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/raid1/www/Hosts/bankrupt/TCR_Public/021216.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, December 16, 2002, Vol. 6, No. 248 Headlines ACOUSTISEAL: Secures Exclusivity Extension through April 5 ADVANCED GLASSFIBER: Receives Approval of First Day Motions AES CORP: Completes $2.1 Billion Bank and Bond Refinancing AGRIFOS FERTILIZER: Air Products Replaces Congress as DIP Lender ANC RENTAL: Court Okays Lincoln Property as New Jersey Broker A NOVO BROADBAND: Silicon Valley Bank Terminates Forbearance ASIA GLOBAL CROSSING: Turns to PwC for Accounting Services ASPEN TECHNOLOGY: Inks Long-Term Agreement with SINOPEC Corp. ASSET SECURITIZATION: Fitch Cuts Ratings on Cl. B-1 & B-1H to B AUXER GROUP: Firming-Up Merger Deal with Viva Airlines Inc. AVATEX CORPORATION: Case Summary & Largest Unsecured Creditors BOYD GAMING: Commences Tender Offer for $250 Million 9.50% Notes BUDGET: Creditors Committee Taps Sonnenschein as Special Counsel CANWEST GLOBAL: Receives $25.7MM Tax Refund after Reassessment CANYON CAPITAL: S&P Assigns BB Prelim. Rating to Class C Notes CIENA CORP: Net Loss Tops $755 Million in Fiscal Fourth Quarter COMDISCO INC: Has Until Wednesday to Challenge Claims CONDUCTUS INC: Fails to Maintain Nasdaq Listing Requirements CONSTELLATION 3D: Case Summary & 20 Largest Unsecured Creditors CONTIMORTGAGE HOME: S&P Cuts Class B Note Ratings to Low-B Level COVANTA ENERGY: Makes Amendments to BofA DIP Credit Agreement CRIIMI MAE: Brascan Completes Due Diligence for Recapitalization DEVON MOBILE: Delaware Court Fixes January 17, 2003 Bar Date DION ENTERTAINMENT: D.A.W. Demands Repayment of $6MM by Dec. 31 EB2B COMMERCE: Richard Cohan Discloses 11.2% Equity Stake EMAGIN CORP: Inks Release Agreement with Triton & Northwind ENCOMPASS SERVICES: Hires Deloitte & Touche as Tax Consultants EOTT ENERGY: Court Approves Disclosure Statement Explaining Plan EUROTECH LTD: Intends to Move from AMEX to OTC Bulletin Board EXIDE TECH: Equity Committee Turns to CFA for Financial Advice EZENIA! INC: Partners with Chiliad to Create Application Suite FX ENERGY: Current Fin'l Position Raises Going Concern Doubt GENUITY INC: Wants to Pay $8 Million in Critical Vendor Claims GLOBAL CROSSING: Launches Latest & Enhanced Ready-Access Record GOLDMAN INDUSTRIAL: Converting FC Corp.'s Case to Chapter 7 HA-LO INDUSTRIES: Pitches Exclusivity Extension to February 28 IFX CORP: Nasdaq Knocks Shares Off Exchange Effective Today IMPSAT FIBER: NY Court Confirms Pre-Arranged Reorganization Plan INSIGHT MIDWEST: S&P Assigns B+ Rating to $175-Mil. Senior Notes INTERPUBLIC GROUP: Fitch Ratchets Conv. Sub. Notes Down to BB+ INTERSTATE BAKERIES: Board Declares Quarterly Dividend on Shares J.P. MORGAN: S&P Assigns Low-B Prelim. Ratings to 6 Note Classes KAIRE HOLDINGS: Needs to Raise Additional Funds to Continue Ops. KAISER: Proposes Uniform Kaiser Center Sale Bidding Procedures KENTUCKY ELECTRIC: Hires Jack Mehalko as Interim CEO & President KMART: Sells RK-235 Beechjet Aircraft to Country Air for $3.4MM LERNOUT & HAUSPIE: Seeks to Set Aside Transfers Made to John Seo MERRY-GO-ROUND: U.S. Trustee Says Hold-Up the 20% Distribution METALS USA: Court Tinkers with Contractual Workers' Claims Order NAVISITE INC: Completes Debt Workout Transaction with ClearBlue NCS HEALTHCARE: Omnicare Ups Merger Proposal to $5.50 per Share NEOFORMA INC: Completes Restatements of FY 2000, 2001 & H1 2002 NORTEL NETWORKS: Names Malcolm Collins to Lead Enterprise Div. NORTH COUNTRY FIN'L: Fails to Satisfy Nasdaq Listing Guidelines NUEVO ENERGY: Appoints J. Frank Haasbeek to Board of Directors O'CHARLEY INC: S&P Assigns BB Rating to $285 Million Bank Loan OM GROUP: Details Key Components of Restructuring Program OM GROUP: Edward W. Kissel Will Step Down as President & COO OWENS: Delaware Court Extends Plan Filing Exclusivity to Jan. 10 OWENS-ILLINOIS: Fitch Rates $175-Mil. Senior Secured Notes at BB PG&E NATIONAL: Secures Financing Commitment for 2 Power Projects PRIME GROUP: Closes on Sale of Centre Square I for $5 Million SALT HLDGS.: S&P Gives BB-/B Credit & Sr. Discount Note Ratings SEQUA CORP: Declares Regular Quarterly Dividend on Preferreds SORRENTO NETWORKS: Net Capital Deficit Widens to $19 Million TERREMARK: Ocean Bank Waives Credit Pact Default Until Dec. 31 TESORO PETROLEUM: Completes Two Deals to Sell 70 Retail Outlets TRENWICK GROUP: S&P Calls Pact with L/C Providers "Favorable" TXU CORP: Fitch Downgrades Ratings & Changes Outlook to Stable UNIROYAL TECHNOLOGY: Bringing-In Financo as Investment Banker UNITED AIRLINES: Paying $35 Million of Critical Vendor Claims US AIRWAYS: Wilmington Trust Auctioning Off 17 Fokker Aircrafts VANGUARD AIRLINES: Seeks Exclusivity Extension through Dec. 27 VELOCITA: Bondholders Tap Houlihan Lokey for Financial Advice WARREN ELECTRIC: Will Sell Business to SUMMIT Electric for $10MM WHEELING-PITTSBURGH: Gets Nod for $2MM Minteq Claim Settlement WORLDCOM: Court Approves Settlement Pact with United Airlines * William Eggers Joins Deloitte Consulting as Research Director * BOND PRICING: For the week of December 16 - 20, 2002 ********* ACOUSTISEAL: Secures Exclusivity Extension through April 5 ---------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Western District of Missouri, AcoustiSeal, Inc., obtained an extension of its exclusive periods. The Court gives the Debtors, until April 5, 2003, the exclusive right to file their plan of reorganization and until June 2, 2003, to solicit acceptances of that Plan from its creditors. Acoustiseal, Inc., filed for chapter 11 protection on September 4, 2002. Cynthia Dillard Parres, Esq., and Mark G. Stingley, Esq., at Bryan, Cave LLP represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of $10-$50 million and estimated debts of over $50 million. ADVANCED GLASSFIBER: Receives Approval of First Day Motions ----------------------------------------------------------- Advanced Glassfiber Yarns LLC, one of the largest global suppliers of glassfiber yarns used in a variety of electronic, industrial, construction and specialty applications, has received Bankruptcy Court approval for various of its initial motions designed to maintain the efficiency of day to day business operations while the company is reorganizing under Chapter 11 of the U.S. Bankruptcy Code. As previously announced, and as a further step in the Company's restructuring efforts, AGY filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code on December 10, 2002. At the hearing, the Court also approved interim borrowings under the Company's previously announced debtor-in-possession (DIP) financing commitment from Wachovia Bank National Association, which will be used to fund ongoing working capital needs, employee obligations and other expenses during the reorganization. AGY filed its voluntary petition in the U.S. Bankruptcy Court for the District of Delaware in Wilmington. The Company's next interim hearing date has been set for January 6, 2003. AES CORP: Completes $2.1 Billion Bank and Bond Refinancing ---------------------------------------------------------- The AES Corporation (NYSE: AES) successfully completed its $2.1 billion bank and bond refinancing comprised of a $1.6 billion senior secured credit facility and its exchange offer relating to $500 million of its outstanding debt securities. This refinancing substantially eliminates all scheduled parent maturities at AES until November 2004, improving liquidity, reducing debt service burden and enhancing financial flexibility. Paul T. Hanrahan, AES President and Chief Executive Officer, commented, "This refinancing is a major accomplishment as it provides a solid foundation for AES's future. With the financial stability afforded by this transaction, we can now focus entirely on implementing our business plan, including our emphasis on operational excellence and the execution of our asset sales and cost reduction programs." AES accepted all bonds validly tendered in its exchange offer for its $300,000,000 8.75% Senior Notes due 2002 and its $200,000,000 7.375% Remarketable or Redeemable Securities due 2013, which are puttable in 2003. Approximately $240,013,000 aggregate principal amount of the 2002 Notes and $173,889,000 aggregate principal amount of the ROARs were tendered. These amounts represent approximately 80% and 87% of the outstanding 2002 Notes and ROARs, respectively. The new Senior Secured Notes, totaling approximately $258 million, bear a coupon of 10% and will mature on July 15, 2005 unless certain conditions are met to extend them to December 12, 2005. The Senior Secured Notes have certain mandatory prepayment provisions and scheduled amortization payments. The Senior Secured Notes will be issued and the other exchange offer consideration will be paid on December 13th. AES also completed the $1.6 billion Senior Secured Credit Facility comprised of a $350 million revolving credit facility, three tranches of term loans totaling approximately $1.2 billion, and a reimbursement agreement associated with a GBP 52.5 million letter of credit. The Credit Facility benefits from a first priority lien, subject to certain exceptions and permitted liens, on (i) all of the capital stock of domestic subsidiaries owned directly by AES and 65% of the capital stock of certain foreign subsidiaries owned directly by AES and (ii) certain inter-company receivables and notes receivable and inter-company tax sharing agreements. The collateral is shared with the Senior Secured Notes and certain other secured parties. The Credit Facility matures on July 15, 2005 with a potential extension to December 12, 2005 if certain conditions are met. The Credit Facility requires mandatory prepayments associated with a proportion of the proceeds from asset sales, the issuances of debt and equity securities and certain other cash flow sweeps. Minimum amortization of approximately $810 million by no later than November 25, 2004 will be required with mandatory prepayments made prior to that date credited against such required amortization. Loans under the revolving credit facility and the term loan facilities bear an interest rate of LIBOR plus 6.5% or Prime plus 5.5%. Barry Sharp, Chief Financial Officer, stated, "The completion of this comprehensive refinancing is a major milestone for our company. Our capital structure now allows us the time and flexibility we need to continue to strengthen our balance sheet. We are excited to have this refinancing completed and sincerely appreciate the overwhelming support and the confidence expressed by the bank and bond community in AES." AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 176 facilities totaling over 60 gigawatts of capacity, in 33 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. For more general information visit its Web site at http://www.aes.com * * * As reported in Troubled Company Reporter's November 13, 2002 edition, Standard & Poor's will not change the corporate credit rating of AES Corp., (B+/Watch Neg/--) following AES' announcement of the extension until December 3, 2002, of the tender offer for its December 2002 notes and June 2003 ROARS, with changes in the terms of the offer. Standard & Poor's believes that the extension reflects the difficulty in reaching an agreement given the multitude of parties involved, the circumstances of the exchange offer, and the time until the Dec. 15 maturity date is reached. AES Corporation's 10.250% bonds due 2006 (AES06USR1) are trading between 41 and 43. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. AGRIFOS FERTILIZER: Air Products Replaces Congress as DIP Lender ---------------------------------------------------------------- Agrifos Fertilizer L.P., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the Southern District of Texas to enter into secured a Postpetition Financing agreement with Air Products L.P. The Debtors relate that prior to the Petition Date, Agrifos Fertilizer L.P. and Agrifos Mining L.L.C. entered into an Amended and Restated Loan and Security Agreement with Congress Financial Corporation (New England). Under the Original Congress Loan Agreement, Congress holds a first lien on all of Fertilizer's contracts, accounts receivable and inventory, and a second lien on the Current Assets Collateral held by Wachovia Bank, National Association, as successor to First Union National Bank. As part of their first day pleadings, the Debtors filed motions requesting authority to enter into a post-petition debtor-in-possession financing agreement with Congress, and continue Wachovia's cash collateral. The Congress DIP Financing and Wachovia Cash Collateral pacts have been extended, with some modifications from time-to-time. As part of the terms of the Congress Facility, the Debtors paid the prepetition secured debt of Congress with the proceeds of the Congress Facility. The Congress Facility is secured by the same package of security under the Original Congress Loan Agreement. Although the Congress Facility was initially considered to be a $15 million facility, Fertilizer has never been able to borrow that amount. Moreover, as Congress' condition to the various extensions of the termination date, Congress required a reduction in availability under the Congress Facility. As a result, the availability under the Congress Facility has been reduced from its initial $15 million to $3.5 million. The Debtors disclose that the availability of $3.5 million is at most times less than the lending formula otherwise would allow the Debtors to borrow. Fertilizer and Air Products, L.P., are parties to a prepetition, long-term agreement. Previously, the Court approved a debtor- in-possession loan between the Debtors and Air Products. The Original Air Products DIP Facility provided $3 million in working capital financing and $5 million for equipment acquisition and repair. The Debtors report that as of December 9, 2002, borrowings under the Air Products DIP Facility were $8 million. The Congress Facility will terminate this month. Congress has stated that it is willing to continue to extend the Congress Facility provided that the Debtors are willing to: (1) accept a further reduction in availability from $3.5 million to $3 million, or (2) post a letter of credit in the amount of $250,000 as additional collateral. The Debtors currently require the entire $3.5 million (at least) in availability in order to operate. Moreover, the Debtors are not able to post a $250,000 letter of credit unless the letter of credit was issued by Congress, which would only further reduce the availability under the Congress Facility. Consequently, the Debtors have requested and Air Products has agreed to replace Congress as a revolving DIP lender. On an interim basis, Air Products has agreed to: (1) extend to the Debtors, under the same terms as Congress, a revolving loan facility with an availability of $3.5 million, which will be used to repay the outstanding balance under the Congress Facility and to provide cash collateral to fully secure letters of credit, and (2) provide additional funds equal to the amount the Debtors owe Air Products for postpetition advances made under the Exchange Agreement, which is estimated at $2.8 million, which funds will be used by the Debtors to pay off the Exchange Advances. The Final DIP Facility will include, among other things, the increase in availability from $3.5 million to an amount to be determined prior to the Final Hearing. Notably, Air Products has not requested that the Original Air Products DIP Facility be cross-collateralized by the Final DIP Facility. The Debtors relate that they are "unable to obtain such credit otherwise". As mentioned above, Congress is not willing to further extend credit without making the terms so much less favorable to the Debtors that the continued operations of the Debtors would be jeopardized. Furthermore, no other creditor, including Air Products, is willing to enter into a DIP financing facility with the Debtors on a junior lien basis. The Debtors are producers of phosphate fertilizers that operate a 600,000 thousand ton per year phosphate fertilizer processing plant in Pasadena, Texas and a 1.2 million ton per year phosphate rock mine located in Nichols, Florida. They filed for chapter 11 protection on May 8, 2001. Christopher Adams, Esq., and H. Rey Stroube, III, Esq., at Akin, Gump, Strauss, Hauer & Feld, LLP represent the Debtors in their restructuring efforts. ANC RENTAL: Court Okays Lincoln Property as New Jersey Broker ------------------------------------------------------------- ANC Rental Corporation, and its debtor-affiliates sought and obtained the Delaware Bankruptcy Court's authority to employ Lincoln Property Company Commercial Inc. as their broker to assist in evaluating the Debtors' property in 822 North Avenue in Elizabeth, New Jersey and supervising and negotiating the property's marketing and sale. The Debtors also obtained the Court's permission to set Lincoln's retention to May 20, 2002 -- the date of the Brokerage Agreement between Lincoln and the Debtors was entered into. Lincoln will receive a commission based on 5% of the sale price if it is the only broker. In case of dual brokers, the commission will be increased to 6%, which Lincoln will split on a 50/50 basis with the cooperating broker. (ANC Rental Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) A NOVO BROADBAND: Silicon Valley Bank Terminates Forbearance ------------------------------------------------------------ A Novo Broadband, Inc., (OTCBB:ANVB) reported that Silicon Valley Bank, the Company's secured lender, has terminated the forbearance it granted to the Company in mid-November in connection with the Company's previously reported default under a financial covenant. The notice from the bank states that the bank has placed a "hold" on all Company funds deposited with the bank and will make no further loan advances to the Company. The notice further states that the bank has not elected to exercise its default rights under the loan documents but reserves the right to do so. Bill Kelly, the Company's chief executive officer, said the bank's action cuts off the Company's principal source of liquidity. He said the Company is examining all of its strategic options, including the possibility that it may seek protection under Chapter 11 of the Bankruptcy Code in order to conserve cash to meet obligations to employees and vendors. Kelly said "The Company's operations are generating substantial cash, and we are introducing new measures to improve productivity and gross margins. In the absence of the bank facility, we may need some time to develop an alternative source for working capital." He said the Company was in contact with its French parent, as well as with the bank and other creditors, and was confident that it could meet its ongoing obligations to vendors and customers. In a related development, the Company reported that John C. Wilson, a consultant who joined the Board in 2000, has resigned as a director effective December 12, 2002. ASIA GLOBAL CROSSING: Turns to PwC for Accounting Services ---------------------------------------------------------- Asia Global Crossing Ltd., and its debtor-affiliates seek the Court's authority to employ PricewaterhouseCoopers LLP as its accountants, auditors and tax advisors, pursuant to an engagement letter between the AGX Debtors and PwC, dated as of October 23, 2002. The Engagement Letter describes: -- the services that PwC anticipates performing for the AGX Debtors in these Chapter 11 cases; and -- the terms and conditions of PwC's proposed engagement by the AGX Debtors. Specifically, the AGX Debtors want PwC to: A. audit financial statements and related disclosures and assist in preparing documents required by the SEC and statutory and other regulatory authorities around the world; B. audit financial statements of any benefit plans as may be required by the Department of Labor or by the Employee Retirement Income Security Act and provide consultation with respect to other employee matters; C. review unaudited quarterly financial statements of the Debtors as required by applicable law or regulations or as requested by the Debtors; D. provide other tax consulting and preparation services; E. assist in preparing financial disclosures required by the Court, including the schedules of assets and liabilities, the statement of financial affairs and monthly operating reports; F. assist in the coordination of responses to creditor information requests and interfacing with creditors and their financial advisors; G. assist the Debtors' legal counsel, to the extent necessary, with the analysis and revision of the Debtors' plan or plans of reorganization; H. attend meetings and assist in discussions with the Creditors' Committee, the U.S. Trustee, and other interested parties, to the extent requested by the Debtors; I. consult with the Debtors' management on other business matters relating to its Chapter 11 reorganization efforts; and J. assist with any other matters as the Debtors' management or legal counsel and PwC may mutually agree. Asia Global Crossing CEO Jack Scanlon contends that the auditing services to be performed by PwC are necessary to enable the Debtors to execute their duties as debtors and debtors-in- possession. The Debtors are required by various federal agencies to complete audited financial statements for the year ended December 31, 2001. PwC is particularly well suited to provide the type of professional services required by the Debtors since it is one of the nation's leading professional services firms providing accounting, consulting, tax and other services. PwC has extensive experience in bankruptcy proceedings under Chapter 11 of the Bankruptcy Code, advising debtors, creditors and other parties-in-interest. The Debtors seek to retain PwC because of its experience in reorganization cases and its ability to perform the services needed, effectively, expeditiously and efficiently for the benefit of the Debtors. Mr. Scanlon emphasizes that the services to be rendered by PwC are not intended to be duplicative in any manner with the services performed and to be performed by any other party retained by the Debtors. PwC, in concert with the other professionals retained by the Debtors, will undertake every reasonable effort to avoid any duplication of their services. PwC Partner Kenneth Sharkey assures the Court that the Firm is a "disinterested person," as defined in Section 101(14) of the Bankruptcy Code and that the partners, managers, associates and other employees of PwC do not have any connection with the Debtors, their creditors, the United States Trustee for the Southern District of New York, or any other party-in-interest, or their attorneys. The Debtors propose to compensate PwC on an hourly basis at rates consistent with the rates charged by PwC in non-bankruptcy matters of this type. The hourly rates to be charged by PwC in connection with this representation are: Partner $560 - 670 National Consulting Partner 640 - 670 Senior Manager 440 - 620 Manager 360 - 510 Senior Associate 220 - 350 Associate 160 - 190 Administrative Assistant 75 These rates are subject to periodic adjustments to reflect economic and other conditions. "During the 90-day period prior to the AGX Debtors' Petition Date, PwC received $60,000 from the AGX Debtors for professional services performed and expenses incurred," Mr. Sharkey says. "However, none of these payments received by PwC could be construed as preferential transfers under Section 537 of the Bankruptcy Code." * * * Judge Bernstein authorizes the Debtors to employ PwC on an interim basis. The final hearing on the application will be held on December 18, 2002, provided that objections are filed on or before December 13, 2002. (Global Crossing Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) Asia Global Crossing's 13.375% bonds due 2010 (AGCX10USN1), DebtTraders reports are trading between 11 and 11.75. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AGCX10USN1 for real-time bond pricing. ASPEN TECHNOLOGY: Inks Long-Term Agreement with SINOPEC Corp. ------------------------------------------------------------- Aspen Technology, Inc., (Nasdaq: AZPN) announced that China Petroleum and Chemical Corporation (SINOPEC Corp., NYSE: SNP), the largest integrated petroleum and chemicals company in China, has signed a long-term agreement to use AspenTech's manufacturing/supply chain solutions. Under the agreement, SINOPEC will implement advanced control, production management, information management and supply chain solutions from AspenTech in its subsidiaries to increase production yield and product quality, reduce cost, and increase profit. The agreement is part of SINOPEC's strategy to adopt advanced technologies to further accelerate the restructuring of its IT system, and to upgrade the performance of its petroleum and petrochemical operations. Using AspenTech's industry-leading solutions, SINOPEC intends to improve its production process control and production management, increase economic returns, and strengthen its competitiveness in the market. These solutions will build on SINOPEC's other recent initiatives to construct a modern information system. These initiatives include the creation of a financial and petroleum distribution management network, establishing two e-business marketplaces for material purchasing and chemical products marketing, and the implementation of an ERP system. Together, these activities have greatly facilitated the company's increased economic returns, and reinforced the competitiveness of the company in the market. The first implementation of AspenTech's solutions will include: a production planning solution to optimize feedstock selection for all eight ethylene plants; advanced process control solutions for the refining and chemical plants, to deliver increased throughput and improved product quality; production management solutions for polymer production, to improve throughput and product quality and reduce transition times; information management solutions to build the infrastructure for plant information systems; and production scheduling solutions to improve the utilization and efficiency of refinery plants. "The relationship between SINOPEC and AspenTech can be traced back twenty years," said Mr. Wang Jiming, President of SINOPEC. "While the first formal collaboration between SINOPEC and AspenTech was initiated in 1993, the two companies made significant progress in both 2000 and 2001. SINOPEC has benefited a lot from AspenTech's Aspen PIMS(TM), Aspen Plus(TM) and Aspen DMCplus(TM) software in many projects." "I am delighted that SINOPEC has recognized the competitive advantages that our solutions could bring to its business, and decided to extend the use of our solution into the areas of manufacturing and supply chain," said Larry Evans, Chairman of AspenTech. "This new agreement demonstrates both companies' long-term commitment to our joint relationship. As SINOPEC moves into the future, AspenTech's solutions should provide a strong foundation for facilitating continued productivity improvements, and to further its ability to compete with other international petroleum and petrochemical companies." Manufacturing/supply chain technologies are a key element of AspenTech's Enterprise Operations Management solutions for the process industries, which deliver value across the enterprise by helping companies optimize the way they engineer and run their manufacturing and supply chain operations. China Petroleum & Chemical Corporation (SINOPEC Corp., NYSE:SNP) is a publicly held company focusing on its core business of petroleum and petrochemicals with integrated upstream, mid- stream and downstream operations and a complete marketing network. SINOPEC Corp. was established on February 25, 2000. The company has a registered capital of 86.7 billion Renminbi (yuan). SINOPEC Corp., is the largest integrated petroleum and petrochemical company in China. Its scope of business includes exploration, development, production and marketing of oil and gas; refining and marketing of petroleum products; and production and marketing of petrochemicals, chemical fibers, chemical fertilizers, and other chemicals. It also has pipelines for the transportation of petroleum and natural gas, and agencies for the import and export of petroleum, natural gas, refined oil products, petrochemicals, chemicals, and other commodities. Research, development and application of various technologies and information technologies are also integrated parts of the overall business of SINOPEC. For more information, visit http://www.sinopec.com.cn Aspen Technology, Inc., is a leading supplier of enterprise software to the process industries, enabling its customers to increase their margins and optimize their business performance. AspenTech's engineering solutions, including Hyprotech's technologies, help companies design and improve their plants and processes, maximizing returns throughout their operational life. AspenTech's manufacturing/supply chain solutions allow companies to run their plants and supply chains more profitably, from customer demand through to the delivery of the finished products. Over 1,200 leading companies rely on AspenTech's software every day to drive improvements across their most important engineering and operational processes. AspenTech's customers include: Air Liquide, Aventis, Bayer, BASF, BP, ChevronTexaco, Dow Chemical, DuPont, ExxonMobil, GlaxoSmithKline, Lyondell Equistar, Merck, Mitsubishi Chemical, Shell, Southern Company, TXU Energy and Unilever. For more information, visit http://www.aspentech.com * * * As reported in Troubled Company Reporter's October 15, 2002 edition, Standard & Poor's lowered its corporate credit rating on Aspen Technology Inc., to single-'B' from single-'B'-plus, following the company's announcement that it expects to report sales in the September 2002 quarter lower than previously expected. As a result, efforts to restore profitability and positive cash flow are likely to be delayed. At the same time, the rating on Aspen's subordinated debt was also lowered, to triple-'C'-plus from single-'B'-minus. ASSET SECURITIZATION: Fitch Cuts Ratings on Cl. B-1 & B-1H to B -------------------------------------------------------------- Asset Securitization Corporation's commercial mortgage pass- through certificates, series 1996-MD VI $35.8 million class B-1 and $1,000 class B-1H are downgraded to 'B' from 'BB-' and remain on Rating Watch Negative by Fitch Ratings. In addition, Fitch affirms $44.8 million class A-4 at 'A', $22.4 million class A-5 at 'A-', $49.2 million class A-6 at 'BBB' and $35.8 million class A-7 at 'BBB-'. The $19 million class A-1A, $333.4 million class A-1B, $172 million class A-1C, $35.8 million class A-2, $35.8 million class A-3 and interest only classes CS-1, Cs- 2 and CS-3 are not rated by Fitch. The rating actions follow Fitch's annual review of the transaction, which closed in December 1996. Fitch downgraded classes B-1 and B-1H primarily due to the continued decline in operating performance of the Horizon II loan. Additionally, the two classes will remain on Rating Watch Negative due to interest shortfalls incurred by these classes as a result of the Prime Retail loan's special servicing fee. The Horizon loan, representing 11.6% of the pool, is collateralized by five factory outlet centers located in three states. The adjusted net cash flow for the trailing twelve months ending June 30, 2002 has declined approximately 30% from the underwritten Fitch NCF at issuance. The corresponding debt service coverage ratio, based on a 10.09% refinance constant, is 1.13 times, versus 1.56x at issuance. The weighted average occupancy level of the centers continues to decline as well. As of June 2002, the weighted average occupancy was 90%, down slightly from 91% as of September 2001 and 94% at issuance. Of additional concern is the relatively high rollover of approximately 20% for both 2002 and 2003. As expected, the two hotel portfolios in the pool experienced a sharp decrease in performance as well. The MHP loan, representing 28.7% of the pool, consists of four full-service hotels located in three states. As of TTM June 2002 the Fitch stressed DSCR based upon a 10.48% refinance constant is 1.98x as compared to 2.45x for TTM ended September 2001 and 2.03x at issuance. The other hotel loan in the transaction, the Columbia Sussex loan, representing 14.3% of the pool, was originally composed of twelve full-service hotels located in eight states. In October 2002, three of the properties, the Holiday Inn Southfield, Best Western Eastgate and Radisson Lake Buena Vista, were substituted out of the portfolio. In their place, the Marriott Saddle Brook was added to the portfolio. The Marriott Saddlebrook is a 245 room full-service hotel in Saddle Brook, New Jersey, approximately eight miles west of Manhattan. Amenities include a restaurant, lounge, room service, indoor and outdoor swimming pools and 4,600 square feet of meeting space. The revenue per available room for the TTM ending June 30, 2002 was $77.20 as compared to $25.13 for the three hotels removed from the pool. While Fitch generally views this substitution as a positive for the portfolio, the overall operating performance is still down from issuance and the Fitch stressed DSCR for the TTM ended June 30, 2002, after taking into account the substitution, was 1.54x as compared to 2.23x as of TTM September 2001 and 1.60x at issuance. The largest loan in the transaction, the Prime Retail loan, representing 41.4% of the pool, also experienced a drop in operating performance. The loan is secured by 13 outlet centers located throughout the U.S. The Fitch stressed DSCR for TTM ended June 30, 2002 is 1.57x as compared to 1.65x for TTM September 2001 and 1.66x at issuance. Comparable in-line sales for year-end 2001 dropped approximately 5.8% from YE 2000 numbers, but still remains ahead of issuance levels. Like the Horizon II loan, there is upcoming rollover risk of approximately 16% for 2002 and 22% for 2003. The weighted average occupancy for the portfolio has dropped to 86% for TTM June 2002 from 90% at YE 2001 and approximately 88% at issuance. In late September, the Prime loan was transferred to GMAC Commercial Mortgage, the special servicer, after expressing concerns regarding its ability to refinance the loan at its anticipated repayment date in November 2003. As a result of this transfer two properties have been defeased out of the portfolio at a 125% release premium, the Prime Outlets at Castle Rock and Prime Outlets at Loveland, representing 17.1% of the Prime Retail loan. The last loan in the transaction, representing 4% of the pool balance, is the Palmer Square loan. The loan is secured by a mixed use property consisting of three mixed use office and retail buildings, a full-service hotel and a two parking facilities. The TTM June 30, 2002 DSCR is a 2.38x, which is down from TTM September 2002 DSCR of 2.56x, but still well above issuance level of 1.79x. Fitch will continue to monitor this transaction for any additional changes in operating performance. AUXER GROUP: Firming-Up Merger Deal with Viva Airlines Inc. ----------------------------------------------------------- The Auxer Group, Inc., (OTCBB: AXGI) announced that the Viva Airlines, Inc., merger is approaching finalization and the Company is pleased to report that Viva has entered into a $500,000 advertising and promotion contract with Joseph Tausch Sr., and MPI of Miami to provide radio, television and print advertising which will concentrate on creating awareness and excitement for VIVA prior to its start of flight operations. The Company intends to attract significant interest from the Hispanic traveler. Tausch and MPI have been previously contracted by others for similar services and are well regarded. Auxer also informed its shareholders of a private news release that VIVA issued on December 11, 2002. That announcement is repeated as follows: Viva Airlines, Inc., has offered a letter of intent through Fiesta Airlines Holdings, LLC (a private consulting & management organization) to acquire Queen Air, Aeronaves Queen. S.A. (a Dominican Republic Corporation and air carrier). Queen Air has the authority to operate international air transportation of persons, property and mail from Santo Domingo, D. R. to New York, Miami, Caracas, Madrid, Buenos Aires, Santiago de Chile, Sao Paula, Milano, & San Juan. Robert Scott, President and Chief Executive Officer of VIVA, stated, "We are optimistic about the potential acquisition of Queen Air. This acquisition along with our wet lease from Falcon Air Express of Miami will move us that much closer to our start of doing business. Despite the news of United Air Lines (NYSE: UAL) filing for chapter 11 bankruptcy protection, we believe there are many outstanding industry opportunities available and we are going forward with our business plan with great momentum". Eugene Chiaramonte, Chairman of Auxer, stated, "We are pleased at the speed at which the Viva Airlines plan is moving forward. Viva's plan to commence flight operations beginning in March of 2003 looks very promising. We are confident that this merger will provide shareholder value". For further information on Viva please visit its Web site at http://www.vivaairlines.com For further information on The Auxer Group, Inc., please visit its Web site at http://www.axgiinvestor.com The Auxer Group's September 30, 2002 balance sheet shows a working capital deficit of about $1.5 million, and a total shareholders' equity deficit of about $2.5 million. AVATEX