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/raid1/www/Hosts/bankrupt/TCR_Public/030113.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, January 13, 2003, Vol. 7, No. 8 Headlines ADELPHIA: SDNY Court Extends Schedule Filing Period to April 23 ADELPHIA COMM: Shareholders Press for Meeting to Elect Directors ADVANCED LIGHTING: Commences Trading on OTCBB Effective Jan. 10 ALLEGHENY ENERGY: Fitch Cuts Several Ratings on Company & Units AMERICAN MEDICAL: Falls Short of Nasdaq's Listing Requirements AMERICAN PAD: Section 341 Meeting to Convene on January 27, 2003 AMERICA WEST: Says Fare Restructuring Is Broader Than Others' AMERIPOL SYNPOL: Bringing-In Jenkens & Gilchrist as Attorneys A NOVO BROADBAND: Committee Hires Klehr Harrison as Counsel ARCH WIRELESS: Provides Financial Guidance for 2003 AVADO BRANDS: Makes Interest Payment on 11-3/4% Senior Sub Notes AVATEX CORP: Brings-In Weil Gotshal to Serve as Special Counsel BUDGET GROUP: Lazard Seeks Nod for $4.4MM Sale Transaction Fee CABLE SATISFACTION: S&P Ratchets L-T Credit Rating Down to CCC- CASCADES: S&P Rates Corp. Credit & Sr. Unsecured Notes at BB+ CD WAREHOUSE: Selling Substantially All Assets by January 24 CENTENNIAL HEALTHCARE: Look for Schedules & Statements by Feb 14 CLICKNSETTLE: Will Discuss Listing Status with Nasdaq on Jan. 30 CMS ENERGY: Fitch Says $1.8B Asset Sale Positive for the Company COLD METAL: Secures Extension to April 14 to File Reorg. Plan COMMANDER AIRCRAFT: Gets Access to $50K DIP Loan Until Feb. 15 CONSECO INC: Hires PricewaterhouseCoopers as Accountants CONTINENTAL AIRLINES: Q4 Web Conference Call Set for January 15 DELTA AIR LINES: Intends to Cut Around 8,000 Jobs by May 1, 2003 DELTA AIR LINES: Expanding Dallas/Fort Worth Hub this Spring EES COKE: Fitch Changes CCC Rating Watch Status to Positive ENRON CORP: Court Okays EPHC's Settlement Agreement with EPKK EOTT: Gets Approval to Implement Enron Employee Transition Plan EXIDE TECHNOLOGIES: Committee Hires Sonnenschein to Sue Lenders FISHER SCIENTIFIC: Will Issue $200M of Senior Subordinated Notes FUTURE BEEF: Creekstone Farms Purchases $100MM Plant in Kansas GENESIS HEALTH: Expect First Quarter Results on February 3 GENTEK INC: Court Okays Retention of Bayard as Special Counsel GENUITY: Hires Ropes & Gray as Interim Bankruptcy Counsel GRANGE MUTUAL: Oregon Court Confirms Insurer's Chapter 11 Plan GREAT LAKES: Reports Preliminary December Traffic Results HEADLINE MEDIA: 2002 Balance Sheet Upside Down By $3 Million HOST MARRIOTT POOL: Class F & G Note Ratings Cut to Low-B Level IMC GLOBAL: Selling Colorado Assets to AmerAlia Unit For $20MM+ INTEGRATED TELECOM: Court Denies Motion to Dismiss Case J. CREW GROUP: December 2002 Revenues Up By 5.9% KAISER: Retired Employees Seek Reactivation to Core Group List KEMPER INSURANCE: S&P Cuts Ratings to BB+ over Management Change KMART CORP: Court Approves S&P Corporate Value's Engagement LUCENT TECH: Will Host Webcast to Discuss Q1 Results on Jan. 22 LUMENON: Will Likely File If Unable to Restructure Notes N2H2: First Quarter 2003 Results Webcast Scheduled for Jan. 23 NAT'L CENTURY: Taps Williams & Prochaska as Litigation Counsel NATIONAL STEEL: Settlement Pact with Russel Parties Approved NATIONAL STEEL: USWA Supports U.S. Steel's Buyout Offer NATIONSLINK: Fitch Affirms Certain Series 1999-1 Note Ratings NETZEE INC: Terminates SEC Reporting and Proceeds to Liquidate OWENS CORNING: Inks Stipulation Resolving Crompton Corp.'s Claim PACIFIC GAS: Wants Exclusive Period Extended through April 30 PERMAGRAIN PRODUCTS: Creditors Meeting Tomorrow in Philadelphia REMINGTON ARMS: S&P Assigns B+ Corporate Credit Rating RENT-WAY: S&P Further Junks Corp. Credit & Bank Loan Ratings SOLUTIA INC: Sees Loss in Fourth Quarter Operating Results SYNSORB BIOTECH: Icoworks to Auction Pharmaceutical Mfg. Assets THAON COMMS: Executes Reverse Split as Part of Restructuring TYCO INT'L: Using Cash to Purchase Convertible Debentures UNIFORET INC: Confirmation Hearing on CCAA Plan Set for March UNITED AIRLINES: Honoring Prepetition Employee Obligations U.S. STEEL: Acquiring National Steel's Assets for $950 Million U.S. STEEL: On Watch Neg. over Planned Nat'l Steel Asset Buy-Out U.S. STEEL: Fitch Places Senior Debt Ratings on Watch Negative VANGUARD HEALTH: S&P Downgrades Corp. Credit Rating to B from B+ WHEELING-PITTSBURGH: Overview of Chapter 11 Reorganization Plan WINDHAM COMMUNITY: S&P Cuts Bonds Rating to BB+ from BBB- WORLDCOM: Court Okays Rejection of North Pacific Cable Pacts WORLDCOM INC: Attorneys File Mass Arbitration Claim Today * BOND PRICING: For the week of January 13 - 17, 2003 ********* ADELPHIA: SDNY Court Extends Schedule Filing Period to April 23 --------------------------------------------------------------- Judge Gerber of the U.S. Bankruptcy Court for the Southern District of New York extends Adelphia Communications and its debtor-affiliates' deadline to file their list of creditors, list of equity security holders, schedules of assets and liabilities, schedules of executory contracts and unexpired leases, and statements of financial affairs to April 23, 2003. (Adelphia Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADELPHIA COMM: Shareholders Press for Meeting to Elect Directors ---------------------------------------------------------------- The Official Committee of Equity Security Holders in the Chapter 11 bankruptcy proceedings of Adelphia Communications Corp., has filed a suit seeking to compel the company to hold a shareholders' meeting to elect directors and to prevent the incumbent Board from influencing the outcome of the election by voting the shares of the Rigas family. The Equity Committee is seeking a "clean break" from the past failures of oversight and corporate governance that allegedly allowed the Rigas family members to loot billions of dollars from the company. The suit, filed in the U.S. Bankruptcy Court for the Southern District of New York, requests an order requiring Adelphia to call and hold a shareholders' meeting "at the earliest practicable time" to permit the shareholders, who are not affiliated with the Rigas family, to exercise their corporate governance rights. According to the Equity Committee appointed by the Bankruptcy Court to represent the company's shareholders, the shareholders have much to gain from the successful rehabilitation of the company. The shareholders' equity interests were valued in excess of $5.8 billion, at June 25, 2002, according to Adelphia's bankruptcy petition. The Equity Committee believes that today's values are even greater. The Equity Committee's Co-chairmen, Van Greenfield, managing member of Blue River Capital, LLC and Leonard Tow, emphasized that the suit and companion motion seeking an expedited ruling from the court will not affect Adelphia's day-to-day business operations. "Shareholders are entitled to exercise their corporate governance rights and elect a board of directors of their choice. This suit is solely to allow the proper exercising of these rights," according to the co-chairmen. The Equity Committee includes five of the largest holders of Adelphia's stock, none of whom are affiliated with the Rigas family. Its members represent the interests of preferred and common shareholders who have contributed billions of dollars to Adelphia in the form of cash and other assets The Equity Committee's motion is scheduled to be heard by Robert Gerber, the United States Bankruptcy Judge presiding over Adelphia's case in New York. The Equity Committee is represented by Sidley Austin Brown & Wood, LLP, led by two of its bankruptcy specialists -- Bryan Krakauer, a partner in its Chicago office, and Norman Kinel, a partner in its New York office. ADVANCED LIGHTING: Commences Trading on OTCBB Effective Jan. 10 --------------------------------------------------------------- Advanced Lighting Technologies, Inc., announced that, on January 8, 2003, it received a determination from a Nasdaq Listing Qualifications Panel that its Common Shares would be delisted by the Nasdaq National Market effective the open of business on Friday January 10, 2003. The Company had requested continued listing since, as noted by the Panel, the Company does not meet the requirements for continued listing on the Nasdaq SmallCap Market. The Panel decision indicates that the Company's common shares will be immediately eligible for quotation on the OTC Bulletin Board effective with the open of business on January 10, 2003. The OTC Bulletin Board symbol assigned to the Company is ADLT. No application for inclusion on the OTC Bulletin Board is required, provided a market maker enters a quote on the first day of eligibility. The Nasdaq Listing and Hearing Review Council may decide on its own to review the Panel's determination on or before February 22, 2003, and the Company would be notified of any such review. Review by the Nasdaq Listing and Hearing Council would not delay the delisting. Advanced Lighting Technologies, Inc. is an innovation-driven designer, manufacturer and marketer of metal halide lighting products, including materials, system components, systems and equipment. The Company also develops, manufactures, and markets passive optical telecommunications devices, components, and equipment based on the optical coating technology of its wholly owned subsidiary, Deposition Sciences, Inc. * * * As reported in the Troubled Company Reporter's November 21, 2002 edition, the Company had an agreement with the banks under the Company's Bank Credit Facility to continue to provide financing until March 31, 2003, despite an existing Event of Default under the facility. The agreement will remain in place so long as there are no further defaults and the Company's other lenders do not take certain actions adverse to the Company. The Company is currently seeking alternative financing sources. The holders of the Company's 8% Senior Notes have the right to accelerate the $100 million principal amount of the 8% Senior Notes. If the Company is unable to negotiate agreements with existing or replacement lenders and Note holders, which permit it to continue to execute its operating plans, the Company may be forced to seek protection under the bankruptcy laws. As discussed in the Company's SEC filings, covenants in the Company's bank credit facility, the indenture relating to the Company's 8% Senior Notes and the Company's agreements with General Electric Company limit certain corporate actions. As a result, implementation of certain strategic alternatives may require consent or require replacement of these ADLT financing sources. The Company has no assurance that such consents or replacement financing can be obtained in a manner to permit timely implementation of these strategic alternatives. Advanced Lighting's September 30, 2002 balance sheet show that total current liabilities exceeded total current assets by about $100 million. ALLEGHENY ENERGY: Fitch Cuts Several Ratings on Company & Units --------------------------------------------------------------- Fitch Ratings lowered the ratings of Allegheny Energy, Inc., and its subsidiaries, Allegheny Energy Supply Co. LLC, Monongahela Power Company, Potomac Edison Company, West Penn Power Company, Allegheny Generating Company and AE Supply's special purpose entity Allegheny Energy Supply Statutory Trust 2001. The ratings of the above entities remain on Rating Watch Negative. The rating downgrade of AYE and AE Supply assumes that AE Supply will successfully complete negotiations with its banks to replace existing credit facilities with new secured bank facilities. Currently, defaults on existing bank facilities of AE supply and AGC are waived until January 14, 2003. AE Supply's new ratings consider the expected subordination of its senior unsecured debt to approximately $1.8 billion of new secured bank financing. The new ratings also incorporate Fitch's view that AE Supply's continued solvency over the next two years will depend on a stabilizing economy and recovering wholesale energy markets, the smooth restructuring of its trading operations and access to additional sources of funding or asset sales proceeds to repay secured loans. Positively, the majority of AE Supply's revenues going forward is projected to come from supplying the provider of last resort obligation load to its regulated utility affiliates, since the contribution from trading and marketing activities will fall precipitously compared to previous forecasts. Fitch expects AE Supply's coverage ratios to be around the 1.5 times range and its debt-to-EBITDA ratio to be above 8x due to higher leverage and interest expenses. While new secured bank loan facilities are expected to have a priority position relative to existing unsecured creditors, there appears to be adequate asset coverage for the aggregate of over $3.5 billion of total debt (secured and unsecured) even taking into consideration reduced market valuations and constrained liquidity in the power market. AYE's ratings are based on the collective cash flows of its three regulated utility companies, WP, MP, and PE, and those of unregulated generation company Allegheny Energy Supply. AYE's downgrade reflects the weakened profile of AE Supply and AYE's potential exposures to AE Supply through $230 million of financial guarantees. AE Supply is expected to contribute to about 50% of consolidated EBITDA in 2003. The other half of AYE's consolidated EBITDA is derived from the stable and predictable revenue stream of regulated utilities, which have limited exposure to supply and market price risk. In 2003 AYE is expected to rely principally on the upstream dividends from the regulated utilities to service its standalone debt and pay for corporate overheads. The downgrade of AYE's regulated subsidiaries WP, PE, and MP reflects Fitch's policy regarding the linkage of ratings of subsidiaries with those of a lower-rated parent. On a stand- alone basis, these three regulated utilities have a credit profile that is comparable to companies in a the low 'A' or upper 'BBB' rating categories. Nevertheless, these companies could experience some stress due to the financial distress of their parent. The downgrade of AGC's rating was triggered by its majority ownership by AE Supply and its reliance on AE Supply for its revenues. Currently AGC's output is sold to AE Supply and marketed by AE Supply's trading arm Allegheny Energy Global Markets and the energy is available to serve AE Supply's long term supply contracts with its regulated utility affiliates or for sale in the wholesale market. AE Supply Trust's downgrade was also occasioned by the downgrade of AE Supply. AE Supply Trust's rating reflects AE Supply's obligation to make rental and other payments that cover the interest and principal payments of the notes issued by the Trust and other related agreements associated with the notes. Once the new bank facilities are closed and the risks associated with the defaults is resolved, Fitch expects to assign a Negative Rating Outlook to the Allegheny group to reflect the uncertainties surrounding the outlook of AE Supply. The Rating Outlook of the Allegheny group AYE could stabilize if it successfully secures additional external funding, including proceeds from the monetization of assets, to meet its debt and loan maturity schedules in 2003 and 2004. Should AE Supply fail to resolve the current negotiations with it banks, its ratings and those of its affiliates would be downgraded further. The ratings affected: Allegheny Energy, Inc. -- Senior unsecured debt lowered to 'B+' from 'BB'; -- Remains on Rating Watch Negative. West Penn Power Company -- Medium-term notes lowered to 'BB+' from 'BBB-'; -- Remains on Rating Watch Negative. Potomac Edison Company -- First mortgage bonds lowered to 'BBB-' from 'BBB'; -- Senior unsecured notes lowered to 'BB' from 'BBB-'; -- Commercial paper lowered to 'F3' from 'F2' and withdrawn; -- Remains on Rating Watch Negative. Monongahela Power Company -- First mortgage bonds lowered to 'BBB-' from 'BBB'; -- Medium-term notes/Pollution control revenue bonds (unsecured) lowered to 