Oklahoma alleging breach of contract concerning the disputed charges and seeking damages exceeding $800,000. On April 26, 2002, Integral removed the case to the United States District Court for the Northern District of Oklahoma. On July 17, 2002, Integral filed its counterclaims against the Debtors: -- alleging Federal Communications Act of 1934 violations, negligence, state law deceptive trade practice act violations; and -- seeking restitution for unjust enrichment and declaratory judgment concerning the Oklahoma Consumer Protection Act. Integral asked for contractual damages over $1,400,000, restitution of overpayments exceeding $285,000, and tort and other damages and interest. Allowing the Oklahoma Action to proceed: -- would result in a complete resolution of all of the issues involving the Debtors' claims and Integral's counterclaims; -- would not interfere with the bankruptcy case; -- would not prejudice the interest of other creditors; and -- would be the most expeditious resolution and the one that comports most with judicial economy. (Worldcom Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM INC: New York Court Approves $1.1 Billion DIP Financing ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York has approved up to $1.1 billion in debtor-in-possession (DIP) financing for WorldCom, Inc., (WCOEQ, MCWEQ) while it reorganizes under Chapter 11. The following statement can be attributed to John S. Dubel, WorldCom Chief Financial Officer: "[Tues]day's decision by the Court to approve our request for $1.1 billion in DIP financing is another positive step in our plan to emerge from Chapter 11. It reflects that WorldCom is performing well in the market and that our cash position is better than expected." WorldCom, Inc., (Nasdaq: WCOEQ, MCWEQ) is a pre-eminent global communications provider for the digital generation, operating in more than 65 countries. With one of the most expansive, wholly- owned IP networks in the world, WorldCom provides innovative data and Internet services for businesses to communicate in today's market. In April 2002, WorldCom launched The Neighborhood built by MCI -- the industry's first truly any- distance, all- inclusive local and long-distance offering to U.S. consumers for one fixed monthly price. For more information, go to http://www.worldcom.com WYNDHAM INT'L: Equity Trading Moved to American Stock Exchange -------------------------------------------------------------- Wyndham International, Inc. (NYSE:WYN), announced that effective at the opening of trading on Tuesday, Oct. 15, its common stock commenced trading on The American Stock Exchange (AMEX). The stock was traded on the NYSE through the close of the market on Monday, Oct. 14 in accordance with the NYSE's Oct. 11, 2002 announcement. Wyndham International announced on Sept. 27, 2002 it received notification from the New York Stock Exchange (NYSE) that its share trading price has fallen below the continued listing criteria for an average closing price of a security of less than $1.00 over a consecutive 30 trading day period. The NYSE Listing and Compliance Committee had agreed to continue the listing of the Company's common stock through Nov. 15, 2002, subject to certain conditions. "We have studied several alternatives to ensure our common stock continues to be publicly traded and the American Stock Exchange clearly provides us with the best solution," said Fred J. Kleisner, chairman and chief executive officer of Wyndham International. "The American Stock Exchange will provide Wyndham shareholders with a quality trading environment on a major national exchange with state of the art technology, so that trades are executed swiftly, reliably, and transparently. We are looking forward to a productive partnership with the American Stock Exchange." Wyndham International, Inc., offers upscale and luxury hotel and resort accommodations through proprietary lodging brands and a management services division. Based in Dallas, Wyndham owns, leases, manages and franchises hotels and resorts in the United States, Canada, Mexico, the Caribbean and Europe. For more information, visit http://www.wyndham.com For reservations, call 800-Wyndham. XO: Pulls Plug on Investment Pact with Forstmann Little & TelMex ---------------------------------------------------------------- XO Communications, Inc., (OTCBB:XOXOQ) has agreed with Telefonos de Mexico, S.A. de C.V. and certain investment partnerships affiliated with Forstmann Little & Co., to mutually terminate the previously announced Forstmann Little/TELMEX Investment Agreement and to settle any potential claims relating to the Investment Agreement or its termination. Under the terms of the settlement, which is subject to bankruptcy court approval, the Investment Agreement will be deemed terminated, Forstmann Little and TELMEX will each pay XO $12.5 million, for a total of $25 million, and all parties will release any claims they may have relating to the Investment Agreement. The settlement