CORPORATION: Case Summary & Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: Avatex Corporation aka National Intergroup, Inc., al aka FoxMeyer Health Corporation 17000 Preston Road, #310 Dallas, Texas 75248 Bankruptcy Case No.: 02-81268 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Avatex Funding, Inc. 02-81274 Davenport, Inc. 02-81287 Natmin Development Corporation 02-81278 National Aluminum Corporation 02-81281 US HealthData Interchange, Inc. 02-81284 Type of Business: A holding company with a nearly 50% stake in drugstore chain Phar-Mor, which has around 75 stores in about 25 states operating under such names as Phar-Mor, Pharmhouse, and Rx Place. Chapter 11 Petition Date: December 11, 2002 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtors' Counsel: Patrick J. Neligan, Jr., Esq. Neligan, Tarpley, Andrews & Foley, LLP 1700 Pacific Ave., Suite 2600 Dallas, Texas 75201 Tel: 214-840-5300 Total Assets: $14,758,000 (as of September 30, 2002) Total Debts: $23,318,000 (as of September 30, 2002) A. Avatex's 7 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Wells Fargo Bank Minnesota Indenture Trustee for $14,752,699 Notes Due Dec. 7, 2002 American Stock Transfer & Stock and Warrant $9,500 Trust Co. Transfer Agent Fees Dallas County Tax Office 2002 Personal Property $2,026 Taxes XO One Master Telecom $1,167 Service Agreement Airband Communications Inc. Service Agreement for $213 High Speed Internet Service Dated 08-07-01 Federal Express Delivery Charges $228 Commercial Record Center Document Storage $88 B. Davenport's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pension Benefit Guaranty Potential Claim Unknown Corporation relating to underfunding of Davenport, Inc. Pension Plan State of Delaware 2002 Franchise Taxes $50 C. Natmin Development's 2 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pennsylvania Dep't of 2002 PA Corp. Taxes $1,276 Revenue State of Delaware 2002 Franchise Taxes $50 D. National Aluminum's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ State of Delaware 2002 Franchise Taxes $50 E. US HealthData's Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ State of Delaware 2002 Franchise Taxes $50 BOYD GAMING: Commences Tender Offer for $250 Million 9.50% Notes ---------------------------------------------------------------- Boyd Gaming Corporation (NYSE: BYD) intends to commence a cash tender offer to purchase all of its outstanding $250 million aggregate principal amount of 9.50% senior subordinated notes due 2007. Under the terms of the proposed offer, the total consideration to be paid for each note validly tendered prior to 5:00 p.m. New York City time, on December 30, 2002 and accepted for payment will be $1,047.50 per $1,000.00 of principal amount, plus accrued and unpaid interest. The total consideration for each note tendered includes an early tender premium of $10.00 per $1,000.00 of principal amount of notes tendered prior to 5:00 p.m., New York City time, on December 30, 2002. Holders that tender their notes after that time but prior to the expiration of the tender offer will receive $1,037.50 per $1,000.00 of principal amount of notes validly tendered and accepted for payment, plus accrued and unpaid interest. The tender offer is scheduled to expire at 5:00 p.m., New York City time, on January 14, 2003, unless extended or earlier terminated. Tenders of notes made prior to 5:00 p.m., New York City time, on December 30, 2002, may not be validly withdrawn or revoked, unless the Company reduces the tender offer consideration or the principal amount of notes subject to the tender offer or is otherwise required by law to permit withdrawal. Tenders of notes made after 5:00 p.m., New York City time, on December 30, 2002, may be validly withdrawn at any time until 5:00 p.m., New York City time, on the expiration date. The tender offer will be conditioned upon the consummation of the Company's proposed issuance of senior subordinated notes due 2012, regulatory approvals and certain other conditions. The Company currently intends to call for redemption, in accordance with the indenture governing the 9.50% senior subordinated notes due 2007, all such notes that remain outstanding, as soon as practicable upon consummation of the Company's proposed issuance of its senior subordinated notes due 2012, at the applicable price of $1,047.50 per $1,000.00 of principal amount thereof, plus interest accrued and unpaid to the redemption date. Lehman Brothers and Deutsche Bank Securities will serve as the Dealer Managers for the tender offer. Questions regarding the tender offer may be directed to Lehman Brothers, Attention: Rad Antonov, at (212) 528-7581 or (800) 438-3242 (toll free). Requests for documents may be directed to D.F. King & Co., Inc., the Information Agent for the tender offer, at (800) 628-8510. * * * As previously reported, Fitch Ratings assigned a 'B' rating to Boyd Gaming's $200 million senior subordinated notes due 2012. BYD has substantial debt maturing in 2003 and the new notes issuance addresses in part these pending maturities. Ratings affirmed include BYD's $612 million senior secured bank credit facility due 2003 at 'BB', $200 million 9.25% senior unsecured notes due 2003 and $200 million 9.25% senior unsecured notes due 2009 at 'BB-'. The Rating Outlook is Negative. The ratings were based on the company's diversified property portfolio, strong customer focus, favorable earnings mix and growing cash flow visibility. Approximately 60% of BYD's revenues are generated from slot play, which is generally a more consistent source of earnings. Due to the events of September 11 and the slowing economy, drive-to properties have had a relatively strong performance compared to the Las Vegas Strip. More than 60% of property EBITDA during 2001 was generated by the Blue Chip, Par-A-Dice and Treasure Chest casinos, which are all drive-to properties, while less than 10% of EBITDA was generated from BYD's Las Vegas Strip property. The ratings also incorporate the solid cash flow potential of Delta Downs, which opened on February 13, 2001. Concerns are centered upon the company's relatively high debt levels in relation to cash flows. In particular, total debt of $1.146 billion was approximately 5.1 times total company EBITDA at December 31, 2001. However, following the $37 million equity contribution to The Borgata project, which was funded during the first quarter 2002, Fitch expects debt reduction to be a priority for the remainder of the year. As a result, debt/EBITDA should approach low to mid-4x at December 31, 2002, levels more appropriate for the rating category. Additional credit concerns include construction risk pertaining to BYD's joint venture project, the Borgata, in Atlantic City, which is expected to open in mid-2003. The project is currently running on time and on budget. BUDGET: Creditors Committee Taps Sonnenschein as Special Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of Budget Group Inc., and its debtor-affiliates, seeks the Court's authority to retain the firm of Sonnenschein Nath & Rosenthal as its special trademark, license and franchise counsel, nunc pro tunc to November 5, 2002. William Bowden, Esq., Ashby & Geddes, in Wilmington, Delaware, tells the Court that Sonnenschein is actively working with the Debtors to renegotiate, formulate and implement the terms of a license for the Debtors' trademark and a strategy for protecting, licensing and franchising the rights of the trademark, franchises and business models. The Committee selected Sonnenschein due to its expertise in trademark, licensing and franchising law, both domestically and internationally. The Committee had sought advice from Sonnenschein on a proposed trademark, licensing and franchise agreement to be entered into between the Debtors and Cherokee for the operations in Europe, the Middle East and Africa as contemplated in the Asset Purchase Agreement between the Debtors and Cherokee. According to Mr. Bowden, the Debtors' operations consist of corporate and franchise locations in 60 countries. There is significant interdependence among the major European countries in the travel markets. Though the Debtors' franchisees are independent business units, they are joined together by a major brand and a substantially common operating agreement that sets standards of operation, signage and other terms that give the appearance of one cohesive unit throughout the world. The Budget trademark, one of the key components to maintaining a unified presentation by all locations in Europe, the Middle East and Africa, is one of the assets that has been sold. As special trademark, licensing and franchise counsel, Sonnenschein is expected provide these services to the Committee: A. expertise with respect to registration and protection of the Debtors' trademarks associated with the operations in Europe, the Middle East and Africa; B. commercial and licensing law advice in respect of structuring of the Debtors' operations in Europe, the Middle East; and C. expertise with respect to domestic and international franchise arrangements and related issues. Sonnenschein will seek compensation based on its hourly rates, and reimbursement of all costs and expenses incurred. The Sonnenschein professionals who will represent the Committee are: Rochelle B. Spandorf $375 John R.F. Baer 425 Other Sonnenschein attorneys or paralegals will also, from time to time, provide legal services on the Committee's behalf. The firm's hourly rates currently range from: Partners $225 - 775 Associates 125 - 390 Paralegals 70 - 230 Peter D. Wolfson, a Member of Sonnenschein, assures the Court that the firm is "disinterested" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Wolfson discloses that Sonnenschein has represented, currently represents, and may, in the future, represent certain parties-in-interest to the Debtors, or their attorneys, accountants, and investment bankers in matters wholly unrelated to the Debtors. These include Bank of Nova Scotia, Citibank NA, Credit Lyonnais, Credit Suisse First Boston, Deutsche Bank Trust Company Americas, Dresdner Bank AG - New York Branch, Goldman Sachs & Co, Merrill Lynch Pierce Fenner & Smith Incorporated, Morgan Stanley, Starcom Worldwide, R2 Investments and SunTrust Bank. (Budget Group Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) CANWEST GLOBAL: Receives $25.7MM Tax Refund after Reassessment -------------------------------------------------------------- CanWest Global Communications Corp., received a refund, which, net of applicable taxes, totaled $25.7 million. The refund was received in respect of CanWest's share of a reassessment of taxes previously paid by WIC Western International Communications in connection with Australian dollar denominated debentures issued by WIC in March 1990. The funds will be applied to reduce corporate debt. CanWest Global Communications Corp., (NYSE: CWG; TSE: CGS.S and CGS.A) -- http://www.canwestglobal.com-- is an international media company. CanWest, now Canada's largest publisher of daily newspapers owns, operates and/or holds substantial interests in newspapers, conventional television, out-of-home advertising, specialty cable channels, radio networks and Internet portals in Canada, New Zealand, Australia, Ireland and the United Kingdom. Fireworks, the Company's program production and distribution division, operates in several countries throughout the world. * * * As previously reported, Standard & Poor's Ratings Services lowered its long-term corporate credit and senior secured debt ratings on multiplatform media company CanWest Media Inc., to 'B+' from 'BB-'. At the same time, the ratings on the company's senior subordinated notes were lowered to 'B-' from 'B'. The outlook is now stable. The downgrade reflects CanWest Media's continued relatively weak financial profile, which was not in line with the 'BB' rating category. CANYON CAPITAL: S&P Assigns BB Prelim. Rating to Class C Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to Canyon Capital CDO 2002-1 Ltd./Canyon Capital CDO 2002-1 Corp.'s $255.6 million fixed- and floating-rate notes due 2014. The preliminary ratings are based on information as of Dec. 12, 2002. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes and by the preference shares and overcollateralization; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The coverage of interest rate risks through hedge agreements; and -- The legal structure of the transaction, which includes the bankruptcy-remoteness of the issuer. PRELIMINARY RATINGS ASSIGNED Canyon Capital CDO 2002-1 Ltd./Canyon Capital CDO 2002-1 Corp. Class Rating Amount (mil. $) A AAA 222.10 B BBB 11.10 C BB 11.20 Subordinated notes N.R. 22.35 Preference shares N.R. 8.25 N.R.-Not rated. CIENA CORP: Net Loss Tops $755 Million in Fiscal Fourth Quarter --------------------------------------------------------------- CIENA(R) Corporation (NASDAQ:CIEN) reported revenue of $61.9 million for its fourth fiscal quarter ended October 31, 2002. Under GAAP, CIENA's reported net loss for the period was $754.8 million. The quarter's results include charges for a goodwill impairment of $557.3 million, restructuring charges of $78.7 million associated with workforce reductions, lease terminations, non- cancelable lease costs and the write-down of certain property, equipment and leasehold improvements, deferred stock compensation charges of $5.7 million, amortization of intangible assets of $3.0 million, a charge for settlement of litigation with Pirelli of $1.8 million, losses on equity investments of $9.9 million, and a $2.7 million loss related to the repurchase and early extinguishment of $97.1 million of the $300 million outstanding 5% convertible subordinated notes due in 2005 assumed in the purchase of ONI Systems. In addition, CIENA recorded a charge of $1.6 million related to excess inventory. "Despite a challenging year, our ongoing operating results in our fiscal fourth quarter show the positive effects of the steps taken across our company over the last year to align our business with a changed environment," said Gary Smith, CIENA's president and CEO. "During the quarter we grew our revenue, improved gross margins and delivered lower-than-anticipated ongoing operating expenses." For its 2002 fiscal year, CIENA reported revenue of $361.2 million. Under GAAP, CIENA's reported net loss for the period was $1,597.5 million. The year's results include charges for a goodwill impairment of $557.3 million, restructuring costs of $225.4 million associated with workforce reductions, lease terminations, non-cancelable lease costs and the write-down of certain property, equipment and leasehold improvements, deferred stock compensation charges of $20.3 million, a provision for doubtful accounts of $14.8 million, amortization of intangible assets of $9.0 million, a charge for settlement of litigation with Pirelli of $1.8 million, losses on equity investments of $15.7 million, and a $2.7 million loss related to the repurchase and early extinguishment of $97.1 million of the $300 million outstanding ONI 5% convertible subordinated notes due in 2005. In addition, CIENA recorded a charge of $286.5 million, primarily related to excess inventory associated with its long-haul transport products and non-cancelable purchase commitments with suppliers. In evaluating the operating performance of its business, CIENA's management excludes certain charges or credits that are required by GAAP. These items, which are identified in the table below, share one or more of the following characteristics: they are unusual and CIENA does not expect them to recur in the ordinary course of its business; they do not involve the expenditure of cash; they are unrelated to the ongoing operation of the business in the ordinary course; or their magnitude and timing is largely outside of the Company's control. Debt Repurchase During the fourth quarter of fiscal 2002, CIENA took steps to improve its already strong balance sheet. The Company saved $21.9 million in future principal payment by purchasing $97.1 million of the $300 million outstanding ONI 5% convertible subordinated notes due in 2005 for $75.2 million on the open market. At the time of purchase, these notes had an accreted book value of $72.5 million. In addition, CIENA has commenced a tender offer for the outstanding 5% Convertible Subordinated Notes due October 15, 2005 originally issued by ONI Systems Corp. and assumed by CIENA in its acquisition of ONI in June 2002. CIENA's purpose in seeking to repurchase the notes is to reduce its annual interest expense and eliminate the need to repay or refinance the debt at maturity in 2005. The tender offer is not contingent on any financing. The notes are currently convertible into CIENA common stock at a conversion rate of approximately 7.7525 shares per $1,000 principal amount held, subject to adjustment. The purchase price for the notes will be $860.00 in cash per $1,000 principal amount, plus accrued and unpaid interest up to, but not including, the date of payment. Holders that desire to tender their notes pursuant to the offer must follow the procedures described in the Offer to Purchase and other related documents to be filed by CIENA with the Securities and Exchange Commission. These documents will be mailed to the registered holders of the notes. The tender offer will expire at 5:00 p.m., New York City time, on January 13, 2003, unless the offer is extended. Goldman, Sachs & Co., will act as the dealer managers for the tender offer and State Street Bank and Trust Company of California, N.A. will act as depositary. Requests for copies of the Offer to Purchase and additional information concerning the terms of the tender offer or questions about the offer may be directed to Goldman, Sachs & Co., at 85 Broad Street, New York City, New York 10004, Attn: Prospectus Department, Telephone: (212) 902-1000 or to the information agent for the tender offer, Georgeson Shareholder, 17 State Street, 10th Floor, New York, New York 10004, Telephone: (866) 295-4322. If the Company successfully purchases all of the $202.9 million outstanding ONI 5% notes at $860 per $1,000 principal amount, it will save approximately $28.4 million in future principal payment and will record a book loss of approximately $18.7 million related to the extinguishment of this debt due to the fact that the accreted book value of the notes will be less than the purchase price. The Company will use its cash and cash equivalents, and short-term investments to fund the note purchase. Business Outlook "We are encouraged by the order activity we have seen thus far in our fiscal first quarter and expect that revenue in the quarter could increase by as much as 10 percent from our fiscal 2002 fourth quarter," said Smith. "In addition, we expect to make continued progress toward profitability through our ongoing efforts to improve gross margin and to lower ongoing operating expenses." "The telecom equipment market has changed radically in just the last 12 months," continued Smith. "While challenging, this change has created opportunity for those positioned to pursue it. CIENA's financial strength and our commitment to continued investment in our business differentiates us from our competitors, many of whom are experiencing financial and directional uncertainty." "As a result, we believe CIENA has an opportunity to achieve growth in 2003 despite decreased carrier spending," concluded Smith. "In addition to working toward increased market share, we are pursuing feature additions and product extensions, and developing new sales channels, to increase our addressable market." CIENA Corporation's market-leading intelligent optical networking systems form the core for the new era of networks and services worldwide. CIENA's LightWorks(TM) architecture enables next-generation optical services and changes the fundamental economics of service-provider networks by simplifying the network and reducing the cost to operate it. Additional information about CIENA can be found at http://www.CIENA.com * * * As reported in Troubled Company Reporter's August 28, 2002 edition, Standard & Poor's lowered the corporate credit rating on optical telecommunications systems and equipment provider, Ciena Corp., to single-'B' from single-'B'-plus, reflecting the company's dramatic decline in sales, and expectations that business conditions will remain weak over the intermediate term. Ciena, based in Linthicum, Maryland, had about $990 million in total debt outstanding as of July 31, 2002. The outlook remains negative. "The ratings continue to reflect the company's narrow business position, substantial leverage, and the risks of continuing technology evolution offset by the company's good financial flexibility," said Standard & Poor's credit analyst Bruce Hyman. Although Ciena has sufficient financial assets to meet its operating requirements over the intermediate term, business prospects are highly uncertain. COMDISCO INC: Has Until Wednesday to Challenge Claims ----------------------------------------------------- Pursuant to Section 105(a) of the Bankruptcy Code and Rule 9006 of the Federal Rules of Bankruptcy Procedure, Comdisco, Inc., and its debtor-affiliates ask the Court to: (a) extend the General Objection Deadline from December 10, 2002 to January 31, 2003 as to claims generally; and (b) extend the Objection Deadline to April 30, 2003 as to Proof of Claim Number 2907, which amends Proof of Claim Number 2792 filed by the Internal Revenue Service. Felicia Gerber Perlman, Esq., at Skadden, Arps, Slate, Meagher & Flom, in Chicago, Illinois, reminds the Court that there are more than 4,400 Proofs of Claims or requests for payment of administrative expenses filed in these cases. To date, the Reorganized Debtors have allowed 1,100 Claims as filed or settled, and have objected to 3,100 Claims pursuant to six omnibus objections and several specific objections previously filed in these cases. The remaining 250 Claims, which have neither been allowed as filed or objected to, remain under review by the Debtors. As to the 3,100 Claims, which have been objected to, all but approximately 450 Claims have been resolved. The 250 Claims Under Review and the 450 Claims Under Objection comprise the remaining unresolved Claims in these cases. Ms. Perlman emphasizes that the Debtors have been diligent in reviewing and objecting to the Claims. Significant progress in the claims resolution process had been made prior to plan confirmation and the pace of the process has continued post- emergence. Ms. Perlman assures the Court that the requested extension is not a delay tactic but is a prudent request to avoid the inadvertent allowance of objectionable Claims to the detriment of all other creditors. With respect to the IRS Claim, the Debtors and the IRS have agreed to an extension of the General Claims Objection Deadline to April 30, 2003. The IRS Claim consists of an asserted unsecured priority claim for $57,090,437 and an asserted general unsecured claim for $4,352,833 on account of corporate income taxes, penalties and interest. Ms. Perlman explains that the IRS is currently conducting an audit of the Debtors' corporate returns for tax years 1996 to 2000. Ms. Perlman relates that the Debtors and the IRS have been diligently working on resolving and settling the IRS Claim and have settled issues as a result of the audit, except two issues concerning tax shelters. Both the Debtors and the IRS believe that there is significant opportunity for resolving the remaining issues within the additional time requested for filing an objection. * * * Judge Black extends the current General Claims Objection Deadline from December 10, 2002 to December 18, 2002. The extension of the General Objection Deadline does not affect the Specific Claim Objection Deadline and is without prejudice against the Debtors' right to seek further extension. (Comdisco Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONDUCTUS INC: Fails to Maintain Nasdaq Listing Requirements ------------------------------------------------------------ Conductus, Inc., (Nasdaq: CDTS) a leading manufacturer of superconducting wireless systems, has received notification from Nasdaq of Nasdaq's intention to delist the Company's securities from the Nasdaq National Market at the opening of business on December 16, 2002, for failure to maintain the required minimum $1 stock price, as required by Marketplace Rule 4450(a)(5) and failure to comply with the minimum $10,000,000 stockholders' equity requirement of Marketplace Rule 4450(a)(3). Conductus recently announced its agreement to merge with Superconductor Technologies, Inc., in a transaction in which Conductus common stock will be converted into shares of Superconductor Technologies common stock. The stockholder meeting for each company to vote on the transaction is scheduled for December 17, 2002. If approved by the stockholders, the transaction is expected to close promptly following the meetings. In response to the notification from Nasdaq, Conductus has requested a hearing. As a result, Conductus stock will not be delisted before the merger is expected to close. Conductus, Inc., founded in 1987 and based in Sunnyvale, California, develops, manufactures, and markets electronic components and systems based on superconductors for applications in the worldwide telecommunications markets. For many applications, the unique properties of superconductor offer significant performance advantages over products based on conventional copper electronic components. These advantages can provide improved price/performance at the system level because of enhanced sensitivity and efficiency as well as reduced size and weight. For additional information, please visit its Web site at http://www.conductus.com Superconductor Technologies Inc., headquartered in Santa Barbara, California, is the global leader in developing, manufacturing, and marketing superconducting products for wireless networks. STI's SuperLink(TM) products are proven to increase capacity utilization, lower dropped and blocked calls, extend coverage, and enable higher wireless transmission data rates. SuperFilter(R), the company's flagship product, incorporates patented high-temperature superconductor technology to create a cryogenic receiver front-end used by wireless operators to enhance network performance while reducing capital and operating costs. More than 1,700 SuperFilter Systems have been deployed worldwide, logging in excess of 20 million hours of cumulative operation. In 2002, STI was named one of Deloitte & Touche's prestigious "Technology Fast 50" companies for the Los Angeles area, a ranking of the 50 fastest-growing technology companies in the area. SuperFilter and SuperLink are trademarks or registered trademarks of Superconductor Technologies Inc. in the United States and in other countries. On October 10, 2002, Conductus and Superconductor Technologies Inc., (Nasdaq: SCON) jointly announced they have signed a definitive agreement to merge the two companies. For more information about STI, please visit http://www.suptech.com * * * Liquidity and Capital Resources In its SEC Form 10-Q, for the quarter ended September 30, 2002, the Company stated: "As of September 30, 2002, our aggregate cash, cash equivalents and short-term investments, excluding $374,000 of restricted cash, totaled $2,535,000, compared to $6,897,000 as of December 31, 2001. "Net cash used in operations was $11,031,000 during the nine months ended September 30, 2002. Net cash used in operations was primarily the result of the net loss of $13,894,000 and an increase in prepaid expenses and other current assets of $191,000, partially offset by decreases in accounts receivable and inventories and increases in accounts payable and other accrued liabilities of $213,000, $1,290,000 and $763,000, respectively, and the effect of non-cash charges of $788,000 for depreciation, amortization, gain on the disposal of equipment and warrants vesting upon commercial product sales during the first nine months of 2002. We anticipate that we will incur significant additional net losses during the remainder of 2002. As a result, we anticipate the use of additional cash in operating activities during the remainder of 2002. We purchased inventory during the first nine months of 2002 to support our projected 2002 sales. The increase in accounts payable and other accrued liabilities is principally a result of legal expenses related to the ISCO International, Inc. patent litigation and, to a lesser extent, inventory purchases. Should actual sales for the remainder of 2002 be less than our projections, the carrying value of inventory may be adversely affected. "Net cash provided by investing activities was $2,043,000 during the nine months ended September 30, 2002. The balance was primarily related to proceeds from sales of short-term investments during the period of $2,250,000, partially offset by investments in additional property and equipment of $216,000. We do not anticipate significant spending on capital expenditures during the remainder of 2002. "Net cash provided by financing activities was $6,872,000 during the nine months ended September 30, 2002, and was primarily the result of an equity financing of $7,300,000, less offering expenses of approximately $422,000, received from the issuance of 3,650,000 shares of common stock at $2.00 per share in March 2002, partially offset by principal payments on long-term debt of $125,000. In connection with the equity financing, we also issued warrants to purchase an additional 1,825,000 shares of our common stock at an exercise price of $2.75 per share. "We believe that the merger transaction contemplated, and noted in footnote 6, between the Company and Superconductor Technologies will close by the end of December 2002. If the close of the merger is delayed beyond the end of December 2002, we believe that our cash balance should be sufficient to fund operations into the first quarter of 2003; however, there can be no assurance that changes in our plans or other events affecting the Company will not result in the expenditure of our resources before then. If the merger transaction is delayed significantly or is not completed at all, we will be required to seek additional financing, however, we can give no assurance that additional financing will be available on acceptable terms or at all. Additionally, if the merger transaction is not completed and we are unable to raise significant additional funds through debt or equity issuances, asset sales, or otherwise, we will be required to delay, reduce or eliminate one or more of our research and development programs or obtain funds from collaborative partners or others that may require us to relinquish rights to our technologies or potential products that we would not otherwise relinquish. Our financial statements have been prepared assuming that we will continue as a going concern. The financial statements do not include any adjustments that might be necessary if we are unable to continue as a going concern or that may result from the outcome of any of these other uncertainties." CONSTELLATION 3D: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Constellation 3D,Inc. aka C3D, Inc. aka Latin Venture Partners, Inc. 235 West 76th Street Suite 8D New York, New York 10023 Bankruptcy Case No.: 02-16231 Type of Business: Research and development of data storage technology Chapter 11 Petition Date: December 13, 2002 Court: Southern District of New York (Manhattan) Judge: Prudence Carter Beatty Debtors' Counsel: Scott R. Kipnis, Esq. Hofheimer Gartlir & Gross, LLP 530 5th Avenue, 9th Floor New York, NY 10036 Tel: (212) 897-7898 Fax: (212) 897-4999 Total Assets: $1,041,020 Total Debts: $13,957,200 Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ DeAm Convertible Arbitrage Fund $1,664,687 c/o The Palladin Group, L.P. 195 Maplewood Avenue Maplewood, NJ 07040 Gleneagles Fund Company $1,000,000 c/o The Palladin Group, L.P. 195 Maplewood Avenue Maplewood, NJ 07040 Baker & McKenzie $250,000 1200 Brickell Ave--19th Fl Miami, FL 33131-3214 State of Delaware Tax Division $250,000 15 East North Street Dover, DE 19901 BDO Seidman $200,000 NASDAQ $63,000 RR Donnelley $60,000 Mullen $52,000 Academic Travel $25,000 Griffin Securities $20,000 ICE Proxy Services $18,895 Related Broadway Development $16,000 Madison Third Building Companies LLC $15,488 Thelen Reid & Preist $15,000 ATG (Advanced Technology Group) $10,875 Shemano Group $10,000 Hosting.com $8,184 The Depository Trust Company $8,000 ADP Proxy Service $8,000 CONTIMORTGAGE HOME: S&P Cuts Class B Note Ratings to Low-B Level ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the B classes of ContiMortgage Home Equity Loan Trust's series 1999-1 and 1999-2. The rating on class B of series 1999-1 is lowered to 'B' from 'BBB-' and the rating on class B of 1999-2 is lowered to 'BB' from 'BBB-'. Simultaneously, ratings are affirmed on the remaining 101 classes from 21 ContiMortgage Home Equity Loan Trust transactions (including the two aforementioned). The lowered ratings reflect a decrease in credit support percentages to the subordinate classes due to net losses consistently exceeding excess interest, resulting in an erosion of overcollateralization. Standard & Poor's projects overcollateralization to be depleted for the B classes of series 1999-1 and 1999-2 within the next 12 months. The affirmations on the classes in the 1997-3, 1997-4, 1997-5, 1998-1, 1998-2, 1998-3, 1998-4, and 1999-3 transactions reflect credit support percentages and losses that have stabilized. However, upgrades are not warranted at this time because of persisting high delinquencies and projected losses. Credit support for each transaction is provided by subordination, excess interest, overcollateralization, and bond insurance provided by MBIA Insurance Corp. (Ambac Assurance Corp. provides bond insurance for the 1999-1 and 1999-3 transactions only). The insurance policies cover only the senior certificates in all cases, except the 1997-3 transaction, in which case there is no insurance policy in effect. The affirmations on the classes in the 1994, 1995, and 1996 transactions are based solely on bond insurance provided by Financial Guaranty Insurance Co. (for the 1995-1, 1995-2, 1995- 3, 1995-4, and 1996-1 transactions) and MBIA Insurance Corp. (for the 1994-3, 1994-4, 1994-5, 1996-2, 1996-3, and 1996-4 transactions). As of the October 2002 distribution date, total delinquencies across all 21 transactions ranged from 14.58% (series 1994-3) to 36.27% (series 1997-3 group 2). Serious delinquencies ranged from 13.47% (series 1994-5) to 29.57% (series 1997-3 group 2), and cumulative losses ranged from 3.11% (series 1994-3) to 4.72% (series 1998-3 group 1). All of the transactions are backed by fixed- and adjustable-rate subprime home equity mortgage loans secured by first and second liens on owner-occupied one- to four-family residences. RATINGS LOWERED ContiMortgage Home Equity Loan Trust Pass-thru certs Rating Series Class To From 1999-1 B B BBB- 1999-2 B BB BBB- RATINGS AFFIRMED ContiMortgage Home Equity Loan Trust Pass-thru certs Series Class Rating 1994-3 A-2, A-2IO, A-3, A-4 AAA 1994-4 A-4, A-5, A-6, A-IO AAA 1994-5 A-4 AAA 1995-1 A-5, A-6IO, A-7IO AAA 1995-2 A-5, A-6 AAA 1995-3 A-5, A-6 AAA 1995-4 A-8, A-9, A-11, A-12 AAA 1995-4 A-13IO AAA 1996-1 A-6, A-7, A-8, A-9IO AAA 1996-2 A-7, A-8, A-9, A-10IO AAA 1996-3 A-6, A-7, A-8, A-9IO AAA 1996-3 A-10IO AAA 1996-4 A-7, A-8, A-9, A-10 AAA 1996-4 A-11IO, A-12IO AAA 1997-3 A-7, A-8, A-9, A-10, M-1A AAA 1997-3 M-1F AA 1997-3 M-2A A 1997-3 B-1A B 1997-4 A-6, A-7, A-9 AAA 1997-5 A-5, A-6, A-8, A-10 AAA 1997-5 B B 1998-1 A-6, A-7, A-8, A-9 AAA 1998-1 B CCC 1998-2 A-5, A-6, A-7, A-8, A-9 AAA 1998-2 B BB 1998-3 A-5, A-6, A-7, A-8, A-9 AAA 1998-3 A-10, A-15, A-16 AAA 1998-3 A-17, A-18 AAA 1998-3 A-20 AAA 1998-3 B-I, B-II BBB- 1998-4 A AAA 1999-1 A-4, A-5, A-6, A-7, A-8 AAA 1999-2 A-4, A-5, A-6, A-7, A-8 AAA 1999-3 A-3, A-4, A-5, A-6, A-7 AAA 1999-3 A-8 AAA 1999-3 B BBB- COOKER RESTAURANT: Knight Securities Reports 11.5% Equity Stake --------------------------------------------------------------- Knight Securities, LP, beneficially owns 742,582 shares of the common stock of Cooker Restaurant Corporation, representing 11.5% of the outstanding common stock of the Company. Knight Securities holds sole voting and dispositive powers over the stock. * * * As previously reported in the September 27, 2002, issue of Troubled Company Reporter, the Cooker Restaurant Corporation's (OTC Bulletin Board: CGRT) plan of reorganization was approved by the Federal Court in Columbus, Ohio on Wednesday, September 11, 2002. CRC entered Chapter 11 in May of 2001 with a total debt of $85 million. The new Company has debt of $34 million. The Company owns and operates 35 restaurants in Tennessee (Nashville & Murfreesboro - 7), in Ohio (Cleveland - 7, Columbus - 5, Cincinnati - 3, Dayton - 2 & Toledo- 2) and in Michigan (Detroit - 6 & Ann Arbor - 1), in Virginia (Chesapeake 1) and in Florida (Orlando - 1). The Company also has raised $4 million in new equity capital, including a large infusion from River Capital Partners, Atlanta, Georgia. COVANTA ENERGY: Makes Amendments to BofA DIP Credit Agreement ------------------------------------------------------------- Covanta Energy Corporation, and its debtor-affiliates amended the DIP Credit Agreement they executed with Bank of America, N.A., as Administrative Agent for the Lenders and Deutsche Bank AG, New York Branch, as Documentation Agent for the Lenders, on May 10 and October 4, 2002. A full-text copy of the Amendments was filed with the Securities and Exchange Commission on November 14, 2002 and it is available at: http://www.sec.gov/Archives/edgar/data/73902/000090342302000718/0000903423-0 2-000718.txt The salient terms of the most recent Amendment are: 1. Under Subsection 1.1, "Advance Limit" means, with respect to Tranche A Loans, a of the any date of determination, during any calendar month set herein, the aggregate amount set herein for the calendar month: Calendar Month Advance Limit -------------- ------------- September 2002 $14,000,000 October 2002 14,000,000 November 2002 24,000,000 December 2002 14,000,000 January 2003 14,000,000 February 2003 14,000,000 March 2003 14,000,000 April 2003 14,000,000 Provided, however, that in the event of any Ottawa Disposition, each of the amounts will be reduced by the excess, if any, of: (a) 75% of the Ottawa Disposition Proceeds over: (b) the greater of zero and the amount, if any, by which the Tranche A Commitments exceed the Advance Limit then in effect; and provided further, however, that in no event shall the Advance Limit then in effect be reduced below $5,000,000 pursuant to the immediately preceding proviso. 