'BB' from 'BBB-'; -- Commercial paper lowered to remains 'F3' from 'F2' and withdrawn; -- Remains on Rating Watch Negative. Allegheny Energy Supply Company LLC -- Senior unsecured notes lowered to 'B' from 'BB-'; -- Remains on Rating Watch Negative. Allegheny Generating Company -- Senior unsecured debentures lowered to 'B' from 'BB-'; -- Remains on Rating Watch Negative. Allegheny Energy Statutory Trust 2001 -- Senior Secured Notes lowered to 'B' from 'BB-'; -- Remains on Rating Watch Negative. The ratings not affected: West Penn Funding LLC -- Transition bonds 'AAA'. Allegheny Energy Supply Company LLC -- Pollution control bonds (MBIA-insured) 'AAA'. AYE is a registered utility holding company, which owns three regulated utilities, Monongahela Power, Potomac Edison and West Penn Power and two non-utility subsidiaries. The utilities deliver electric and gas service to 1.5 million customers in parts of Maryland, Ohio, Pennsylvania, Virginia, and West Virginia and 230,000 customers in West Virginia, respectively. AYE's non-utility subsidiaries consist of AE Supply Co. LLC, which develops, acquires, owns and operates generating plants and is a marketer of electricity and other energy products and Allegheny Ventures which is involved in telecommunications and energy related projects. Allegheny Energy Inc.'s 7.750% bonds due 2005 (AYE05USR1), DebtTraders says, are traded 72 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AYE05USR1for real-time bond pricing. AMERICAN MEDICAL: Falls Short of Nasdaq's Listing Requirements -------------------------------------------------------------- American Medical Technologies received a Nasdaq Staff Determination indicating that the Company failed to comply with NASD requirements for continued listing, and that its securities are, therefore, subject to delisting from the Nasdaq SmallCap Market. Those requirements include soliciting proxies for and holding an annual meeting of shareholders by December 31, 2002 as set forth in Marketplace Rule 4350(e) and (g), maintaining a minimum bid price for its Common Stock of $1.00 per share for 30 consecutive trading days as set forth in Marketplace Rule 4310(C)(4), and maintaining a minimum $1,000,000 in market value of publicly held shares as set forth in Marketplace Rule 4310(C)(7). The Company has requested a hearing based on written submissions before a Nasdaq Listing Qualifications Panel to review the Staff Determination, which should take place next month. There can be no assurance that the Panel will grant the Company's request for continued listing. American Medical Technologies, Inc., headquartered in Corpus Christi, Texas, develops and manufactures advanced technologies for dentistry and markets them worldwide. The Company's securities are listed on the Nasdaq SmallCap Market under the symbol "ADLI". The Company's Web site is found at: http://www.americanmedicaltech.com * * * As reported in Troubled Company Reporter's August 21, 2002 edition, the independent auditors of American Medical Technologies, Ernst & Young, state in their report for the year ended December 31, 2001: "The Company was in technical default on certain financial covenants in connection with its line of credit. The Company and its bank have entered into a forbearance agreement, under which the bank has agreed not to exercise its remedies under the defaulted line of credit until September 15, 2002. Accordingly, the entire amount outstanding under the line of credit of approximately $1,750,000 has been classified as a current liability in the accompanying consolidated financial statements...These matters raise substantial doubt about the Company's ability to continue as a going concern." AMERICAN PAD: Section 341 Meeting to Convene on January 27, 2003 ---------------------------------------------------------------- The United States Trustee will convene a meeting of American Pad & Paper LLC's creditors on January 27, 2003 at 1:00 p.m., at Plano Centre. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. American Pad & Paper, LLC, manufacturer and distributor of writing pads, filing supplies, retail envelopes and specialty papers, filed for chapter 11 petition on December 20, 2002 in the U.S. Bankruptcy Court for the Eastern District of Texas. Deirdre B. Ruckman, Esq., at Gardere & Wynne, L.L.P., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of over $10 million and estimated debts of over $50 million. AMERICA WEST: Says Fare Restructuring Is Broader Than Others' ------------------------------------------------------------- While other airlines continue to experiment with fare tests in select markets, America West Airlines (NYSE: AWA) offers its business-friendly low fares and ticketing policies every day on every flight nationwide. America West is the only major, hub- and-spoke airline to completely restructure its fares. "We have seen other airlines introduce and test lower fares for the business traveler but only America West has done a complete overhaul of its pricing structure," said Scott Kirby, executive vice president, sales and marketing. "Other airlines have not committed to the nationwide structure that America West offers and only offer reductions on select routes in addition to still imposing restrictions on ticketing policies. "America West has revolutionized pricing in response to today's business traveler's demands. We were the first to introduce lower fares last March and remain committed to providing affordable fares. We've taken an innovative approach to meeting customers' needs and their response has been tremendous. We continue to look for new ways to meet their needs including the current test of our of 'Buy on Board' meal service program." America West offers the value of flexibility and affordability including a reasonable price no matter when or where customers fly, reasonable advance- purchase requirements, no requirements for a Saturday-night stay and allowing customers the flexibility to change their plans or fly standby for free. An example comparing America West's fares to United's new fares, shows that customers traveling between Chicago and Los Angeles can save 70 percent by flying America West versus United. When a business traveler purchases his tickets seven days in advance he'll pay $179 each way on America West compared to $599 each way on United. If that same business traveler purchases his ticket at the last minute he will still save 70 percent versus the price on United Airlines. Listed below are pricing examples comparing America West's and United's new fares: Chicago - Los Angeles America West Fare United Fare % Savings ----------------- ----------- --------- Walk up $179 each way $599 each way 70 7 days advance $89 each way $299 each way 70 Washington/Dulles - San Francisco America West Fare United Fare % Savings ----------------- ----------- --------- Walk up $299 each way $799 each way 63 7 days advance $179 each way $499 each way 64 Listed below are pricing examples comparing America West and United fares on routes where United did not introduce new lower fares: Boston - Los Angeles America West Fare United Fare % Savings ----------------- ----------- --------- Walk up $245 each way $1,285 each way 81 7 days advance $245 each way $1,192 each way 79 Washington/Dulles - Los Angeles America West Fare United Fare % Savings ----------------- ----------- --------- Walk up $299 each way $1,230 each way 76 7 days advance $299 each way $1,127 each way 73 "As the only major, full-service airline to offer a flexible pricing structure nationwide with no Saturday night stay requirement and one-way fares 40 to 70 percent lower, America West has become the airline of choice for travelers who expect the most value without sacrificing flexibility," said Kirby. "America West is the easiest airline to do business with. It starts with a simple pricing structure, followed by sensible, business-friendly rules." * * * As previously reported in the Troubled Company Reporter, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. AMERIPOL SYNPOL: Bringing-In Jenkens & Gilchrist as Attorneys ------------------------------------------------------------- Ameripol Synpol Corporation asks for permission from the U.S. Bankruptcy Court for the District of Delaware to retain the law firm of Jenkens & Gilchrist Parker Chapin LLP as bankruptcy attorneys. The Debtor relates that Jenkens & Gilchrist has never represented the Debtor in any capacity. Immediately prior to the Petition Date, the Debtor consulted with Jenkens & Gilchrist with respect to advice regarding a host of issued related to the Debtor's restructuring efforts and the preparation for the commencement and prosecution of this case. Ameripol wants Jenkens & Gilchrist to have primary responsibility for counseling and representing the Debtor in connection with general bankruptcy administration, general corporate and finance matters, employee benefits matters, intellectual property matters, labor matters and tax matters as well as general litigation, real estate and regulatory matters and matters of claims administration. The professionals who will be primarily responsible for this engagement are: Mitchel H. Perkiel Partners $585 per hour Lee W. Stremba Partners $540 per hour Lawrence David Swift Partners $450 per hour Paul H. Deutch Associates $370 per hour Beth Friedman Paralegal $160 per hour Sonia Shah Paralegal $150 per hour Ameripol Synpol Corporation filed for chapter 11 petition on December 16, 2002. Joseph A. Malfitano, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor, represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of more than $100 million and estimated debts of over $50 million. A NOVO BROADBAND: Committee Hires Klehr Harrison as Counsel ----------------------------------------------------------- The Official Committee of Unsecured Creditors of A Novo Broadband, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to employ Klehr, Harrison, Harvey, Branzburg & Ellers LLP as Counsel. The Committee wants Klehr Harrison to: a) provide the Committee with legal advice with respect to its rights, duties and powers in the Debtor's case; b) assist the Committee in investigating the acts, conduct, assets, liabilities and financial condition of the Debtors, the operation of the Debtor's businesses and the desirability of the continuance of such businesses and other matters; c) assist the Committee in identifying and evaluating proposals for a transaction with the Debtor, including a possible sale, merger or other business transaction; d) prepare pleadings and applications as may be necessary in furtherance of the Committee's interests and objectives on behalf of its constituency; e) review and analyze all applications, order, operating reports, schedules and statements of affairs filed and to be filed with this Court by the Debtor or other parties in this case; advise the Committee with respect to the foregoing matters and their impact upon unsecured creditors; and take such action with respect to the foregoing matters as the Committee may determine are appropriate; f) consult with the Debtor, any other committees that may be appointed in the case, major creditors, and parties in interest, and the United States Trustee concerning the administration of the Debtor's case and its estate; g) participate in formulating a chapter 11 plan or plans of reorganization; h) assist the Committee in the solicitation and filing with the Court of acceptances or rejections of any proposed plan of plans of reorganization; i) advise the Committee with respect to, and implement as appropriate, communications or related programs to notify unsecured creditors regarding material development in the case, the Committee's position on any proposed plan, the creditor's obligations relating to any claims deadlines and similar matters; j) represent the Committee in hearings and other judicial proceedings; k) perform such other legal services as may be required and as are deemed to be in the best interest of the Committee and the constituency it represents. The range of current hourly rates for bankruptcy attorneys and paralegals with primary responsibility in this engagement are: Partners $225 to $450 per hour Associates $180 to $290 per hour Paralegals $130 per hour A Novo Broadband, Inc., a business engaged primarily in the repair and servicing of broadband equipment for equipment manufacturers and operators of cable and other broadband systems in North America, filed for chapter 11 petition on December 18, 2002. Brendan Linehan Shannon, Esq., M. Blake Cleary, Esq., at Young, Conaway, Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $12,356,533 in total assets and $10,577,977 in total debts. ARCH WIRELESS: Provides Financial Guidance for 2003 --------------------------------------------------- Arch Wireless, Inc. (OTC Bulletin Board: AWIN), a leading wireless messaging and mobile information company, announced financial guidance for fiscal year 2003. J. Roy Pottle, executive vice president and chief financial officer, said: "Arch expects to generate between $580 million and $600 million of consolidated revenue for the 12-month period ending December 31, 2003. The company also expects 2003 operating expenses (excluding depreciation, amortization and stock-based compensation expense) to range between $425 million and $435 million." Pottle added: "Arch's capital expenditure and working capital requirements are expected to decline in 2003 due to lower device prices. Capital and working capital requirements are expected to range between $60 million and $70 million." Arch plans to announce its fourth quarter and 2002 yearend results in March. Arch Wireless, Inc., headquartered in Westborough, Mass., is a leading wireless messaging and mobile information company with operations throughout the United States. It offers a full range of wireless messaging and wireless e-mail services to business and retail customers nationwide, including mobile data solutions for the enterprise. Arch provides wireless services to customers in all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico and in the Caribbean principally through a nationwide sales force, resellers, retailers and other strategic partners. Additional information on Arch is available on the Internet at http://www.arch.com Arch Wireless, Inc.'s September 30, 2002 balance sheet shows that total current liabilities exceeded total current assets by about $12.5 million. AVADO BRANDS: Makes Interest Payment on 11-3/4% Senior Sub Notes ---------------------------------------------------------------- Avado Brands, Inc. (OTC Bulletin Board: AVDO) announced that it has made its semi-annual interest payment to holders of its 11-3/4% Senior Subordinated Notes. The interest payment was originally due on December 15, 2002, and as the Company indicated earlier, the payment was made within the 30 day, no- default period provided for under the terms of the Indenture. The Company's semi-annual interest payment to holders of its 9-3/4% Senior Notes, originally due on December 1, 2002, was paid on December 30, 2002, also within the 30 day, no-default period provided for under the terms of that Indenture. Avado Brands owns and operates two proprietary brands, comprised of 120 Don Pablo's Mexican Kitchens and 66 Hops Restaurant * Bar * Breweries. AVATEX CORP: Brings-In Weil Gotshal to Serve as Special Counsel --------------------------------------------------------------- Avatex Corporation and its debtor-affiliates seek authority from the U.S. Bankruptcy Court for the Northern District of Texas to employ Weil, Gotshal & Manges LLP as Special Counsel. The Debtors retained Neligan Tarpley Andrews & Foley LLP as general bankruptcy counsel. However, the Debtors and Neligan Tarpley believe that the retention of Weil Gotshal as special counsel will enhance Neligan Tarpley's ability to effectively represent the Debtors. The two firms will make every effort to avoid unnecessary duplication of efforts in these cases. The Debtors relate that Weil Gotshal has rendered a variety of legal services to the Debtors or their