has the support of all parties to the Investment Agreement, the entities controlled by Carl C. Icahn which hold over 85% of XO's senior secured debt and over $1.33 billion face amount of XO's senior notes, the indenture trustee for XO's subordinated notes, and the plaintiffs in certain shareholder actions. XO has scheduled a hearing for bankruptcy court approval of the settlement for mid-November. XO also announced that, in light of these developments, it will take steps to implement the stand-alone plan contained in its plan of reorganization filed with the bankruptcy court. As previously announced, XO included the stand-alone plan as part of its plan of reorganization in order to allow XO to move quickly to complete its financial restructuring if the transactions contemplated by the Forstmann Little/TELMEX Investment Agreement did not close for any reason. XO will now withdraw the Forstmann Little/TELMEX plan, which the bankruptcy court confirmed last August, and seek confirmation by the bankruptcy court of the stand-alone plan. XO has scheduled a hearing date for confirmation of the stand-alone plan for mid- November. XO will commence the process of seeking the regulatory approvals required to complete the stand-alone plan. The Company believes that the receipt of these regulatory approvals and the confirmation of the stand-alone plan by the Bankruptcy Court are two of the most significant steps that XO must accomplish before the restructuring can be completed and the Company can emerge from bankruptcy. XO's operating subsidiaries continue to provide service to more than 100,000 business customers and to add new customers, evidencing the ongoing value in XO's wide range of industry- leading product offerings and markets served. XO also continues to improve operations and operational costs. XO had cash and cash equivalents of more than $500 million as of September 30, 2002. XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking, Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in 65 markets throughout the United States. YORK RESEARCH: SDNY Court to Consider Plan on October 30, 2002 -------------------------------------------------------------- On September 27, 2002, the U.S. Bankruptcy Court for the Southern District of New York approved the Proposed Disclosure Statement prepared by York Research Corporation, and its debtor- affiliate. The Bankruptcy Court finds that the Disclosure Statement provides creditors with a sufficient explanation about the Company's Plan of Reorganization and contains adequate information, as described in 11 U.S.C. Sec. 1125, to allow creditors to make informed voting decisions. A hearing to consider confirmation of the Plan will be held at 2:30 p.m. on October 30, 2002 before the Honorable Prudence Carter Beatty in Manhattan. Objections, if any, to the confirmation of the Plan must be received no later than October 25, 2002 by: Debtor: York Research Corporation Attn: Robert Paladino, CEO 590 Madison Avenue Suite 303 Harrison, New York 10528 Counsel to the Debtor: Alan Kolod, Esq. Moses & Singer LLP 1301 Avenue of the Americas, 40th Floor New York, NY 10019 Counsel to the Creditors' Committee: Attn: Fred Hodara, Esq. Robert J. Stark, Esq. Akin Gump, Strauss, Hauer & Feld LLP 590 Madison Avenue, 20th Floor New York, NY 10022 Counsel to the Informal Bondholder Committee: Attn: D. Ross Martin, Esq. Ropes & Gray One International Place Boston, Massachusetts 02110-2624 Counsel to HSB Bank USA, as Bond Trustee: Attn: David Retter, Esq. Kelley Rye & Warren LLP 101 Park Avenue New York, NY 10178-0002 United States Trustee: Attn: Pamela Lustrin, Esq. Office of the United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 York develops, constructs and operates energy production facilities, including (i) cogeneration projects that utilize natural gas as a fuel to produce thermal and electric power and (ii) renewable energy projects primarily converting wind and solar energy into transmittable electric power. The company filed for Chapter 11 protection on June 7, 2002. Alan Kolod, Esq., Alan E. Gamza, Esq., and Mark N. Parry, Esq., at Moses & Singer LLP represent the Debtors in its restructuring efforts. * Jefferies & Company Hires Robert H. Lessin as Vice Chairman ------------------------------------------------------------- Jefferies & Company, Inc., the principal operating subsidiary of Jefferies Group, Inc. (NYSE: JEF), announced the hiring of Robert H. Lessin as a Vice Chairman of the firm. He will focus on leveraging his extensive relationships, developed over twenty-five years on Wall Street, with Jefferies' outstanding financial advisory services and ability to execute transactions in all areas of the capital markets. He will be based in the firm's New York headquarters. The addition of Mr. Lessin is another significant step in the ongoing growth of Jefferies' Investment Banking Department and a demonstration of the firm's strength in the current environment. On its way to becoming a