2. Subsection 2.5A is amended to read: "during the period from date of the appointment of the Official Committee for the Unsecured Creditors in the Chapter 11 cases to September 25, 2002, proceeds of the Loans, the Letters of Credit and Cash Collateral not to exceed $345,000 may be used to pay reasonable fees and expenses for the Committee to, among other things, analyze and investigate the Prepetition Obligations and any Liens securing the claims." 3. This provision is further inserted in Subsection 2.5A: "Subject to the foregoing restrictions, proceeds of Loans and Cash Collateral not to exceed $500,000 in the aggregate my be used to pay reasonable fees and expenses of professionals for the Official Committee of Unsecured Creditors to prosecute, after September 25, 2002, the claims of the Committee, acting on behalf of the Debtors, against the holders of Company's 9.25% Debentures and their trustee, as the claims are described in the complaint filed as part of the adversary case number 02-03004." "Notwithstanding anything to the contrary, (a) in no event shall any portion of the $500,00 be used to pursue any claims or prosecute any action against the Lenders, the Prepetition Lenders or the Agents; and (b) in no event shall any consent, authorization or lack of prohibition with respect to the Committee's right to use the Cash Collateral to prosecute any action in any way be deemed to confer on the Committee any right to use Cash Collateral to pursue any adversary action, suit, arbitration, proceeding or other litigation of any type against the Lenders, the Prepetition Lenders or the agents now or at any time in the future." 4. These new provisions are added in Subsection 7.7: (xi) Ogden Spain S.A. may commence voluntary bankruptcy proceedings in Spain; provided that: (a) at the time of commencement of the bankruptcy proceedings, Ogden Spain S.A. shall not be engaged in any business activities and shall have no material assets other than the net intercompany receivable against Company; (b) the aggregate amount of costs incurred by Borrowers and their respective Subsidiaries in connection with the bankruptcy proceedings shall not exceed $225,000; and (c) Administrative Agent shall have received an Officer's Certificate from Company certifying as to the foregoing. (xii) Ogden Entertainment Services of Spain S.A., a Foreign Subsidiary, may be liquidated in accordance with applicable law; provided that: (a) at the time of liquidation, the Foreign Subsidiary shall not be engaged in any business activities; (b) Borrowers and their respective Subsidiaries shall have in the aggregate no more than $90,000 if debts or other obligations, contingent or otherwise, relating to the Foreign Subsidiary and the assets being liquidated; (c) the aggregate amount of costs incurred by Borrowers and their respective Subsidiaries in connection with the liquidation shall not exceed $30,000; and (d) Administrative Agent shall have received an Officer's Certificate from Company certifying as to the foregoing. (Covanta Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392- 0900) CRIIMI MAE: Brascan Completes Due Diligence for Recapitalization ---------------------------------------------------------------- An affiliate of Brascan Real Estate Financial Partners LLC has completed due diligence for the previously announced transactions designed to recapitalize and refinance commercial mortgage company CRIIMI MAE Inc. (NYSE: CMM). Under the terms of the Investment Agreement, BREF will purchase 10% of the outstanding shares of CRIIMI MAE's common stock and up to $40 million of subordinated debt to be issued by CRIIMI MAE. In addition, Bear, Stearns & Co., Inc., has completed its initial due diligence and signed a commitment letter to provide CRIIMI MAE with a secured financing of up to $300 million in the form of a repurchase transaction under terms substantially in the form as previously disclosed in the Company's third quarter 10-Q. CRIIMI MAE, BREF and Bear Stearns are proceeding to the expected closing of the proposed transactions in January 2003. The combined proceeds of up to $353 million from the BREF investments and the Bear Stearns secured financing together with a substantial portion of the Company's liquid assets will be used to retire CRIIMI MAE's recourse debt incurred in connection with its emergence from Chapter 11 in April 2001. The closing of the transactions contemplated by the BREF Investment Agreement and the Bear Stearns commitment letter is subject to the completion of documentation, absence of material adverse changes and the satisfaction of certain other closing conditions. Brascan Corporation (NYSE: BNN), (Toronto: BNN.A) is a North American based company which owns and manages assets which generate sustainable cash flows. Current operations are largely in the real estate, power generation and financial sectors. Total assets exceed $23 billion and include 55 premier commercial properties and 38 power generating facilities. In addition, Brascan holds investments in the resource sector. Brascan's publicly traded securities are listed on the New York and Toronto stock exchanges. CRIIMI MAE Inc., (NYSE: CMM) is a commercial mortgage company based in Rockville, Md. CRIIMI MAE holds a significant portfolio of commercial mortgage-related assets and performs, through its servicing subsidiary, mortgage servicing functions for $17.7 billion of commercial mortgage loans. During the late 1990s, CRIIMI MAE was the largest buyer of subordinated commercial mortgage-backed securities. It also originated commercial real estate mortgages, pooled and securitized commercial mortgages and executed three of the commercial real estate industry's earliest resecuritization transactions. The Bear Stearns Companies Inc. (NYSE: BSC), founded in 1923 and headquartered in New York City, is the parent company of Bear, Stearns & Co. Inc., a leading investment banking and securities trading and brokerage firm serving governments, corporations, institutions and individuals worldwide. With approximately $29.6 billion in total capital, the company's business includes corporate finance and mergers and acquisitions, institutional equities and fixed income sales, trading and research, private client services, derivatives, foreign exchange and futures sales and trading, asset management and custody services. For further information, including CRIIMI MAE's SEC filings, see the company's Web site: http://www.criimimaeinc.com Shareholders and securities brokers should contact Shareholder Services at 301-816-2300, e-mail shareholder@criimimaeinc.com, and news media should contact James Pastore, Pastore Communications Group LLC, at 202-546-6451, e-mail pastore@ix.netcom.com DEVON MOBILE: Delaware Court Fixes January 17, 2003 Bar Date ------------------------------------------------------------ By Order of the U.S. Bankruptcy Court for the District of Delaware, January 17, 2003, has been fixed as last day for creditors, except for governmental claim holders, to file their Proofs of Claim against Devon Mobile Communications, LP, or be forever barred from asserting those claims. The Governmental Claims Bar Date is set for February 17, 2003. Proofs of Claim need only be filed by entities: i. whose claims are not listed in the Debtors' Schedules; ii. whose claims are listed in the Schedules as contingent, unliquidated, or disputed; iii. who dispute the amount of their claims; iv. who dispute the manner in which their claims are listed; Proofs of Claim must be received before 5:00 p.m. on the applicable bar date at: Devon Mobile Communications, LP c/o Robert L. Berger & Associates LLC, 10351 Santa Monica Boulevard Suite 101-A, PMB 1029, Los Angeles, California 90025 Devon Mobile Communications, L.P., a personal communications service company, filed for Chapter 11 protection on August 19, 2002. J. Kate Stickles, Esq., at Saul, Ewing LLP and Gerard S. Castellano, Esq., at Brown Raysman Millstein Felder & Steiner LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed total assets of about $142.7 million and total debts of $64.8 million. DION ENTERTAINMENT: D.A.W. Demands Repayment of $6MM by Dec. 31 --------------------------------------------------------------- The Board of Directors of Dion Entertainment Corp., (TSX:DIO) provides this update to investors. As previously announced, D.A.W. Investments Limited, a company controlled by David Wallace has reiterated its allegations that the Company is in default under a loan agreement dated June 17, 1999 and a series of pledge agreements and amending agreements dating back to January 31, 1996. Consequently, DAW has appointed David Wallace as the sole director of certain of the subsidiaries of the Company, including Leisure Food Services Corp., Dion First American, Inc. Bingo World Conference & Expo Inc., and Bingo Plus Services (America) Inc., in addition to Great Canadian Bingo Corp., as previously announced, and to further seize all corporate assets of those companies on behalf of DAW. DAW has further demanded repayment of an aggregate of $6,089,232.07 by December 31, 2002, under its various Security Agreements, Amended and Restated Security Agreements, General Security Agreements and Security Pledge Agreements executed between the parties. Mr. Louis Dion, a new board member, considers these actions in breach of a long-standing agreement between himself and Mr. Wallace. The new Board is taking these recent developments into consideration with its legal advisors, and is working diligently to resolve this matter in the best interests of the Company and its shareholders. EB2B COMMERCE: Richard Cohan Discloses 11.2% Equity Stake --------------------------------------------------------- Mr. Richard S. Cohan used his own personal funds to purchase a 7% senior subordinated secured convertible note of eB2B Commerce Inc. in the principal amount of $5,729, which Note is convertible immediately into 56,725 shares of common stock of the Company at the rate of $0.101 per share, which acquisition is the event that required filing of an Amendment No. 2 with the SEC. Such funds had previously been placed in escrow with the Company in July 2002. The aggregate number of shares of common stock which Mr. Cohan beneficially owns is 244,648, representing 11.2% of the outstanding common stock of the Company; less than 1% on a fully diluted basis, giving effect to all shares of common stock underlying derivative securities issued by eB2B Commerce (i.e. convertible notes, convertible preferred stock, warrants and options). Mr. Cohan holds sole power to vote or to direct vote of, and the sole power to dispose or to direct the disposition of the entire 244,648 shares. Mr. Cohan is the owner of 3,447 shares of eB2B Commerce common stock; the Note presently convertible into 56,725 shares of common stock; wo 7% senior subordinated secured convertible notes in the principal amounts of $7,292 and $5,729, which notes are presently convertible into 72,195 and 56,725 shares of common stock, respectively; and options to purchase 1,316,668 shares of common stock of the Company. Of such Options, (i) 133,334 are exercisable at $7.95 per share, of which 1/3 (44,445 shares) are exercisable immediately and an additional 1/3 of which shall vest on each of May 4, 2003 and 2004; (ii) 33,334 are exercisable at $3.45 per share, of which 1/3 (11,111 shares) are exercisable immediately and an additional 1/3 of which shall vest on each of July 3, 2003 and 2004; (iii) 350,000 are exercisable at $1.30 per share, of which 1/2 (175,000 shares) shall vest on each of February 19, 2003 and 2004; and (iv) 800,000 are exercisable at $0.11 per share, of which 1/2 (400,000 shares) are exercisable immediately and the remaining 1/2 of which shall vest on June 27, 2003; provided, however, this option for 800,000 shares shall not vest at all until the Company shall obtain shareholder approval of a proposal to increase the number of shares available for issuance under the Company's 2000 Stock Option Plan, as amended (and the Company has indicated Shareholder Approval will not be obtained within sixty days from the date of this Amendment No. 2). For purposes of this article, only those shares subject to Options exercisable within 60 days have been included in calculating Mr. Cohan's beneficial ownership of the issued and outstanding shares of common stock of the Company. All transactions disclosed herein have been adjusted to reflect the 1:15 reverse stock split of the Company's common stock effective January 10, 2002. eB2b's working capital deficit tops $3.2 million at September 30, 2002. EMAGIN CORP: Inks Release Agreement with Triton & Northwind ----------------------------------------------------------- eMagin Corporation, Triton West Group, Inc., and Northwind Associates, Inc., entered into a Release Agreement dated December 5, 2002. The Agreement, among other things, terminates the Common Stock Purchase Agreement dated March 4, 2002 between eMagin and Northwind. The warrant issued pursuant to the Common Stock Purchase Agreement will remain outstanding. As part of the termination, eMagin will not be required to utilize the minimum draw down commitment amount of $250,000 under the Common Stock Purchase Agreement. In addition, under the Agreement, Triton agrees to release certain claims it had asserted against, and which were disputed by, eMagin for anti-dilution protection pursuant to the Securities Purchase Agreement entered into as of February 27, 2002 between eMagin, Triton and certain other investors. As part of the Agreement, eMagin agreed to issue to Triton 500,000 shares of its common stock, pay Northwind the sum of $25,000 upon the completion of a financing with gross proceeds to eMagin of $500,000 subject to certain additional adjustments, and file a registration statement with the SEC covering the resale of all shares of common stock owned by Triton and Northwind within forty-five calendar days from the completion of a financing with gross proceeds of at least $7,000,000 and under certain additional circumstances. Further, Triton and Northwind on the one hand and eMagin on the other hand provided a complete mutual release from all claims. A leading developer of virtual imaging technology, eMagin combines integrated circuits, microdisplays, and optics to create a virtual image similar to the real image of a computer monitor or large screen TV. These miniature, high-performance, modules provide access to information-rich text, data, and video which can facilitate the opening of new mass markets for wearable personal computers, wireless Internet appliances, portable DVD-viewers, digital cameras, and other emerging applications. eMagin's September 30, 2002 balance sheet reported a net capital deficit of about $11 million. ENCOMPASS SERVICES: Hires Deloitte & Touche as Tax Consultants -------------------------------------------------------------- Encompass Services Corporation and its debtor-affiliates need tax consultants to assist them in tax-related matters as they go about their business operations as debtors-in-possession. Alfredo R. Perez, Esq., at Weil Gotshal & Manges LLP, in Houston, Texas, informs Judge Greendyke that the Debtors chose Deloitte & Touche LLP to render tax consulting, tax advisory and other related services. The Debtors believe that Deloitte's extensive experience and knowledge of tax laws will surely have an impact on their business and financial affairs. Mr. Perez notes that Deloitte has rendered accounting, auditing, consulting and tax advisory services and advice to financially troubled companies for many years. Hence, Deloitte has the necessary background to deal effectively with many of the Debtors' needs and problems that may arise. Mr. Perez relates that the services Deloitte will render are in the nature of tax issue analysis and consulting and tax advisory services and therefore are not duplicative in any manner with the services performed and to be performed by other professionals retained by the Debtors. In particular, Deloitte will: (a) assist and advise them in their restructuring objectives and post-restructuring operations with regard to tax matters; (b) provide tax consulting regarding the availability, limitations and preservation of certain tax attributes like as net operating losses, tax credits and basis; (c) assist them in determining the likely amount of cancellation of indebtedness income arising from various restructuring scenarios and the effect of tax attribute reduction for federal and state purposes under the bankruptcy exclusion of Section 108 of the Internal Revenue Code; (d) assist them to determine whether an ownership change, within the meaning of Section 382 of the Internal Revenue Code, will occur as a result of the proposed plan of reorganization and whether they would potentially qualify for and benefit from the special bankruptcy exceptions contained in Section 382(l)(5) and (l)(6) of the IRC; (e) review their determination of tax bases in subsidiaries and provide tax consulting with respect to any excess loss accounts that may exist with respect to any subsidiaries; (f) advise as to the treatment of damages relating to rejected leases, if any, postpetition interest, and other insolvency or bankruptcy tax issues that may arise; (g) document, as appropriate, the tax analysis, opinions, recommendations, conclusions, and correspondences for any proposed restructuring alternative tax issue or other tax matter; and (h) other tax services in connection with these Chapter 11 cases as they may request;. The Debtors will pay Deloitte for its services in accordance with the firm's standard hourly rates: Professional Rate ------------ ---- Partners/Directors/Principals $550 - 650 Senior Managers 450 - 550 Managers 350 - 450 Staff/Seniors 250 - 350 The Debtors will also indemnify and hold Deloitte and its personnel harmless, to the fullest extent of the law, from all claims, liabilities and expenses related to: -- their engagement except to the extent judicially determined to have resulted primarily from the bad faith or intentional misconduct of the firm; -- a breach or an alleged breach by the Debtors or any of their personnel of any provision of the terms of the Engagement Letter; and -- the access to or use of certain communications between the Debtors and Deloitte by any of their professional advisors. The Debtors further agree that the Indemnified Parties will not be liable for any claims, liabilities, or expenses related to their engagement for an aggregate amount in excess of the fees the Debtors paid pursuant to the engagement, except to the extent judicially determined to have resulted from the bad faith or intentional misconduct of Deloitte. Pursuant to an engagement letter executed on October 8, 2002, the Debtors paid Deloitte a $50,000 retainer. So far, Deloitte has drawn $28,870. The balance will be applied to post-petition invoices. Timothy Leverenz, a D&T partner, declares that that his Firm does not have or represent any interest materially adverse to the interest of the Debtors by reason of any relationship to, connection with or interest in them, or for any other reason. (Encompass Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) EOTT ENERGY: Court Approves Disclosure Statement Explaining Plan ---------------------------------------------------------------- EOTT Energy Partners, L.P., (OTC Pink Sheets: EOTPQ) provided an update on the company's progress relative to its restructuring plan that includes legal and operational separation from Enron. The Bankruptcy Courts for the Southern District of Texas and the Southern District of New York have given final approval of EOTT's settlement agreement with Enron. The court approvals clear the way for EOTT's separation from Enron to occur upon confirmation of the EOTT plan of reorganization, which is expected to take place early in 2003. The Court has also approved EOTT's disclosure statement to be distributed to its creditors and unitholders in connection with solicitation of approval of the reorganization plan. The EOTT Creditors' Committee also approved to the contents of the disclosure statement. Solicitation packages, including the disclosure statement, plan of reorganization, and ballots, will be mailed to creditors and unitholders during the week of December 16, 2002. The deadline for submitting ballots is January 23, 2003. The Court has scheduled a hearing on January 30, 2003, to approve the reorganization plan. "We are pleased with the progress of our restructuring plan and believe that the Creditors' Committee and the company are working well together in achieving the required approvals to complete the Chapter 11 proceedings promptly," stated Dana Gibbs, EOTT President and Chief Executive Officer. "We are on track to emerge from the Chapter 11 process in early 2003 with solid customer relationships, a stronger financial position and a plan for growth." On October 9, EOTT Energy Partners, L.P., and its subsidiaries announced the filing of a voluntary, pre-negotiated plan of reorganization. A complete copy of EOTT's disclosure statement and plan of reorganization, as filed with the Bankruptcy Court, are available at http://www.eott.comor through the SEC's EDGAR database. EOTT Energy Partners, L.P., is a major independent marketer and transporter of crude oil in North America. EOTT also processes, stores, and transports MTBE, natural gas and other natural gas liquids products. EOTT transports most of the lease crude oil it purchases via pipeline that includes 8,000 miles of intrastate and interstate pipeline and gathering systems and a fleet of more than 230 owned or leased trucks. The partnership's common units are traded under the ticker symbol EOTPQ:PK. DebtTraders says that Eott Energy Partners/Fin.'s 11.000% bonds due 2009 (EOT09USR1) are trading between 57 and 59. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for real-time bond pricing. EUROTECH LTD: Intends to Move from AMEX to OTC Bulletin Board ------------------------------------------------------------- Eurotech, Ltd., (AMEX:EUO) announced that on December 10, 2002, the Company received a written notice from the staff of the American Stock Exchange indicating that the Staff had determined that the Company would not be able to regain compliance with the Exchange's continued listing standards by March 31, 2004, and that the Exchange intended to proceed with the filing of an application with the Securities and Exchange Commission to strike the Company's common stock from listing and registration on the Exchange if the Company did not appeal the Staff's determination by Tuesday, December 17, 2002. In its notice, the Staff cited as reasons for its determination (i) the Company's financial concerns, such as sustaining losses in the last three fiscal years, (ii) the listing of additional shares without due approval from the Exchange, (iii) the Company's failure to provide sufficient information to the Exchange and (iv) the Company's recent financing transactions which, the Staff contended, raise public interest concerns. The Company stated that its Board of Directors voted this afternoon not to appeal the Staff's decision and to immediately commence efforts to cause the Company's common stock to trade on the OTC Bulletin Board. The Company is in the process of restructuring, including its recent announcement of a transaction with Markland Technologies, Inc. Don V. Hahnfeldt, the Company's President, stated "We regret Amex's decision, but our Board of Directors maintains a strong, positive belief in the prospects of Eurotech, and we hope to announce soon additional elements of our continuing efforts to restructure and position Eurotech for the future. We anticipate that trading of our common stock on the OTC Bulletin Board will begin next week and we will work closely with both Amex and the Bulletin Board to ensure the smoothest possible transition." Eurotech is a corporate asset manager seeking to acquire, integrate and optimize a diversified portfolio of manufacturing and service companies in various markets. Our mission is to build value in our emerging technologies and in the companies we acquire and own, providing each with the resources it needs to realize its strategic business potential. Eurotech's emerging technology business segment develops and markets chemical and electronic technologies designed for use in Homeland and Environmental Security. Following the closing of the previously announced exchange with Markland Technologies, Inc., the Homeland Security segment of the business shall be conducted through Markland. Eurotech's portfolio of technologically advanced products includes: (i) proprietary materials created to specifically solve the serious problems of how nuclear and other hazardous wastes are cost effectively contained; (ii) advanced performance materials for use in industrial products such as coatings and paints; (iii) automatic detection of explosives and illicit materials though its Markland Technologies subsidiary, and; (iv) cryptographic systems for secure communications, all of which can be used in Homeland and Environmental Security. At September 30, 2002, Eurotech's balance sheet shows that total current liabilities exceeded total current assets by about $2 million. EXIDE TECH: Equity Committee Turns to CFA for Financial Advice -------------------------------------------------------------- According to Equity Committee in the Chapter 11 cases of Exide Technologies and its debtor-affiliates, Chairman Keith Johnson, Corporate Financial Advisors, LLC is a financial advisory firm that provides a broad range of services including, but not limited to: -- investment banking; -- bankruptcy and turnaround consulting; and -- litigation and dispute support services. On the other hand, Water Tower Capital FAE, LLC is a financial advisory firm that has provided services to clients that include the LTV Equity Committee, the Comdisco Equity Committee, a significant trade creditor in the Sheffield Steel bankruptcy, and a sub-advisory role to the Official Committee in the Finova Chapter 11 proceeding. The principals of Water Tower Capital, LLC have served on several dozen creditors' committees during the course of the past decade. The principals of Water Tower Capital, LLC have also managed more than $900,000,000 of proprietary funds dedicated to investing in the securities of troubled companies. The Official Committee of Equity Security Holders seeks the Court's authority to retain Corporate Financial Advisors, LLC as financial advisors nunc pro tunc to November 14, 2002. The Equity Committee and CFA entered into an engagement letter on November 15, 2002. The Equity Committee also asks the Court to approve the Engagement Team Agreement between CFA and Water Tower Capital FAE, LLC. Mr. Johnson explains that the Equity Committee has chosen CFA as its financial advisor and has approved the Team Agreement because CFA and WTC have substantial knowledge and experience in the field of financial advisory services both within and outside Chapter 11 contexts and with the matters in which the Equity Committee will be active in these cases. Although CFA has substantial experience in financial advisory services, the synergies created by adding the experience of WTC's professionals will greatly benefit the estate by allowing CFA and WTC to efficiently combine the expertise of each group's professionals. The compensation received by WTC is a fixed percentage of the compensation received by CFA. WTC will look only to CFA for payment of its fees, although, through CFA, it will seek reimbursement from the Debtors' estates for its out-of-pocket expenses. Therefore, neither CFA nor WTC will have an incentive to duplicate efforts. CFA is expected to: A. communicate with the Debtors' officers and directors with respect to any proposed plan of reorganization and any other plan that may be proposed by any party; B. review the Debtors' asset pools and evaluate their quality and management; C. advise the Equity Committee with respect to potential business plans for the debtors-in-possession and any reorganized debtors; D. advise the Equity Committee with respect to the business operations of the debtors-in-possession; E. provide expertise and, if necessary, expert testimony concerning valuation of the Debtors' assets or enterprise; and F. provide any further and other services at the request of and in the interest of the Equity Committee. Pursuant to the Engagement Letter, Mr. Johnson relates that CFA will be compensated for its services at a rate of $100,000 per month for the first four months of the engagement and at a rate of $75,000 per month throughout the remainder of the engagement. In addition, CFA will receive a success fee equal to 3% of the Recovery Value in the cases payable in cash or in-kind distribution, as the Equity Committee elects. Pursuant to the Team Agreement, WTC will receive 50% of any fees received by CFA. In addition, CFA and WTC will keep detailed records of all expenses for which they seek reimbursement pursuant to the Engagement Letter and Team Agreement including, without limitation, travel and lodging expenses, word processing charges, messenger and duplicating services, facsimile expenses, long distance calls and other customary expenditures. CFA will submit WTC's expenses for reimbursement along with their own. Mr. Johnson adds that the Engagement Letter provides that the Debtors will indemnify CFA and WTC; provided, however, that the indemnification excludes any claims arising from and based solely on the bad faith or deliberate and willful gross negligence of CFA, WTC or any other indemnified person. The terms of the requested indemnity are the same as those granted to the financial advisor for the Official Committee of Unsecured Creditors in these cases. Mr. Johnson believes that the fee structure, which is set forth in the Engagement Letter is comparable to those generally charged by financial advisory and investment banking firms of similar stature to CFA and WTC for comparable engagements, both in and out of court, and reflect a balance between a fixed, monthly fee and a contingency amount, which is tied to the Recovery Value contemplated by the Equity Committee, CFA and WTC in the Engagement Letter and the Team Agreement. The hours worked, the results achieved and the ultimate benefit to the Equity Committee of the work performed by CFA and WTC in connection with this engagement may vary and the Equity Committee, CFA and WTC have taken this into account in setting the fees. To induce CFA and WTC to do business with the Equity Committee, the fees were set against the difficulty of the assignment and the potential for failure. Additionally, the Equity Committee has been advised by CFA and WTC that they will coordinate with the other retained professionals in these cases to eliminate unnecessary duplication or overlap of work. Mr. Johnson assures the Court that both CFA and WTC do not represent and do not hold any interest adverse to the Debtors' estates, their creditors or their equity security holders in the matters on which CFA is to be engaged. Accordingly, CFA and WTC are "disinterested persons" within the meaning of the Bankruptcy Code. (Exide Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) EZENIA! INC: Partners with Chiliad to Create Application Suite -------------------------------------------------------------- Ezenia! Inc., (Nasdaq: EZEN) a leading provider of real-time collaboration solutions for corporate and government networks and eBusiness, entered into a partnership agreement with Chiliad to create an application suite combining the industry's next- generation real-time knowledge search, discovery and content analysis engine with a complete, secure collaboration platform in use by the Government today. Ezenia! and Chiliad plan to jointly sell the integrated product offerings to existing and expanded customer bases. InfoWorkSpace Version 2.5 introduces the first level of integration with the Athena Discovery, a component of Chiliad's Current Awareness Suite. Both companies have agreed to incorporate the Chiliad Alert real-time contextual filtering engine into a subsequent release of InfoWorkSpace, which will provide users with continuous message monitoring and discern real-time alerts. "With the Chiliad partnership and the integration of its CAS components into InfoWorkSpace, Ezenia! further solidifies its leadership in the collaborative software solution market by delivering improved technology, broadened performance and increased value to our customers," said Khoa Nguyen, Chairman and CEO of Ezenia!. "This integration of software technologies by Chiliad and Ezenia! will enable effective real-time situation assessment and collaborative decision making for time- and mission-critical applications," said Paul McOwen, CEO of Chiliad. "By raising the standards of accuracy and productivity for real-time content analysis, this combined solution enables users to provide proactive immediate-response capabilities for national defense, national security and business intelligence applications." "InfoWorkSpace is known and endorsed by its users for proven quality, deployed scalability and battle-tested reliability. Its value as the premier collaboration platform with a flexible architecture enables complimentary applications, such as Chiliad's CAS, to be quickly integrated," said Michael LeJeune, Director of Federal Sales, Marketing and Business Development of Ezenia!. "This agreement firmly demonstrates Ezenia!'s commitment to continuously improve its functionality either with internal development or with technology partnerships, as well as bring the best price/performance solution to our valued customers in the U.S. Federal market, including the Department of Defense, Department of Homeland Security and Intelligence Community. InfoWorkSpace delivers cost-effective tools and operational interoperability to all branches of the services." InfoWorkSpace, available to all federal agencies via GSA schedules and to the commercial marketplace, provides a secure virtual office where users can build online meeting places organized into virtual buildings, floors and rooms to meet and interact on projects in real-time. InfoWorkSpace allows for the establishment of user-friendly online work-groups that enhance collaboration and increase productivity among knowledge workers. Product Features: -- Online Detection & Instant Messaging - InfoWorkSpace instant messenger capability, LaunchPad(TM), enables users to locate people connected to the system, chat with them instantaneously and/or invite them to join a virtual conference. -- Virtual Work Space - InfoWorkSpace offers a complete virtual meeting facility where users can meet and collaborate, store projects and review archives. -- Collaboration Tools - InfoWorkSpace includes a full range of collaboration tools such as multiparty message chat, multiparty audio conferencing, video webcasting, advanced whiteboarding capability, application casting and shared viewing, persistent storage of meeting minutes, online voting and polling and much more. Chiliad has released the first two products in its Current Awareness Suite. Athena Discovery is the first of a new generation of more productive real-time content analysis and knowledge discovery software, built on top of the most accurate contextual retrieval engine in the industry. The Chiliad Alert contextual filtering engine continuously monitors live email traffic, information flows across files systems, news feeds, and other sources using intelligent filtering agents to detect specific context and critical events, including security violations. The filtering engine provides instant alerts to desktops or wireless devices with the highest accuracy and the fewest false alarms. Both products are introduced with an industry changing pricing model to enable higher utilization and return on investment. The software is listed on the GSA Schedule. Chiliad's initial customers include the Defense Department, various intelligence agencies involved in Homeland Security, and the US Library of Congress. Chiliad was incorporated in 1999 with headquarters in Amherst, Massachusetts. Information about Chiliad can be found at http://www.chiliad.com Ezenia! Inc., (Nasdaq: EZEN) founded in 1991, is a leading provider of real-time collaboration solutions, bringing new and valuable levels of interaction and collaboration to corporate