predecessors. In particular, Weil Gotshal has represented the Debtors for the past 6 years in that certain class action litigation styled Zuckerman et al. V. FoxMeyer Health Corp. et al., pending before the U.S. District Court of the Northern District of Texas. In this retention, Weil Gotshal will: i) assist the Debtors with tax, pension plans, employee benefits securities laws, and related litigation matters; ii) represent the Debtors in the Zuckerman Action, including any claims now or hereafter asserted by or against the Debtors in connection with such litigation; iii) assist the Debtors in connection with any other matters as requested during the chapter 11 proceeding; and iv) prepare on behalf of the Debtors, as debtors in possession, certain necessary motions, applications, answers, orders, reports and papers in connection with the matters for which Weil Gotshal is to be retained. Weil Gotshal's current customary hourly rates are: Members and Counsel $450 to $750 per hour Associates $220 to $440 per hour Paraprofessionals $ 90 to $215 per hour Avatex Corporation, aka National Intergroup, Inc., aka FoxMeyer Health Corporation is 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. The Debtors filed for chapter 11 petition on December 11, 2002. Patrick J. Neligan, Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP represents the Debtors in their restructuring efforts. As of September 30, 2002, the Company listed $14,758,000 in total assets and $23,318,000 in total debts. BUDGET GROUP: Lazard Seeks Nod for $4.4MM Sale Transaction Fee -------------------------------------------------------------- Lazard Freres & Co., LLC Managing Director James E. Millstein reminds the Court that Budget Group Inc., and its debtor- affiliates retained Lazard as financial advisor to provide comprehensive investment banking and financial advisory services. Lazard assisted the Debtors with the negotiation and implementation of the Asset and Stock Purchase Agreement with Cherokee Acquisition Corp. According to the Court-approved engagement letter, Lazard is entitled to compensation in the form of a $200,000 monthly financial advisory fee, and either a $4,800,000 Restructuring Transaction Fee or a $4,800,000 Sale Transaction Fee. Lazard believes that the sale of substantially all of the Debtors' assets to Cherokee Acquisition Corp. constitutes a Sale Transaction. Accordingly, Lazard asks the Court for allowance of a $4,453,333 Sale Transaction Fee. Mr. Millstein tells the Court that Lazard agreed to credit the monthly financial advisory fees beginning as of October 1, 2002 and continuing until either consummation of a Restructuring Transaction or a Sale Transaction. Accordingly, Lazard is crediting, and thereby reducing, the $4,800,000 Sale Transaction Fee by $346,667 to a net amount of $4,453,333. This reduction reflects the $200,000 monthly advisory fee for October and $146,667 pro-rated for 22 days of November through the closing date of the Asset and Stock Purchase Agreement. With respect to Lazard's monthly advisory fees, Lazard is in the process of preparing a separate Fee Application, which will include the $346,667 amount referred to as credited against the Sale Transaction Fee. (Budget Group Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 609/392-0900) CABLE SATISFACTION: S&P Ratchets L-T Credit Rating Down to CCC- --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Longueuil, Quebec-based Cable Satisfaction International Inc., to 'CCC-' from 'B-', and its senior unsecured debt rating to 'CC' from 'CCC+'. The ratings remain on CreditWatch with negative implications, where they were placed September 10, 2002. CSII, through its wholly owned subsidiary Cabovisao-Televisao por Cabo S.A., is the second-largest cable television service provider in Portugal. The company had C$412.3 million of total lease-adjusted debt outstanding at September 30, 2002. The downgrade and CreditWatch status reflect Standard & Poor's continued concerns regarding CSII's ability to arrange funding by Jan. 31, 2003, to refinance its maturing Euro 100 million secured term loan and obtain liquidity for ongoing operations and debt service. As at Sept. 30, 2002, CSII was in violation of some of its covenants for its Euro 100 million secured term loan, for which the company obtained waivers until Jan. 31, 2003, and simultaneously extended maturity to Jan. 31, 2003 from Dec. 31, 2002. "CSII currently has no access to additional funding and cash on hand is limited, implying a risk profile that is vulnerable to nonpayment and dependent on financial market conditions in the very near term," said Standard & Poor's credit analyst Barbara Komjathy. In September 2001, CSII amended its Euro 260 million secured revolving credit facility due December 2008 to include a one- year Euro 100 million secured term-loan tranche maturing September 2002. In August 2002, the company indicated that it exercised its option to extend the term loan to Dec. 31, 2002. The term and revolving facilities could not be drawn at the same time. CSII intended to refinance the term facility from proceeds of its revolver tranche; however, availability was restricted by certain financial covenants and conditions. On Dec. 30, 2002, the company announced that in view of the uncertainties with regard to accessing the Euro 260 million revolving facility, and in order to facilitate negotiations to secure long-term financing, it has cancelled the revolving facility. The resolution of the CreditWatch placement is dependent on CSII's ability to secure funding to refinance its Euro 100 million term loan that matures on Jan. 31, 2003, and obtain additional liquidity to continue as a going concern. CASCADES: S&P Rates Corp. Credit & Sr. Unsecured Notes at BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' long-term corporate credit rating to diversified paper and packaging producer Cascades Inc. At the same time, Standard & Poor's assigned its 'BB+' rating to the company's proposed senior unsecured notes, and its 'BBB-' rating to the company's proposed senior secured credit facility. The outlook is stable. The ratings on the proposed unsecured notes are based on the assumption that the exchange of the new notes for the outstanding 8.375% senior notes issued by Cascades Boxboard Group Inc., due 2007, will be successful. At the same time, the ratings on Cascades Boxboard Group Inc. were placed on CreditWatch with positive implications, and are expected to be withdrawn on successful completion of the exchange. Cascades' bank credit facility is rated one notch higher than the corporate credit rating, reflecting good prospects for recovery in a default scenario. The ratings on Kingsey Falls, Quebec-based Cascades reflect its good product diversity in paper, packaging, and tissue; its leading market positions across several geographic and product markets; and its relatively stable earnings and cash flow generation through the industry cycle. These strengths are offset by the company's use of debt to support an aggressive growth strategy. "Cascades' diverse revenue base has historically mitigated the cyclical volatility in earnings experienced by many of its peers," said Standard & Poor's credit analyst Clement Ma. The company operates in several markets including boxboard, containerboard and corrugated products, specialty packaging products, fine papers, and tissue. Cascades continues to grow its business in packaging and tissue, with substantial capital expansion and acquisitions completed, the most recent being the purchase of two tissue mills from American Tissue Inc. in July 2002. Industry consolidation in both containerboard and boxboard has prevented prices from dropping as severely as other sectors during the current cyclical downturn. The company further benefits from its less cyclical tissue operations and its modest geographic diversity, with a strong European boxboard position and a European presence in specialty products. Profitability and cash flow generation remain consistent despite aggressive growth, reflecting the company's stabilizing product mix. Furthermore, Cascades' steady return on permanent capital, averaging 10.7% in the past eight years, illustrates its ability to generate solid value from its acquisitions. For the 12 months ending Sept. 30, 2002, EBITDA interest coverage was 5.4x and funds from operations to total debt was 22.2%, both of which are healthy for the rating. Nevertheless, to maintain the rating, credit protection measures should remain stable with debt to EBITDA averaging in the 2.5x to 3.5x range, and funds from operations to debt averaging greater than 20%, through the cycle. Cascades' stable earnings and free cash generation, due to its strong product diversity and exposure to less cyclical commodity markets, should enable it to pursue a disciplined acquisition strategy without substantially affecting credit measures. CD WAREHOUSE: Selling Substantially All Assets by January 24 ------------------------------------------------------------ CD Warehouse, Inc. (OTC Pink Sheets: CDWI), Compact Discs Management, Inc. and CD Warehouse Finance Company, announced the sale of all or substantially all of the Companies' Assets by January 24, 2003. The sale is pursuant to order of the United States Bankruptcy Court for the Western District of Oklahoma. The Assets to be sold are all real and personal property of the Companies. Causes of action under Chapter 5 of the Bankruptcy Code are excluded. According to the bidding procedures, officers, directors, or employees are prohibited from bidding in the sale. For this reason only, and to assure the fairness of the bidding process, Christopher M. Salyer, Director, President and Chief Executive Officer for the Companies resigned his offices and directorship effective December 23, 2002. Salyer has expressed an interest in bidding for the Assets. David R. Payne, interim Chief Financial Officer, will assume the duties previously performed by the Chief Executive Officer of the Companies. "My resignations are indicative of management's commitment to maximizing the value of the Assets for the benefit of the Creditors," said Christopher M. Salyer. For more information or to request a bid package contact David R. Payne at: D.R. Payne & Associates, Inc. 119 N. Robinson Avenue, Suite 400 Oklahoma City, Oklahoma 73102 405-CD-MUSIC or 1-800-641-9394 CD Warehouse stores buy, sell and trade pre-owned CDs, DVDs and games. Company information is available at http://www.cdwarehouse.com CENTENNIAL HEALTHCARE: Look for Schedules & Statements by Feb 14 ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Georgia gave its nod of approval to Centennial HealthCare Corporation and its debtor-affiliates' request to extend the time period to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors have until February 14, 2003 to file these basic disclosure documents with the Bankruptcy Court. Centennial HealthCare Corporation, which operates and manages 86 nursing homes in 19 states, filed for Chapter 11 petition on December 20, 2002. Brian C. Walsh, Esq., and Sarah Robinson Borders, Esq., at King & Spalding represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million each. CLICKNSETTLE: Will Discuss Listing Status with Nasdaq on Jan. 30 ---------------------------------------------------------------- clickNsettle.com, Inc. (Nasdaq: CLIK), the leading global provider of innovative dispute resolution solutions, announced that the Company will meet with the Nasdaq Listing Qualifications Panel on January 30, 2003 to consider its request for continued listing of the Company's common stock on The Nasdaq SmallCap Market. Until a decision is made by the Nasdaq Listing Qualifications Panel, the delisting of the Company's common stock from The Nasdaq SmallCap Market is stayed. There can be no assurance that the Panel will grant the Company's request for continued listing. In the event the Panel determines to delist the Company's securities, the Company's common stock will be listed on the OTC Bulletin Board. Previously, on December 23, 2002, the Company received a Nasdaq Staff Determination indicating that the Company failed to comply with the minimum $2,500,000 stockholders' equity requirement for continued listing set forth in Marketplace Rule 4310c(2)(B), and that its securities are, therefore, subject to delisting from The Nasdaq SmallCap Market. Additionally, on September 25, 2002, the Company received a letter from the Nasdaq Staff that its common stock had failed to maintain a minimum market value of publicly held shares of $1,000,000. As a result, the Company had been provided 90 calendar days, or until December 24, 2002, to regain compliance. The Company has not been able to regain compliance. Furthermore, on November 6, 2002, the Company received a letter from the Nasdaq Staff that its common stock had failed to maintain a minimum bid price of $1.00 over the previous 30 consecutive trading days. As a result, the Company has been provided 180 calendar days, or until May 5, 2003, to regain compliance. Headquartered in Great Neck, New York, clickNsettle.com, Inc. provides dispute resolution services and software/web-enabled tools designed to enhance and streamline the traditional and often time-consuming and expensive legal process. clickNsettle.com offers customized solutions built upon a sophisticated technology platform that enables users to resolve disputes more quickly and efficiently than ever before possible. clickNsettle.com features a comprehensive suite of dispute resolution tools and access to a network of approximately 1,500 highly qualified hearing officers in the United States and abroad. clickNsettle.com provides an interactive portal of communication and information between client and administrator. * * * Liquidity and Capital Resources In its SEC Form 10-QSB filed on November 14, 2002, the Company stated: "At September 30, 2002, the Company had a working capital surplus of $1,589,721 compared to $1,833,092 at June 30, 2002. The decrease in working capital occurred primarily as a result of the loss from operations. "Net cash used in operating activities was $129,618 for the three months ended September 30, 2002 versus $172,325 in the prior comparable period. Cash used in operating activities principally declined due to a reduction in the loss from operations which was offset by a decrease in non-cash charges for advertising and changes in operating assets and liabilities. "Net cash used in investing activities was $56,947 for the three months ended September 30, 2002 versus net cash provided by investing activities of $12,466 in the comparable prior period. The change in cash from investing activities was primarily due to a higher level of net purchases of marketable securities in the current period. "Net cash used in financing activities was $0 for the three months ended September 30, 2002 versus $61,952 in the prior comparable period. In the prior period, we purchased 28,567 shares of our common stock for an aggregate cost of $61,952. "We have incurred net losses and had negative cash flow from operations during the last six years and through September 30, 2002. Cash and cash equivalents arising principally from equity transactions have provided sufficient working capital to fund losses incurred and capital expenditures, as well as to provide cash to redeem preferred stock outstanding and to purchase treasury stock. As of September 30, 2002, we had $1,730,501 in aggregate cash and cash equivalents. We believe that, through the proper utilization of these existing funds, from revenue generated from existing and new services and from expense reductions achieved by streamlining operations through the utilization of an enhanced processing system, we will have sufficient cash to meet our needs over the next twelve months." CMS ENERGY: Fitch Says $1.8B Asset Sale Positive for the Company ---------------------------------------------------------------- Fitch believes recent actions by CMS Energy Corp. (CMS, senior unsecured rated 'B+', Rating Watch Negative by Fitch), specifically