leading investment banking firm on Wall Street, Jefferies has recently hired several senior professionals, including Raymond J. Minella as Director of Capital Markets Origination, Gregg H. Feinstein as Director of Mergers & Acquisitions, and David C. Reilly, who joined as head of the firm's Services Group last month along with 20 additional professionals formerly of Robertson Stephens. Mr. Lessin began his career at Morgan Stanley where he became the youngest-ever partner in 1987, Vice Chairman of the Investment Banking Operating Committee in 1990, and Chairman of the Investment Bank's Strategy Committee in 1993. More recently, Mr. Lessin was Vice Chairman of Salomon Smith Barney. He was also a member of the firm's Executive Committee and Head of the Investment Bank, a position he held from 1993 to 1997. From 1998 to 2000, Mr. Lessin held the role of Chairman of Wit Capital Group, Inc., now known as SoundView Technology Group, Inc. He will continue to be a consultant to and Chairman of SoundView Ventures and the Dawntreader Funds. Mr. Lessin received a Masters in Business Administration from Harvard Business School and graduated magna cum laude from Harvard College. "The high quality of Bob Lessin's relationships are the result of his years of creative thinking and proactive strategies in helping clients to realize value," commented Richard B. Handler, Chairman and Chief Executive Officer of Jefferies. "Jefferies is committed to enhancing the quality and expanding the breadth of services we can offer our investment banking and trading clients. Commenting on Jefferies' continued expansion, Mr. Handler added, "We are seeking to increase our market presence during this difficult period for our industry, while, at the same time, we are intensely focused on containing our costs and maximizing productivity. We believe our strategy will yield a preeminent position for Jefferies in the years to come." "Bob Lessin is a legendary, world-class financier and will be key to continued growth in Jefferies' capital markets activities," said John C. Shaw, Jr., President of Jefferies. "His leading role on Wall Street brings tremendous credibility to our efforts." "Jefferies possesses a superb skill set in all aspects of investment banking and the capital markets--they are very good at what matters," remarked Mr. Lessin. "I'm proud to leverage my client relationships with the people of Jefferies because they understand what is important. The firm continues to attract talent in a world where relationships and trust are key," he added. 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 * Meetings, Conferences and Seminars ------------------------------------ October 24-25, 2002 NATIONAL BANKRUPTCY CONFERENCE Member's Meeting Sidley Austin Brown & Wood Offices, Washington D.C. Contact: http://www.law.uchicago.edu/NBC/NBC.htm November 18-19, 2002 EUROLEGAL Insurance Exit Strategies Kingsway Hall, London Contact: +44 0 20 7878 6886 November 21-24, 2002 COMMERCIAL LAW LEAGUE OF AMERICA 82nd Annual New York Conference Sheraton Hotel, New York City, New York Contact: 312-781-2000 or clla@clla.org or http://www.clla.org/ October 24-28, 2002 TURNAROUND MANAGEMENT ASSOCIATION Annual Conference The Broadmoor, Colorado Springs, Colorado Contact: 312-822-9700 or info@turnaround.org December 2-3, 2002 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Distressed Investing 2002 The Plaza Hotel, New York City, New York Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com December 5-7, 2002 STETSON COLLEGE OF LAW Bankruptcy Law & Practice Seminar Sheraton Sand Key Resort Contact: cle@law.stetson.edu December 5-8, 2002 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference The Westin, La Paloma, Tucson, Arizona Contact: 1-703-739-0800 or http://www.abiworld.org February 22-25, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Litigation Institute I Marriott Hotel, Park City, Utah Contact: 1-770-535-7722 or http://www.nortoninstitutes.org March 27-30, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Litigation Institute II Flamingo Hilton, Las Vegas, Nevada Contact: 1-770-535-7722 or http://www.nortoninstitutes.org March 31 - April 01, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Healthcare Transactions: Successful Strategies for Mergers, Acquisitions, Divestitures and Restructurings The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com April 10-13, 2003 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org May 1-3, 2003 (Tentative) ALI-ABA Chapter 11 Business Organizations New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 8-10, 2003 (Tentative) ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org June 19-20, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Corporate Reorganizations: Successful Strategies for Restructuring Troubled Companies The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2002. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $625 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***