networks and the Internet. By integrating voice, video and data collaboration, the Company's award-winning products enable groups to interact through a natural meeting experience regardless of geographic distance. Ezenia! products allow dispersed groups to work together in real-time using powerful capabilities such as instant messaging, white boarding, screen sharing and text chat. The ability to discuss projects, share information and modify documents allows users to significantly improve team communication and accelerate the decision-making process. More information about Ezenia! Inc. and its product offerings can be found at the company's Web site, http://www.ezenia.com/ At September 30, 2002, Ezenia!'s balance sheet shows that total current liabilities eclipsed total current assets by about $2.4 million. FX ENERGY: Current Fin'l Position Raises Going Concern Doubt ------------------------------------------------------------ As of September 30, 2002, FX Energy Inc., had approximately $1.1 million of cash and cash equivalents, negative working capital of approximately $6.2 million and a stockholders' deficit of approximately $1.2 million. In addition, it had a remaining commitment of $9.3 million ($2.7 million of which is included in accrued liabilities at September 30, 2002) that must be spent by FX in order to complete its earning obligation in its Fences project area. The Company's current financial position raises substantial doubt about its ability to continue as a going concern. After the recent implementation of certain cost-cutting measures, management estimates that the existing cash and cash equivalents should be sufficient to meet minimum requirements through approximately the first quarter of 2003, without regard to the Fences project area commitment and the Company's RRPV obligation. Management indicates that it is aggressively pursuing additional capital from both industry and equity market sources and has implemented measures to reduce Company cash requirements to enable it to continue operations, including the following: * FX is actively negotiating the farmout of its Polish properties. On October 28, 2002, the Company announced the signing of a Memorandum of Understanding with CalEnergy Gas (Holdings) Ltd., an affiliate of MidAmerican Energy Holdings Company, for the joint exploration of certain of FX' oil and gas exploration property interests in Poland. Details of the Memorandum of Understanding remain confidential pending the negotiation of definitive agreements, third-party participation and other matters. The proposed transaction is subject to the negotiation of a definitive agreement with CalEnergy and other matters. * The Company's current liabilities at September 30, 2002, include $5.0 million, secured by a lien on most of the Polish property interests, due RRPV that is repayable in March 2003, unless converted to common stock at $5.00 per share. FX may seek an extension of the due date, conversion of the obligation at the previously agreed or a newly-negotiated price per share, a release of the lien in order to facilitate further exploration or financing or other modification of its agreements with RRPV. * FX has reduced by 50% the salaries of all key employees. The Company has taken steps to reduce or eliminate as much of its other ongoing costs requiring cash expenditures as practicable. * FX is seeking funds through a farmout of its Polish properties to help it satisfy the $2.7 million accrued liability related to the Fences project area as well as the remaining commitment of $6.6 million that must be spent by FX in order to complete its earning obligation in this project area. In addition, it is seeking to alter the terms of its agreement with Polish Oil and Gas Company, or POGC, respecting the Fences project area. As of this date, the Company does not have a commitment from a third party to provide any additional funding. There can be no assurance that the Company will be able to obtain additional financing, further reduce expenses, renegotiate the terms of existing agreements or successfully complete other steps to enable it to continue as a going concern. If unable to obtain sufficient funds to satisfy future cash requirements, FX indicates that it may be forced to curtail operations further, dispose of assets, issue securities to meet obligations or seek extended payment terms from its creditors. Such events would materially and adversely affect its financial position and results of operations and result in the dilution of the interests of existing stockholders. FX operates within two segments of the oil and gas industry: the exploration and production segment, or E&P, and the oilfield services segment. For the three and nine months ended September 30, 2002, FX had total revenues of $976,589 and $2,033,992, as compared to $1,174,478 and $3,178,178 for the three and nine months ended September 30, 2001, respectively. Net loss for the three and nine months ended September 30, 2002 was $372,586 and $1,194,918, as compared to the net losses of $2,260,672 and $5,158,736 for the three and nine months ended September 30, 2001. GENUITY INC: Wants to Pay $8 Million in Critical Vendor Claims -------------------------------------------------------------- Genuity Inc., and its debtor-affiliates propose to pay all prepetition, fixed, liquidated, and undisputed claims of certain critical suppliers of materials, goods, and services, subject to these conditions: A. The Debtors, in their sole discretion, will determine which Critical Vendor Claims, if any, are entitled to payment under this Motion; B. If a Critical Vendor accepts payment under this Motion, the Critical Vendor is deemed to have agreed to continue to provide services to the Debtors, on as good or better terms and conditions that existed 120 days prior to the Petition Date, during the pendency of these Chapter 11 cases; C. If a Critical Vendor accepts payment under this Motion does not continue to provide services on at least the Customary Terms during the pendency of these Chapter 11 cases, then: -- any payment on a prepetition claim received by the Critical Vendor will be deemed to be an unauthorized voidable postpetition transfer under Section 549 of the Bankruptcy Code and, therefore, recoverable by the Debtors in cash after written request, and -- after recovery by the Debtors, any prepetition claim will be reinstated as if the payment had not been made; and D. Prior to making a payment to a Critical Vendor under this Motion, the Debtors may, in their absolute discretion, settle all or some of the prepetition claims of the Critical Vendor for less than their face amount without further notice or hearing. The Debtors estimate that the aggregate Critical Vendor Claims is approximately $8,000,000. Sally McDonald Henry, Esq. at Skadden Arps Slate Meagher & Flom LLP, in New York, tells the Court that the materials, goods and services to be provided by the Critical Vendors during these Chapter 11 cases are integrally intertwined with the products and services that the Debtors, in turn, sell to their customers. The Debtors believe that absent payment of the critical Vendors' prepetition claims in the ordinary course of business, these Critical Vendors may cease doing business with them. Accordingly, the Debtors believe that unless they are authorized to pay the Critical Vendors' prepetition claims, the Debtors' business operations may be severely damaged, perhaps beyond repair. Among the Debtors' Critical Vendors are: -- Equipment Vendors. Equipment vendors provide both new equipment to meet customer provisioning demands and network capacity adjustments, and maintenance services such as parts replacement and telephone and onsite support. The equipment provided by the Debtors' equipment vendors is engineered specifically for the Debtors' network; and the maintenance services provided by the equipment vendors are critical to keeping the Debtors' network operational. Some equipment vendors are the sole source of particular equipment, and certain equipment vendors provide services that are not available from other vendors; -- Software Vendors. Software vendors provide backup support for faults, maintain releases of software (which may be required to obtain the backup support), and provide subscription services for data, including tariff data which is necessary for the running of the Debtors' quoting, ordering, provisioning and billing systems; -- Network Service Vendors. Network service vendors provide time critical support to the Debtors' installed network, including repairs and modifications to the network. These vendors have unique skills and certifications to support the type of equipment used in the Debtors' network, making replacement of these vendors difficult. In some instances, there simply may not be a secondary vendor in a required geographic area; -- Consultants and Contractors. Several agencies provide the Debtors with consultants and contractors who have in-depth knowledge of the Debtors' businesses and therefore could not easily be replaced. Some of these consultants and contractors are essential to projects and work directly for the Debtors or through agencies that are not under contract to provide services to the Debtors; and -- Customer Service and Sales support Vendors. The Debtors use various vendors to implement and support their customer service programs and to provide support for customer sales. The services provided by the customer service and sales support vendors are critical to the Debtors' businesses because these services are necessary to maintain customer satisfaction -- and therefore the Debtors' customer base -- and to generate new business. The Debtors believe that such vendors could not easily be replaced because of the close coordination between the Debtors and the vendors -- a coordination which has developed and been carefully nurtured over time. Furthermore, even if the customer support functions could be transitioned to replacement vendors, the transition process would be costly and time- consuming due to operational and training issues. "Some vendors are the sole providers of some products and services within a convenient geographic area," Ms. Henry explains. "Those replaceable ones should also not be replaced owing to the expertise they have of their services and the in- depth knowledge of the Debtors' needs." The Debtors clarify that they do not seek to pay all Critical Vendor Claims. While the Debtors believe that they must continue to receive the materials, goods and services provided by the Critical Vendors to achieve a successful reorganization, the Debtors recognize that in many cases payment of a Critical Vendor's prepetition claims will not be necessary to facilitate the continued delivery of materials, goods and services. Rather, the Debtors believe that many of their Critical Vendors will continue to do business with them postpetition because they are required to do so under various provisions of the Bankruptcy Code -- or simply because continuing to do business with them makes good business sense, even without the payment of prepetition claims. In some cases, however, the Debtors anticipate that, Critical Vendors may: -- refuse to deliver materials, goods and services without payment of their prepetition claims; -- refuse to deliver materials, goods and services on reasonable credit terms absent payment of prepetition claims, effectively refusing to do business with the Debtors; or -- suffer significant financial hardship, so that the Debtors' non-payment of prepetition claims would destroy a Critical Vendors' business and therefore its ability to supply the Debtors with materials, goods and services. It is in cases like these -- where non-payment of Critical Vendors' claims would lead to the interruption of the delivery of necessary materials, goods and services -- that the Debtors seek to exercise their discretion to pay Critical Vendor Claims. (Genuity Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) GLOBAL CROSSING: Launches Latest & Enhanced Ready-Access Record --------------------------------------------------------------- Global Crossing announced the latest enhancement of its Ready- Access(R) conferencing service -- Ready-Access Record. Ready- Access Record is the first recording solution available from a US carrier-class provider, enabling users to automatically record audio conferences on demand easily and cost-effectively -- anytime, anywhere and with anyone. With Ready-Access Record, users can record conference calls on demand through any touch-tone telephone without reservations, advance set-up or special equipment. Users can then access a comprehensive Web-based archive management system to play back, store and share the recorded files with anyone around the world instantly. Ready-Access Record also gives customers the flexibility to broadcast pre-recorded messages to thousands of users and to download and save recordings to Intranet sites or personal computers. "Ready-Access Record demonstrates our commitment to delivering features that create a richer conferencing customer experience," said Don Poulter, president of Global Crossing Conferencing. "Our on-demand conference recording solution directly addresses the needs of our customers to improve productivity through enhanced easy-to-use communication tools." Ready-Access, Global Crossing's flagship conferencing service, puts the user in control of the audio conference. Each chairperson is assigned a permanent phone number and a seven- digit access code. Simple touch-tone commands are used to control the meeting. Participants dial into the phone number and enter an access code, allowing geographically dispersed people to meet anytime, anywhere. The chairperson can also use the Ready-Access "Web Moderator" for point-and- click control of the conference using a Web browser. eMeeting is available to share documents, presentations and data, browse the Internet, or demonstrate software instantly during the conference via the Internet. Reservations are not needed, although operators are always available to assist. Ready-Access global "800" service enables users to host local, regional and global conferences easily and cost-effectively. Global Crossing is a full conferencing solution provider offering automated and operator-assisted audio conferencing services, Web conferencing and video conferencing -- all backed by the industry's best redundancy protection and disaster recovery systems. With offices and call centers located across the globe, Global Crossing Conferencing is a market leader and currently serves hundreds of Fortune 1000 companies. Ready-Access is a registered trademark of Global Crossing. Global Crossing provides telecommunications solutions over the world's first integrated global IP-based network, which reaches 27 countries and more than 200 major cities around the globe. Global Crossing serves many of the world's largest corporations, providing a full range of managed data and voice products and services. Global Crossing operates throughout the Americas and Europe, and provides services in Asia through its subsidiary, Asia Global Crossing. On January 28, 2002, Global Crossing Ltd. and certain of its subsidiaries (excluding Asia Global Crossing and its subsidiaries) commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York (Bankruptcy Court) and coordinated proceedings in the Supreme Court of Bermuda (Bermuda Court). On the same date, the Bermuda Court granted an order appointing joint provisional liquidators with the power to oversee the continuation and reorganization of the Bermuda-incorporated companies' businesses under the control of their boards of directors and under the supervision of the Bankruptcy Court and the Bermuda Court. Additional Global Crossing subsidiaries commenced Chapter 11 cases on April 23, August 4 and August 30, 2002, with the Bermuda incorporated subsidiaries filing coordinated insolvency proceedings in the Bermuda Court. The administration of all the cases filed subsequent to Global Crossing's initial filing on January 28, 2002 has been consolidated with that of the cases commenced on January 28, 2002. Global Crossing's Plan of Reorganization, which it filed with the Bankruptcy Court on September 16, 2002, does not include a capital structure in which existing common or preferred equity would retain any value. On November 18, 2002, Asia Global Crossing Ltd., and its subsidiary, Asia Global Crossing Development Company, commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of New York and coordinated proceedings in the Supreme Court of Bermuda. Asia Global Crossing Ltd., is a majority-owned subsidiary of Global Crossing. However, Asia Global Crossing's bankruptcy proceedings are being administered separately and are not being consolidated with Global Crossing's proceedings. Asia Global Crossing has announced that no recovery is expected for Asia Global Crossing's shareholders. Please visit http://www.globalcrossing.comor http://www.asiaglobalcrossing.comfor more information about Global Crossing and Asia Global Crossing. DebtTraders reports that Global Crossing Holdings Ltd.'s 9.125% bonds due 2006 (GBLX06USR1) are trading between 2.5 and 3. See http://www.debttraders.com/price.cfm?dt_sec_ticker=GBLX06USR1 for real-time bond pricing. GOLDMAN INDUSTRIAL: Converting FC Corp.'s Case to Chapter 7 ----------------------------------------------------------- Goldman Industrial Group, Inc., and its debtor-affiliates asks the U.S. Bankruptcy Court for the District of Delaware to convert the Chapter 11 case of FC Corporation to a Chapter 7 liquidation proceeding under the Bankruptcy Code. Pursuant to an order by the Court, FC sold substantially all of its assets. Among the assets retained by FC was the real property located at 36 Precision Drive, in Springfield and Chester, Vermont. In recent months, the State of Vermont has contacted the Debtors regarding concerns with respect to materials located on the Fellows Real Property. The State of Vermont has requested that FC agree to a cleanup plan regarding the materials located on the Fellows Real Property. FC has not agreed to a cleanup plan nor has FC agreed that such a plan is necessary or appropriate. Consequently, the Debtors seek entry of an Order converting FC's case into a case under chapter 7 of the Bankruptcy Code. FC has long ceased operations and has sold substantially all of its assets. There is no likelihood that FC will be rehabilitated. Additionally, because of insufficient funding, FC is unable to effectuate a plan of liquidation under chapter 11. Goldman Industrial Group, Inc., with its affiliates, provide metalworking machinery to manufacturers; marketing and selling original equipment primarily to the aerospace, automotive, computer, defense, medical, farm, construction, energy, transportation and appliance industries. The Company filed for chapter 11 protection on February 14, 2002. Victoria W. Counihan, Esq., at Greenberg Traurig, LLP represents the Debtors in their restructuring efforts. HA-LO INDUSTRIES: Pitches Exclusivity Extension to February 28 -------------------------------------------------------------- HA-LO Industries, Inc., and it debtor-affiliates ask for the U.S. Bankruptcy Court for the Northern District of Illinois for a further extension of their exclusivity periods. The Debtors tell the Court that they need until February 28, 2003, to propose a chapter 11 plan. Until that date, the Debtors want to share that exclusive plan proposal right with the Official Committee of Unsecured Creditors, but keep other parties-in- interest out of the process. The Debtors ask for a concomitant extension of their exclusive period to solicit acceptances of any plan through April 30, 2003. The Debtors point out the significant events they have accomplished in these cases since the Petition Date: a. Negotiation of a court-approved $31 million DIP Facility to assure that the Debtors would be able to meet their ongoing obligations to vendors, employees and sales representatives; b. Development and implementation of a court-authorized vendor retention program to maintain or restore vendor confidence, as well as to improve the Debtors' liquidity; c. Development and implementation of a court-authorized employee retention program; d. Development and implementation of a court-authorized sales representative retention program; e. Analysis and rejection of approximately 100 executory contracts and unexpired leases to reduce or eliminate expenses and eliminate non-economic business units and/or contracts; f. Development and implementation of a business consolidation program, pursuant to which HA-LO rejected the highly- expensive lease of its worldwide headquarters and consolidated its administrative operations with those of Lee Wayne in Sterling, Illinois, thereby reducing annual occupancy and personnel expenses by an aggregate amount in excess of $20 million; g. Sale of HA-LO's Detroit division for approximately $8 million; h. Sale of HA-LO's Canadian subsidiary for approximately $2 million; i. Sale of substantially all of the assets of HA-LO Sports, Inc., a subsidiary of HA-LO; j. Sale of substantially all of the assets of Promotional Products, LLC dba Upshot for approximately $10.25 million; k. Sale of substantially all of the assets of Upshot Integrated Inc., an indirect subsidiary of HA-LO, for approximately $557,000; l. Radical restructuring of their business model; and m. The payoff of the secured debt to the Banks, which had been as high as $74 million in early 2001. Notwithstanding the substantial progress the Debtors have made toward the development of a consensual plan of reorganization, they will be unable to file a plan on the current exclusivity deadline. The Debtors relate that in the first few months following the commencement of these cases, the Debtors focused their resources on stabilizing their operations and dealing with numerous critical issues in this bankruptcy case. Most recently, the Debtors have focused their resources towards the fulfillment of a dual track strategy designed to maximize the value of its estate. Under the first track of this strategy, the Debtors have worked with their investment bankers to explore the possibility of selling the Company. At the same time, the Debtors have worked to develop a plan of reorganization under which the Company will emerge as a reorganized entity. Upon recent meetings with the Committee, the Debtors are optimistic that these meetings will result in a negotiated agreement with respect to a sale or plan of reorganization. In the past, the Committee has consented to each of the Debtors' requests to extend the Exclusive Periods. The Committee agrees to this motion to extend exclusivity periods, provided that through February 28, 2003, neither the Debtors nor the Committee shall file a plan of reorganization and disclosure statement unless such party has previously provided the other party with no less than twenty-one days written notice of its intention to file such plan and disclosure statement. Ha-Lo Industries, Inc., provides full service, innovative brand marketing in the custom and promotional products industry. The Company filed for chapter 11 protection on July 30, 2001. Adam G. Landis, Esq., Eric Lopez Schnabel, Esq., Mary Caloway, Esq., at Klett Rooney Lieber & Schorling represent the Debtors in their restructuring efforts. IFX CORP: Nasdaq Knocks Shares Off Exchange Effective Today ----------------------------------------------------------- IFX Corporation (Nasdaq: FUTR) -- http://www.ifxcorp.com-- has decided not to file an appeal with the Nasdaq Listing Qualifications Panel of the notice of Nasdaq delisting of IFX's securities. On December 10, 2002, the Company reported that it received the Nasdaq Staff Determination on December 6, 2002, indicating that the Company had failed to comply with the minimum $2,500,000 stockholders' equity requirement for continued listing set forth in Marketplace Rule 4310(C)(2)(B), and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. Accordingly, the Company's common stock will be delisted from The Nasdaq SmallCap Market at the opening of business today, December 16, 2002. After delisting, the Company expects that its common stock would be quoted on the Over-the-Counter Bulletin Board (OTCBB). Information regarding the OTCBB can be found at http://www.otcbb.com IFX had previously announced that on October 17, 2002, Nasdaq notified the Company that it was not in compliance with Marketplace Rule 4310(C)(2)(B), which requires IFX to have a minimum of $2,000,000 in net tangible assets or $2,500,000 in stockholders' equity or a market capitalization of $35,000,000 or $500,000 of net income for the most recently completed fiscal year or two of the three most recently completed fiscal years. In addition, the Company had previously announced that on February 14, 2002, the NASDAQ Staff notified the Company that the bid price of its common stock had closed at less than $1.00 per share over the previous 30 consecutive trading days and, as a result, did not comply with Marketplace Rule 4310(C)(4). IFX Corporation (Nasdaq: FUTR) -- http://www.ifxcorp.com-- is a continent- wide Network Service Provider. The Company's operations are headquartered in Miami Lakes, Florida. IFX operates a pan-regional Internet Protocol network that is marketed under the IFX Networks brand name, provides Internet network connectivity and offers a broad range of value-added services to multinationals, Internet Service Providers, telecommunications carriers and small to medium-sized businesses in Latin America. Although the Company's primary focus is to pursue multinational businesses, carriers and small to medium- sized businesses in Latin America, the Company continues to provide consumer Internet products and services. IFX offers network solutions that include region-wide wholesale and private label Internet access, dedicated fixed wireline and wireless Internet access, unlimited dial-up roaming access to IFX Network's POPs throughout the Latin American region, web design, web-hosting and co-location, dial-up local area network, or LAN services, and virtual private network, or VPN services, and full technical support. IFX Corp.'s September 30, 2002 balance sheet shows a working capital deficit of about $11 million, and a total shareholders' equity deficit of about $2.4 million. IMPSAT FIBER: NY Court Confirms Pre-Arranged Reorganization Plan ---------------------------------------------------------------- Impsat Fiber Networks, Inc., (OTC:IMPT) a leading provider of integrated telecommunications services in Latin America, announced that the US Bankruptcy Court for the Southern District of New York approved the Company's Plan of Reorganization. The Plan was approved by creditors holding 83% of the indebtedness subject to ballot. The confirmation of the Plan took place exactly six months after Impsat filed for Chapter 11. The Plan enables Impsat to emerge from Chapter 11 as a financially stronger company, reducing the Company's principal and accrued interest by more than over $700 million. As a result, total consolidated indebtedness will be approximately $ 270 million. According to the terms of the new securities, no cash payments on principal or interest will be required for the first two years. As of November 30, 2002, Impsat had cash and cash equivalents on hand of approximately $57 million. Impsat expects to complete the administrative details to make its Plan effective before year-end. The Company's subsidiaries have continued to operate normally throughout the year. As part of the approved Plan, a new seven-member Board of Directors will be formed, including Mr. Ricardo Verdaguer, Impsat's chief executive officer, together with Joseph Thornton, William Connors, Thomas Doster IV, Raul Ramirez, Ignacio Troncoso, Elias Makris. The Management team will remain unchanged. Commenting on this action by the court, Mr. Verdaguer stated: "The confirmation of our Plan gives us the financial structure we need to maintain our competitive position in the region. Completing the reorganization before year-end has been result of continued support from our creditors, clients and employees. Their vital support has allowed us to sustain and enhance our key commercial relationships, control our cash flow, and even improve our operating margins in difficult times. After sorting the financial challenges we faced, we are in an unmatched position to seize new opportunities in the region." The terms of the Plan approved are the same the Company previously announced. Impsat Fiber Networks, Inc., is a leading provider of fully integrated broadband data, Internet and voice telecommunications services in Latin America. Impsat has recently launched an extensive pan-Latin American high capacity broadband network in Brazil, Argentina, Chile and Colombia using advanced technologies, including IP/ATM switching, DWDM, and non-zero dispersion fiber optics. The Company has also deployed fourteen facilities to provide hosting services. Impsat currently provides services to 3,000 national and multinational companies, government entities and wholesale services to carriers, ISPs and other service providers throughout the region. The Company has local operations in Argentina, Colombia, Venezuela, Ecuador, Mexico, Brazil, the United States, Chile and Peru. Visit us at http://www.impsat.com INSIGHT MIDWEST: S&P Assigns B+ Rating to $175-Mil. Senior Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to cable operator Insight Midwest L.P.'s $175 million 9.75% senior notes due October 1, 2009. Net proceeds will be used to repay a portion of the outstanding debt under the Insight Midwest Holdings LLC bank credit facility. Standard & Poor's also affirmed its 'BB' corporate credit rating on Insight Midwest. The outlook is stable. As of Sept. 30, 2002, the New York, New York-based company had $2.4 billion in total debt outstanding, including $100 million of intercompany debt owed to Insight Communications Co. Inc. Insight Midwest also had $190 million of preferred stock outstanding as of September 30, 2002. Debt to EBITDA for 2002 is expected to be about 7x, excluding intercompany debt and management fees and including debt at Coaxial LLC and Coaxial Communications of Central Ohio Inc., which is conditionally guaranteed by Insight Midwest subsidiary Insight Communications of Central Ohio LLC. This debt is serviced through preferred dividend payments to Coaxial Communications of Central Ohio by Insight Ohio. "While cash flow should continue to benefit from increased revenue generating unit penetration, particularly in high-speed data and digital cable services, leverage improvement prospects in 2003 will be somewhat constrained by funding needed to complete system upgrades and continued deployment of telephony and interactive digital services," said Standard & Poor's credit analyst Catherine Cosentino. Despite ongoing competition from direct broadcast satellite and high overall aggregate market penetration of cable and DBS, the company experienced year-over-year growth in overall subscribers at September 30, 2002, albeit at a modest level of less than 1% on a same-store basis. This contrasts with recent subscriber losses experienced by several other major cable operators. Insight Midwest also posted a solid 9.4% internal growth rate in advanced service RGUs in the third quarter of 2002 over the comparable period in 2001. INTERPUBLIC GROUP: Fitch Ratchets Conv. Sub. Notes Down to BB+ -------------------------------------------------------------- Fitch Ratings has downgraded the following debt ratings for The Interpublic Group of Companies, Inc.: senior unsecured debt to 'BBB-' from 'BBB', multi-currency bank credit facility to 'BBB-' from 'BBB', convertible subordinated notes to 'BB+' from 'BBB-' and the short-term debt rating to 'F3' from 'F2'. The Rating Outlook remains Negative. Approximately $3.0 billion of debt is affected by this action. Weak revenue trends and lower than expected operating results have heightened uncertainties about the ability of IPG to improve credit measures to a level consistent with the previous 'BBB' senior debt rating, with debt/EBITDA now expected to operate in a range between 3.0 times and 3.5x and adjusted debt/EBITDAR in a range between 4.5x and 5.0x, as compared with Fitch's previous expectations of 2.5x-3.0x and 4.0x-4.5x, respectively. The weak revenue trends reflect both declines in advertising spending by major clients and client losses related to previous year's acquisitions. IPG has made progress in improving its operating cost structure as part of a corporate-wide reorganization following the acquisition of True North Communications in June 2001. The benefits to EBITDA in 2002, however, have been more than offset by the declines in revenue and by operating problems at its subsidiaries. While IPG has achieved good net new business wins in 2002, weak spending by its existing clients has depressed organic growth and weakness in marketing services and public relations combined with significant operating problems at the company's Octagon sports marketing business heighten concerns about a near-term recovery in operating cash flow. Given the current outlook for revenue and EBITDA, the company has focused on improving free cash flow. Capital expenditures have been reduced and discretionary acquisitions, which have been a feature of the company's strategy, remain at low levels. Nevertheless, cash commitments for earn-out payments, increased equity investments, and residual restructuring funding are expected to substantially absorb operating cash flow over the intermediate term and limit the ability of the company to materially improve the balance sheet. While near-term liquidity appears adequate, with approximately $50 million drawn on $875 million of committed credit facilities, the rating change and Negative Rating Outlook also reflect concerns about financing flexibility in 2003. The company's $500 million 364-day committed credit facility expires in May. Bank negotiations for companies with low investment- grade ratings have been difficult in the current credit environment, particularly when near-term financing needs exist. The expected put of $587 million of Zero-Coupon Notes to the company in December 2003 will likely result in restrictions in the amendments to the credit facility due by January 15 that could limit future financial flexibility and would likely require that IPG find other means of financing the Zero-Coupon put. The company has suggested that dividend reductions may also be required. While a reduction in the dividend would generate addition cash flow savings to IPG of up to $150 million, this would have a modest effect on strengthening the balance sheet and would not assure liquidity over the near term. Fitch further believes that the receptivity of the capital markets to financing by IPG is uncertain over the near term. The availability of the committed credit facility is crucial to the company due to its large seasonal working capital needs. IPG is evaluating expanded cost-reduction initiatives and is planning the disposition of the non-core Octagon operations to help stem the deterioration in earnings. The ability of management to execute on these and other initiatives to strengthen the company's credit profile are key to the resolution of the current Rating Outlook. IPG is one of the three largest advertising and marketing communications organizations in the world, with several market- leading agencies, a diverse client base and long-term relationships for key accounts. INTERSTATE BAKERIES: Board Declares Quarterly Dividend on Shares ---------------------------------------------------------------- The board of directors of Interstate Bakeries Corporation (NYSE:IBC) declared a quarterly dividend of $0.07 per share on the Company's common stock, payable February 3, 2003, to stockholders of record at the close of business on January 15, 2003. Interstate Bakeries Corporation is the nation's largest baker and distributor of fresh-baked bread and sweet goods in the U.S., under various national brand names including Wonder, Hostess, Dolly Madison and Drake's. The Company, with 62 bread and cake bakeries located in strategic markets from coast to coast, is headquartered in Kansas City, Missouri. * * * As previously reported, Moody's Investors Service confirmed the senior secured and senior implied ratings for Interstate Bakeries Corporation and its guaranteed subsidiaries. Outlook remains negative. Rating Confirmations: Interstate Bakeries Corporation: * Senior implied rating - Ba1 * Senior unsecured issuer rating - Ba2 * Preferred Shelf at - (P)B1 Interstate Brands Corporation and Interstate Brands West Corporation as Co-borrowers: * $300 million senior secured revolving credit facility - Ba1 * $375 million senior secured Term Loan A facility - Ba1 * $125 million senior secured Term Loan B facility - Ba1 Interstate Bakeries Corporation, Interstate Brands Corporation, Interstate Brands West Corporation as joint and several obligors: * Senior unsecured shelf - (P)Ba2 * Subordinated shelf - (P)Ba3 J.P. MORGAN: S&P Assigns Low-B Prelim. Ratings to 6 Note Classes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to J.P. Morgan Chase Commercial Mortgage Securities Corp.'s $747.8 million commercial mortgage pass-through certificates series 2002-C3. The preliminary ratings are based on information as of Dec. 11, 2002. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, B, C, D, and E are currently being offered publicly. The remaining classes are being offered privately. Standard & Poor's analysis of the portfolio determined that, on a weighted average basis, the pool has a debt service coverage ratio of 1.41x based on a weighted average constant of 7.59%, a beginning loan-to-value ratio of 93.6%, and an ending LTV of 77.8%. All statistics exclude the B note for the Long Island Industrial Portfolio III loan. Preliminary Ratings Assigned J.P. Morgan Chase Commercial Mortgage Securities Corp. $747.8 million commercial mortgage pass-thru certs series 2002-C3 Class Rating Amount ($) A-1 AAA 183,050,000 A-2 AAA 396,517,000 B AA 28,043,000 C AA- 9,348,000 D A 24,305,000 E A- 9,347,000 X-1 AAA 747,828,090 X-2 AAA 705,770,000 F BBB 22,435,000 G BBB- 11,218,000 H BB+ 14,021,000 J BB 12,153,000 K BB- 3,739,000 L B+ 3,739,000 M B 6,543,000 N B- 4,674,000 NR N.R. 18,696,090 KAIRE HOLDINGS: Needs to Raise Additional Funds to Continue Ops. ---------------------------------------------------------------- Kaire Holdings Incorporated, a Delaware corporation, was incorporated on June 2, 1986. Effective February 3, 1998, Kaire changed its name to Kaire Holdings Incorporated from Interactive Medical Technologies, Ltd., in connection with its investment in Kaire International, Inc. In 1999, the Company formed YesRx.com, Inc., an Internet drugstore focused on pharmaceuticals, health, and wellness and beauty products. YesRx.com focuses on selling drugs for chronic care as opposed to emergency needs and works mainly with the patient who has regular medication needs and requires multiple refills. Effective May 20, 2002, the Company discontinued its services of providing pharmaceuticals to individuals in long-term assisted living facilities. The Company has a net working deficit of $799,451 for the nine months ended September 30, 2002. Additionally, the Company must raise capital to meet its working capital needs subsequent to the spin-off of Classic Care. If the Company is unable to raise sufficient capital to fund its operations for the Health Advocacy program, it might be required to discontinue operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management has previously relied on equity financing sources and debt offerings to fund operations. The Company's reliance on equity and debt financing will continue, and the Company will continue to seek to enter into strategic acquisitions. In October 2002, the Company tendered an offer to purchase a retail pharmacy located in Southern California. The purchase price of $175,000 will be allocated as follows: $75,000 for inventory and $100,000 for other tangible assets plus trade name. In connection with this acquisition, the Company will issue short-term notes payable aggregating to $110,000. The Company has made a deposit of $32,399 toward the purchase of this pharmacy. For the three and nine months ended September 30, 2002, revenues were approximately $480,693 and $1,615,279 compared to $461,571 and $1,091,923 for the same periods prior year, for an increase of $19,122 and $523,356 respectively. The results for the quarter were flat due to the termination of Classics Cares Medi- Cal license. Gross profit for products and services was $108,006 and $70,715 for three and nine months ended September 30, 2002 compared to $50,773 and $131,031 for the same period prior year, an increase (decrease) of $57,233 and ($60,319) over the same periods prior year. The Company's revenues have been insufficient to cover acquisition costs, cost of revenues and operating expenses. Therefore, the Company has been dependent on private placements of common stock securities, bank debt, loans from private investors and the exercise of common stock warrants in order to sustain operations. In addition, there can be no assurances that private or other capital will continue to be available, or that revenues will increase to meet the Company's cash needs, or that a sufficient amount of the Company's common stock or other securities can or will be sold or that any common stock purchase options/warrants will be exercised to fund the operating needs of the Company. On September 30, 2002 the Company had assets of $3,338,781 compared to $11,616,629 on December 31, 2001. The Company had a total stockholders' equity of $463,002 on September 30, 2002 compared to stockholders equity of $937,673 on December 31, 2001, an decrease of $474,671. As of September 30, 2002 the Company's working capital position increased $6,649,515 from a negative $7,849,143 at December 31, 2001 to a negative $1,190,608, primarily as a result of the forgiveness of an acquisition debt on May 20, 2002. KAISER: Proposes Uniform Kaiser Center Sale Bidding Procedures -------------------------------------------------------------- Kaiser Aluminum Corporation and its debtor-affiliates want to be certain that they are getting the highest and best offer for the Kaiser Center and Summit Commercial Properties has agreed to let the Debtors test its $65.5 million bid in a competitive auction process and also accept backup offers from other buyers. Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, explains that, in the event Summit terminates or otherwise fails to perform its obligations under the agreement, the Debtors will move the next-best backup offer to a closing. The Debtors propose to establish uniform competitive bidding procedures for the sale of the Kaiser Center. Mr. DeFranceschi notes that the proposed bidding procedures are an integral part of the sale process. The Debtors are convinced that the Bidding and Auction Procedures will enable the Debtors to maximize the realizable value of the Kaiser Center assets. Mr. DeFranceschi reports that the Debtors are currently in discussions with at least one entity that's likely to enter into a Backup Agreement. The Debtors' acceptance of an offer from a Backup Purchaser is subject to these Bidding and Auction Procedures: A. Qualified Bid A bid must meet these requirements to be considered a Qualified Bid: (i) the bid must be in writing; (ii) the bid must be served on -- and actually received by: * the Debtors; * the Debtors' counsel and financial advisors; * Summit's counsel; * the counsel and financial advisors to the Creditors' Committee and the counsel for the Asbestos Committee, on or before the February 17, 2003 Bid Date; (iii) the bid must exceed the $65,600,000 Purchase Price by at least an Initial Overbid Increment of $2,900,000; (iv) the bid must be on the same or more favorable terms and conditions as set forth in the Summit Sale Agreement; (v) the bid must include a $5,500,000 deposit in escrow, which represents: (A) the $3,100,000 to be on deposit by Summit before the Bid Date; and (B) the full amount of the proposed Breakup Fee; (vi) the bid must not be subject to any contingencies; and (vii) the bid must be accompanied by proof -- in a form satisfactory to the Debtors after consultation with the advisors to the Committees -- of the entity's financial ability to consummate its offer to purchase the Kaiser Center assets. If no Qualified Bid is received, the Debtors will consummate the sale transaction with Summit or the Backup Purchaser, as the case may be, without conducting an Auction. B. Auction If one or more competing Qualified Bids are received, an auction will be conducted for the Kaiser Center Assets at the Wilmington, Delaware offices of the Debtors' Delaware Counsel, Richards, Layton & Finger on February 20, 2003. The Debtors will notify all bidders at least two business days before the date of the Auction. At the Auction: -- competing bidders, including Summit and the Backup Purchaser, may submit bids for the Kaiser Center in excess of the Purchase Price -- or purchase price under a Backup Offer, if applicable -- provided that their bids: (a) are in increments of at least $500,000; and (b) otherwise comply with the requirement for competing Qualified Bids; and -- the Debtors, after consultation with the advisors for the Committees, will select the highest and best bid for the Kaiser Center assets. The Debtors reserve the right at the Auction to refuse to consider the bid of any bidder that fails to meet the established procedures or to submit a competing Qualified Bid. If necessary, the Debtors ask the Court to schedule a Sale Hearing to approve the sale to the Successful Bidder. Objections, if any, to the sale of the Kaiser Center assets must be served no later than February 7, 2003. C. Break-up Fee Summit is entitled to a $2,400,000 Break-up Fee plus recoupment of any deposits it made with interest, in the event: -- the Debtors fail to diligently pursue the approval of the sale on or before March 24, 2003, and Summit is not in default under the terms of the sale agreement; -- the Debtors breach the sale agreement after the sale has been approved and fail or refuse to transfer the Kaiser Center assets to Summit; or -- the Kaiser Center assets are sold to another Successful Bidder and Summit is not in default under the sale agreement. Any deposit to be returned and the Break-up Fee will be paid within two business days of the occurrence of the event giving rise to the obligation to pay those fees. In the event the Agreement is terminated by Summit for any reason, the buyer under any applicable Backup Agreement will be entitled to these benefits. The Break-up Fee will not be payable to Summit in the event that the Court declines to enter the Sale Order solely as a result of an objection to the sale of the Kaiser Center assets by Newkirk Kalan. D. Notice The Debtors will serve a notice of the proposed sale and bidding procedures to each entity that has previously expressed interest in purchasing the Kaiser Center assets. The Debtors will also publish the Notice in the national edition of the Wall Street Journal. Mr. DeFranceschi contends that the Break-up Fee is reasonable and necessary to preserve, if not enhance, the value of the Kaiser Center assets. Mr. DeFranceschi points out that Summit will not subject itself to a competitive bidding process unless this protection exists to safeguard its investment of time and money in the process. The right to receive the Break-up Fee is also justified given the value added to the auction process by Summit's due diligence and initial bid, which has set the minimum Purchase Price and will force other interested parties to increase their bids. (Kaiser Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kaiser Aluminum & Chemicals' 12.750% bonds due 2003 (KLU03USR1) are trading between 10 and 12. See http://www.geocities.com/Hollywood/Studio/1635/matt.htmlfor real-time bond pricing. KENTUCKY ELECTRIC: Hires Jack Mehalko as Interim CEO & President ---------------------------------------------------------------- Kentucky Electric Steel, Inc., (Nasdaq: KESI) announced that Charles C. Hanebuth, the Company's Chief Executive Officer, pursuant to his medical leave following back surgery, has relinquished his CEO duties effective December 12, 2002, until a long term solution to his medical problems is found. Mr. Hanebuth will remain as the Company's Chairman of the Board of Directors. The Company also announced that the Board of Directors has hired Jack W. Mehalko as interim CEO and President. Jack was the Vice President and General Manager of Kentucky Electric Steel from 1986 - 1989, when it was a subsidiary of NS Group, and was responsible for reopening the facility. Jack retired from NS Group in December, 1999 having served as Vice President of NS Group, Inc., from 1994 - 1999 and President and COO of Newport Steel, its subsidiary, from 1989 - 1994. Mr. Hanebuth stated, "Jack brings with him an extensive knowledge of the Company's markets, employees, and facilities." William J. Jessie will return full time to his duties as Vice President and Chief Financial Officer. The Board of Directors extends its appreciation to Mr. Jessie for his help and guidance as acting President and Chief Operating Officer. Kentucky Electric Steel, Inc., is a publicly held company which operates a specialty steel mini-mill, manufacturing special quality steel bar flats for the leaf-spring suspension, cold drawn bar conversion, truck trailer support beam, and steel service center markets. Kentucky Electric Steel, Inc.'s common stock (symbol: KESI) is traded on the NASDAQ Small Cap Market. * * * As previously reported in the Troubled Company Reporter, Kentucky Electric Steel entered into an agreement with the holders of its 7.66% Senior Notes due November 1, 2005 to defer the $1.5 million principal payment due under the notes from November 1, 2002 to January 2, 2003. In addition, the Company agreed with the lenders under its $18 million revolving line of credit to increase the advance rates under the revolving credit agreement. The amendment to the revolving credit agreement provides that the borrowing base will be the sum of (a) 85% of the Company's net outstanding eligible accounts receivable and (b) the lesser of $14 million or the sum of 60% of the net security value of eligible scrap and raw materials inventory, 50% of the net security value of eligible billet inventory, and 70% of the net security value of eligible finished goods inventory. Each of the agreements provides that on or before December 16, 2002, the Company must deliver a proposed agreement to the noteholders and to the lenders under the revolving credit facility regarding a restructuring of the Company's indebtedness or other transaction that would enable the Company to repay the notes and the revolver in full. Kentucky Electric's quarter-by-quarter losses have caused shareholder equity to erode to $12 million at June 29, 2002, from $20 million a year earlier. KMART: Sells RK-235 Beechjet Aircraft to Country Air for $3.4MM --------------------------------------------------------------- Kmart Corporation, and its debtor-affiliates sought and obtained the Court's authority to consummate the Purchase Agreement with Big Country Air for the sale of a Model Year 1999 Beechjet 400A, identified by serial number RK-235 and registration number N695BK, subject to higher and better offers. Aerodynamics Inc., was hired as broker for the sale. After the Debtors, their legal and financial advisors, evaluated the terms of each proposal submitted for the aircraft, Big Country Air, LLC was declared as the highest and best bidder for the property. The salient terms of the Purchase Agreement between the Debtors and Big Country Air are: Purchase Price: $3,400,000 Escrow Deposit: $50,000 Assets Included: All the Debtors' right, title and interest in the aircraft Closing: Immediately after the last to occur of: (1) approval of the Proposed Sale by this Court; (2) completion of the Pre-Purchase Inspection; (3) closing of the Escrow Deposit; and (4) payment of the Purchase Price. Conditions to Closing: The Agreement is subject to higher and better offers as well as Bankruptcy Court approval. Representations And Warranties: The Property will be conveyed "as is, where is." (Kmart Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392- 0900) LERNOUT & HAUSPIE: Seeks to Set Aside Transfers Made to John Seo ---------------------------------------------------------------- John Seo used to head Lernout & Hauspie Speech Products N.V. and Dictaphone Corp.'s much-troubled Korean operation, which has been deluged with allegations of fraud and which still has missing millions. Before September 1999, Mr. Seo owned Bumil Information & Communications Co., a Korean company based in Seoul. On September 9, 1999, L&H acquired Bumil from John Seo for $25,000,000 and became obligated to make a $25,000,000 payment under an earnout agreement. Due to fraudulently reported revenues, John Seo received the Earnout earlier than expected on January 31, 2000. As of the date of these allegedly fraudulent transfers, Bumil was worth substantially less than the total consideration paid by L&H. As a result, L&H's estate and creditors suffered a substantial loss. The fraudulently reported revenues of L&H's Korean operations from September 1999 to June 2000 are the subject of a Complaint for Injunctive Relief brought by the Securities & Exchange Commission against L&H in October 2002. Accordingly, L&H asks Judge Wizmur to set aside the transfers and award the estate judgment in the amount of the money paid to John Seo, together with interest. (L&H/Dictaphone Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) MERRY-GO-ROUND: U.S. Trustee Says Hold-Up the 20% Distribution -------------------------------------------------------------- W. Clarkson McDow, the United States Trustee for Region IV, doesn't like the proposal Deborah H. Devan, the Chapter 7 Trustee overseeing Merry-Go-Round Enterprises, Inc.'s liquidation, has brought before the U.S. Bankruptcy Court for the District of Maryland. The U.S. Trustee doesn't object to money flowing to unsecured creditors 7 years after the retailer filed for bankruptcy protection. The U.S. Trustee doesn't take issue with the 20% interim distribution amount. Rather, the U.S. Trustee takes exception with the "wide-sweeping exculpation and indemnification protections" Ms. Devan seeks for herself and her professionals. Merry-Go-Round filed chapter 11 bankruptcy protection in 1994. Following a couple of failed attempts to find its place on the retail landscape, the case converted to a chapter 7 liquidation in early 1996. Since that time, Ms. Devan has worked on winding-up the Debtors' estates. Seeking exculpation and indemnification "for any act or omission taken in good faith in connection with, or arising out of, the Bankruptcy Cases," goes too far, Assistant U.S. Trustee Mark A. Neal tells Judge Derby, especially since that would grant protections covering actions already taken by the Chapter 7 Trustee and her professionals in Merry-Go-Round's cases. The scope of liability for a Chapter 7 trustee is articulated in Yadkin Valley Bank & Trust Co. v. McGee, 819 F.2d 75 (4th Cir. 1987)(reaffirmed in In re Hutchinson, 5 F.3d 750 (4th Cir. 1993). The Yadkin decision says that if the trustee acts pursuant to the explicit instructions of the bankruptcy court, the trustee is completely immune from suit, except for acts of negligence. Id at 76. That protection should be good enough, Mr. Neal argues, and the Bankruptcy Court should decline to protect Ms. Devan and her professionals from their own negligence or prior bad acts. Unless the objectionable exculpation and indemnification provisions are eliminiated from Ms. Devan's motion to permit a 20% interim distribution, the U.S. Trustee urges that no distribution be made at this time. To date, Ms. Devan has collected approximately $270 million, of which $115 million remains. The major inflow of cash came from Ernst & Young's $185 million settlement of the Trustee's turnaround malpractice lawsuit. The major expense the Trustee incurred was the contingency fee to her lawyers in the E&Y litigation. Ms. Devan has accounted for all chapter 7 administrative claims, paid some 2,500 chapter 11 administrative claims totaling $21.4 million. Some money's been recovered on account of preference claims and the estate is looking for a Federal tax refund. Ms. Devan intends to pay all unsecured priority claims in full and assures Judge Derby that she will establish appropriate reserves to pay any currently disputed claim that becomes an allowed claim against the estate. Jonathan W. Lipshire, Esq., at Neuberger, Quinn, Gielen, Rubin & Gibber, P.A., represents Ms. Devan. METALS USA: Court Tinkers with Contractual Workers' Claims Order ---------------------------------------------------------------- Metals USA, Inc., and its debtor-affiliates sought and obtained a Court order amending the previous Order authorizing the payment of contractual employees claims. The amended order clarifies that the Debtors only meant to preclude any further claims for: -- the prepetition bonus; and -- the 15% pay cut. The Debtors did not intend to prevent contract employees from asserting other contract rejection damage claims based on change of control provisions in their contracts under Section 502(b)(7) of the Bankruptcy Code. These parties may make such claims: Employee: Rejection Damage Amount: --------- ------------------------ John Hageman $225,000 Terry Freeman $200,000 Don Temperton $160,000 Craig Doveala $300,000 Robert McCluskey $200,000 Ferrell Russell $170,000 Leon Jeffreys $185,000 The Court modifies the previous order to provide that any rejection damage claim waived be one "arising only out of claims for bonus and payment at less than full contract salary amount" and provide that "this Order shall not limit any rejection damage claim filed by any employee by the November 18, 2002 date set in the Plan Confirmation Order and notice of Consummation of the Plan for filing rejection damage claims, except insofar as such claim is for bonus or payment at less than contract salary." According to Zack A. Clement, Esq., at Fulbright & Jaworski LLP, in Houston, Texas, the order will permit the filing of general unsecured rejection damage claims capped by Section 502(b)(7) amounting to $1,100,000. (Metals USA Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) NAVISITE INC: Completes Debt Workout Transaction with ClearBlue --------------------------------------------------------------- NaviSite, Inc. (Nasdaq: NAVI), a provider of Always On Managed Hosting(SM) services, announced a debt restructuring with its majority owner ClearBlue Technologies. As part of the transaction, CBT has exercised its right to convert $20 million of its $65 million aggregate principle amount of convertible debt into approximately 77 million shares of NaviSite equity at the price of 26 cents per share. Subsequent to the conversion, CBT intends to make a distribution of its equity interests in NaviSite to its shareholders. As a result, ClearBlue Atlantic, LLC the majority stockholder of CBT, and Hewlett Packard Financial Services will be respectively, 68% and 20% direct shareholders of NaviSite. In conjunction with the debt restructuring, CBT has waived its right to receive interest payments on the remaining debt from NaviSite during calendar year 2003 and has accepted the current fourth quarter 2002 interest payment in the form of stock rather than cash. Finally, CBT has cancelled warrants to purchase an aggregate of 5.2 million shares of NaviSite Common Stock at exercise prices ranging from $5.77 to $6.92 per share. NaviSite's board of directors, pursuant to authority previously granted by NaviSite's shareholders at last year's annual meeting, has approved a reverse stock split at a ratio of one- for-fifteen (1:15) and has set January 7, 2003 as the effective date for the reverse stock split. Following CBT's debt conversion, NaviSite is taking this action to reduce the total issued and outstanding share count from approximately 181 million to 12 million shares. In lieu of fractional shares, the holder would receive payment in cash. Shares of NaviSite will temporarily trade under the symbol NAVID after the reverse split goes into effect. "The debt restructuring clearly demonstrates CBT's support of NaviSite and the long-term commitment to building a leadership position. It improves NaviSite's balance sheet and capital structure, and the interest waiver strengthens the company's cash flow position over the next 12 months," said Andy Ruhan, chairman and CEO of CBT. NaviSite, Inc., a leader in "Always On Managed Hosting(SM)" for companies conducting mission-critical business on the Internet, including enterprises and other businesses deploying Internet applications. The Company's goal is to help customers focus on their core competencies by outsourcing the management and hosting of their Web operations and applications, allowing customers to fundamentally improve the ROI of their web operations. NaviSite's solutions provide secure, reliable, co- location and high-performance hosting services, including high- performance Internet access, and high-availability server management solutions through load balancing, clustering, mirroring and storage services. In addition, NaviSite's enhanced management services, beyond basic co-location and hosting, are designed to meet the expanding needs of businesses as their Web sites and Internet applications become more complex and as their needs for outsourcing all aspects of their online businesses intensify. The Company's application services, which include application hosting and management, provide cost-effective access to, as well as rapid deployment and reliable operation of, business- critical applications. For more information about NaviSite, please visit http://www.navisite.com NaviSite is headquartered at 400 Minuteman Road, Andover, MA 01810 and is majority-owned by ClearBlue Atlantic, LLC, an affiliate of ClearBlue Technologies Inc. NCS HEALTHCARE: Omnicare Ups Merger Proposal to $5.50 per Share --------------------------------------------------------------- Omnicare, Inc. (NYSE: OCR), a leading provider of pharmaceutical care for the elderly, has sent a letter to the Board of Directors of NCS HealthCare, Inc. (OTC Bulletin Board: NCSS), attaching an agreement and plan of merger pursuant to which Omnicare would acquire all of the outstanding shares of Class A and Class B common stock of NCS HealthCare for $5.50 per share. Omnicare also has extended its tender offer for all of the outstanding shares of Class A common stock and Class B common stock of NCS. The offer, which was scheduled to expire at 12:00 Midnight, New York City time, on Thursday, December 12, 2002, has been extended until Friday, December 27, 2002, unless further extended. As of the close of business on December 12, 2002, a total of 13,855,327 shares of Class A common stock of NCS had been tendered, which represents approximately 75% of the outstanding shares of Class A common stock, and a total of 24,782 shares of Class B common stock had been tendered, which represents less than 1% of the outstanding shares of Class B common stock. Here's the full text of the letter sent to the Board of Directors of NCS HealthCare: December 12, 2002 Board of Directors NCS HealthCare, Inc. 3201 Enterprise Parkway, Suite 220 Beachwood, Ohio 44122 Gentlemen: Your advisors have informed us that Genesis Health Ventures, Inc. has now offered to acquire NCS HealthCare, Inc., for $3.50 per share in Genesis common stock and have asked us if we would reconsider our merger proposal. In an effort to bring this matter to an expeditious and successful conclusion, we are revising our merger proposal, which was delivered to you on October 7, 2002. We have revised the Agreement and Plan of Merger between NCS and Omnicare, which is attached to this letter and has been executed by Omnicare, to provide that, if NCS executes the agreement, each outstanding share of NCS Class A and Class B common stock will be converted into the right to receive $5.50 per share in cash. All of the other terms of Omnicare's merger proposal remain substantially unchanged, other than the addition of a modest termination fee at the same percentage of transaction value as is included in the merger agreement between NCS and Genesis. We also remain committed to treating NCS creditors and bondholders in the same manner as they would have been treated in the NCS/Genesis merger. We are willing to consider paying all or part of the purchase price in Omnicare common stock and, as we have stated before and repeat here, are willing to discuss all aspects of our merger proposal. Omnicare's revised merger proposal provides substantial value to NCS stockholders that is demonstrably superior to the consideration offered by Genesis -- both in the NCS/Genesis merger agreement and Genesis' revised proposal. Our revised merger proposal provides NCS stockholders with $2.00 per share (or 57%) more than Genesis' revised offer (and almost $4.00 per share more than the consideration offered in the NCS/Genesis merger agreement) and represents more than a 76% premium to [Thurs]day's closing price of NCS common stock. Omnicare's merger proposal presents a compelling opportunity for NCS and its stockholders, and we believe that our proposal is in the best interests of NCS and its stockholders. Omnicare has attached an executed copy of the NCS/Omnicare Merger Agreement to this letter. Therefore, NCS can accept the agreement by signing and returning a copy of the agreement to me by facsimile (859-392-3360) on or before the earliest of (i) the "Effective Time," if any, of the merger of Genesis and NCS (as defined in Section 1.3 of the NCS/Genesis merger agreement), (ii) two (2) calendar days after the date on which (A) the NCS/Genesis merger agreement is terminated by either NCS or Genesis in accordance with its terms, (B) a "Final Order" (as defined in Section 8.12(c) of the NCS/Genesis merger agreement) is entered enjoining or otherwise prohibiting Genesis or NCS from consummating their merger or (C) NCS stockholders fail to adopt the NCS/Genesis merger agreement and approve the transactions contemplated by the NCS/Genesis merger agreement at a meeting called for such purpose, (iii) any amendment or waiver of any of the provisions of the NCS/Genesis merger agreement, other than an amendment solely to reflect the $3.50 per share all-stock offer made by Genesis, and (iv) December 20, 2002 at 5:00 p.m. (EST). As you are aware, in order to accept the NCS/Omnicare Merger Agreement, each of the NCS/Genesis merger agreement and the voting agreements among NCS, Genesis and each of Messrs. Outcalt and Shaw shall have been terminated in accordance with their respective terms or otherwise on terms satisfactory to Omnicare, as stated in the NCS/Omnicare Merger Agreement. If not accepted during the time period and in the manner set forth above, the NCS/Omnicare Merger Agreement will expire at the option of Omnicare, and Omnicare will no longer be bound by the terms of such agreement. If you have any questions or would like to discuss Omnicare's revised merger proposal or the terms of our tender offer, please do not hesitate to call me at 859-392- 3305 or, if you would prefer, you can have your advisors call either Alan Hartman of Merrill Lynch (212-449-8585) or Mort Pierce of Dewey Ballantine LLP (212-259-6640). Sincerely, /s/ Joel F. Gemunder President and Chief Executive Officer Dewey Ballantine LLP is acting as legal counsel to Omnicare and Merrill Lynch is acting as financial advisor. Innisfree M&A Incorporated is acting as Information Agent. Omnicare, based in Covington, Kentucky, is a leading provider of pharmaceutical care for the elderly. Omnicare serves approximately 746,000 residents in long-term care facilities in 45 states, making it the nation's largest provider of professional pharmacy, related consulting and data management services for skilled nursing, assisted living and other institutional healthcare providers. Omnicare also provides clinical research services for the pharmaceutical and biotechnology industries in 28 countries worldwide. For more information, visit the company's Web site at http://www.omnicare.com NCS Healthcare's September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $111 million. NEOFORMA INC: Completes Restatements of FY 2000, 2001 & H1 2002 --------------------------------------------------------------- Neoforma, Inc., (Nasdaq: NEOFE) has completed the restatement of its financial results for fiscal 2000 and 2001, as well as the six months ended June 30, 2002, and has filed its amended annual and quarterly reports for the affected periods with the Securities and Exchange Commission. In addition, Neoforma has filed its Form 10-Q for the third quarter ended September 30, 2002. The Company has restated its financial results in connection with the completion of the re-audit of its fiscal 2000 and 2001 financial statements by its current auditors. The net impact of the adjustments over the ten quarters ended June 30, 2002 was a reduction in the Company's cumulative net losses of $1.8 million. For fiscal 2000, the net impact of the adjustments was an increase in net loss of $6.9 million, or 3.3%; for fiscal 2001, the net impact was a reduction in net loss of $4.3 million, or 1.5%; and for the six months ended June 30, 2002, the net impact was a reduction in net loss of $4.4 million, or 10.0%. The adjustments had no impact on Neoforma's revenue, and primarily impacted the Company's non-cash operating expenses. "With the re-audit of our financial results complete and all of our required reports filed with the SEC, we are pleased to close the book on these accounting matters," says Bob Zollars, chairman and chief executive officer of Neoforma. "Neoforma's growing customer base and operational momentum remain right on track." Third Quarter 2002 Financial Results On October 24, 2002, Neoforma announced preliminary financial results for the quarter ended September 30, 2002, with final results pending the conclusion of the Company's restatement. With the restatement completed, the Company is providing financial results for the third quarter. Neoforma's total net revenue for the third quarter on a pro forma basis, excluding the impact of EITF No. 01-9, was $19.9 million, consistent with the Company's previously announced results. On the same basis, Marketplace Services revenue was $18.7 million and Trading Partner Services revenue was $1.2 million. On a GAAP basis, including the application of EITF No. 01-9, in which non-cash amortization of partnership costs is offset against the Company's related party revenue, Neoforma's net revenue for the third quarter was $1.3 million. Neoforma's marketplaces supported $1.3 billion in volume during the third quarter, as previously announced. Of the two components of the Company's marketplace volume, gross transaction volume in the quarter equaled $550.7 million, an increase of 30% from the prior quarter, while supply chain data equaled $737.0 million, an increase of 28%. For the third quarter of 2002, cash operating expenses, which the Company defines as excluding non-cash and non-recurring items, totaled $14.5 million. When the Company announced preliminary results for the quarter, it announced that it expected its cash operating expenses to equal between $14.5 million and $15.0 million. Neoforma's cash operating income, or EBITDA, which is the difference between pro forma net revenue and cash operating expenses, was $5.5 million for the third quarter. The Company has reported $12.6 million in positive EBITDA for the nine months ended September 30, 2002. In the third quarter, total cash flow equaled $6.0 million. As of September 30, 2002, Neoforma's cash, cash equivalents and restricted cash totaled $23.6 million. "Neoforma's business continues to grow and generate cash. With the second consecutive quarter of positive cash flow, our focus remains on maximizing the long-term cash flow growth of the business," states Andrew Guggenhime, chief financial officer of Neoforma. Pro forma net income for the third quarter, excluding non-cash and non-recurring items, was $5.3 million. The First Call consensus estimate was $0.25 per share. In the third quarter, on a GAAP basis, the Company reported total operating expenses of $22.2 million. These operating expenses included $4.1 million in depreciation and amortization, $1.2 million in amortization of deferred compensation, $1.3 million in amortization of partnership costs, a $1.1 million write-down of a note receivable and a $110,000 write-off of acquired in-process research and development in conjunction with the July 2002 acquisition of HPIS and Med-ecom. The net loss for the third quarter on a GAAP basis was $21.1 million. GAAP and pro forma financial information for the ten quarters ended June 30, 2002, reflecting the completed restatements, is available on Neoforma's Web site at http://www.neoforma.com Financial information for the third quarter ended September 30, 2002 is attached. Additional information regarding the restatement is set forth in the Company's reports filed Thursday with the SEC. Neoforma builds and operates Internet marketplaces that empower healthcare trading partners to optimize supply chain performance. Neoforma uses proven, scalable technologies to provide customized marketplace solutions and services that enable customers to maximize their existing technology and supply chain relationships. Healthcare providers, leading group purchasing organizations, manufacturers and distributors choose Neoforma as their e-commerce partner. For more information, visit the company's Web site at http://www.neoforma.com Neoforma's September 30, 2002 balance sheet shows that total current liabilities exceeded total current assets by about $11 million. NORTEL NETWORKS: Names Malcolm Collins to Lead Enterprise Div. -------------------------------------------------------------- Nortel Networks (NYSE:NT) (TSX:NT) announced the appointment of Malcolm Collins as president, Enterprise Networks. Collins, whose appointment is effective immediately, is a 10-year Nortel Networks veteran and he brings worldwide experience in data and enterprise networking to the job. "We are committed to the long-term success and growth of our Enterprise Networks business," said Frank Dunn, president and chief executive officer, Nortel Networks. "The enterprise market remains a top priority for us. I am confident Malcolm will ensure our continued momentum and focus on enterprise technology innovation for our customers worldwide." In his new position, Collins will report directly to Frank Dunn and have end-to-end responsibility for all elements of Nortel Networks Enterprise business -- including business development, products, marketing and sales. Collins most recently served the company as the senior executive for the UK and Northern European Region, where he had financial and customer responsibility across all major European accounts spanning the UK, Ireland, Luxemburg, Belgium, Netherlands, Finland, Norway, Sweden and Denmark. Prior to that role, Collins led Nortel Networks European data business as managing director and general manager. He successfully grew the business throughout key markets in Europe, having responsibility for all aspects of business, sales, marketing, support, product line management and operations and service. He joined Nortel Networks in 1992 as vice president of sales, where his responsibilities included account planning, business planning and product definition for a wide range of data, voice, and transmission networking gear and products. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2) are trading at about 63 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2 for real-time bond pricing. DebtTraders says that Nortel Networks Capital's 6.875% bonds due 2023 (NT23CAR1) are trading between 50 and 52. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT23CAR1for real-time bond pricing. NORTH COUNTRY FIN'L: Fails to Satisfy Nasdaq Listing Guidelines --------------------------------------------------------------- North Country Financial Corporation (Nasdaq: NCFC), the holding company for North Country Bank & Trust, announced that the Company received a Nasdaq Staff Determination on December 6, 2002, indicating that the Company fails to comply with the current filing of required SEC reports requirement for the continued listing set forth in Marketplace Rule 4310(C)(14), and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. The Company has requested a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. There can be no assurance the Panel will grant the Company's request for continued listing. The Nasdaq Staff Determination was based upon the failure of the Company's report on Form 10-Q for the period ended September 30, 2002, to be reviewed by an independent public accountant as required by Regulation S-X of the Securities and Exchange Commission, which omission was disclosed in the Form 10-Q. The omission of such review was occasioned by the resignation of the Company's independent public accountants, Rehmann Robson, on November 11, 2002. On December 10, 2002, the Company retained Plante & Moran as its independent public accountants. The Company has requested Plante & Moran to review its financial statements filed in its report on Form 10-Q. The Company will file an amended report on Form 10-Q for the period ended September 30, 2002 upon completion of that review. Headquartered in Traverse City, North Country Financial Corporation is a diversified financial services company providing a full range of commercial, consumer, and mortgage banking services to a client base throughout northern Michigan. North Country Bank and Trust, its primary subsidiary, currently has 26 offices conveniently located throughout Michigan's Upper Peninsula and northern lower Michigan. * * * Liquidity In its SEC Form 10-Q filed on November 14, 2002, the Company reported: "During the first week in November 2002, and in conjunction with the announcement of the third quarter results and negative publicity, the Corporation experienced an unexpected decrease in deposits particularly from local government entities. It is anticipated that further deposit decreases may occur. The Corporation, as of November 7, 2002, still had approximately $32 million of municipal deposits. The Corporation's capital remains well above the regulatory minimum levels. "To address possible liquidity issues, the Corporation is revising its liquidity plan to provide both short-term and long- term strategies. The Corporation's ability to increase its borrowings from the Federal Home Loan Bank and its correspondent banks, is minimal. Therefore, short-term liquidity sources include the sale of unencumbered investment securities available-for-sale, sale of assets, and generating new deposits via the Internet CD network. "From a long-term perspective, the liquidity plan will include strategies to increase core deposits in the Corporation's local markets, the sale of segments of the commercial loan and lease portfolio to strategic buyers, and possible sale and closure of the smaller operating locations. "The liquidity plan is intended to be designed to address potential short-term liquidity demands. Some of the short-term aspects of the liquidity plan could result in negative impacts on the Corporation's earnings. Regulatory Matters "It is the policy of the Corporation to maintain capital at a level consistent with both safe and sound operations and proper leverage to generate an appropriate return on shareholders' equity. The capital ratios of the Corporation exceed the regulatory minimum guidelines. "The capital levels include adjustment for the Capital, or Trust Preferred, Securities issued in May 1999, subject to certain limitations. Federal Reserve guidelines limit the amount of cumulative preferred securities which can be included in Tier I capital to 25% of total Tier I capital. As of September 30, 2002, $10,994,000 of the $12,450,000 of Capital Securities were available as Tier I capital of the Corporation. "In addition to the generally applicable regulatory capital requirements set forth above, since January, 2002, the Bank has been required by Federal and State regulatory authorities to maintain its Tier 1 capital at a level equal to or exceeding 6.5% of the Bank's total assets, and if such level is less than 6.5% at June 30 or December 31 of any year while the requirement is in effect, to submit to such regulatory authorities within 30 days thereafter a plan for augmentation of the Bank's capital accounts to restore such ratio to 6.5%. At June 30 and September 30, 2002, the Bank was in compliance with this requirement. At the same time, the Federal and State regulatory authorities required the Bank to take various other steps, among other things, to improve asset quality, to reduce certain loan concentrations, and to improve loan documentation, credit underwriting, and loan and lease loss provision procedures." NUEVO ENERGY: Appoints J. Frank Haasbeek to Board of Directors -------------------------------------------------------------- Nuevo Energy Company (NYSE:NEV) announced that Mr. J. Frank Haasbeek has been elected to Nuevo's Board, increasing the number of Directors to eight of which one is an insider. "We are pleased that Frank Haasbeek has joined our Board as his financial background combined with his energy related experience will be an asset to our Board," commented Jim Payne, Chairman, President and Chief Executive Officer. Mr. Haasbeek's career has spanned over forty years and includes financial and senior management positions with domestic and international companies. Most recently, Mr. Haasbeek was employed by International Transquip Industries as President and Chief Executive Officer from 1991 to 2002. His career included positions with Hurricane Industries as President and Chief Executive Officer, Reading and Bates Construction Company as Vice President, Administration and Finance, and Cope Allman International Ltd. as Chief Financial Officer and a Director. Mr. Haasbeek began his career as an auditor at Deloitte, Haskins and Sells in Canada. Mr. Haasbeek is a graduate of the University of Manitoba, in Winnipeg, Canada with accreditation as a Chartered Accountant. Nuevo Energy Company is a Houston, Texas-based company primarily engaged in the acquisition, exploitation, development, production, and exploration of crude oil and natural gas. Nuevo's domestic properties are located onshore and offshore California and in West Texas. Nuevo is the largest independent producer of oil and gas in California. The Company's international properties are located offshore the Republic of Congo in West Africa and onshore the Republic of Tunisia in North Africa. To learn more about Nuevo, please refer to the Company's internet site at http://www.nuevoenergy.com As reported in Troubled Company Reporter's November 20, 2002 edition, Standard & Poor's Ratings Services lowered its corporate credit ratings for independent oil and gas company Nuevo Energy Co., to 'BB-' from 'BB', and removed the ratings from CreditWatch where they were placed on September 20, 2002. The outlook is stable. Houston, Texas-based Nuevo Energy has about $454 million of debt outstanding. "The ratings downgrade reflects the company's continuing inability to meaningfully delever during an extended period of unusually high oil and gas prices," said Standard & Poor's credit analyst Brian Janiak. "The ratings action also reflects the vulnerability of the company's challenging asset base and highly leveraged balance sheet to downward movements in oil prices," Janiak added. O'CHARLEY INC: S&P Assigns BB Rating to $285 Million Bank Loan -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' senior secured bank loan rating to casual dining restaurant operator O'Charley's Inc.'s proposed $285 million bank loan, which is comprised of a $150 million term loan and a $135 million revolving credit facility. Concurrent with the closing of this offering, the company is acquiring Ninety Nine Restaurant & Pub. The new credit facility will be used to fund the acquisition, refinance existing debt, and for general corporate purposes. Standard & Poor's also assigned its 'BB-' corporate credit rating to O'Charley's. The outlook is stable. "The acquisition provides O'Charley's with an entrance into the Northeast, diversifying its geographic mix. The company's strategy of clustering new restaurants in order to enhance supervisory, marketing, and distribution efficiencies does not currently allow it to expand into the Northeast," said Standard & Poor's credit analyst Robert Lichtenstein. "While O'Charley's diversification into another concept could enhance long-term profit growth, in the near term it increases the company's business risk because of difficulties in successfully operating multiple concepts. The industry is very competitive and both management- and capital-intensive due to the complexity of operations and relatively high capital requirements driven by growth strategies. Although Ninety Nine is a healthy concept, its future growth could be challenging," added Mr. Lichtenstein. O'Charley's history of stable operating performance, good credit measures for the rating category, and sufficient liquidity provide support for the rating if the company were to experience some difficulties with the Ninety Nine acquisition. OM GROUP: Details Key Components of Restructuring Program --------------------------------------------------------- OM Group, Inc., (NYSE: OMG) released the details of its previously announced restructuring program designed to improve cash flow and strengthen its balance sheet. Key components of the program include: * Generating up to $100 million from the sale of non-core assets, including its SCM Powdered Metals business, Tungsten Carbide technology and assets, the PVC Heat Stabilizer product line and other assets including the Microbond product line; * Reducing work force expenses by approximately $35 million in 2003 or by approximately $45 million on an annualized basis starting in 2004, through the elimination of approximately 550 positions; and * Lowering other manufacturing and administrative costs by approximately $30 million in 2003 or by approximately $40 million on an annualized basis starting in 2004. The Company also announced it will take a restructuring charge of up to $335 million, of which the cash portion is expected to be approximately $38 million to $43 million. The cash portion of the charge is principally due to severance costs. The restructuring charge will be recorded in the fourth quarter of 2002. Thomas R. Miklich, chief financial officer, stated, "This restructuring plan is designed to significantly lower the Company's operating costs and increase cash flows, providing us with the financial flexibility necessary for our business." Business Outlook The Company presently projects sales in 2003 to be in the range of $5.0 billion to $5.2 billion and earnings per share in the range of $.90 to $1.30, before the impact of asset sales. EBITDA is expected to be between $240 million and $260 million. James P. Mooney, chairman and chief executive officer, concluded, "We have made good progress since announcing our plans to restructure the business on October 29 -- from successfully amending our debt covenants to initiating the process to further deleverage our balance sheet. That said, our hard work is just beginning. Today's actions start a strategic evolution that will transform OM Group into a highly focused operation that delivers value-added products to growing niche markets. We are fully aware that this transformation will not take place overnight, and we will work diligently and deliberately to meet our goals." OM Group, Inc., through its operating subsidiaries, is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. OMG is a recognized leader in manufacturing products from base and precious metals and managing metals procurement related to these activities. The Company supplies more than 1,700 customers in 50 countries with more than 3,000 product offerings. Headquartered in Cleveland, Ohio, OMG operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia. For more information on OMG, visit the Company's Web site at http://www.omgi.com * * * As reported in Troubled Company Reporter's November 18, 2002 edition, Standard & Poor's lowered its corporate credit rating on metal-based specialty chemical and refined metal products producer OM Group Inc., to 'B+' from 'BB-' based on an expected diminished business profile following management's announcement that it is exploring strategic alternatives for its precious metals operations. Standard & Poor's said that its ratings on OM Group remain on CreditWatch with negative implications where they were placed October 31, 2002. Cleveland, Ohio-based OM Group has about $1.2 billion of debt outstanding. OM GROUP: Edward W. Kissel Will Step Down as President & COO ------------------------------------------------------------ OM Group, Inc., (NYSE: OMG) announced that, effective immediately, Edward W. "Bud" Kissel is leaving the company as its president and chief operating officer to pursue other interests. Kissel, who joined the Company in this capacity in 1999, will remain a consultant to the Company. "I am proud of the many operational successes we were able to achieve over the years at OMG," said Kissel. "As we developed our restructuring program, it quickly became apparent to me that this newly configured company did not require an executive in my post." The Company announced on October 29 that it would undergo a corporate restructuring in order to improve its cash flow and strengthen its balance sheet. OM Group, Inc., through its operating subsidiaries, is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. OMG is a recognized leader in manufacturing products from base and precious metals and managing metals procurement related to these activities. The Company supplies more than 1,700 customers in 50 countries with over 3,000 product offerings. Headquartered in Cleveland, Ohio, OMG operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia, with approximately 4,600 associates worldwide. For additional information on OMG, visit the Company's Web site at http://www.omgi.com OM Group Inc.'s 9.250% bonds due 2011 (OMG11USN1), DebtTraders says, are trading between 58 and 61. See http://www.debttraders.com/price.cfm?dt_sec_ticker=OMG11USN1for real-time bond pricing. OWENS: Delaware Court Extends Plan Filing Exclusivity to Jan. 10 ---------------------------------------------------------------- With the consent of the Official Committee of Unsecured Creditors, the Asbestos Claimants' Committee, and the Futures Representative, Judge Judith K. Fitzgerald of the U.S. Bankruptcy Court for the District of Delaware further extends Owens Corning and its debtor-affiliates' exclusive period to file a Chapter 11 Plan to January 10, 2003 and the Debtors' exclusive period to solicit acceptances of that plan to March 14, 2003. (Owens Corning Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) OWENS-ILLINOIS: Fitch Rates $175-Mil. Senior Secured Notes at BB ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Owens-Illinois' (NYSE: OI) 8 3/4% $175 million senior secured notes, pursuant to Rule 144A. The notes are due 2012. Proceeds will be used to reduce a portion of the bank debt that matures in March 2004. This offering further reduces commitments for OI's bank debt. The Rating Outlook remains Negative. The rating and Outlook reflect OI's asbestos exposure, high indebtedness and refinancing requirements. Total debt outstanding was $5.4 billion at September-end and approximately $1.7 billion in senior unsecured notes borrowed at the parent level is currently outstanding, $300 million of which will come due in April 2004. Fitch expects OI to refinance this amount as Owens-Illinois Group senior secured. Owens-Illinois is a leading manufacturer of glass containers and plastics packaging products. OI's glass bottle business makes about one of every two glass containers produced worldwide. The markets the company serves include soft drink and alcoholic beverage markets, as well as food and pharmaceutical companies. Contact: Mika Teodori 1-312-368-3214 or Mark Oline 1-312-368- 2073, Chicago. PG&E NATIONAL: Secures Financing Commitment for 2 Power Projects ---------------------------------------------------------------- PG&E National Energy Group Inc., announced that the company and its lenders have reached agreement to provide funding for two of the company's power-plant projects, Lake Road Generating in Connecticut and La Paloma Generating in California. PG&E National Energy Group is a wholly owned subsidiary of PG&E Corporation (NYSE: PCG). The funds will allow construction to be completed at the La Paloma plant, provide additional working capital facilities to enable each project to continue to procure fuel and other services and support collateral that may be required by suppliers of natural gas transportation services and others for the completion and operation of the projects. Subsidiaries of PG&E National Energy Group will continue to manage the completion of construction of La Paloma, provide operating services to both projects and provide energy management services. The agreement requires that each facility be transferred to its lenders or their designees on or before June 8, 2003. This funding is without further recourse to PG&E National Energy Group. The company also is required to work with the lenders to replace its energy trading entity as the energy management services provider. The Lake Road facility, fueled by natural gas and fuel oil, is an 840- megawatt power plant in Killingly, Conn., that sells wholesale electricity into the New England market. It entered commercial operation in June 2002. La Paloma Generating is a 1,121-megawatt combined-cycle power plant fueled by natural gas, which is 99 percent complete in Kern County, Calif. The administrative agent for each syndicate of lenders is Citibank N.A. PG&E National Energy Group is in default on several of its major credit agreements as a result of failing to repay $431 million under it revolving credit facilities that matured on Nov. 21, 2002, and failing to make various interest payments. These payment defaults have created cross-defaults under various loan facilities, including the Lake Road and La Paloma facilities. PG&E National Energy Group has been in active negotiations regarding a global restructuring of its debt with lenders, including lenders for the La Paloma and Lake Road facilities. An element of this global restructuring would be for the company to abandon, sell or transfer certain merchant assets including Lake Road and La Paloma. Unless further agreements are reached, PG&E National Energy Group Inc. and certain of its subsidiaries may be compelled to seek protection under or be forced into Chapter 11 of the Bankruptcy Code. Notwithstanding the restructuring efforts, if PG&E National Energy Group abandons, sells or transfers assets, the company would incur substantial charges to earnings in either the fourth quarter of 2002 or in 2003. Headquartered in Bethesda, Maryland, PG&E National Energy Group develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk-management services. PRIME GROUP: Closes on Sale of Centre Square I for $5 Million ------------------------------------------------------------- Prime Group Realty Trust (NYSE:PGE) has closed on previously announced transactions that were pending at the time of its earnings call held on November 14, 2002. On November 20, 2002, the Company closed on the sale of Centre Square I, a 93,711 square foot office building located in Knoxville, Tennessee, for $5.1 million with estimated net cash proceeds of approximately $3 million. Lender approval was received for the Sedgwick, Detert, Moran & Arnold, a San Francisco-based law firm, sublease for 27,826 square feet at One North Wacker Drive. The sublease expires August 31, 2012 and covers a portion of the lease liability assumed by Dearborn Center, L.L.C. in connection with its lease to Citadel Investment Group at Dearborn Center. The lease term is expected to commence on June 1, 2003. Lease renewal activity during the fourth quarter for tenants in excess of 18,000 square feet includes: Heartland Alliance at 208 South LaSalle Street for 18,889 square feet; Schwartz, Cooper, Greenberg & Krauss at 180 North LaSalle Street for 48,080 square feet; and Porsche Credit at Olympian Office Center for 29,327 square feet. Prime Group Realty Trust is a fully-integrated, self- administered, and self-managed real estate investment trust that owns, manages, leases, develops, and redevelops office and industrial real estate, primarily in the Chicago metropolitan area. The Company owns 14 office properties containing an aggregate of approximately 6.3 million net rentable square feet and 30 industrial properties containing an aggregate of approximately 3.9 million net rentable square feet. In addition, the Company has joint venture interests in two office properties containing an aggregate of approximately 1.3 million net rentable square feet. The portfolio also includes approximately 202.1 acres of developable land and the Company has the right to acquire more than 31.6 additional acres of developable land which management believes could be developed with approximately 5.0 million rental square feet of office and industrial space. In addition to the properties described above, the Company is developing Dearborn Center in downtown Chicago, a Class A, state-of-the-art office tower containing 1.5 million rentable square feet of office and retail space. As reported in Troubled Company Reporter's December 5, 2002 edition, K Capital Partners, which holds an 18% equity stake in the Company, urged Prime Group's Management and the Board to pursue a liquidation of a substantial portion of its real estate portfolio or a sale of the entire Company. Early this year, the Company faced the risk of involuntary bankruptcy due to the potential redemption of $40 million of PGE's Preferred A shares. SALT HLDGS.: S&P Gives BB-/B Credit & Sr. Discount Note Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Salt Holdings Corp, the parent of Compass Minerals Group Inc. The outlook is negative. In addition, Standard & Poor's assigned its 'B' rating to Salt Holding's $60 million senior discount notes due 2012. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on Compass Minerals and revised its outlook on the company to negative from stable reflecting the more aggressive financial posture than had been initially incorporated into Compass's ratings. Compass' total debt (pro forma for the debt and preferred stock at the holding company) will be approximately $531 million. "The issuance of the proposed notes eradicates the company's progress towards strengthening its credit measures", said Standard & Poor's credit analyst Paul Vastola. "Indeed, Standard & Poor's had anticipated that Compass would focus on reducing its total debt to EBITDA to about 3.5x and the company was on track with $70 million of debt reduction prior to this deal. However, as a consequence of the new notes, this ratio will increase to 4.6x". The proposed discount notes will be issued as a result of the sale of its cumulative senior redeemable preferred stock of Salt Holdings by the majority shareholder -- Apollo Management V, L.P. Pursuant to the company's preferred stock agreement, the sale of the preferred stock by Apollo triggers its conversion to debt. SEQUA CORP: Declares Regular Quarterly Dividend on Preferreds ------------------------------------------------------------- Sequa Corporation (NYSE:SQAA) -- whose senior unsecured debt has been downgraded by Fitch Ratings to 'BB-' from 'BB+' -- declared a regular quarterly dividend of $1.25 per share on its $5.00 cumulative convertible preferred stock. The dividend is payable February 1, 2003 to all stockholders of record January 10, 2003. SORRENTO NETWORKS: Net Capital Deficit Widens to $19 Million ------------------------------------------------------------ Sorrento Networks (Nasdaq:FIBR), a leading supplier of intelligent optical networking solutions for metro and regional applications, announced financial results for its third quarter of fiscal year 2003. The company also announced that it had reached a capital restructuring agreement in principle with holders of a majority of its convertible debentures and holders of a majority of the Series A preferred stock of its optical networking subsidiary, Sorrento Networks Inc. Third Quarter Financial Performance For the quarter ended Oct. 31, 2002, the company reported revenues of $5.5 million, compared with $5.2 million last quarter, an increase of 6 percent, and compared with $10.1 million for the same period of the prior year. Quarterly revenues for the company's primary operating subsidiary, Sorrento Networks Inc., increased 13 percent from the previous quarter to $5.2 million. The subsidiary's revenues increased as a result of improved orders from a blue-chip customer base of telecommunications, cable MSO, and utility network companies and from both the European and North American regions. Two new customer accounts were added during the quarter, bringing Sorrento's list of direct customers to over 25, representing greater than 1,600 nodes deployed worldwide. The company reported a quarterly operating loss of $5.3 million, compared with a quarterly operating loss of $14.4 million for the previous quarter and $12.6 million for the same quarter of the prior fiscal year. The substantial progress in operating loss reduction reflects the company's continued efforts to implement its aggressive expense control plan initiated earlier in the year. Net loss for the quarter totaled $6.9 million, a substantial improvement compared with a net loss of $15.8 million for the previous quarter and $15.9 million for the same quarter in the prior fiscal year. Net loss per common share was $8.86, compared with a net loss per common share of $22.24 for the same quarter in the prior fiscal year. The company reported that order intake during the third quarter was robust, with bookings exceeding $13 million. In particular, European operations generated over $5.5 million in orders, the highest quarterly total in the company's history. Another substantial contributor to bookings included $5 million in orders from the broadband infrastructure partner of Unlimited Fiber Optic Communications Inc., a leading provider of enterprise broadband optical communications services. The company signed five-year agreements to be the exclusive equipment supplier to UFO and its broadband infrastructure partner for their nationwide expansion into key markets, including the previously announced Los Angeles and Dallas metropolitan areas. At October 31, 2002, Sorrento's balance sheet shows a working capital deficit of about $30 million. The Company's total shareholders' equity deficit widened to about $19.8 million, from a deficit of about $18 million (Jan. 31, 2002). Phil Arneson, Sorrento's chairman and chief executive officer, commenting on the company's third quarter performance, stated, "I am pleased by our sequential revenue performance and especially by the backlog of orders with which we entered the fourth quarter. Despite continued softness in the overall market, Sorrento has been creative, determined and successful in capturing new business. Our recent agreements with UFO and its partner demonstrate Sorrento's flexibility in crafting winning solutions. The Sorrento management team remains optimistic about our near-term revenue outlook as it appears very positive." During the quarter, the company also: -- Announced a contract with FiberNet Communications L.L.C., an Iowa-based consortium of independent telecommunications companies, for a high-capacity, interstate optical network in Iowa and South Dakota; -- Announced distribution partnerships with Infraconcepts in Northern Europe and with Unitech Networks in the Asia Pacific region; -- Rolled out significant enhancements to its popular GigaMux metro dense wavelength division multiplexing (DWDM) product line, featuring improved density, scalability and user operational savings; and, -- Added Larry Matthews, a respected businessman and seasoned entrepreneur with over 35 years experience, to its board of directors. Restructuring Plan in Place The company has reached a restructuring agreement in principle with holders of a majority of its convertible debentures and holders of a majority of the Series A preferred stock of its optical networking subsidiary, Sorrento Networks Inc. This agreement is subject to the completion of definitive agreements and other conditions, including the consent of Series A preferred stockholders and debenture holders. The company expects to seek common shareholder approval of the proposed capital restructuring in a proxy to be issued as early as possible in 2003. The company will soon file a Form 8-K with the SEC providing details of this agreement, including the approval thresholds and other conditions necessary to complete the restructuring. Upon completion of the restructuring, among other things, the company's $32.2 million in convertible bonds will be converted into common shares of the company and into a portion of $12.5 million in convertible debentures, with interest of 7.5% and maturity in August 2007. In addition, the outstanding Series A "put" of $48.8 million against Sorrento Networks Inc. will be withdrawn and all Series A shares will be converted into common shares of the company, and into a portion of the $12.5 million in convertible debentures and up to $0.95 million in additional convertible debentures to pay certain legal fees. Upon completion of the restructuring, common shares of the company equal to approximately 87.5 percent of the company's common stock (on a diluted basis) will be registered for issuance to the Series A and debenture holders in connection with the restructuring. This percentage is based on the total of the existing shares outstanding, the shares to be issued to the Series A and debenture holders, the shares issuable upon conversion of the new debentures, and shares issuable upon conversion of warrants to be issued to existing shareholders, but excluding new employee stock options, shares issuable upon conversion of up to $0.95 million in convertible debentures to be issued to certain holders of the Series A preferred stock to pay certain legal fees and certain other issuances. On the same diluted basis, existing shareholders will retain 7.5 percent of the common stock of the company and will receive warrants to purchase approximately 5 percent of the company's common stock, exercisable at a 10 percent premium over an average closing price of the company's stock prior to the closing of the restructuring. As part of the restructuring, the company will simplify its corporate structure by merging its operating and non-operating subsidiaries into Sorrento Networks Corp., the publicly traded entity. This will include Sorrento Networks Inc., and Meret Optical Communications. Sorrento and Meret products will continue to be marketed under their respective brand names. The company will also, subject to shareholder approval, reincorporate in Delaware. Commenting on the agreement, Arneson said, "We have worked hard to reach this landmark achievement for Sorrento Networks. Completion of the restructuring will dramatically improve the company's balance sheet and remove concerns that customers or investors may have about the company's financial health. The restructuring will clear the way for us to continue executing our business plan and provide the financial flexibility to drive future growth." Arneson added, "While challenges lie ahead, including executing the definitive agreements and managing restructuring expenses, which in our current quarter will be unusually high, we are committed to completing the capital and corporate restructuring by March 2003. We also need to focus on opportunities to increase the company's working capital to fund our expected growth." Arneson went on to say, "Given the upward trend in bookings and continued robust sales activity, if the restructuring goes smoothly, is closed in a timely manner, and we raise additional capital and aggressively control our expenses, we believe that the company could achieve cash-flow breakeven within the next 12 months." Status of the Nasdaq Listing Completion of the capital restructuring is expected to address the company's last remaining issue with Nasdaq, meeting the shareholder equity requirement for National Market listing. Details of this agreement in principle were submitted to Nasdaq on Dec. 10, 2002. As part of the submission, the company requested that Nasdaq extend its prior Jan. 8, 2003 deadline to allow sufficient time for the company to implement the restructuring plan. At the end of the most recent quarter, the company regained compliance for its bid price deficiency by implementing a reverse stock split. In addition, the market capitalization deficiency was resolved as a result of the increase in the company's stock price following the reverse stock split. In conclusion, Arneson stated, "With the resolution of the restructuring and Nasdaq listing issues underway, Sorrento Networks is beginning to have in place the sound financial fundamentals and corporate structure to more aggressively go after opportunities in its metro and regional target markets. We are already seeing sales momentum with recent new contract wins and additional sales to existing customers. Going forward, we plan to remain focused on our financial and operational goals." Sorrento Networks, headquartered in San Diego, is a leading supplier of intelligent optical networking solutions for metro and regional applications worldwide. Sorrento Networks' products support a wide range of protocols and network traffic over linear, ring and mesh topologies. Sorrento Networks' existing customer base and market focus includes communications carriers in the telecommunications, cable TV and utilities markets. The storage area network (SAN) market is addressed though alliances with SAN system integrators. Recent news releases and additional information about Sorrento Networks can be found at http://www.sorrentonet.com TERREMARK: Ocean Bank Waives Credit Pact Default Until Dec. 31 -------------------------------------------------------------- Terremark Worldwide, Inc. (together with its subsidiaries), is a multinational corporation that provides Internet infrastructure and managed services. It is the owner and operator of the NAP of the Americas, the fifth Tier-1 Network Access Point in the world. The NAP of the Americas located in Miami, Florida, was fully placed in service on July 1, 2001. The Company's strategy is to leverage its experience as the owner and operator of the NAP of the Americas by developing and operating TerreNAPSM Data Centers in Latin America and Europe. TerreNAPSM Data Centers provide exchange point, collocation and managed services to carriers, Internet service providers, other Internet companies and enterprises. Through September 30, 2003, $89.1 million of the Company's liabilities, including notes, construction and other trade payables are or will come due. Additionally $30.7 million of Convertible Subordinated Debentures have been classified as a current liability. The Company had a net working capital deficit of approximately $116.2 million and stockholder's deficit of approximately $45.3 million at September 30, 2002 and incurred a net loss of approximately $17.4 million for the six months then ended. Management expects the Company will need an infusion of cash to fund business operations during this fiscal year ending March 31, 2003. The Company's liquidity needs are primarily related to repayment of construction payables and debt and to support operations. The Company has developed a plan to continue operating through the year ended March 31, 2003. Actual funding requirements are dependent upon management's ability to meet its expectations and will be significantly impacted if some or all of the following assumptions, which underly the expectations are not met: * restructuring of approximately $21.6 million of construction payables into long term payables or