the announced sale of the CMS Panhandle Companies for $1.828 billion, will have positive credit implications for the company. The ratings for CMS were placed on Rating Watch Negative on July 17, 2002, following concerns regarding CMS' weak liquidity position, high parent debt levels and limited financial flexibility. The sale of the Panhandle Companies will serve to bolster CMS' near-term liquidity levels and will help the company to meet approximately $1.3 billion of debt and bank facility maturities in 2003. Additionally, consolidated leverage and coverage ratios should improve over prior estimates as a result of associated debt reduction from the sale, although CMS will lose a relatively stable dividend source. Going forward, resolution of the Rating Watch is dependent on the timely release of re-audited financial restatements, the successful refinancing of bank facilities and the conclusion of pending regulatory investigations. CMS expects to release re- audited financial statements and repay or refinance outstanding bank facilities by March 31, 2003. If bank facilities at Consumers Energy are not successfully refinanced, Fitch foresees the need for $630 million of additional funding from asset sales or other financing sources in 2003, and approximately $800 million of maturities in 2004. Longer term CMS' prospective ratings will be determined by the company's ability to generate free operating cash flow, maintain adequate liquidity, reduce debt leverage, and demonstrate improved credit protection measures. Fitch will continue to monitor CMS' progress in stabilizing its financial condition and business position. CMS is a utility holding company whose primary subsidiary is Consumers Energy, a regulated electric and gas utility serving customers in western Michigan. CMS also has operations in natural gas pipelines and independent power production. Ratings for CMS and Consumers are as follows, all ratings are on Rating Watch Negative: CMS -- Senior unsecured debt 'B+'; -- Preferred stock/trust preferred securities 'CCC+'. Consumers Energy -- Senior secured debt 'BB+'; -- Senior unsecured debt 'BB'; -- Preferred stock/trust preferred securities 'B'. Consumers Power Financing Trust I -- Trust preferred securities 'B'. COLD METAL: Secures Extension to April 14 to File Reorg. Plan ------------------------------------------------------------- Cold Metal Products Inc., announced U.S. Bankruptcy Court approval for an extension of the period in which the company can propose a Chapter 11 plan of reorganization. The ruling extends Cold Metal's right to file a reorganization plan through April 14, 2003. "Cold Metal Products continues to operate and to serve our customers as we make progress on the development of our reorganization plan," said Raymond P. Torok, Cold Metal president and CEO. "While the court's ruling extends the period to file our reorganization plan through April 14, we anticipate completing and submitting the plan prior to that date. We expect to emerge from Chapter 11 as a strong, viable company." A leading North American intermediate strip steel processor, Cold Metal Products provides a wide range of steel strip products to meet the critical requirements of precision parts manufacturers. Through cold rolling, annealing, normalizing, edge conditioning, oscillate winding, slitting and cutting to length, the company provides value-added products to manufacturers in the automotive, construction, cutting tools, consumer goods and industrial goods markets. Cold Metal Products operates plants in Ottawa, Ohio; Detroit, Mich.; Indianapolis, Ind.; Hamilton, Ontario; and Montreal, Quebec. The company employs approximately 350 people. COMMANDER AIRCRAFT: Gets Access to $50K DIP Loan Until Feb. 15 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to Commander Aircraft Company's application to obtain postpetition financing on an interim basis. Pending a Final Hearing, the Debtor is authorized to borrow up to $100,000 from Nyltiak Investments, LLC. The Loan will mature on February 15, 2003. However should Nyltiak, in its sole discretion, elect to provide financing in addition to the two $50,000 scheduled draws, up to a $250,000 aggregate commitment, the maturity date may be extended. The DIP Loan will accrue interest at the rate of 10% per annum. The Final Hearing is currently scheduled on January 21, 2003 at 1:00 p.m. in Wilmington. Commander Aircraft Company, a wholly-owned subsidiary of publicly-traded Aviation General, Incorporated, filed for chapter 11 petition on December 27, 2002. David Lee Finger, Esq., at David L. Finger, P.A., represents the Debtor in its restructuring efforts. CONSECO INC: Hires PricewaterhouseCoopers as Accountants -------------------------------------------------------- Pursuant to Section 327(a) of the Bankruptcy Code, Conseco and its debtor-affiliates seek the Court's authority to employ PricewaterhouseCoopers as accountants, auditors and tax advisors in these Chapter 11 cases. Anne Marrs Huber, Esq., at Kirkland & Ellis, relates that the Debtors are familiar with PwC's professional standing and reputation. The firm has a wealth of experience providing accounting, tax and financial advisory services in restructurings and reorganizations, and enjoys an excellent reputation for large complex Chapter 11 cases. PwC was first engaged to provide auditing and tax services to the Debtors in 1980. Since then, PwC has developed a great deal of institutional knowledge of the Debtors' operations, finance and systems. This will be valuable in the Debtors' efforts to reorganize. The general nature and extent of services that PwC may perform for the Debtors include: (a) auditing and reporting on the consolidated financial statements of the Debtors and their non-debtor affiliates for the year ending December 31, 2002, and thereafter; (b) reviewing quarterly financial information to be included in reports of the Debtors filed with the United States Securities and Exchange Commission; (c) performing agreed upon procedures on the schedule of taxes collected, withheld, refunded/exchanged and remitted for the year ending December 31, 2002, and thereafter; (d) auditing and reporting on the Debtors' cost structure; (e) auditing and reporting on the schedule of fees remitted to the state guaranty funds for the year ending December 31, 2002, and thereafter; (f) auditing and reporting on the financial statements of Conseco and its subsidiaries for the year ending December 31, 2002, and thereafter; (g) providing property tax services to assist Conseco in connection with its property tax costs for its properties; (h) providing temporary tax staffing to assist in the preparation of amended federal and state income tax returns; (i) providing expatriate tax and international administration services, including preparation of federal, state, and foreign income tax returns; exit and entrance orientations; tax equalization calculations; tax noticing; other compliance services; year-end w-2 processing; fiscal year compensation reporting; 2001 tax equalization processing; post-assignment support services; (j) assisting the Debtors in connection with the preparation and filing of their registration statements required by the SEC in relation to their debt and equity offerings; (k) providing other audit, accounting and tax services, as may be requested by the Debtors and as may be agreed to PwC; and (l) as agreed to by PwC and Debtors, attending and participating in administrative or court appearances consistent with these services. The Debtors and PwC estimate that the total fees will be approximately $4,200,000. To date, $1,300,000 has been paid and $2,900,000 is owed and will be paid postpetition, along with out-of-pocket expenses. The customary hourly rates charged by PwC are: Partners $640 - 1,235 Managers/Directors 340 - 600 Associates/Senior Associates 145 - 320 Administration/Paraprofessionals 100 - 120 John J. Quinn, Partner at PwC, relates that the firm conducted a database review, under his supervision, to identify potential relationships with the Debtors. Due to the enormous size and reach of Conseco and PwC's international scope, it would be impossible to avoid all semblances of relationships with potential parties-in-interest. However, Mr. Quinn maintains that none of the interactions create interests materially adverse to the Debtors in matters PwC will be involved in and none are in connection with these cases. (Conseco Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392- 0900) DebtTraders reports that Conseco Inc.'s 10.500% bonds due 2004 (CNC04USR2) are trading at 37 cents-on-the dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC04USR2for real-time bond pricing. CONTINENTAL AIRLINES: Q4 Web Conference Call Set for January 15 --------------------------------------------------------------- In conjunction with Continental Airlines, Inc.'s (NYSE: CAL) Fourth Quarter Earnings release, you are invited to listen to its conference call that will be broadcast live over the Internet on January 15, 2003 at 10:30 AM Eastern. Where: http://www.continental.com/company/investor How: Live over the Internet -- Simply log on to the web at the address above. Contact: Investor Relations, 713-324-5152 Continental Airlines is the world's sixth-largest airline and has more than 2,000 daily departures. With 131 domestic and 93 international destinations, Continental has the broadest global route network of any U.S. airline, including extensive service throughout the Americas, Europe and Asia. Continental has hubs serving New York, Houston, Cleveland and Guam, and carries approximately 45 million passengers per year on the newest jet fleet among major U.S. airlines. With 48,000 employees, Continental is one of the "100 Best Companies to Work For in America." Fortune ranked Continental the No. 2 Most Admired Global Airline and No. 30 Most Admired Global Company in March 2002. For more company information, visit http://www.continental.com DELTA AIR LINES: Intends to Cut Around 8,000 Jobs by May 1, 2003 ---------------------------------------------------------------- In October 2002, Delta announced it intended to reduce between 7,000 and 8,000 jobs from its workforce. Approximately 3,900 jobs will be reduced through voluntary programs. Up to an additional 4,000 jobs are expected to be reduced through involuntary programs. Most of these job reductions will be completed by May 1, 2003. The total cost of the job reduction program is estimated to be approximately $175 million, pretax. Delta will recognize $125 million of this amount as a one-time charge in the fourth quarter 2002 and the remaining $50 million in the March 2003 quarter. Delta Air Lines (NYSE: DAL), the world's largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,826 flights each day to 437 destinations in 78 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, go to http://www.delta.com Delta Air Lines' 10.375% bonds due 2022 are currently trading at about 66 cents-on-the-dollar. DELTA AIR LINES: Expanding Dallas/Fort Worth Hub this Spring ------------------------------------------------------------ Delta Air Lines (NYSE: DAL) will expand service at its Dallas/Fort Worth hub with the introduction of the spring schedule on April 6. The new schedule substantially increases the number of flights Delta offers customers at Dallas/Fort Worth International Airport, and improves travel choices by adding two new connecting banks during peak travel hours. With the spring schedule, Delta and the Delta Connection will give Dallas/Fort Worth customers 13 percent more flights every day -- 272 flights daily with nonstop service to 73 destinations, compared to 240 today. Delta Connection will increase the number of flights from 153 today to 209 by May 2003, while Delta will reduce flights from 87 to 63. The additional Delta Connection flights will feature Bombardier CRJ regional jets, including the new 70-seat aircraft. "Delta is significantly increasing the number of departures to give customers more convenient connections and expanded travel options while making adjustments to match capacity to the demand in these markets," said Subodh Karnik, senior vice president- Network and Revenue Management. In addition, Delta will rework its Dallas/Fort Worth flight schedule to offer more connecting opportunities for customers and to make the hub more productive. Flights will be scheduled throughout the day in eight connecting banks, up from today's six. The two new connecting banks, one at 11:30 a.m. and one at 5:15 p.m., are during peak travel hours. "Our customers, especially business travelers, tell us that frequency of service is very important to them. This new schedule, with its additional frequencies and connecting banks, is a major enhancement to the service we offer at Dallas/Fort Worth," said Karnik. Customers traveling between Dallas/Fort Worth and the following 25 cities will enjoy more frequency of flights: Albuquerque, N.M.; Houston (Bush Intercontinental and Hobby), Austin and San Antonio, Texas; Memphis and Nashville, Tenn.; New Orleans, Birmingham, Baton Rouge and Shreveport, La.; Columbia, S.C.; Denver and Colorado Springs, Colo.; Jackson, Miss.; Jacksonville and Pensacola, Fla.; Oklahoma City and Tulsa, Okla.; Phoenix and Tucson, Ariz.; Louisville, Ky.; Salt Lake City; Las Vegas, Los Angeles and Fayetteville/Bentonville/Springdale, Ark. (Northwest Regional Airport). Also, with the introduction of its spring schedule, Delta will retire the remainder of its Boeing 727 fleet. The retirement, which was previously announced, is part of Delta's long-term plan to simplify Delta's mainline fleet. "Fleet standardization provides significant cost and operational efficiencies, allowing Delta to save on maintenance costs and pilot training expenses. It also improves fleet reliability, which translates into improved customer service," said Karnik. Delta Air Lines, the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,826 flights each day to 437 destinations in 78 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. EES COKE: Fitch Changes CCC Rating Watch Status to Positive ----------------------------------------------------------- Fitch Ratings has changed the Rating Watch status to Positive from Negative on the 'CCC' rating of EES Coke Battery LLC's $75 million senior secured notes due 2007, following the announcement by United States Steel Corporation that it has agreed to acquire substantially all steelmaking and finishing assets of the bankrupt National Steel Corporation. The repayment of the EES Coke senior secured notes is largely dependent on the long-term credit quality and viability of the contractual coke offtaker, which to-date has been NSC. NSC filed for bankruptcy protection in March 2002. If the proposed assets purchase is completed and U.S. Steel assumes NSC's role as the contractual coke offtaker, Fitch would expect to upgrade the EES Coke rating. The rating action coincides with Fitch's placement of U.S. Steel's senior unsecured debt rating of 'BB' on Rating Watch Negative. The coke produced by EES Coke currently supplies approximately two-thirds of the coke required for the steel making process at National Steel's Great Lakes Division (GLD) facility, which is adjacent to the project, and is one of the assets U.S. Steel has agreed to acquire. The price paid by NSC for coke is adjusted periodically and is based upon a composite index tied to the cost of producing coke. This pricing mechanism coupled with the close proximity of the coke battery, makes the delivered price quite favorable to NSC compared to other options. As such, Fitch continues to believe NSC (or a replacement offtaker) will purchase coke from the project at least as long as the GLD facility is in operation. EES Coke is an affiliate of DTE Energy Services (DTEES), which is a wholly owned indirect subsidiary of DTE Energy Co. (Fitch senior unsecured debt rating of 'BBB+'). The EES Coke notes were issued in 1997 to finance the acquisition of NSC's Coke Battery #5. Payments on the notes are made from revenues received by EES Coke from sales of coke and coke by-products. ENRON CORP: Court Okays EPHC's Settlement Agreement with EPKK ------------------------------------------------------------- Martin Sosland, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that Enron Corporation, through its indirect wholly owned subsidiary, Enron Nippon Holdings LLC, has a 76.2% interest in E Power Holdings Corp. EPHC is part of the E Power group of companies that were established to pursue asset-based power opportunities in Japan. The E Power group of companies has ceased operations and is in the process of being wound up. On October 13, 1999, EPHC entered into a services agreement with E Power KK. Currently, EPHC owes EPKK $1,634,818 for services rendered by EPKK to EPHC during the period from January 1, 2001 to December 31, 2001. In December 12, 2001, EPKK filed for bankruptcy protection in Japan and the Tokyo Bankruptcy Court appointed a trustee. Pursuant to the EPKK Trustee's finalization of the EPKK bankruptcy, on October 8, 2002, the EPKK Trustee advised EPHC that it considers payment under the service agreement, in an amount equivalent to the current estimated proportional distribution to EPHC creditors at 32 cents to the dollar, to be mandatory under Japanese bankruptcy law. Based on the current estimated distribution amount, the amount payable to the Trustee would be $522,922. To memorialize the satisfaction of the debt, EPHC and the EPKK Trustee negotiated a settlement agreement. Mr. Sosland informs Judge Gonzalez that EPHC's liquid assets are the cash receivables from E Power Wheeling Services Ltd. and Yamaguchi Power Ltd. YPL owes EPHC $2,131,000. Mr. Sosland reports that YPL has sufficient cash funds to pay this amount, which funds are held in a trust account in Tokyo by the E Power group's Japanese counsel, Baker & McKenzie. EPHC intends to use these funds to pay the $522,922 Settlement Amount and all remaining funds will be transferred to an escrow account in the U.S. The EPKK Trustee has indicated that it will take all necessary actions to prevent any transfer of the YPL funds to EPHC prior to payment of the Settlement Amount. Accordingly, EPHC asks the Court to: (a) approve its use of property outside the ordinary course of business; and (b) approve the Settlement Agreement with EPKK pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Rules. Mr. Sosland asserts that EPHC's request should be granted because: (a) the Settlement Amount is based on the estimated proportional distribution of EPHC assets to all creditors; (b) the cost and time involved in defending civil and criminal actions the EPKK Trustee would be significant -- estimated to be around $300,000 to $500,000; (c) the defense could take several years and the probability of success is unknown; (d) if the Settlement Agreement is not approved, the EPKK Trustee will attempt to either freeze or appropriate the YPL money owed to EPHC, which represent the majority of EPHC's assets; and (e) the settlement will allow the administration of EPHC's bankruptcy to be carried out in an orderly manner, without undue cost or burden to the estate, and will not unduly prejudice the rights of any creditor. * * * Judge Gonzalez finds that sufficient justifications exist to merit EPHC's use of property outside the ordinary course of business to pay the Settlement Amount under the Settlement Agreement. Thus, the Court approves EPHC's request in all respects. (Enron Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-0900) EOTT: Gets Approval to Implement Enron Employee Transition Plan --------------------------------------------------------------- EOTT Energy Partners, L.P., and its debtor-affiliates sought and obtained Court approval for an order: (i) authorizing the transition of Employees to EOTT Energy LLC without the necessity of executing and filing new Form I-9 with regard to these Employees and finding that their transition without executing and filing new Form I-9 is consistent with federal immigration law; (ii) authorizing the transition of the Employees to EOTT Energy LLC without the necessity of performing new pre- employment drug and alcohol testing and finding that the transitioning of Employees without performing new pre- employment drug and alcohol testing is consistent with Department of Transportation regulations; and (iii) extending the relief granted in the Employee Order to cover the Employees transferred from EOTT Corp. and EPSC to EOTT Energy LLC and making the Employee Order applicable to and binding on EOTT Energy LLC and requiring that EOTT Energy LLC will continue to honor the obligations under the Employment Order. Trey A. Monsour, Esq., at Haynes and Boone LLP, in Dallas, Texas, related that EOTT Corp. provides EOTT Energy Partners, LP with the personnel necessary to conduct EOTT Partners' day-to- day business operations, or arranges for the services of the required personnel from third parties or other affiliates of Enron Corp. Pursuant to the EOTT Partnership Agreement, EOTT Partners reimbursed EOTT Corp. for substantially all of its direct and indirect costs and expenses, including compensation and benefit costs, incurred in providing or arranging for the services to EOTT Partners. In addition, pursuant to the Operation and Services Agreement, Enron Pipeline Services Company, on EOTT Corp.'s behalf: -- operates EOTT Partner's pipeline facilities, -- provides administrative services related to the operation of the facilities, -- provides emergency services, -- performs capital improvements, -- provides other service requested by EOTT Corp., and -- provides certain employees to operate the pipeline facilities. Mr. Monsour notes that the Debtors' joint plan of reorganization contemplates a complete and total "divorce" of the Debtors from Enron. Thus, as part of its reorganization efforts, the Debtors will transfer employees from EOTT Corp. to EOTT Energy LLC. The Employee transition will be effective as of January 1, 2003. (EOTT Energy Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Eott Energy Partners/Fin.'s 11.000% bonds due 2009 (EOT09USR1) are trading between 57 and 59. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for real-time bond pricing. EXIDE TECHNOLOGIES: Committee Hires Sonnenschein to Sue Lenders --------------------------------------------------------------- David B. Stratton, Esq., at Pepper Hamilton LLP, in Wilmington, Delaware, recounts that on May 10, 2002, the U.S. Bankruptcy Court for the District of Delaware entered a Final DIP Order, which set forth a timetable for the investigation and assertion of Claims and Defenses against the Exide Technologies and its debtor-affiliates' Prepetition Lenders and its Agent. This timetable was subsequently amended by a Stipulated Order entered by this Court on September 10, 2002 and further amended by this Court's Order of November 5, 2002. The November 5th Order required that parties-in-interest file: -- a preliminary report outlining the Claims and Defenses that may be asserted against the Prepetition Agent and the Prepetition Lenders no later than November 18, 2002; and -- a complaint or other pleading asserting any Claims and Defenses no later than November 28, 2002. Mr. Stratton tells the Court that Akin Gump and Pepper Hamilton each currently represent, or have represented, one or more of the Prepetition Lenders, which will be defendants in the Bank Litigation, in unrelated matters, and Akin Gump has represented, and may be continuing to represent, the Prepetition Agent, Credit Suisse First Boston, in unrelated matters. Accordingly, Akin Gump and Pepper Hamilton advised the Official Committee of Unsecured Creditors that, while both firms could investigate the Claims and Defenses and prepare the C&D Report, it would be better to retain a special litigation counsel to assist it with the prosecution of the Bank Litigation. On October 24, 2002, the Creditors' Committee filed an application to retain Brown Rudnick Berlack Israels LLP as Special Litigation Counsel nunc pro tunc to October 9, 2002. The Prepetition Agent and the Debtors filed objections to the Brown Rudnick Application with this Court. However, prior to the hearing on the Application, Brown Rudnick resigned as potential special litigation counsel to the Committee, and the Application was withdrawn. After interviewing new candidates to represent the Committee in the Bank Litigation, Mr. Stratton relates that the Committee selected Sonnenschein Nath & Rosenthal to serve as special litigation counsel to the Committee to prosecute the Bank Litigation and for other services as the Committee may request from time to time. Accordingly, the Creditors' Committee seeks the Court's authority to retain Sonnenschein Nath & Rosenthal as special litigation counsel nunc pro tunc to December 4, 2002. Sonnenschein is expected to prosecute the claims and causes of action with respect to the Debtors' Prepetition Lenders and Agent including, advising and representing the Committee with respect to: -- analyzing the possible claims of and against the Prepetition Lenders and Agent; and -- pursuing the Bank Litigation. The Creditors' Committee believes that Sonnenschein possesses extensive knowledge and expertise in the areas of law relevant to the Bank Litigation, and that Sonnenschein is well qualified to represent the Committee. In selecting attorneys to pursue the Bank Litigation, the Creditors' Committee sought a counsel with considerable experience in representing unsecured creditors' committees in complex Chapter 11 reorganization cases and bankruptcy litigation. Mr. Stratton tells the Court that Sonnenschein understands and agrees that fees and expenses incurred in rendering services to the Committee will be paid after the confirmation of a plan of reorganization, or as otherwise approved by this Court. Sonnenschein and the Committee have agreed that Sonnenschein will bill the Committee for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date these services are rendered and for out- of-pocket expenses, plus a 5% per annum interest rate on fees and expenses to the extent these fees and expenses are not paid within 30 days of the date on which these fees are allowed or expenses incurred. The current hourly rates charged by Sonnenschein's professionals and paraprofessionals are: Billing Category Hourly Rate ----------------- ----------- Partners $225 - 775 Associates 125 - 400 Paraprofessionals 70 - 230 These hourly rates are subject to annual adjustments to reflect economic and other conditions. Peter D. Wolfson, Esq., a member of Sonnenschein, assures the Court that the firm does not represent and does not hold any interest adverse to the Debtors' estates or their creditors in the matters on which Sonnenschein is to be engaged. However, Sonnenschein currently represents and in the past has represented these parties in unrelated matters: Allstate Life Insurance Co., Bank of Montreal, Bear Stearns & Co., Citicorp USA Inc., Comerica Bank, Credit Agricole Indosuez, Dai-Ichi Kangyo Bank Ltd., Dresdner Bank AG, Fortis Bank (Nederland) N.V., Lehman Bros. Bankhausag, Orix Capital Markets, Orix Real Estate, R2 Investments LDC, Sumitomo Trust & Banking Co. Ltd., Societe Generale, and UBS Realty Investors. Because of the potential conflict issues that may prevent Akin Gump and Pepper Hamilton from prosecuting the Bank Litigation, the significant potential benefit to the Debtors' estate from the Bank Litigation and the extensive legal services that may be necessary, the Committee believes that Sonnenschein's retention would be appropriate and in the best interests of the estates and the unsecured creditor constituency that the Committee represents. CSFB Responds Mark D. Collins, Esq., at Richards Layton & Finger P.A., in Wilmington, Delaware, informs the Court that Credit Suisse First Boston, in its capacity as Agent for creditors holding prepetition secured claims, does not object in principle to the Committee's retention of a third law firm, Sonnenschein, as its special litigation counsel. However, the Proposed Order submitted by the Committee cannot be approved because it violates the terms of the Final DIP Order. The Proposed Order conflicts with certain of the elements of the adequate protection package that the Prepetition Secured Creditors negotiated with the Committee and other parties-in-interest, and relied on in consenting to the priming of their prepetition liens by the DIP Facility. Specifically, the Final DIP Order provides that professionals prosecuting claims against the Prepetition Secured Creditors cannot be compensated at any time for work from Lender Funds. Given that the Committee is seeking to retain Sonnenschein to prosecute these claims, the Proposed Order violates this provision because it authorizes Sonnenschein to be paid from Lender Funds after confirmation of a reorganization plan. Mr. Collins contends that the Committee, or any party for that matter, cannot first negotiate and expressly agree to the Final DIP Order and then violate their agreement. Given the irreconcilable conflict between the Proposed Order and the Final DIP Order, and the Committee's repeated unwillingness to seek to retain special litigation counsel in a manner consistent with the Final DIP Order, the Prepetition Administrative Agent proposes an alternative order that provides for Sonnenschein to be retained by the Committee and compensated in accordance with the terms and conditions of the Final DIP Order. (Exide Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) FISHER SCIENTIFIC: Will Issue $200M of Senior Subordinated Notes ---------------------------------------------------------------- Fisher Scientific International Inc. (NYSE: FSH) announced that it has priced a $200 million offering of its 8.125 percent senior subordinated notes due 2012. The notes have been issued at a dollar price of 104.0 to yield 7.4 percent. These notes are a tack-on to the company's existing $150 million of 8.125 percent senior subordinated notes due 2012. The company intends to use the proceeds from the offering to repay a portion of its 9 percent senior subordinated notes due 2008. The proposed notes will be issued under the same indenture as, and with terms identical to, the company's existing 8.125 percent notes. The notes are being issued in a private placement and are expected to be resold by the initial purchasers to qualified institutional buyers under Rule 144A of the Securities Act of 1933, as amended, and outside the United States pursuant to Regulation S under the Securities Act. The offering is expected to close on or about Jan. 14, 2003. This offering is part of the company's strategy to refinance $600 million of its 9 percent senior subordinated notes due 2008. Fisher plans to refinance the remaining balance of these notes with bank debt during the next few weeks. The notes to be offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. This news release shall not constitute an offer to sell or a solicitation of an offer to buy such notes in any jurisdiction in which such an offer or sale would be unlawful and is issued pursuant to Rule 135c under the Securities Act of 1933. About Fisher Scientific International Inc. Fisher Scientific International Inc. (NYSE: FSH) is the world leader in serving science. We enable scientific discovery and clinical-laboratory testing services by offering more than 600,000 products and services to over 350,000 customers in approximately 145 countries. As a result of our broad product offering, electronic-commerce capabilities, and integrated global logistics network, Fisher serves as a one-stop source of products, services and global solutions for many of our customers. The company's primary target markets are scientific research and healthcare. Additional information about Fisher is available on the company's Web site at http://www.fisherscientific.com As reported in Troubled Company Reporter's December 23, 2002 edition, Standard & Poor's placed its ratings on Fisher Scientific International Inc., on CreditWatch with positive implications. The ratings action