equity or a combination thereof; * signing and installation of additional customer contracts at NAP of the Americas; and * no funding under any of the Company's guarantees. On November 8, 2002, CRG, LLC entered into an agreement with Cupertino Electric, Inc. to purchase $18.5 million of the Company's debt and all associated rights held by Cupertino. This amount represents the entire construction payable that the Company owes to Cupertino. On November 11, 2002, the Company entered into an agreement with CRG that provides the Company the option, upon the closing of the purchase of the debt by CRG from Cupertino, to repay the entire debt at a discount by either issuing shares of the Company's common stock valued at $0.75 per share or making a cash payment. The Company's option must be exercised simultaneously with the closing of CRG's purchase of the debt from Cupertino. If the purchase by CRG of the debt from Cupertino closes on or before November 22, 2002, the Company may choose to pay $9.5 million in cash or issue 24,666,667 shares. If the purchase by CRG of the debt from Cupertino closes after November 22, 2002 and on or before December 15, 2002, the Company may choose to pay $11.0 million in cash or issue 24,666,667 shares. The Company's debt to Cupertino is in default as it matured on October 31, 2002 and it has not yet been repaid. As part of the agreement between CRG and Cupertino, Cupertino has agreed not to enforce any of its rights against the Company, but in order to preserve its rights, on November 8, 2002 Cupertino filed an action to enforce the rights it had acquired by virtue of a construction lien. Nevertheless, the standstill will be in effect until the closing of the purchase of the debt by CRG and upon the closing of the purchase of the Company's debt to Cupertino by CRG the action filed by Cupertino will be dismissed and the default under the debt cured. If the purchase of the debt by CRG does not occur on or before December 15, 2002 the standstill and the agreement between CRG and Cupertino will expire, and the Company will continue to owe the $18.5 million to Cupertino. On November 1, 2002 and November 5, 2002, approximately $2.8 million and $1.0 million of the Company's debt owed to Kinetics came due. As a result of not having repaid these amounts, Kinetics may declare a default under the debt agreement. As of November 14, 2002 no default has been declared and the Company is currently negotiating to reach a settlement with Kinetics. The Company's indebtedness with Ocean Bank of $44.0 million contains a cross-default provision linked to a default under the debt agreements with Cupertino and Kinetics. The current default under the debt with Cupertino would allow Ocean Bank to call a default under the credit agreement. However, the Company has obtained a letter from Ocean Bank waiving any default under the credit agreement with them resulting from a default under the Company's indebtedness to Cupertino or Kinetics. This waiver from Ocean Bank is effective until December 31, 2002. The Company has not paid approximately $918,000 of accrued interest due September 30, 2002 on the convertible debentures. As a result, $30.7 million of such convertible debentures are in default and classified as a current liability in the Company's September 30, 2002 balance sheet. As of November 14, 2002 no holder of the debentures requested an acceleration of payment. The Company has made an offer to all of the holders of the convertible debentures to convert their debentures, including accrued interest as of September 30, 2002, into the Company's common shares at the lower of their current conversion price or a conversion price of $0.75. Approximately $26.4 million of the convertible debentures have stated conversion prices in excess of $0.75 per share. The Company has not paid approximately $28,000 due under its $803,000 note to a financial institution. Accordingly, this note is also in default. Net loss decreased $3.9 million, or 29.4%, from $13.3 million for the three months ended September 30, 2001 as compared to $9.4 million for the three months ended September 30, 2002. Changes in operating results include an increase in interest expense of $1.0 million which was offset by a decrease in depreciation and amortization of $0.7 million, decrease in sales and marketing of $0.2 million, decrease in data center operations of $0.4 million, decrease in construction contract expenses of $1.0 million and decrease in general and administrative expenses of $1.6 million. Net loss decreased $3.9 million, or 18.4%, from $21.3 million for the six months ended September 30, 2001 to $17.4 million for the six months ended September 30, 2002. Changes in operating results include an increase in interest expense of $3.0 million and increase in data center operations of $1.8 million which were offset by a decrease in construction contract expenses of $1.9 million, decrease in general and administrative expenses of $2.4 million and decrease in start-up costs-data centers of $3.4 million. TESORO PETROLEUM: Completes Two Deals to Sell 70 Retail Outlets --------------------------------------------------------------- Tesoro Petroleum Corporation (NYSE:TSO) -- whose Corporate Credit Rating has been downgraded by Standard & Poor's to 'double-B-minus' -- has completed two of the three separate transactions for the sale of the company's 70 Northern California retail outlets. Transactions completed Thursday involve 47 of the outlets. Proceeds received from USA Petroleum Corporation and Green Valley Gasoline L.L.C. totaled $44 million, including working capital, and 50 percent of such proceeds will be used to pay down term debt in accordance with the company's current bank covenants. The company expects to close the third transaction for the California retail sites as well as the recently announced sale of the Northern Great Plains Product Pipeline by the end of the month. Tesoro Petroleum Corporation, a Fortune 500 Company, is an independent refiner and marketer of petroleum products and provider of marine logistics services. Tesoro operates six refineries in the western United States with a combined capacity of nearly 560,000 barrels per day. Tesoro's retail-marketing system includes nearly 600 branded retail stations, of which 300 are company owned under the Tesoro(R) and Mirastar(R) brands. TRENWICK GROUP: S&P Calls Pact with L/C Providers "Favorable" ------------------------------------------------------------- Standard & Poor's Ratings Services commented on Trenwick Group Ltd., and its subsidiaries. The ratings on these companies, including the 'CCC+' counterparty credit rating on Trenwick Group Ltd., remain on CreditWatch with negative implications, where they were placed on Oct. 21, 2002. On Dec. 8, 2002, Trenwick announced that it reached an agreement with its letter-of-credit providers to extend the letters of credit issued and outstanding to support underwriting at Lloyd's Syndicate 839, thereby allowing the syndicate to trade for the 2003 year of account. Standard & Poor's believes this development is favorable for the company and will provide additional time to negotiate the refinancing of its $75 million of senior notes, which are due in April 2003, as well as its several outstanding preferred stock obligations. The letter of credit is reduced to $182.5 million from $230 million and is extended from Dec. 31, 2005, to Dec. 31, 2006. Trenwick will further satisfy its Lloyd's solvency deficit of about $100 million with payments from LaSalle Re Ltd., and the proceeds from the Cat E Put settlement with Swiss Reinsurance Co. The creditors will also allow Trenwick to make a cash payment of about $14.4 million to support capital requirements for year-of-account 2003. Consideration to the banks includes the payment of a 5% cash fee, warrants equal to 10% of Trenwick's equity capital, and the right to receive 15% of the profits earned by Trenwick at Lloyd's for the 2002 and 2003 years of account. At the closing, which is expected by Dec. 31, 2002, Trenwick has undertaken to satisfy several new affirmative covenants covering the management of obligations at its runoff companies, including specific financial tests and a commitment to refinance the $75 million senior notes by March 2003 and collateralize the letter- of-credit banks by Dec. 31, 2003. Negative covenants include a prohibition on the type of business that can be undertaken and limitations on the assumption of financial and other obligations. The termination of the Chubb or Berkshire agreements also constitutes a default. The banks might also review and opine on operational matters to include compensation, runoff costs, and (both intercompany and third-party) expenditures. Standard & Poor's expects to meet with management over the next few weeks to fully review the implications of the agreement and status of the senior debt negotiation. The CreditWatch status of these ratings is expected to be resolved when the negotiations on the April 2003 debt maturities are concluded. TXU CORP: Fitch Downgrades Ratings & Changes Outlook to Stable -------------------------------------------------------------- Fitch Ratings downgrades TXU Corp.'s senior notes to 'BBB-', preference stock 'BB+', and commercial paper to 'F3' from 'BBB', 'BBB-', and 'F2', respectively. Also downgraded were the outstanding ratings on TXU US Holdings, Oncor Electric Delivery Co., TXU Energy Co. LLC, TXU Gas Co., Pinnacle One Partners, L.P., TXU Australia Holdings Limited Partnership and TXU Electricity Limited as outlined below. The Rating Outlook of all the companies listed above has been revised to Stable from Negative. The downgrade of the parent, TXU, takes into account TXU's already high leverage and the increased debt burden resulting from recent borrowings under new financing arrangements and existing credit facilities to maintain liquidity for potential collateral calls or accelerated repayment of debt associated with Pinnacle One Partners, and the related increase in interest expense. Fitch expects that TXU will have to maintain large cash reserves for an extended period as a precaution against potential collateral calls or accelerated maturities, pushing up the cost of capital and potentially delaying a needed reduction in debt leverage. The Stable Outlook for TXU and the maintenance of investment grade ratings recognize the existence of sufficient liquidity to meet expected refinancing and potential collateral requirements, after the painful but necessary decision to terminate support for TXU Europe, resulting in the ailing subsidiary going into administration. The Stable Outlook for TXU also factors in Fitch's view that TXU Corp. will not have a material liability for TXU Europe obligations. The single-notch downgrades of the ratings of TXU Energy, Oncor, TXU Gas, TXU Australia, and TXU Electricity Limited reflect the lower parent company rating, consistent with Fitch's policy on the relationship of subsidiary ratings to those of the parent. The ratings of TXU Gas, TXU Australia, and TXU Electricity Limited, all lowered to 'BBB-', previously depended upon the premise that the subsidiaries would receive continuing parental support from TXU Corp. While Fitch believes that support will continue, the ratings are now at levels consistent with the companies' individual credit profiles. The two-notch downgrade of US Holdings, an intermediate holding company that is parent to Oncor and TXU Energy, brings this rating to the same level as its parent at 'BBB-'. That approach is consistent with Fitch's view that US Holdings is a conduit through which the cash flows of the US subsidiaries pass on their way upstream to the parent company. TXU Energy's senior unsecured debt rating, lowered to 'BBB' from 'BBB+', incorporates Fitch's view that currently high margins earned by retail power suppliers in Texas are likely to moderate over time if price competition becomes more prevalent in that market, though this is not an immediate concern. Ample liquidity has been put in place to meet and exceed all anticipated needs of the parent and US affiliates. Management estimates that collateral for contractual counterparties would be on the order of $635 million if TXU Energy were downgraded by any one or two rating agencies to below investment grade and $905 million in the event of such action by all three rating agencies. A substantial portion of the collateral relates to non-trading obligations, including leases and long-term power contracts that are not sensitive to commodity price risk. Downgrade of TXU Corp. to below investment grade by any one agency to the equivalent of 'BB' or lower would occasion a put of $810 million of notes of Pinnacle One Partners. TXU Corp. and its US affiliates have estimated combined cash and available liquidity to meet these needs of approximately $1.9 billion after allowing for the amount needed to fund maturing commercial paper through Dec. 31. This provides a cushion of $200 million in excess of the maximum level of collateral calls, potential redemption of Pinnacle One notes, and Oncor's maturing obligations in the next year of approximately $700 million, Fitch anticipates that Oncor's current maturities as well as the $125 million maturing debt of TXU Gas will be refunded. TXU Energy has maturing obligations of $73 million that can be funded from operating cash flow, and also faces remarketing of pollution control revenue bonds of $505 million. Parent debt of $323 million will mature in 2003, in line with funds available from internal sources and expected tax refunds. TXU management forecasts indicate that additional liquidity, derived from operating cash flow and tax rebates, will be sufficient to cover maturities in 2003, in the event that refunding or remarketing is not possible for any units other than Oncor. Factors that could result in higher future ratings for TXU Corp. and its affiliates are: the TXU group's ability to reduce consolidated debt and leverage measures during 2003-2004; sustained improvement in operating performance of TXU Gas and TXU Australia; and stable operating performance and margins continuing at TXU Energy despite the constrained credit and business environment. Ratings could be lowered from the current level in the event of substantial, unanticipated erosion in TXU Energy's margins, possibly as a result of more aggressive price competition evolving in the retail supply market, or unexpected liability for material obligations of TXU Europe. Rating Changes: TXU -- Senior notes downgraded to 'BBB-' from 'BBB'; -- Preference stock to 'BB+' from 'BBB-'; -- Commercial paper to 'F3' from 'F2'. U.S Holdings -- Senior unsecured debt downgraded to 'BBB-' from 'BBB+'; -- Preferred stock downgraded to 'BBB-' from 'BBB+'. Oncor -- First mortgage bonds downgraded to 'BBB+' from 'A-' -- Debentures downgraded to 'BBB' from 'BBB+'; -- Commercial paper affirmed at 'F2'. TXU Energy -- Senior unsecured bonds to 'BBB' from 'BBB+'. -- Commercial paper to 'F3' from 'F2' TXU Gas Co. -- Senior notes downgraded to 'BBB-' from 'BBB'. TXU Australia Holdings Limited Partnership -- Senior unsecured debt downgraded to 'BBB-' from 'BBB'. TXU Electricity Limited (formerly Eastern Energy Limited) -- Bonds downgraded to 'BBB-' from 'BBB'. Pinnacle One Partners, L.P. -- Senior secured notes downgraded to 'BB+' from 'BBB-'. UNIROYAL TECHNOLOGY: Bringing-In Financo as Investment Banker ------------------------------------------------------------- Uniroyal Technology Corporation and its debtor-affiliates ask for permission from the U.S. Bankruptcy Court for the District of Delaware to retain Financo Restructuring Group as their investment banker, nunc pro tunc to December 3, 2002. The Debtors submit that the retention of an investment banker such as Financo is justifiable and necessary to assist and further enable them to execute faithfully their duties as chapter 11 debtors-in-possession. The Debtors are looking to Financo to: a) to the extend deemed desirable by the Debtors, identify or initiate potential transactions; b) review and analyze the Debtors' assets and the opening and financial strategies of the Debtors; c) review and analyze the business plans and financial projections prepared by the Debtors including testing assumptions and comparing those assumptions to historical and industry trends; d) evaluate the Debtors' debt capacity in light of their projected cash flows and assist in the determination of an appropriate capital structure for the Debtors; e) assist the Debtors and their other professionals in reviewing the terms of any proposed Transaction, in responding thereto and, if directed, in evaluating alternative proposals for a Transaction, whether in connection with a chapter 11 plan or otherwise; f) determine a range of values for the Debtors and any securities that the Debtors offer or propose to offer in connection with a Transaction; g) advise the Debtors on the risks and benefits of considering a Transaction with respect to the Debtors' intermediate and long-term business prospects and strategic alternatives to maximize the business enterprise value of the Debtors whether pursuant to chapter 11 plan or otherwise; h) review and analyze any proposals the Debtors receive from third parties in connection with a Transaction, including any proposals for debtor-in-possession financing, as appropriate; i) assist or participate in negotiations with the parties in interest, including, without limitation, any current or prospective creditors of, or holders of equity in, the Debtors in connection with a Transaction or a chapter 11 plan; j) advise and attend meetings of third parties and official and unofficial constituencies, as necessary; k) if requested by the Debtors, participate in hearings before the Bankruptcy Court or otherwise and provide relevant testimony and issues arising in connection with any proposed chapter 11 plan; and l) render such other financial advisory and investment banking services as may be agreed upon by Financo, subject to approval of the Court. The Debtors have agreed to pay Financo with: a) a monthly cash fee of $25,000; b) a cash fee in the amount $350,000; c) a cash fee in the amount of 1.0% of the aggregate value of any Transaction; and d) a new capital fee equal to: (i) 3.0% of any secured debt, junior secured debt or senior subordinated unsecured debt, excluding any debtor in possession financing; and (ii) 5.0% of any equity or hybrid capital raised. Uniroyal Technology Corporation and its subsidiaries are engaged in the development, manufacture and sale of a broad range of materials employing compound semiconductor technologies, plastic vinyl coated fabrics and specialty chemicals used in the production of consumer, commercial and industrial products. The Company filed for chapter 11 protection on August 25, 2002 Eric Michael Sutty, Esq., and Jeffrey M. Schlerf, Esq., at The Bayard Firm represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $85,842,000 in assets and $68,676,000 in debts. UNITED AIRLINES: Paying $35 Million of Critical Vendor Claims ------------------------------------------------------------- UAL Corporation/United Airlines Inc., and its debtor-affiliates purchase goods and services from domestic vendors. If the Debtors lose their relationships with these Essential Trade Creditors, their ability to create future revenue will suffer. James H.M. Sprayregen, Esq., at Kirkland & Ellis, informs the Court that many of these Essential Trade Creditors are sole source suppliers without whom the Debtors could not operate. Other Essential Trade Creditors could not be replaced within a reasonable time on terms as beneficial to the Debtors as those already in place. The Debtors believe that many of these Essential Trade Creditors will refuse to supply them postpetition unless their prepetition claims are paid. If the Debtors can benefit from maintaining lower costs of goods purchased during the postpetition period, it is prudent for the Debtors to pay selected Essential Trade Creditors some or all of their prepetition claims, provided that the vendors continue to sell their goods at the same reduced prices and on at least as favorable terms on a going forward basis as were in effect during the prepetition period. Mr. Sprayregen lists the Essential Trade Creditors and their functions to the Debtors. -- Safety and Security The Debtors are required by federal regulation to use certain products and services to protect employees, customers and assets, including hazardous material handling, identification cards and building security and fire systems. Airline safety and security is the number one priority of the Debtors, especially in the wake of the tragic events of September 11. Without maintaining a certain level of safety and security, the Debtors would not be allowed to operate. Furthermore, the implications of real or perceived breaches of safety and security would severely damage the Debtors' reputation and performance. The Debtors are unable to change safety and security suppliers because replacements would be too expensive. Also, the Debtors require uninterrupted service to continue operating and to avoid compromising the safety of their customers, which would be impossible if the Essential Trade Creditors providing safety and security refused to supply the Debtors until they were paid their prepetition claims. The Debtors cannot and will not compromise their high safety standards. Therefore, the Debtors' safety and security suppliers are essential to their successful reorganization. -- Aircraft Parts and Maintenance Services The Debtors require the replacement or repair of aircraft parts to maintain flight schedules and their customer base. Furthermore, the repair and replacement of old or damaged aircraft parts are vital to maintaining a safe aircraft. Without airplane parts and the service, the Debtors cannot fly their aircraft and the business would shut down. The Debtors' access to the airplane parts and services also reduces the number of flight delays and cancellations that result from unmaintained parts and components, and enable the Debtors to reduce costs and maintain schedule integrity. The Debtors' aircraft parts and service suppliers are essential because they are substantially less expensive than their competitors, who are unreliable due to limited competition, standardization and training issues. -- Flight Training Rigorous training of pilots and flight attendants is an essential component of maintaining a safe airline. To comply with the FAA, pilots and flight attendants must receive both initial qualifications and continual proficiency training. The Debtors use specialized products, devices and facilities to meet their requirements, including flight simulators. Simulators offer a far less expensive method of training compared to using aircraft. In addition to cost effectiveness, programmed simulators create specific conditions and maneuvers to train crews without any downside risks. There are two major simulator manufacturers, and the Debtors purchase simulators from each of them. These two manufacturers exclusively produce replacement parts for their simulators. -- Customer Impact To meet customer expectations and maintain brand integrity, the Debtors provide customer amenities on the ground and in flight. These goods include food, beverages and tabletop and paper products. The Debtors have built a solid and reliable reputation of offering high quality amenities, which their passengers have come to expect. Any drop-off in the quality of these customer-facing products would certainly damage business and result in a loss of customer confidence. The airport distribution and catering requirements for these goods are extremely high and cannot be met by a majority of suppliers. Many of the goods require airline specific packaging and product identification to meet airline requirements and avoid pilferage. Therefore, the Debtors are unable to replace these Essential Trade Creditors due to limited competition, long lead times, tooling requirements and non-competitive product offerings. -- Customer Handling Moving a customer and their baggage from the point of origin to the ultimate destination requires specialized products and services driven by airline and airport requirements. These goods and services include, but are not limited to, Mobile Chariot, Easy Check-in equipment, baggage sorter parts, ground equipment fuel and ground support. Any loss of replacement parts or system support would result in less automation and an increase in operating costs. Further, this equipment is specifically designed and manufactured for the Debtors. Therefore, the manufacturers of this equipment are likely the only entities that can, or will, maintain and repair the equipment. If these creditors refused to continue to supply the Debtors, the Debtors would be forced to purchase new equipment from new suppliers, which would result in additional and unnecessary expenses for the redesign and remanufacture of similar equipment. -- Crew and Employee Related As a labor-intensive business, the Debtors require significant infrastructure to support a large volume of employees. Additionally, the Debtors require automated and standardized tracking, scheduling and flight bidding programs to operate the airlines. Each of these programs is either customized to the Debtors' needs or required by airport or other external regulations. They are all integral to the operation of the Debtors' businesses. If any of these suppliers refused to supply the Debtors or maintain and repair their products, the Debtors would be required to implement new systems or programs at excessive costs and long lead times, which would severely disrupt business and, potentially, shut down the Debtors. Further, even if the Debtors could change suppliers, replacement suppliers would require policy changes for, among other things, time tracking, scheduling and flight bidding within the Debtors that would be damaging to their businesses due to the excessive and unnecessary costs to replace the current programs. -- Information Systems To operate a large, complex and information intensive business, the Debtors must maintain computer software and hardware systems and equipment. These systems' mainframes, routers and servers are used to process and network data, including gate assignments on flight-information-display screens, aircraft maintenance history for aviation maintenance technicians, current weather and fuel calculations for flight crews. Information plays a vital role in maintaining uninterrupted operations. Without information like the amount of fuel or weight on each plane, the Debtors would be unable to fly and, thus, their businesses would shut down. These suppliers are unique to the industry. The Debtors cannot simply replace them without concerns that the new information systems would be less than completely accurate. -- Cogen Equipment The Debtors own and operate a facility at the Maintenance Operations Center in San Francisco that co-generates electricity and steam. The steam is used to run engine test cells at the Maintenance Operations Center and the electricity is sold as a source of income. Because the Debtors own the facility, the steam cannot be created by anyone else. In many instances, suppliers provide replacement parts, monitoring equipment and services available only through the OEM or a single distributor. Without the steam generated at the facility, the Debtors are not able to test their engines. If the Debtors are unable to test their engines, the aircraft must be removed from service, which would increase costs and eliminate revenue- generating capacity. Pursuant to Sections 363 and 105 of the Bankruptcy Code and the "necessity of payment" doctrine, the Debtors seek the Court's authority to pay -- at their discretion -- certain prepetition Trade Claims of the Essential Trade Creditors not more than $35,000,000. In determining the amount of the Trade Claims Cap, the Debtors carefully reviewed all of their suppliers to determine, among other things, which suppliers are sole source suppliers without whom the Debtors could not continue to operate and which suppliers are cost prohibitive to find a replacement. The Debtors then analyzed the financial condition of each of these suppliers, including the level of dependence each supplier has on the Debtors' continued business. After determining this information, the Debtors estimated the amount, which they believe they would be required to ensure the continued supply of critical goods and services. The Trade Claims Cap represents this estimated amount. Thus, the Trade Claims Cap does not represent the total amount of the prepetition trade claims of all creditors. Rather, it represents the Debtors' best estimate as to how much can be paid, at a minimum, to these creditors to continue the supply of critical goods and services. The Trade Claims Cap represents approximately 13.7% of the Debtors' estimate of aggregate prepetition trade claims, which total approximately $255,000,000. To minimize the amount of payments required, the Debtors seek the Court's authority to designate the identity of Essential Trade Creditors in the ordinary course of their businesses. Designating the Essential Trade Creditors now would likely cause these vendors to demand payment in full. Mr. Sprayregen informs the Court that when determining whether a creditor is an Essential Trade Creditor, the Debtors considered, among other things: (a) whether the goods or services the creditor provides can be replaced; (b) whether failure to pay prepetition trade claims will require the Debtors to incur higher costs for goods or services postpetition; and (c) whether failure to pay prepetition trade claims will cause the Debtors to lose sales or future revenue. The Debtors propose to pay the Trade Claims of each Essential Trade Creditor that agrees to continue to supply goods or services to the Debtors on its Customary Trade Terms. Customary Trade Terms means: (a) the most favorable trade terms and practices (including allowances) in effect between the Essential Trade Creditor and the Debtors within 120 days prior to the Petition Date, (b) other trade terms as agreed by the Debtors and the Essential Trade Creditor, or (c) other trade terms, practices and programs that are at least as favorable as those that were in effect prepetition. Mr. Sprayregen relates that it may be necessary to pay certain Essential Trade Creditors only a portion of their claims in return for the continued supply of critical goods and supplies - - even if it is not on the Essential Trade Creditor's Customary Trade Terms. The Debtors further ask Judge Wedoff's permission to enter into a separate agreement, at their discretion, with each Essential Trade Creditor on a case-by-case basis. The Debtors also propose that if an Essential Trade Creditor later refuses to continue to supply goods on Customary Trade Terms during the pendency of these Chapter 11 Cases -- or on terms as were individually agreed to between the Debtors and the Essential Trade Creditor, then the Debtors may, in their discretion declare that: (a) any payment of a Trade Claim made by the Debtors under the order granting this Motion will be deemed to be a postpetition advance that the Debtors may recover from the Essential Trade Creditor in cash or in goods; and (b) upon any recovery by the Debtors, the Trade Claim of the Essential Trade Creditor paid after the Petition Date will be reinstated in the amount recovered. In the event that this scenario occurs, an Essential Trade Creditor will then immediately repay to the Debtors any payment made to it on account of its Trade Claim to the extent that payments on account of the Trade Claims exceed the postpetition claims of the Essential Trade Creditor then outstanding without giving effect to any rights of setoff, claims, provision for payment of reclamation or trust fund claims, or otherwise. In sum, the Debtors seek to return to their position immediately prior to the entry of an order approving the Motion with respect to all prepetition claims in the event a Trade Agreement is terminated or a Essential Trade Creditor refuses to supply goods or services on Customary Trade Terms following receipt of payment on its Trade Claim. To ensure that Essential Trade Creditors transact business with the Debtors on Customary Trade Terms, the Debtors ask the Court to approve these procedures, as a condition to paying any Essential Trade Creditor: (a) that a letter be delivered to, and executed by, the Essential Trade Creditors along with a copy of the order granting the Motion; and (b) that the check used to pay a Trade Claim contains a legend stating that the Trade Creditor agrees to this treatment. Mr. Sprayregen tells the Court that some of the Essential Trade Creditors may also have obtained mechanics' liens, possessory liens, or similar state law trade liens on the Debtors' assets, based on Trade Claims. As a further condition of receiving payment on a Trade Claim, the Debtors propose that an Essential Trade Creditor must agree to take whatever action is necessary to remove the Trade Lien at the Essential Trade Creditor's sole expense. Payment of Trade Claims owed to Essential Trade Creditors is key to a successful reorganization. If the Debtors' request is not granted, Essential Trade Creditors will have no incentive to continue to finance the Debtors on customary trade terms. Indeed, certain Essential Trade Creditors that suspected that the Debtors were contemplating filing bankruptcy petitions have gone so far as to demand that the Debtors pay for their goods on a cash-in-advance or cash-on-delivery basis. Any further expansion of these activities by other Essential Trade Creditors would be detrimental to the Debtors, their estates and their creditors. The continued availability of trade credit in amounts and on terms consistent with those that the Debtors enjoyed prepetition is clearly advantageous to the Debtors because it allows them to maintain liquidity for operations and continued high levels of operating profitability. The Debtors believe that preserving working capital through the retention or reinstatement of traditional trade credit terms will enable them to maintain their competitiveness and to maximize the value of their businesses. Conversely, a deterioration of trade credit and a disruption or cancellation of deliveries of goods would hinder the Debtors' operations and undermine their ability to reorganize. Additionally, the relief requested may also help to avert the institution of countless reclamation claims, suits and motions. Avoiding the time and expense of evaluating and litigating these claims will benefit the Debtors, their estates and their creditors. Finally, the Debtors request that all applicable banks and other financial institutions be authorized and directed to receive, process, honor and pay all checks presented for payment of, and to honor all fund transfer requests made by the Debtors related to, the claims that the Debtors request authority to pay in this Motion, regardless of whether the checks were presented or fund transfer requests were submitted prior to or after the Petition Date; provided, however, that: (a) funds are available in the Debtors' accounts to cover the checks and fund transfers; and (b) all banks and other financial institutions are authorized to rely on the Debtors' designation of any particular check as approved by Court. (United Airlines Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) United Airlines' 10.670% bonds due 2004 (UAL04USR1), debtTraders reports, are trading between 12.75 and 13.75. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. US AIRWAYS: Wilmington Trust Auctioning Off 17 Fokker Aircrafts --------------------------------------------------------------- By virtue of US Airways, Inc.'s (f/k/a USAir, Inc.) defaults under various Trust Indenture and Security Agreements, the Secured Party, Wilmington Trust Company will commence the foreclosure and sale, through a public auction, of 17 Fokker F100 Aircraft which the Debtor pledged as collateral. The auction will be held at 3:00 p.m. on December 20, 2002, at the offices of the Milbank, Tweed, Hadley & McCloy LLP. Each aircraft will be sold in an "as is, where is" basis. Bids may be submitted in writing at any time before the Date of Sale to the Secured Party's Counsel: Milbank, Tweed, Hadley & McCloy LLP 1 Chase Manhattan Plaza, 54th Floor New York, NY 10005 Tel: 212-530-5000 Fax: 212-530-5219 Attn: W. Rogers Benson, Esq. Wilbur F. Foster, Esq. Cecilia Chan, Esq. The Public Auction will be subject to a minimum cash bid of $2,647,058.80 for each aircraft and the minimum bidding increments will be $100,000. Closing of the sale will take place within 10 business days after the Date of Sale. If the winning bidder fails to close, it will lose its cash deposit and may be held liable for the full price it bid. US Airways Group, Inc., filed for Chapter 11 protection on August 11, 2002, listing total assets and debts of about of $7.8 billion. Alexander Williamson Powell Jr., Esq., and David E. Carney, Esq., at Skadden, Arps, Slate, Meagher & Flom and Lawrence E. Rifken, Esq., at McGuireWoods LLP represent the Debtors in their restructuring efforts. DebtTraders reports that US Airways Inc.'s 10.375% bonds due 2013 (U13USR2) are trading between 10 and 20. See http://www.debttraders.com/price.cfm?dt_sec_ticker=U13USR2for real-time bond pricing. VANGUARD AIRLINES: Seeks Exclusivity Extension through Dec. 27 -------------------------------------------------------------- Vanguard Airlines, Inc., asks the U.S. Bankruptcy Court for the Western District of Missouri to extend its exclusive periods. The Debtor tells the Court it needs until December 27, 2002, to file a plan and until February 25, 2003, to solicit acceptances of that plan from its creditors. The Debtor agues that it is in the best position to develop and propose a plan and comprehensive disclosure statement. The Debtor believes that it will have time to finalize a comprehensive plan and disclosure statement by Feb. 25. The Debtor has spent a substantial amount of time, especially in the initial months of the case, negotiating with potential purchasers and dealing with issues attendant to preserving the ability of Vanguard to restart operations. Due to the complexity of the issues involved in Vanguard's business, Vanguard believes that it is reasonable for the Debtor in this case to need additional time to formulate a plan and solicit approval of the plan. The Debtor assures the Court that its request for extension is not for the purpose of delaying proceedings in its case, but is intended to provide adequate time for the Debtor to complete its development and submission of a plan and comprehensive disclosure statement. Vanguard Airlines, currently shutting down its business, used to provide all-jet service to 14 cities nationwide: Atlanta, Austin, Buffalo/Niagara Falls, Chicago-Midway, Dallas/Ft. Worth, Denver, Fort Lauderdale, Kansas City, Las Vegas, Los Angeles, New Orleans, New York-LaGuardia, Pittsburgh and San Francisco. The Company filed for Chapter 11 protection on July 30, 2002. Daniel J. Flanigan, Esq., at Polsinelli Shalton & Welte, P.C., represents the Debtor in its restructuring efforts. When the company filed for protection from its creditors, it listed total assets of $39.7 million and total debts of $95.9 million. VELOCITA: Bondholders Tap Houlihan Lokey for Financial Advice ------------------------------------------------------------- The Official Committee of Bondholders of Velocita Corp., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to employ Houlihan Lokey Howard & Zukin Financial Advisors, Inc. The Bondholders' Committee believes that retention of a financial advisor is necessary and appropriate in order to facilitate the Bondholders' Committee's role in this proceedings and to assist the Bondholders' Committee in exercising its powers and performing its duties under the Bankruptcy Code. The Bondholders' Committee requires the experience of Houlihan Lokey to: a) evaluate the assets and liabilities of the Company; b) analyze and review the financial and operating statements of the Company; c) analyze the business plans and forecasts of the Company; d) evaluate all aspects of the Company's near term liquidity, including all available financing alternatives; e) provide such specific valuation of other financial analyses as the Committee may require; f) assess the financial issues and options concerning any proposed Transaction; and g) prepare, analyze and explain any Transaction to various constituencies. Houlihan Lokey will bill Velocita's estate $175,000 per month for the first 2 months of its engagement and $150,000 per month thereafter as its Monthly Fee. 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. WARREN ELECTRIC: Will Sell Business to SUMMIT Electric for $10MM ---------------------------------------------------------------- SUMMIT Electric Supply, a leading electrical distributor, will acquire Warren Electric Group for $10.5 million. Warren, an 83- year-old electric distributor based in Houston, TX, filed for bankruptcy in September. SUMMIT acquires Warren's domestic operations, including 11 wholesale electrical Service Centers in the Gulf Coast, and in Venezuela. SUMMIT's corporate headquarters will remain in Albuquerque, N.M. "Warren has had an impressive history of serving customers in the Gulf Coast area and is highly regarded for its expertise in the petrochemical and process industries," said SUMMIT president and co-founder Victor R. Jury. "We look forward to building on its long-standing success." "This acquisition is very positive for Warren's employees, customers and vendors," said Warren Chairman and CEO Cheryl Thompson-Draper. "We've obviously had a difficult year and we appreciate those who have stood by us. SUMMIT has a sterling reputation in the industry." The acquisition preserves the jobs of more than 260 Warren employees. Upon closing the deal, SUMMIT reinstated the Warren associates' health care coverage which had been terminated, making it retroactive to December 1, 2002. "Warren not only offers us the opportunity to expand, but also to revive a company that might otherwise have been forced to close," said Jury. "We are delighted to keep it intact for the employees and customers who rely on it." SUMMIT acquires 11 wholesale electrical distribution centers in the following states and locations: -- TEXAS: Houston, La Porte, Beaumont, Clute, Corpus Christi and Lufkin. -- LOUISIANA: New Orleans, Lafayette (Broussard), Baton Rouge (Gonzales) and Lake Charles (Sulphur). -- INTERNATIONAL: Venezuela Sales Office The newly-acquired centers will continue to operate under Warren's name during the transition. SUMMIT Electric Supply -- http://www.summit.com-- was founded in 1977 and is headquartered in Albuquerque, N.M. It is the 10th largest privately-held company in New Mexico, and prior to the Warren acquisition, ranked as the 34th largest electrical distributor in the nation. It operates centers in Albuquerque, Farmington, Santa Fe and Los Alamos in New Mexico; San Antonio, Austin, Dallas, Fort Worth, Killeen and El Paso in Texas; and Phoenix, Arizona. WHEELING-PITTSBURGH: Gets Nod for $2MM Minteq Claim Settlement -------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation asks the Court to approve its settlement agreement with Minteq International. James M. Lawniczak, Esq., and Scott N. Opincar, at Calfee Halter & Griswold LLP, in Cleveland, Ohio, inform Judge Bodoh that Minteq is a supplier of goods and services to WPSC, both before and after the Petition Date. In April 2001, Minteq filed a proof of claim for $2,098,466.88 against WPSC for goods sold by Minteq prior to the Petition Date. Minteq asserted that this claim was secured for $1,832,041.99 by a mechanic's lien on real property located at WPSC's Mingo Junction plant in Jefferson County. Minteq further asserted that it held a right to a priority unsecured claim for $71,451.70 based on asserted reclamation rights. The Court previously established procedures for the liquidation and treatment of reclamation claims like that held by Minteq. Accordingly, Minteq's reclamation claim is resolved for $842. WPSC claimed that Minteq received $710,058.03 in payments during the 90-day prepetition preference period. Minteq asserts that it has meritorious defenses to any preference action. Rather than litigate these claims, WPSC and Minteq decided to settle their dispute. The parties agree that: (1) Unsecured Claim. Minteq will have an unsecured claim against WPSC equal to $2,097,624.88; (2) Reclamation Claim. Minteq will have an allowed reclamation claim against WPSC equal to $842, which will be treated as all other reclamation claims are treated; (3) Release. -- Minteq waives its claim secured by the mechanic's lien and will deliver a release of that lien to WPSC; -- WPSC releases any claim to recover prepetition monies as preferences paid to Minteq and otherwise; and -- The parties will exchange mutual releases of all other actual or possible claims against the other; and (4) Future Relationship. WPSC agrees that Minteq will be a "preferred supplier" in the future refractory work that will be "earned on a competitive basis". Specifically, Minteq will be considered first for: -- electric furnace Miniscan equipment and material; -- blast furnace reprofiling material; -- reheat furnace maintenance materials; and -- continuous caster undish materials. Mr. Lawniczak assures Judge Bodoh that he has examined the mechanic's lien held by Minteq, and that it appears to be properly filed and recorded, and is therefore likely to be a valid lien. However, despite this, Mr. Lawniczak believes that there are remaining, substantial and complex issues of valuation of Minteq's secured claim. To litigate this to conclusion would consume time and money since Minteq has a "strong new value defense" to any preference action. Accordingly, any litigation would likely be contentious and result in minimal, if any, recovery for the estate. This Settlement Agreement, therefore, avoids the risk, substantial delay and costs of litigation, in which Mr. Lawniczak includes the cost of collecting any judgment. Furthermore, the Settlement Agreement is aimed at maximizing the net assets of the estate so as to obtain the greatest possible distribution to creditors. * * * Accordingly, Judge Bodoh approves the parties' settlement. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM: Court Approves Settlement Pact with United Airlines ------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates, sought and obtained Court approval of a Settlement Agreement with United Air Lines Inc. According to Lori R. Fife, Esq., at Weil Gotshal & Manges LLP, in New York, United Air Lines Inc. hosts a program pursuant to which participants are issued airline travel miles for traveling on United and for purchasing certain goods and services offered by participating companies in association with the Mileage Plus Program. Prior to the Petition Date, the Debtors joined with United in forming a special option for Mileage Plus Members that become customers of the Debtors' residential long-distance service. Program Members are awarded Mileage Plus Miles for each dollar spent on these services. In connection with the Mileage Plus Program, on November 1, 2000, Ms. Fife recounts that the Debtors entered into a Restated and Amended Airline Partnership Agreement with United, which expires on June 30, 2004. The Partnership Agreement provides for a six-month wind-down period after its termination. During the wind-down period, United is required to issue applicable Mileage Plus Miles to Program Members as long as they remain customers of the Debtors' residential long-distance service. The Debtors are required to pay for Mileage Plus Miles, and the Debtors are not permitted to enroll any new Program Members during the wind-down period. As of the Petition Date, the Debtors owed United $6,000,000 for Mileage Plus Miles purchased under the Partnership Agreement. In addition, the Partnership Agreement provides that the Debtors will be the exclusive telecommunications provider associated with the Mileage Plus Program. Prior to the Petition Date, Ms. Fife reports that a dispute arose between the parties concerning termination rights under the Partnership Agreement. Specifically, on July 19, 2002, United sent the Debtors a written notice of termination of the Partnership Agreement purporting to terminate the Partnership Agreement based on the Debtors' alleged admission of an inability to pay its debts when due. United subsequently sought to enter into an agreement with Sprint Communications Company L.P. and Sprint Spectrum L.P. pursuant to which the Sprint Entities would become the telecommunications providers associated with the Mileage Plus Program. On September 13, 2002, Ms. Fife tells the Court that the Debtors filed a demand for arbitration against United, alleging that United had breached the Partnership Agreement and had violated the Exclusivity Provision. The Debtors also indicated to United and the Sprint Entities that it may assert a claim against the Sprint Entities for tortious interference with the Partnership Agreement. On October 16, 2002, United asserted a counterclaim against the Debtors in the Arbitration alleging breach of contract, trademark infringement, and trademark dilution. On October 5, 2002, Ms. Fife relates that the Debtors and United entered into a standstill agreement, which provided that, until November 4, 2002 at 5:00 p.m., the Debtors would not actively market the Mileage Plus Program and United and the Sprint Entities would not make any public announcements or take any public actions in connection with any agreement to provide Mileage Plus Miles to any customers of the Sprint Entities. While the Standstill Agreement was in place, the Debtors and United prepared for the Arbitration hearing scheduled for October 30 and 31, 2002. Prior to the Arbitration hearing, however, the parties entered into settlement discussions and ultimately negotiated a settlement agreement. The salient terms of the Settlement are: -- The Partnership Agreement will be terminated as of October 31, 2002, provided, however, that the parties agree to perform their wind-down obligations as set forth in Article 12 of the Partnership Agreement. The wind-down period will begin on November 1, 2002 and end on February 28, 2003; -- The Debtors will notify Program Members of the termination of the Debtors' participation in the Mileage Plus Program. Notification to Program Members is subject to United's pre-approval of the termination notice; provided, however, that the pre-approval will not unreasonably be withheld. The cost of notification will be borne by the Debtors; -- During the Wind-Down Period and so long as United complies with the Settlement and its wind-down obligations under the Partnership Agreement, the Debtors will not seek to enforce the Exclusivity Provision and will not sue United, Sprint, and Sprint Spectrum for any claim relating to a violation of the Partnership Agreement, including the Tortious Interference Claim against the Sprint Entities; -- During the Wind-Down Period, neither party may use the other party's logos, trademarks, trade names, or service marks to market any Mileage Plus Program or to enroll new Program Members; -- United will not disclose to the Sprint Entities or any other entity any information that identifies the Program Members, and neither United nor the Sprint Entities will target or market specifically to the Program Members. United and the Sprint Entities will be free to market generally the Mileage Plus Program; -- United will continue to provide Mileage Plus Miles to Program Members earned during the Wind-Down Period and any Program Members who joined the Mileage Plus Program on or prior to October 31, 2002 will be entitled to bonus miles in accordance with the Mileage Plus Program rules. The Debtors will have no obligation to pay United any amounts for Mileage Plus Miles earned by Program Members during the Wind-Down Period; and -- The mutual releases provided in the Settlement will be effective after completion of both: a. the conclusion of the Wind-Down Period, and b. the posting by United of all of the Mileage Plus Miles due to Program Members earned through and including the expiration of the Wind-Down Period. The Debtors have estimated that, if the Partnership Agreement were to continue pursuant to its terms through the Expiration Date, they could expect to obtain $14,000,000 EBITDA from the agreement. Ms. Fife notes that this assumption, however, does not take into account the $6,000,000 owed to United as of the Petition Date, the risks associated with the Arbitration, counterclaims and certain other mitigating factors United has asserted in the Arbitration, or the costs of continuing the Arbitration. While the Debtors believe that it would eventually prevail in the Arbitration, they estimate that, even presuming a best case scenario, the value to the Debtors of a successful Arbitration would be $7,000,000 to $8,000,000. Based on the Debtors' estimation of the precarious financial state of the airline industry as a whole and of United in particular, the Debtors believe that the continuance of the Partnership Agreement through the Expiration Date is unrealistic. In contrast, Ms. Fife points out that the Settlement provides a mechanism for the Debtors to obtain Mileage Plus Miles for Program Members at no cost to the Debtors over the next four months. Therefore, obtaining significant value in the short-term under the Settlement eliminates the difficulties associated with collection in the event the Arbitration is continued and is ultimately successful. Ms. Fife insists that arbitrating and litigating issues concerning breach of contract, admission of insolvency, trademark infringement and dilution, and tortuous interference with contract is complex. The Arbitration and any litigation concerning the Tortious Interference Claim would necessitate extensive discovery, including significant document production and numerous depositions. The Debtors estimate that the Arbitration and any litigation could take years to complete at significant costs to the estate. The Settlement, which provides the Debtors with $5,800,000 of value in the short-term, is therefore eminently reasonable in light of the complexity, cost, and delay of obtaining, at best, an award valued at $7,000,000 to $8,000,000. The Debtors and its creditors are benefited by a Settlement that: -- alleviates the burdens on the Debtors' management; -- eliminates the costs and risks associated with the Arbitration; and -- brings significant value into the Debtors' estate in the short-term. (Worldcom Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 609/392-0900) Worldcom Inc.'s 7.875% bonds due 2003 (WCOM03USN1), DebtTraders reports are trading between 25 and 26. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM03USN1 for real-time bond pricing. * William Eggers Joins Deloitte Consulting as Research Director --------------------------------------------------------------- Deloitte Consulting, soon to become Braxton, announced that prominent government authority William Eggers has joined the firm as a Director with Deloitte Research. Deloitte Research works with leading academics, technologists, industry organizations, and clients worldwide to anticipate and understand strategic, global, and industry-specific issues that are critical to improving performance. "Bill Eggers is spearheading our public sector research agenda, allowing us to deliver provocative, insightful, and timely points of view that speak straight to the complex issues facing government executives worldwide," said Ann Baxter, director of Deloitte Research. "Bill works directly with Deloitte Consulting's partners, consultants, and clients, as well as leading academics, to put forth innovative approaches, tools, and techniques that can help solve strategic problems and improve the performance of government." "To support Deloitte Consulting's global public sector practice, we're developing timely research and points of view about current issues including homeland security and options for reducing state budget deficits," said Bill Eggers. "Deloitte Research will also assess the next generation of e-Government and provide perspectives on emerging trends such as networked government and constituent management models." Eggers has been quoted extensively in broadcast and print media with his perspectives on how to address the states' budget crises and he has been asked by senior officials with current and new state administrations to meet with them to review alternatives for cutting costs. Eggers' byline article, Message to Governors: Cut, Cut, Cut, appeared in the Wall Street Journal immediately following the November elections. Prior to joining Deloitte Research, Eggers was with the Manhattan Institute of Policy Research, a prestigious think tank, where his research efforts resulted in published reports on e-Government and government reform. Eggers will maintain his affiliation with the Manhattan Institute as a Senior Fellow. He will continue as an appointee to the Performance Measurement Advisory Council, established by the U.S. federal government's Office of Management and Budget. Bill will also support the firm's efforts related to the National Governors Association, the Democratic Governors' Association and the Republican Governors Association. Eggers' new book, which addresses how technology is transforming government, is expected to be published in the spring of 2003. "Bill brings a powerful combination of skills, experience, and vision," said Bob Campbell, senior global partner with Deloitte Consulting. "He is known for producing outstanding research because his insights and perspectives are grounded in real-world government experience." Eggers' first-hand government experience includes his role as project director for the Texas Performance Review/e-Texas initiative, which was charged with developing recommendations to save tax dollars, increase the use of technology, improve customer service, and inject competition into state services. He served as a commissioner for the Texas Incentive and Productivity Commission and a designee on the Texas Council on Competitive Government. As chair of the Government Reform Policy Committee for then Governor George W. Bush during the presidential campaign, Eggers coordinated research related to e- Government, privatization, civil service reform, government performance, procurement, and other cross-cutting policy areas. Mr. Eggers is the former director of Government Reform at the Reason Public Policy Institute, a Los Angeles-based think tank. He is the 1996 winner of the prestigious Roe Award for leadership and innovation in public policy research and the 2002 APEX award for excellence in business journalism. His book, Revolution at the Roots: Making our Government Smaller, Better, and Closer to Home (The Free Press), which he co-authored, was named the winner of the 1996 Sir Anthony Fisher International Memorial Award for "making the greatest contribution to the understanding of the free economy during the past two years." Prior to joining the Reason Foundation, Mr. Eggers assisted reformers in Eastern Europe and the former Soviet Union with the transition from socialist to free-market economies as a policy analyst at The Heritage Foundation in Washington, D.C. He has advised dozens of cities, states, and foreign countries and trained hundreds of public officials on restructuring government. Deloitte Consulting is one of the world's leading management consulting firms, and is uniquely known for its straightforward approach to solving today's most complex business challenges. Deloitte Consulting works hand-in-hand with clients to improve business performance, drive shareholder value, and create competitive advantage. The firm has 15,000 professionals in 33 countries, and serves more than one-third of the companies in the Global Fortune(R) 500. It is the only consulting firm with five straight appearances on Fortune Magazine's list of "100 Best Companies to Work for in America. Deloitte Consulting can be found on the Internet at http://www.dc.com Deloitte Consulting will become Braxton upon its separation from Deloitte Touche Tohmatsu. * BOND PRICING: For the week of December 16 - 20, 2002 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 3.250% 05/01/21 7 Adelphia Communications 6.000% 02/15/06 7 Adelphia Communications 10.875% 10/01/10 39 Advanced Micro Devices Inc. 4.750% 02/01/22 67 Advanstar Communications 12.000% 02/15/11 66 AES Corporation 4.500% 08/15/05 40 AES Corporation 8.000% 12/31/08 50 AES Corporation 9.375% 09/15/10 50 AES Corporation 9.500% 06/01/09 50 Aether Systems 6.000% 03/22/05 72 Agere Systems 6.500% 12/15/09 73 Agro-Tech Corp. 8.625% 10/01/07 65 Akamai Technologies 5.500% 07/01/07 38 Alaska Communications 9.375% 05/15/09 73 Allegheny Generating Company 6.875% 09/01/23 74 Alternative Living Services (Alterra) 5.250% 12/15/02 1 Alkermes Inc. 3.750% 02/15/07 62 Alexion Pharmaceuticals Inc. 5.750% 03/15/07 69 Alpharma Inc. 3.000% 06/01/06 71 Amazon.com Inc. 4.750% 02/01/09 74 American Tower Corp. 5.000% 02/15/10 63 American Tower Corp. 6.250% 10/15/09 67 American & Foreign Power 5.000% 03/01/30 60 America West Airlines 6.930% 01/02/08 58 Americredit Corp. 9.875% 04/15/06 75 Amkor Technology Inc. 5.000% 03/15/07 57 Amkor Technology Inc. 9.250% 05/01/06 70 Amkor Technology Inc. 9.250% 02/15/08 66 Amkor Technology Inc. 10.500% 05/01/09 47 AMR Corp. 9.000% 08/01/12 50 AMR Corp. 9.000% 09/15/16 47 AMR Corp. 9.750% 08/15/21 48 AMR Corp. 9.800% 10/01/21 48 AMR Corp. 10.000% 04/15/21 49 AMR Corp. 10.200% 03/15/20 50 AnnTaylor Stores 0.550% 06/18/19 61 ANR Pipeline 9.625% 11/01/21 72 Arco Chemical Company 9.800% 02/01/20 73 Argo-Tech Corp. 8.625% 10/01/07 72 Armstrong World Industries 9.750% 04/15/08 40 AMR Corporation 9.000% 09/15/16 74 AMR Corporation 9.750% 08/15/21 75 AMR Corporation 9.800% 10/01/21 75 Asarco Inc. 8.500% 05/01/25 35 Aspen Technology 5.250% 06/15/05 50 Atlas Air Inc. 9.250% 04/15/08 51 AT&T Corp. 6.500% 03/15/29 75 AT&T Wireless 8.750% 03/01/31 71 Aurora Foods 9.875% 02/15/07 61 Avaya Inc. 11.125% 04/01/09 69 Axcelis Technologies 4.250% 01/15/07 62 BE Aerospace Inc. 8.875% 05/01/11 70 Best Buy Co. Inc. 0.684% 06?27/21 68 Bethlehem Steel 8.450% 03/01/05 14 Borden Inc. 7.875% 02/15/23 55 Borden Inc. 8.375% 04/15/16 55 Borden Inc. 9.250% 06/15/19 57 Borden Inc. 9.200% 03/15/21 56 Boston Celtics 6.000% 06/30/38 65 Brocade Communication Systems 2.000% 01/01/07 71 Brooks Automatic 4.750% 06/01/08 74 Browning-Ferris Industries Inc. 7.400% 09/15/35 73 Budget Group Inc. 9.125% 04/01/06 21 Building Materials Corp. 8.000% 10/15/07 72 Building Materials Corp. 8.000% 12/01/08 71 Burlington Northern 3.200% 01/01/45 52 Burlington Northern 3.800% 01/01/20 72 CSC Holdings Inc. 7.625% 07/15/18 73 Calair LLC/Capital 8.125% 04/01/08 46 Calpine Corp. 4.000% 12/26/06 48 Calpine Corp. 8.500% 02/15/11 42 Calpine Corp. 8.625% 08/15/10 42 Capital One Financial 7.125% 08/01/08 75 Case Credit 6.750% 10/21/07 74 Case Corp. 7.250% 01/15/16 72 Cell Therapeutic 5.750% 06/15/08 59 Centennial Cell 10.750% 12/15/08 57 Century Communications 8.875% 01/15/07 34 Century Communications 9.500% 03/01/05 23 Champion Enterprises 7.625% 05/15/09 40 Charter Communications, Inc. 4.750% 06/01/06 24 Charter Communications, Inc. 5.750% 10/15/05 30 Charter Communications Holdings 8.625% 04/01/09 51 Ciena Corporation 3.750% 02/01/08 71 Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 67 Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 78 CIT Group Holdings 5.875% 10/15/08 74 CNET Inc. 5.000% 03/01/06 58 Coastal Corp. 6.375% 02/01/09 74 Coastal Corp. 6.500% 05/15/06 69 Coastal Corp. 6.500% 06/01/08 73 Coastal Corp. 6.950% 06/01/28 45 Coastal Corp. 7.420% 02/15/37 55 Coastal Corp. 7.500% 08/15/06 73 Coastal Corp. 7.750% 10/15/35 53 Coeur D'Alene 6.375% 01/31/05 73 Coeur D'Alene 7.250% 10/31/05 70 Cogentrix Energy 8.750% 10/15/08 74 Comcast Corp. 2.000% 10/15/29 23 Comforce Operating 12.000% 12/01/07 56 Commscope Inc. 4.000% 12/15/06 74 Computer Associates 5.000% 03/15/07 72 Computer Network 3.000% 02/15/07 64 Cone Mills Corp. 8.125% 03/15/05 60 Conexant Systems 4.000% 02/01/07 45 Conexant Systems 4.250% 05/01/06 51 Conseco Inc. 8.750% 02/09/04 11 Conseco Inc. 10.750% 06/15/09 23 Continental Airlines 4.500% 02/01/07 46 Corning Inc. 3.500% 11/01/08 74 Corning Inc. 6.300% 03/01/09 65 Corning Inc. 6.750% 09/15/13 55 Corning Inc. 6.850% 03/01/29 44 Corning Inc. 8.875% 08/15/21 58 Corning Glass 8.875% 03/15/16 58 Cox Communications Inc. 3.000% 03/14/30 33 Cox Communications Inc. 0.348% 02/23/21 70 Cox Communications Inc. 0.348% 02/23/21 71 Cox Communications Inc. 0.426% 04/19/20 45 Cox Communications Inc. 7.750% 11/15/29 30 Critical Path 5.750% 04/01/05 63 Critical Path 5.750% 04/01/05 63 Crown Castle International 9.000% 05/15/11 74 Crown Castle International 9.375% 08/01/11 54 Crown Castle International 9.500% 08/01/11 71 Crown Castle International 10.750% 08/01/11 70 Crown Cork & Seal 7.375% 12/15/26 69 Cubist Pharmacy 5.500% 11/01/08 49 Curagen Corp. 6.000% 02/02/07 64 Cummins Engine 5.650% 03/01/98 63 Cypress Semiconductor 3.750% 07/01/05 71 Cypress Semiconductor 4.000% 02/01/05 72 Dana Corp. 7.000% 03/01/29 72 Dana Corp. 7.000% 03/15/28 73 DDI Corp. 6.250% 04/01/07 17 Delhaize America 9.000% 04/15/31 72 Delta Air Lines 7.900% 12/15/09 69 Delta Air Lines 8.300% 12/15/29 53 Delta Air Lines 9.000% 05/15/16 63 Delta Air Lines 9.250% 03/15/22 60 Delta Air Lines 9.750% 05/15/21 64 Delta Air Lines 10.375% 12/15/22 67 Dillard Department Store 7.000% 12/01/28 70 Dobson Communications Corp. 10.875% 07/01/10 72 Dobson/Sygnet 12.250% 12/15/08 63 Documentum Inc. 4.500% 04/01/07 74 Dresser Industries 7.600% 08/15/96 60 DVI Inc. 9.875% 02/01/04 75 Dynegy Holdings Inc. 6.875% 04/01/11 41 EOTT Energy Partner 11.000% 10/01/09 67 Echostar Communications 4.875% 01/01/07 74 Echostar Communications 5.750% 05/15/08 73 Edison Mission 9.875% 04/15/11 29 Edison Mission 10.000% 08/15/08 35 El Paso Corp. 7.000% 05/15/11 68 El Paso Corp. 7.750% 01/15/32 59 El Paso Energy 6.750% 05/15/09 73 El Paso Natural Gas 7.500% 11/15/26 57 El Paso Natural Gas 8.625% 01/15/22 66 Emulex Corp. 1.750% 02/01/07 72 Enron Corp. 9.875% 06/15/03 16 Enzon Inc. 4.500% 07/01/08 73 Equistar Chemicals 7.550% 02/15/26 74 E*Trade Group 6.000% 02/01/07 72 E*Trade Group 6.750% 05/15/08 71 Extreme Networks 3.500% 12/01/06 73 FEI Company 5.500% 08/15/08 71 Finisar Corp. 5.250% 10/15/08 46 Finova Group 7.500% 11/15/09 34 Fleming Companies Inc. 5.250% 03/15/09 52 Fluor Corp. 6.950% 03/01/07 59 Foamex L.P. 9.875% 06/15/07 22 Food Lion Inc. 8.050% 04/15/27 66 Ford Motor Co. 6.625% 02/15/28 74 Fort James Corp. 7.750% 11/15/23 74 Foster Wheeler 6.750% 11/15/05 58 GCI Inc. 9.750% 08/01/07 75 General Physics 6.000% 06/30/04 51 Geo Specialty 10.125% 08/01/08 57 Georgia-Pacific 7.375% 12/01/25 70 Georgia-Pacific 7.700% 06/15/15 73 Georgia-Pacific 7.750% 11/15/29 70 Georgia-Pacific 8.125% 06/15/23 71 Georgia-Pacific 8.250% 03/01/23 62 Georgia-Pacific 8.625% 04/30/25 74 Georgia-Pacific 8.875% 05/15/31 71 Globespan Inc. 5.250% 05/15/06 74 Goodyear Tire 7.000% 03/15/28 52 Goodyear Tire 7.857% 08/15/11 74 Great Atlantic 9.125% 12/15/11 69 Gulf Mobile Ohio 5.000% 12/01/56 62 Hanover Compress 4.750% 03/15/08 74 Hasbro Inc. 6.600% 07/15/28 74 Health Management Associates Inc. 0.250% 08/16/20 67 Health Management Associates Inc. 0.250% 08/16/20 67 HealthSouth Corp. 7.000% 06/15/08 70 HealthSouth Corp. 8.375% 10/01/11 64 HealthSouth Corp. 8.500% 02/01/08 74 HealthSouth Corp. 10.750% 10/01/08 68 Hertz Corp. 7.000% 01/15/28 74 Human Genome 3.750% 03/15/07 63 Human Genome 5.000% 02/01/07 70 Huntsman Polymer 11.750% 12/01/04 67 I2 Technologies 5.250% 12/15/06 58 ICN Pharmaceuticals Inc. 6.500% 07/15/08 73 IMC Global Inc. 7.300% 01/15/28 70 IMC Global Inc. 7.375% 08/01/18 73 Ikon Office 6.750% 12/01/25 65 Ikon Office 7.300% 11/01/27 69 Imcera Group 7.000% 12/15/13 75 Imclone Systems 5.500% 03/01/05 67 Incyte Genomics 5.500% 02/01/07 68 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 55 Inhale Therapeutic Systems Inc. 5.000% 02/08/07 61 Inland Steel Co. 7.900% 01/15/07 47 International Rectifier 4.250% 07/15/07 75 Internet Capital 5.500% 12/21/04 37 Interpublic Group 1.870% 06/01/06 72 Isis Pharmaceutical 5.500% 05/01/09 74 JL French Auto 11.500% 06/01/09 54 Juniper Networks 4.750% 03/15/07 73 Kaiser Aluminum & Chemicals Corp. 9.875% 02/15/49 67 Kmart Corporation 9.375% 02/01/06 15 Kulicke & Soffa Industries Inc. 4.750% 12/15/06 57 Kulicke & Soffa Industries Inc. 5.250% 08/15/06 62 LSI Logic 4.000% 11/01/06 75 LSP Energy LP 8.160% 07/15/25 74 LTX Corporation 4.250% 08/15/06 65 Lehman Brothers Holding 8.000% 11/13/03 70 Level 3 Communications 6.000% 09/15/09 42 Level 3 Communications 6.000% 03/15/10 41 Level 3 Communications 9.125% 05/01/08 64 Liberty Media 3.500% 01/15/31 65 Liberty Media 3.750% 02/15/30 52 Liberty Media 4.000% 11/15/29 56 LSI Logic 4.000% 11/01/06 72 LSI Logic 4.000% 11/01/06 72 LTX Corp. 4.250% 08/15/06 66 Lucent Technologies 5.500% 11/15/08 49 Lucent Technologies 6.450% 03/15/29 42 Lucent Technologies 6.500% 01/15/28 42 Lucent Technologies 7.250% 07/15/06 58 Magellan Health 9.000% 02/15/08 25 Mail-Well I Corp. 8.750% 12/15/08 64 Mastec Inc. 7.750% 02/01/08 75 MCi Communications Corp. 6.500% 04/15/10 46 MCI Communications Corp. 7.500% 08/20/04 29 MCI Communications Corp. 7.750% 03/15/24 30 Medarex Inc. 4.500% 07/01/06 61 Mediacom Communications 5.250% 07/01/06 71 Mediacom LLC 7.875% 02/15/11 67 Mediacom LLC 8.500% 04/15/08 75 Mediacom LLC 9.500% 01/15/13 73 Metris Companies 10.125% 07/15/06 71 Mikohn Gaming 11.875% 08/15/08 74 Mirant Corp. 5.750% 07/15/07 40 Mirant Americas 7.200% 10/01/08 48 Mirant Americas 7.625% 05/01/06 64 Mirant Americas 8.300% 05/01/11 43 Mirant Americas 8.500% 10/01/21 35 Mission Energy 13.500% 07/15/08 43 Missouri Pacific Railroad 4.750% 01/01/20 75 Missouri Pacific Railroad 4.750% 01/01/30 71 Missouri Pacific Railroad 5.000% 01/01/45 58 Motorola Inc. 5.220% 10/01/21 63 MSX International 11.375% 01/15/08 66 NTL (Delaware) 5.750% 12/15/09 14 NTL Communications Corp. 7.000% 12/15/08 19 National Vision 12.000% 03/30/09 50 Natural Microsystems 5.000% 10/15/05 58 Navistar Financial 4.750% 04/01/09 69 Nextel Communications 5.250% 01/15/10 71 Nextel Partners 11.000% 03/15/10 67 NGC Corp. 7.625% 10/15/26 56 Noram Energy 6.000% 03/15/12 71 Northern Pacific Railway 3.000% 01/01/47 50 Northern Pacific Railway 3.000% 01/01/47 50 Northwest Airlines 7.625% 03/15/05 65 Nvidia Corp. 4.750% 10/15/07 75 ON Semiconductor 12.000% 05/15/08 73 ONI Systems Corporation 5.000% 10/15/05 74 OSI Pharmaceuticals 4.000% 02/01/09 73 Owens-Illinois Inc. 7.800% 05/15/18 68 PG&E Gas Transmission 7.800% 06/01/25 60 PG&E National Energy 10.375% 05/16/11 36 Panamsat Corp. 6.875% 01/15/28 74 Park Ohio Industries 9.250% 12/01/07 68 Paxson Communications 10.750% 07/15/08 75 Pegasus Satellite 12.375% 08/01/06 49 Pegasus Satellite 12.500% 08/01/07 15 Photronics Inc. 4.750% 12/15/06 68 PMC-Sierra Inc. 3.750% 08/15/06 75 Polaroid Corp. 11.500% 02/15/06 5 Polymer Group 9.000% 07/01/07 21 Primedia Inc. 7.625% 04/01/08 71 Primedia Inc. 8.875% 05/15/11 73 Providian Financial 3.250% 08/15/05 72 PSEG Energy Holdings 8.500% 06/15/11 74 Public Service Electric & Gas 5.000% 07/01/37 71 Photronics Inc. 4.750% 12/15/06 72 Quanta Services 4.000% 07/01/07 54 Qwest Capital Funding 7.000% 08/03/09 62 Qwest Capital Funding 7.250% 02/15/11 62 Qwest Capital Funding 7.625% 08/03/21 47 Qwest Capital Funding 7.750% 08/15/06 66 Qwest Capital Funding 7.900% 08/15/10 64 Qwest Communications Int'l 7.250% 11/01/06 74 RF Micro Devices 3.750% 08/15/05 74 RF Micro Devices 3.750% 08/15/05 74 Redback Networks 5.000% 04/01/07 25 Rite Aid Corp. 4.750% 12/01/06 70 Rite Aid Corp. 7.125% 01/15/07 72 Rockwell Int'l 5.200% 01/15/98 72 Royster-Clark 10.250% 04/01/09 74 Rural Cellular 9.625% 05/15/08 50 Ryder System Inc. 5.000% 02/25/21 73 SBA Communications 10.250% 02/01/09 54 SC International Services 9.250% 09/01/07 65 SCI Systems Inc. 3.000% 03/15/07 69 Saks Inc. 7.375% 02/15/19 72 Sepracor Inc. 5.000% 02/15/07 59 Sepracor Inc. 5.750% 11/15/06 63 Sepracor Inc. 7.000% 12/15/05 62 Service Corp. Int'l 6.750% 06/22/08 74 Service Merchandise 9.000% 12/15/04 9 Silicon Graphics 5.250% 09/01/04 54 Simula Inc. 8.000% 05/01/04 73 Skechers USA, Inc. 4.500% 04/15/07 75 Solutia Inc. 7.375% 10/15/27 74 Sonat Inc. 7.625% 07/15/11 59 Sonic Automotive 5.250% 05/07/09 74 Sotheby's Holdings 6.875% 02/01/09 74 Sprint Capital Corp. 6.900% 05/01/19 67 TCI Communications Inc. 7.125% 02/15/28 74 TECO Energy Inc. 7.000% 05/01/12 73 Tenneco Inc. 10.000% 03/15/08 72 Tenneco Inc. 11.625% 10/15/09 71 Tennessee Gas PL 7.000% 10/15/28 53 Tennessee Gas PL 7.500% 04/01/17 61 Tennessee Gas PL 7.625% 04/01/37 56 Teradyne Inc. 3.750% 10/15/06 72 Tesoro Pete Corp. 9.000% 07/01/08 65 Tesoro Pete Corp. 9.625% 11/01/08 57 TIG Holdings Inc. 8.125% 04/15/05 75 Time Warner Inc. 6.625% 05/15/29 74 Time Warner Telecom Inc. 9.750% 07/15/08 58 Transwitch Corp. 4.500% 09/12/05 59 Trenwick Capital I 8.820% 02/01/37 72 Tribune Company 2.000% 05/15/29 74 Triton PCS Inc. 8.750% 11/15/11 74 Triton PCS Inc. 9.375% 02/01/11 74 Trump Atlantic 11.250% 05/01/06 74 Turner Broadcasting 8.375% 07/01/13 74 TXU Corp. 6.375% 06/15/06 75 US Airways Passenger 6.820% 01/30/14 72 US Airways Inc. 7.960% 01/20/18 74 Ugly Duckling 11.000% 04/15/07 60 Universal Health Services 0.426% 06/23/20 64 US Timberlands 9.625% 11/15/07 62 US West Capital Funding 6.250% 07/15/05 63 US West Capital Funding 6.375% 07/15/08 45 US West Capital Funding 6.875% 07/15/28 67 US West Communications 6.875% 09/15/33 70 US West Communications 7.250% 10/15/35 66 US West Communications 7.500% 06/15/23 71 USG Corp. 8.500% 08/01/05 74 Utilicorp United 7.625% 11/15/09 70 Utilicorp United 7.950% 02/01/11 71 Utilicorp United 8.000% 03/01/23 57 Utilicorp United 8.270% 11/15/21 59 Vector Group Ltd. 6.250% 07/15/08 64 Veeco Instrument 4.125% 12/21/08 73 Vertex Pharmaceuticals 5.000% 09/19/07 73 Vesta Insurance Group 8.750% 07/15/25 74 Viropharma Inc. 6.000% 03/01/07 35 Vitesse Semiconductor 4.000% 03/15/05 72 Weirton Steel 10.750% 06/01/05 62 Weirton Steel 11.375% 07/01/04 52 Westpoint Stevens 7.875% 06/15/08 24 Williams Companies 6.625% 11/15/04 65 Williams Companies 6.750% 01/15/06 65 Williams Companies 7.125% 09/01/11 73 Williams Companies 7.625% 07/15/19 62 Williams Companies 7.750% 06/15/31 59 Williams Companies 7.875% 09/01/21 62 Williams Companies 9.375% 11/15/21 73 Williams Holding (Delaware) 6.250% 02/01/06 72 Williams Holding (Delaware) 6.500% 12/01/08 57 Wind River System 3.750% 12/15/06 74 Witco Corp. 6.875% 02/01/26 69 Worldcom Inc. 6.400% 08/15/05 12 XM Satellite Radio 7.750% 03/01/06 39 Xerox Corp. 0.570% 04/21/18 63 ********* 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. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. 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 ***