reflects Fisher's strong performance in a difficult market environment and the expected benefits of a planned refinancing. The company's total debt outstanding is $900 million. Standard & Poor's estimates that a proposed refinancing of high- cost debt issued to finance the company's 1998 leveraged buyout should save at least $10 million of interest expense annually. If the refinancing is completed as anticipated in early 2003, Standard & Poor's expects to raise the corporate credit and senior debt ratings to 'BB' from 'BB-' and subordinated debt ratings to 'B+' from 'B'. FUTURE BEEF: Creekstone Farms Purchases $100MM Plant in Kansas -------------------------------------------------------------- The Denver bankruptcy court trustee overseeing the liquidation of the former Future Beef Operations plant and assets in Arkansas City, Kan. has accepted an offer from Creekstone Farms Premium Beef LLC to purchase the high-profile beef processing plant. The offer is subject to court approval on Jan. 10. Future Beef Operations was placed into Chapter 7 bankruptcy proceedings in August 2002 and was auctioned on Jan. 8 in Denver. The company will use the facility to process its fresh and cooked Black Angus beef products. Creekstone Farms Premium Beef LLC is a privately held producer and marketer of Creekstone Farms Premium Black Angus Beef based near Louisville, KY. The $100-million, 400,000-plus-square-foot processing plant incorporates many highly innovative technologies for harvesting, processing and cooking beef. Ownership of such a state-of-the-art processing facility is a major step toward vertical integration for the Creekstone Farms Black Angus branded beef program, which was founded seven years ago by John and Carol Stewart on their 1,100-acre purebred Black Angus farm near Louisville. The Stewarts' overall business model has been to develop their own unique, high-quality Black Angus genetics with the intent of becoming the world's premier producer and marketer of Black Angus beef. Creekstone Farms had been processing its beef at the former Future Beef Operations plant -- named "Plant of the Year" by Food Engineering magazine -- in the months prior to Future Beef's Chapter 7 filing and subsequent closing in August 2002. "This is a significant milestone for us," said John Stewart. "Having our own dedicated processing facility gives us control of our future brand development in terms of volume, processing capability, technology and, most importantly, food safety. "This facility allows us to realize the full potential of our business model and maximize our branding strategy. It's a dynamic fit for us." Creekstone Farms Premium Beef LLC is anticipated to take ownership of the plant within a few days. It is anticipated the plant will reopen in March 2003. Stewart projects that the plant, which had more than 900 employees when it first opened, will initially employ approximately 500 people. John Stewart will be CEO of the venture. Meat industry veteran, Bill Fielding, former president of Farmland Industries' refrigerated foods group and past chairman of the American Meat Institute, has been retained by Creekstone Farms to assist with the company's rapid expansion. When it was completed in August 2001, the Future Beef plant was recognized industry-wide for having the most technologically advanced beef processing systems in the world. "During its year of operation, the plant's safety and sanitation record was second to none," said Stewart. "This key area, food safety, is a very important and critical part of our selling proposition. Today, more than ever before, food safety must always be our top priority." Creekstone's program is unique in the beef industry because it combines family-owned superior genetics, healthy and humane cattle management, carefully controlled high-quality feeding and premium processing for maximum food safety. Creekstone Farms beef is one of a few branded programs certified by the USDA's Agricultural Marketing Service (AMS). This certification requires that USDA graders examine each individual carcass to assure that it meets Creekstone Farms Premium Black Angus BeefT quality and certification standards. Creekstone Farms cattle are given plenty of room to roam and are mandated extra space during finishing in Nebraska under an exclusive arrangement with one of the nation's most respected cattle-feeding operations. Creekstone Farms Premium Black Angus genetics are developed at the purebred facility in Kentucky for commercial use in specialized breeding programs in conjunction with the company's network of producer-partner farms. Creekstone Farms plans to supply 1000 head per week of the plant's needs upon opening, similar to the level it processed at the plant prior to its closing. This number is projected to more than quadruple by the end of 2003. Though the plant was designed to process 1,650 head per day, Creekstone Farms plans to begin with a volume threshold of 1,000 head per day in order to adhere to the company's strict quality and safety standards. In addition to its technologically advanced processing systems, the plant also has state-of-the-art cooking and case-ready facilities that are unique in the industry. Creekstone Farms plans to make use of these facilities to increase value-added product development and production. Creekstone Farms fresh beef products are distributed throughout the United States and in Asia. Customers of fresh and fully cooked products include regional and national restaurant chain accounts, regional and national retail grocery chains, food service purveyors and distributors, convenience stores, club stores and retail distributors. Fresh Creekstone Farms Premium Black Angus Beef is served in restaurants across America. Fine-dining restaurants featuring Creekstone Farms beef include Aqua, Farallon and LuLu in San Francisco and Bellagio, MGM Grand and New York-New York in Las Vegas. Plans are to increase the distribution of fresh meat nationwide as capacity increases. The company also sells three varieties of frozen Creekstone Farms Fully Cooked Premium Black Angus Beef Patties in 16 states through such well- known grocery retailers as Winn-Dixie, Drager's, Albertson's, Costco, King Soopers, Publix, Kroger, Weis Markets and Sheetz convenience stores. It has plans for significant expansion of its value added products business over the next 18 months to include deli and innovative entree products. Internationally, the company distributes fresh beef in Japan with distribution partner Sumitomo Corporation and in Hong Kong and mainland China with distribution and marketing partner Hormel Foods. GENESIS HEALTH: Expect First Quarter Results on February 3 ---------------------------------------------------------- Genesis Health Ventures, Inc. will release operating results for the first quarter of fiscal 2003 before the open of trading on February 3rd and will also hold a conference call at 9:30 a.m. EST on February 3rd. Investors can access the conference call by phone at (877) 209- 9919 or live via webcast through the Genesis web site at http://www.ghv.com. A replay of the call will also be posted at http://www.ghv.comfor one month. Genesis Health Ventures (Nasdaq: GHVI) provides healthcare services to America's elders through a network of NeighborCare pharmacies and Genesis ElderCare skilled nursing and assisted living facilities. Other Genesis healthcare services include rehabilitation and respiratory therapy, hospitality services, group purchasing, and diagnostics. On Oct. 3, 2002, Standard & Poor's Ratings Services affirmed its corporate credit rating and assigned its 'B+' rating to a proposed $200 million senior unsecured term loan B, due 2007. Visit its Web site at http://www.ghv.com. GENTEK INC: Court Okays Retention of Bayard as Special Counsel -------------------------------------------------------------- GenTek Inc., and its debtor-affiliates, sought and obtained the Court's authority to employ The Bayard Firm as its special counsel, nunc pro tunc to October 17, 2002. Bayard will render these services: (a) Providing services and advice to, and representing GenTek in connection with status, treatment and disposition of inter-Debtor claims asserted by or against GenTek; (b) Providing services and advice to, and representing GenTek in connection with situations, transactions, litigations and other circumstances posing any apparent, potential or actual conflict of interest between GenTek and any other Debtor, without limitation, any inter-Debtor, intercompany or third-party funding, financing and adequate protection arrangements and facilities; (c) Providing services and advice to, representing, and as as appropriate assisting the General Bankruptcy Counsel and other Special Counsel representing, GenTek in connection with the drafting a disclosure statement to accompany a plan of reorganization; (d) Formulating, negotiating, confirming and consummating a plan or plans of reorganization in connection with any contemplated sales or acquisitions of assets and business combinations -- including negotiating asset, stock purchase, merger or joint venture agreements, evaluating competing offers, drafting and negotiating appropriate corporate documents with respect to the proposed transactions -- and consulting GenTek in connection with the closing of those transactions; (e) Attending meetings and participating in negotiations with respect to the proposed transactions; (f) Appearing before this Court, any district, appellate, state or foreign courts and the U.S. Trustee with respect to matters related to GenTek's Chapter 11 case; and (g) Performing all other necessary legal services and providing all other necessary legal advice to GenTek in connection with the matters related to its Chapter 11 case. GenTek will recompense Bayard for its services in accordance with the firm's customary hourly rates. GenTek also will reimburse Bayard for its actual necessary expenses. Bayard's hourly rates range from: Hourly Rate Professional ----------- ------------ $350 to 475 directors 180 to 325 associates 80 to 130 paralegals & assistants The principal attorneys and paralegals proposed to represent GenTek and their respective hourly rates are: Professional Rate ------------ ---- Neil B. Glassman $475 per hour Charlene D. Davis 425 per hour Eric M. Sutty 250 per hour Steven G. Weiler (paralegal) 125 per hour (GenTek Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY: Hires Ropes & Gray as Interim Bankruptcy Counsel --------------------------------------------------------- Genuity Inc., and its debtor-affiliates seek to employ and retain the firm of Ropes & Gray, as of the date the company filed for bankruptcy, to represent the Debtors as their bankruptcy counsel in connection with the filing of their Chapter 11 petitions and the prosecution of their Chapter 11 cases. William F. McCarthy, Esq., at Ropes & Gray, in Boston, Massachusetts, informs the Court that since February 3, 2000, the Firm has performed legal work for the Debtors in connection with certain corporate, financing, securities, tax and other matters. Prior to that time Ropes had represented BBN Corp., now known as Genuity Solutions, Inc., which was an independent company prior to its acquisition by GTE in 1998. As a result of representing the Debtors on these matters, the Firm has acquired substantial knowledge of the Debtors and their businesses as well as their capital structure, financing documents and other material agreements. In July 2002, Mr. McCarthy recounts that immediately after the initial defaults under the Verizon and bank credit agreements, the Debtors retained Ropes & Gray for a few days to provide general restructuring and bankruptcy advice. At that time Ropes & Gray prepared bankruptcy papers for certain of the Debtors and provided advice to the Debtors regarding their strategic alternatives. During that time the Debtors sought out and retained the law firm of Skadden Arps Slate Meagher & Flom LLP as general restructuring and bankruptcy counsel. From July 26, 2002 until after the Petition Date, Skadden Arps served in this role. However, on December 9, 2002 this Court indicated that the Debtors should retain new bankruptcy counsel to replace Skadden Arps. From the time of the Debtors' retention of Skadden Arps until the present, Mr. McCarthy relates that Ropes & Gray has continued to provide the corporate, tax, labor and other advice to the Debtors that it has historically provided. In addition, in September 2002, the Debtors retained Ropes & Gray to evaluate potential causes of action against Verizon and certain of Verizon's affiliates, in connection with the Debtors' consideration of possible transactions in which claims against Verizon might be released, and to be able to file suit against Verizon if necessary. In providing that advice, Ropes & Gray has from time to time consulted with Skadden Arps, while not being directly involved in the negotiations or drafting of the Asset Purchase Agreement with Level 3, and gained a general familiarity with the issues in the restructuring and proposed transaction with Level 3. The Debtors believe that Ropes & Gray is the best choice at this time because of: -- the firm's familiarity with the Debtors' operations; -- their prior work for the Debtors with respect to Verizon; and -- it' general familiarity with the bankruptcy case and the proposed asset-sale transaction. Mr. McCarthy explains that the Debtors have retained Ropes & Gray because of this existing knowledge and its experience and knowledge in the field of debtors' and creditors' rights and business reorganizations under Chapter 11 of the Bankruptcy Code. Since the retention of Ropes & Gray on December 10, 2002, Ropes & Gray has undertaken constant and extensive work to take over duties as bankruptcy counsel. Subject to further order of this Court, Ropes & Gray will be required to render various services to the Debtors including: A. advise the Debtors with respect to their powers and duties as debtors and debtors-in-possession in the continued management and operation of their businesses and properties; B. attend meetings and negotiate with representatives of creditors and other parties-in-interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in Chapter 11; C. take all necessary action to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any actions commenced against those estates, negotiations concerning litigation in which the Debtors may be involved and objections to claims filed against the estates; D. prepare on behalf of the Debtors motions, applications, answers, orders, reports and papers necessary to the administration of the estates; E. negotiate and prepare on the Debtors' behalf plans of reorganization, disclosure statements and related agreements and documents and take any necessary action on behalf of the Debtors to obtain confirmation of these plans; F. advise the Debtors in connection with any sale of assets, including, in particular, the proposed sale of substantially all of the Debtors' assets to an affiliate of Level 3 pursuant to the Asset Purchase Agreement dated November 27, 2002; G. appear before this Court, any appellate courts, and the U.S. Trustee and protect the interests of the Debtors' estates before these courts and the U.S. Trustee; and H. perform other necessary legal services and provide other necessary legal advice to the Debtors in connection with these Chapter 11 cases. Given the size, complexity, scope and international implications of their businesses, and the large number of parties in interest, the Debtors believe that it is necessary and essential that they employ attorneys under a general retainer to render the foregoing professional services. Ropes & Gray Member John T. Montgomery assures the Court that the members, counsel and associates of Ropes & Gray: -- do not have any connection with any of the Debtors, their affiliates, their creditors or any other party-in- interest, or their attorneys and accountants, the United States Trustee or any person employed in the office of the United States Trustee; -- are "disinterested persons," as that term is defined in Section 101(14) of the Bankruptcy Code; and -- do not hold or represent any interest adverse to the estates. However, Ropes & Gray has in the past represented, currently represents, and likely in the future will represent certain parties-in-interest in these cases in matters unrelated to the Debtors, the Debtors' Chapter 11 cases, or these entities' claims against or interests in the Debtors. These parties include: Citigroup Inc., The Bank of New York, BNP Paribas, JPMorgan Chase Bank, Credit Suisse First Boston, Deutsche Bank AG, Mizuho Corporate Bank, Toronto Dominion Bank, Wachovia Bank N.A. Inc., AT&T, Cisco Systems, EMC Corporation, Lucent Technologies Inc., US West Inc., Sprint Corporation, Telefonica SA, LDDS Communications Inc., State Street Bank & Trust Company, and Arthur Andersen LLP. Mr. Montgomery contends that Ropes & Gray has not, and does not, represent Verizon Communications Inc. and its subsidiaries who have been principally involved with the Debtors. Ropes & Gray does currently represent Verizon Investment Management Inc., a subsidiary of Verizon that manages the pension plan for Verizon employees. The work that Ropes & Gray performs for VIMCO relates to VIMCO investments in private equity funds and direct real estate investments. That work has been completely unrelated to the Debtors. In calendar years 2001 and 2002, collectively, Ropes & Gray billed VIMCO $900,000 in the aggregate, which accounts for 0.15% of Ropes & Gray's revenue over that period. In the past, Ropes & Gray has represented Bell Atlantic Yellow Pages Company, the subsidiary of Verizon that produces telephone directories, with respect to certain labor and employment matters. Ropes & Gray has not done any significant work for that Verizon subsidiary in several months. That representation has since been formally terminated. Pursuant to the Engagement Agreement, Mr. Montgomery informs the Court that for the remainder of calendar year 2002, Ropes & Gray will be providing professional services to the Debtors under its normal hourly rates for matters of the type on which Ropes & Gray will be representing the Debtors, less a negotiated discount, plus disbursements and charges. Ropes & Gray and the Debtors had negotiated an arrangement for calendar 2002 under which Ropes & Gray would give discounts on fees, up to 10% if certain volume thresholds were exceeded. The Debtors have exceeded that threshold, and accordingly for the remainder of calendar 2002 Ropes & Gray will provide that discount to the Debtors. The Engagement Agreement provides that no discount will apply for work performed in calendar 2003 and thereafter. Presently, Ropes & Gray's hourly rates range from: Partners $385-605 Associates $210-425 Legal Assistants $80-180 These hourly rates are subject to periodic increases in the normal course of the firm's business. Ropes & Gray anticipates increasing its rates effective January 1, 2003. In connection with its engagement, beginning in July 2002, Mr. Montgomery admits that the Debtors have prepaid Ropes & Gray for professional services and expenses. As of the Petition Date, the prepaid amount is $254,000, less amounts Ropes & Gray billed or accrued through the Petition Date. Ropes & Gray will hold any remaining prepaid amount to be applied in accordance with further orders of the Court. In addition, since February 2000, in the ordinary course of business, the Debtors paid to Ropes & Gray $5,500,000 for services rendered and as reimbursement for charges and disbursements. * * * Judge Beatty authorizes the Debtors on an interim basis, to employ and retain Ropes & Gray as their attorneys under a general retainer as of the commencement of these cases to serve as lead bankruptcy counsel. (Genuity Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) GRANGE MUTUAL: Oregon Court Confirms Insurer's Chapter 11 Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Oregon confirmed Grange Mutual Insurance Company's First Amended Plan of reorganization. While insurance companies are statutorily prohibited from filing for bankruptcy under 11 U.S.C. Sec. 109, Albert N. Kennedy, Esq., at Tonkon Torp LLP, in Portland, explains that there's an exception described in the legislative history to the Sec. 109 prohibition. Grange Mutual, whose history dates back to 1885, is an "exempt insurer" under ORS 731.032(4) -- meaning exempt from Oregon's state guaranty funds. That means no protection for policyholders and claimants. Grange Mutual was granted permission by the bankruptcy court to terminate all of its insurance policies as of October 1, 2002, so coverage under Grange policies stopped as of that date. Full-text copies of Grange Mutual's Plan and Disclosure Statement are available for a fee at: http://www.researcharchives.com/bin/download?id=030109215346 and http://www.researcharchives.com/bin/download?id=030109215208 The Debtor's memorandum in support of confirmation of the Plan is available at: http://www.researcharchives.com/bin/download?id=030109215051 and the Court's order confirming the Plan is available at: http://www.researcharchives.com/bin/download?id=030109214709 The Debtor's Plan provides that that the assets of the estate will be reduced to cash and shall be distributed to the creditors as soon as practicable. The Reorganized Debtor will be dissolved after all distributions have been made. Pursuant to Section 1123(a)(1) of the Bankruptcy Code, the Plan designate classes of claims and classes of interest. The Plan classifies all Claims and Interests into 5 Classes: Class 1 Priority Claims unimpaired Class 2 General Unsecured Claims impaired Class 3 Bank's Unsecured Claims impaired Class 4 Small Unsecured Claims impaired Class 5 Member Interests impaired Classs 2, 4 and 5 voted to accept the Plan. Class 3 voted to reject the Plan. Class 3 consists of all Allowed Unsecured Claims of National Consumer Cooperative Bank only. The Debtor successfully argued that the Plan satisfies each of the elements of Section 1129(a) of the Bankruptcy Code and that the Plan could be confirmed notwithstanding the Bank's rejection of the Plan. In its objection, the Bank contended that the Plan provides priority status to claims for unearned premium payments and those "Refunds" would be paid at a higher priority than the Bank's claim. The Plan, the Debtor pointed out, does not make any reference to claims for refunds of unearned premiums. That was a separate matter brought to the Bankruptcy Court outside the Plan. The Debtor is confident that the proceeds will be sufficient to pay in full all Allowed Small Unsecured Claims, Allowed Administrative Claims, Allowed Priority Tax Claims and Allowed Priority Claims. The distribution to the general Unsecured Creditors, Class 2 under the Plan, and the National Consumer Cooperative Bank, Class 3, remains uncertain. Pending entry of a judgment in the Adversary Proceeding, the claim of National Consumer Cooperative Bank shall be treated as a Disputed Claim under the Plan. In the event that the Bank's Claim is not subordinated to the payment of the general Unsecured Claims, then the Bank shall share pari passu with general Unsecured Creditors. The Bank further argues that the distributions made to other unsecured creditors unfairly discriminates their claim because the aggregate amount is so large. The Debtor explains that Section 1122(b) of the Bankruptcy Code specifically allows the Plan's designation and treatment of Class 4 (Small Unsecured Claims). Section 1122(b) allows a plan to create a separate class of claims for administrative convenience to consist unsecured claim that is reduced to a certain amount that the court approves as reasonable and necessary. The Debtor explains that the administrative costs in creating Class 4 will enhance the amount of any distributions ultimately paid to the Bank. The creation of Class 4 does not unfairly discriminate against the Bank because the administrative cost will be greatly reduced by creating a class of Small Unsecured Claims. The Debtor adds that the Plan provides to each holder of a claim or interest in each impaired class a recovery on account of the holder's claim or interest that has a value at least equal to the value of the distribution that each such holder would receive if Debtor was liquidated under Chapter 7 of the Bankruptcy Code. For that reason, the Plan is in the best interests of the holders of claims and interests because it provides to holders of impaired claims. The Debtor points out that a voluntary, orderly liquidation pursuant to the Plan will result in a higher return to creditors than would a liquidation conducted by a trustee pursuant to Chapter 7 of the Bankruptcy Code. The expenses will be less and payments to creditors will occur sooner under the Plan than under a Chapter 7 liquidation. Grange Mutual Insurance Company, an Oregon non-profit corporation, is an exempt insurer under ORS 731.032(4). The Debtor offered fire, automibile, homeowners and farmowners insurance to members of the Grange, to cooperative associations that serve Grange members, and to corporations organized or controlled by members of the Grange. Grange filed for Chapter 11 protection on July 2, 2002. Albert N. Kennedy, Esq., and Michael W. Fletcher, Esq., at Tonlon Torp LLP represent the Debtor in its restructuring efforts. At Sept. 30, 2002, the company reported total assets of about $7 million and total liabilities of $6.5 million. GREAT LAKES: Reports Preliminary December Traffic Results --------------------------------------------------------- Great Lakes Aviation, Ltd. (OTC Bulletin Board: GLUX) announced preliminary passenger traffic results for the month of December. Scheduled service generated 10,507,000 revenue passenger miles (RPM's), a 4.7 percent decrease from the same month last year. Available seat miles (ASM's) increased 2.8 percent to 29,797,000. As a result, load factor decreased 2.7 points to 35.3 percent. Passengers carried decreased 9.4 percent compared to December 2001 to 39,071. For the twelve months ending December 31, 2002 compared to the same twelve month period in 2001, revenue passenger miles (RPM's) decreased 33.2 percent to 134,063,000 while available seat miles (ASM's) decreased 16.2 percent to 359,257,000, resulting in a load factor of 37.3 percent for the year 2002 compared to 46.8 percent for the same twelve month period in 2001. The company carried 503,833 revenue passengers for the twelve month period ending December 31, 2002, a 37.9 percent decrease on a year over year basis. As of January 7, 2003, Great Lakes is providing scheduled passenger service at 45 airports in fifteen states with a fleet of Embraer EMB-120 Brasilias and Raytheon/Beech 1900D regional airliners. A total of 198 weekday flights are scheduled at four hubs, with 168 flights at Denver, 14 flights at Chicago -- O'Hare International Airport, 10 flights at Minneapolis/St. Paul, and 6 flights at Phoenix. All scheduled flights are operated under the Great Lakes Airlines marketing identity in conjunction with code-share agreements with United Airlines and Frontier Airlines. Additional information is available on the company Web site that may be accessed at http://www.greatlakesav.com Great Lakes' September 30, 2002 balance sheet shows a working capital deficit of about $120 million, and a total shareholders' equity deficit of about $24 million. HEADLINE MEDIA: 2002 Balance Sheet Upside Down By $3 Million ------------------------------------------------------------ Headline Media Group Inc. (TSX:HMG) announced its results for the fourth quarter and year ended August 31, 2002. HIGHLIGHTS - On August 26, 2002 the Company's subsidiary, The Score Television Network Ltd., terminated its telecast rights agreement with Major League Baseball ("MLB"), effective at the end of the 2002 season. Under the agreement, The Score made a $12 million final payment to MLB on August 23, 2002. This one time payment eliminated existing and all future financial liabilities to MLB, and represents a savings to The Score in excess of $8 million relating to future rights fees payments. - Revenue in the broadcast group for the fourth quarter increased by $1.4 million or 39.4%, reflecting a 38.7% increase in advertising revenue and a 43.8% increase in subscription revenue. Revenue in the Sports and Entertainment Marketing group declined by $1.4 million due to lower advertising revenues, which was offset by a decline in operating expenses over the prior year. Overall, consolidated revenues were $5.4 million in the fourth quarter for both fiscal years. - On December 23, 2002, the Company announced that it has agreed to a non-brokered private placement of 1,428,571 Class A Subordinate Voting shares with Levfam Holdings Inc., the Company's controlling shareholder, at a price of $0.35 per share. The gross proceeds of the private placement will be $0.5 million. The deal is anticipated to close, subject to regulatory approval, early in January 2003. Proceeds from the private placement will be used primarily to fund the operations of PrideVision Inc. ("PrideVision TV") and for general corporate purposes. The Company has three business units "Broadcasting", "Sports and Entertainment Marketing" and "Corporate". The Broadcasting group consists of the Company's specialty television networks, The Score and PrideVision TV. The Sports and Entertainment Marketing group consists of St. Clair Group Investments Inc. Three Months Ended August 31, 2002 Revenues for the fourth quarter of $5.4 million were consistent with revenues of the prior year. Compared to the prior year, the increase in revenue in the Broadcasting group of $1.4 million was offset by the decline of $1.4 million in revenue in the Sports and Entertainment Marketing group. Operating expenses excluding rights fees were $6.7 million during the quarter, compared to $8.0 million in the prior year, representing a decrease of $1.3 million. Operating expenses in the Broadcast group were $1.0 million higher in the quarter, reflecting operating costs associated with PrideVision TV. Operating expenses for the Sports and Entertainment Marketing group were $1.5 million less than the prior year, which more than offset the decline in revenues. Operating expenses for the Corporate group were $0.8 million less than the prior year reflecting lower bonuses payable to senior management compared to the prior year. Program rights, excluding the expense associated with the termination of the MLB agreement, were $6.5 million during the quarter, compared to $6.7 million in the prior year. Program rights for the quarter were $0.2 million in the Sports Entertainment and Marketing Group and $6.3 million in the Broadcasting group versus $0.4 million and $6.3 million respectively in the prior year. During the quarter, the Company terminated its telecast rights agreement with MLB, which included in a one-time payment of $12.0 million, to satisfy all existing and future financial liabilities of the Company. This one-time payment resulted in a program rights termination expense of $6.7 million. During the quarter the Company also wrote-down certain assets of its subsidiary PrideVision TV, including fixed assets, programming and deferred charges, resulting in a one-time charge of $4.3 million. Loss before interest, taxes, depreciation and amortization, was $18.8 million for the fourth quarter, compared with $10.9 million in the same quarter last year. Excluding the operating losses for PrideVision TV, which is in its first year of operations, the MLB program rights termination expense, and the write-down of certain PrideVision TV assets, the loss before interest, taxes, depreciation and amortization was $5.2 million versus $8.6 million in the prior year, an improvement of $3.4 million or 39.5% over the prior year. The loss of $8.6 million in the prior year excludes a $1.6 million write-down of investments and $0.7 million in operating losses for PrideVision TV. Interest income for the fourth quarter was negligible compared to $0.5 million in the prior year. The decrease in interest income resulted from a reduction in the cash, cash equivalents and short-term investments held by the Company during the period. Interest expense for the fourth quarter was $0.4 million compared to $0.5 million in the prior year. The decrease of $0.1 million reflects a lower average loan balance outstanding for the period, partially offset by commitment fees payable on the available credit facilities. Depreciation expense of $0.4 million in the fourth quarter, similar to that in the prior year, reflects $0.1 million in depreciation of fixed assets for PrideVision TV and the Corporate group, versus nil in the prior year. Fixed assets additions for PrideVision TV and the Corporate group occurred in the latter part of the prior fiscal year. Amortization expense was $0.3 million in the quarter, which was consistent with the prior year. The amortization expense was attributable to the amortization of start-up and license costs associated with the launch of PrideVision TV, as well as, the amortization of goodwill on the acquisition of St. Clair. Net loss for the fourth quarter was $20.0 million or $0.31 per share based on a weighted average 64.9 million Class A Subordinate Voting Shares and Special Voting Shares outstanding, compared to a net loss of $11.7 million or $0.18 per share based on a weighted average 64.9 million Class A Subordinate Voting Shares and Special Voting Shares outstanding in the prior year. Broadcasting Group Revenues for the Broadcasting group increased $1.3 million to $4.7 million for the quarter compared to $3.4 million in the prior year. Advertising revenue increased $0.8 million during the quarter compared to the prior year, reflecting a 38.1% increase in advertising revenue for The Score and new advertising revenue for PrideVision TV. The increase in advertising revenue for The Score reflects strong audience growth and improved ratings over the prior year. Subscriber revenue increased by $0.5 million or 43.8% over the same quarter last year. $0.3 million primarily reflects an increase in the average number of subscribers to The Score for the quarter and increased subscriber rates for The Score on renewed distribution contracts. As at August 31, 2002, The Score had 5.2 million paying subscribers. PrideVision TV generated $0.2 million in subscriber revenue during the quarter and as at August 31, 2002 had approximately 20,000 paying subscribers. Operating expenses were $11.5 million in the quarter, compared to $10.5 million in the prior year, representing an increase in operating expenses of $1.0 million. Operating expenses for PrideVision TV were $3.2 million in the quarter, compared to $0.7 million in the prior year. Expenses in the prior year for PrideVision TV related to certain programming, technical and general and administrative costs related to the start-up and launch. The Score's operating expenses decreased by $1.5 million to $8.3 million in the quarter compared to $9.8 million in the prior year. The Score's prior year operating expenses included an adjustment to program rights of $2.4 million, due to a revised estimate of the total expected future revenue from the broadcast of Major League Baseball games. During the quarter, The Score terminated its telecast rights agreement with Major League Baseball, which included a one-time payment of $12.0 million, to satisfy all existing and future financial liabilities of The Score. This one-time payment resulted in a program rights termination expense of $6.7 million. During the quarter certain assets of PrideVision TV were written-down, including fixed assets, programming and deferred charges, resulting in a one- time charge of $4.3 million. Loss before interest, taxes, depreciation and amortization for the fourth quarter increased by $10.6 million to $17.7 million from $7.1 million in the same quarter last year. The increased loss was attributable to the increase in the operating loss for PrideVision TV, the MLB program rights termination expense by The Score and the write-down of certain PrideVision TV assets. Sports and Entertainment Marketing Group Revenue for St. Clair was $0.7 million in the fourth quarter, compared to $2.0 million in the prior year. The decrease in revenue of $1.3 million reflects a decline in advertising revenues, as well as timing differences in the realization of revenue from certain sporting events, which occurred in previous quarters when compared to the prior year. Advertising revenue declined in both print and television mediums, as well as sponsorship revenue from sporting events, primarily due to a soft advertising market. Operating expenses were $1.1 million in the quarter, compared to $2.8 million in the prior year, representing a decrease in operating expenses of $1.7 million. The decrease primarily reflects expenses associated with the timing of certain sporting events, which have been reflected in previous quarters when compared to the prior year. St. Clair's operating loss before interest, taxes, depreciation and amortization for the fourth quarter was $0.5 million or $0.3 million less than the loss of $0.8 million in the prior year. Corporate Loss before interest, taxes, depreciation and amortization for the fourth quarter was $0.6 million, which is lower than the previous year loss of $1.4 million, which included a bonus payable to senior management for fiscal 2001. Operating expenses included executive compensation, public relations costs, professional fees, capital taxes and other expenses. Year Ended August 31, 2002 Revenue for the year ended August 31, 2002 increased by $5.1 million or 18.7% to $32.4 million from $27.3 million for the same period last year. Advertising revenues increased by $3.9 million or 17.6% due to an increase in advertising revenue in the Broadcast group of $1.6 million, as well as an additional $2.3 million in St. Clair revenue over the prior year, which primarily reflects a full year of operations in the current year versus eight months in the prior year. Subscriber fee revenue increased by $1.4 million or 28.3%, primarily reflecting an increase in the average number of subscribers to The Score for the year, as well an increased subscriber rates for The Score on renewed distribution contracts. In addition, subscriber fee revenue for PrideVision TV was $0.5 million. At the end of August 2002, The Score had approximately 5.2 million paying subscribers and PrideVision TV had approximately 20,000 paying subscribers. Operating expenses were $54.0 million for the year ended August 31, 2002 compared to $45.3 million in the prior year, representing an increase of $8.7 million. Operating expenses in the Broadcast group were $7.3 million higher in the year, reflecting $9.8 million in operating costs associated with the first full year of operations for PrideVision TV, and a $2.5 million decrease in operating expenses for The Score, primarily as a result of cost containment initiatives. Approximately $2.0 million of the increase was attributable to increased operating expenses for St. Clair, reflecting a full year of operations versus eight months in the prior year. Operating expenses in the Corporate group were $2.6 million versus $3.1 million in the prior year, reflecting lower bonuses payable to senior management, partially offset by a full year of operating as a public company versus nine months in the prior year. During the year, the Company's subsidiary, The Score, terminated its telecast rights agreement with MLB, which included a one- time payment of $12.0 million, to satisfy all existing and future financial liabilities of The Score under this agreement. This one-time payment resulted in a program rights termination expense of $6.7 million. The Company also wrote-down certain assets of its subsidiary PrideVision TV, including fixed assets, programming and deferred charges, resulting in a one-time charge of $4.3 million. Loss before interest, taxes, depreciation and amortization for the year ended August 31, 2002 was $32.6 million, compared with $19.7 million last year. Excluding the results for PrideVision TV, the program rights termination expense with respect to MLB, and the write-down of certain PrideVision TV assets, operating results improved by $5.0 million or 28.9% over the prior year, reflecting a loss of $12.1 million versus a loss of $17.1 million in the prior year. The loss of $17.1 million in the prior year excludes a $1.6 million write-down of investments and $0.9 million of operating losses for PrideVision TV. Interest income for the year was $0.7 million compared to $1.1 million in the prior year. Lower interest income reflects a reduction in the cash, cash equivalents and short-term investments held by the Company during the year as compared to the prior year, as well as a decline in interest rates. Interest expense for the year was $1.5 million compared to $1.8 million in the prior year. The decrease in interest expense reflects a decrease in the average outstanding bank indebtedness during the year and lower interest rates. Net loss for the year ended August 31, 2002 was $36.5 million or $0.56 per share based on a weighted average 64.9 million Class A Subordinate Voting Shares and Special Voting Shares outstanding, compared to a net loss of $22.6 million or $0.42 per share based on a weighted average 53.9 million Class A Subordinate Voting Shares and Special Voting Shares outstanding in the prior year. Liquidity and Capital Resources Cash flow used in operations for the three months ended August 31, 2002 increased to $15.8 million from cash flow used in operations of $5.8 million in the prior year. Cash flow used in operations for the year ended August 31, 2002 increased to $35.9 million from $16.0 million in the prior year. Cash flow used in operations for the three months and year ended August 31, 2002 reflect higher operating losses due to the first full year of the operation for PrideVision TV and the $12 million termination payment made to MLB. Cash flow from financing activities was $12.5 million for the three months ended August 31, 2002 compared to cash flow from financing activities of $1.1 million in the prior year. During the quarter, $12.5 million was drawn on the Company's credit facilities for The Score as a result of the termination payment made to MLB. Cash flow from financing activities for the year ended August 31, 2002 was $3.6 million compared to cash flow from financing activities of $58.6 million in the prior year. The cash flow from financing activities in the prior year reflects the completion of a private placement in November 2000, as well as the public offering in April 2001. The following is a summary of the significant financing activities undertaken by the Company during the year to secure financing for its ongoing business operations: The Score In April 2002, the Company amended the bank credit facility for its subsidiary, The Score, which was initially established in December 2001. The bank credit facility was subsequently amended in August 2002 as part of an agreement between MLB and The Score to terminate its program rights agreement for the 2003 baseball season. The amended revolving credit facility allows The Score to borrow up to $15.0 million in prime rate loans, BAs or letters of guarantee. The bank credit facility matures February 28, 2004. Prime rate loans bear interest at the prime rate plus 3.25%. BAs bear interest at BA rates plus 4.25%. Loans under the bank credit facility are secured by a pledge of substantially all of the assets of The Score, including the pledge of The Score shares and the subordination and pledge of shareholder loans and intercompany debt from the Company to The Score. Under the terms of the bank credit facility and subsequent amendments, the Company loaned The Score $17.0 million in December 2001 and $1.5 million in August 2002. The loans are secured and are pledged and subordinated to the bank credit facility. The Score has also settled the repayment fee of $1.75 million related to the previous credit facility and paid fees of $0.5 million upon closing of the transactions. The provisions of the amended bank credit facility impose restrictions on The Score, the most significant of which are debt incurrence and debt maintenance costs, restrictions on additional investments, sales of assets, payment of management fees or other distributions to shareholders, restrictions on entering into new or renewed programming rights agreements, and the maintenance of certain financial covenants. Financial covenants include meeting minimum subscriber levels, minimum revenue amounts, maximum EBITDA losses, maximum capital expenditure amounts and maximum total debt to total contributed capital requirements. In addition, the agreement has a number of events of default, including solvency tests for the Company and The Score. As at August 31, 2002, $13.1 million of the facility had been drawn. In August 2002, The Score also entered into a credit facility agreement for a $2 million operating loan with a company related by virtue of common control. The credit facility was used to fund the termination payment to MLB and matures on August 31, 2004. The credit facility bears interest at 17% per annum and is secured by a second ranking general security agreement and a limited recourse guarantee by the Company, supported by the pledge of The Score's shares, subject to a prior security interest. The credit facility was negotiated with and considered by a Special Committee of the Board of Directors, and ultimately approved by the Board of Directors. As at August 31, 2002, the entire credit facility amount of $2 million had been drawn. St. Clair In October 2002, the Company's subsidiary St. Clair completed a bank credit facility agreement for an operating line of credit for up to $1 million. The operating line of credit is payable on demand and bears interest at the rate of prime plus 1%. The line of credit is secured by a general assignment of book debts of St. Clair and a general security agreement. As at August 31, 2002, no amounts were outstanding under the facility. Headline Media Group Inc. In April 2002, the Company entered into a non-revolving secured standby credit facility of up to $2.3 million with a company related by virtue of common control. The credit facility was subsequently amended in November 2002. The credit facility is available to fund operations and working capital requirements commencing November 11, 2002 and matures on August 31, 2004. The credit facility bears interest at 12% per annum, commencing 90 days following the initial advance. The standby credit facility is secured by the assets of PrideVision TV, including a pledge of the PrideVision TV shares by the Company and a first charge over all of the Company's assets, with the exception of its shares in The Score and St. Clair. The credit facility was negotiated with and considered by a Special Committee of the Board of Directors, and ultimately approved by the Board of Directors. As at August 31, 2002, no amounts were outstanding under the facility. At August 31, 2002, total long-term loans were $15.1 million compared to $11.5 million at August 31, 2001. On December 23, 2002, the Company announced that it has agreed to a non- brokered private placement of 1,428,571 Class A Subordinate Voting shares with Levfam Holdings Inc., the Company's controlling shareholder, at a price of $0.35 per share. The gross proceeds of the private placement will be $500,000. The deal is anticipated to close, subject to regulatory approval, early in January 2003. Proceeds from the private placement will be used primarily to fund the operations of PrideVision TV and for general corporate purposes. With the above credit facilities and financing in place and, assuming the successful execution of its revised business plan, management believes there are sufficient resources to fund operations until the end of fiscal 2003. During 2002 and continuing into fiscal 2003, the Company has introduced significant cost cutting measures to preserve cash and to strategically realign the Company's resources. Beyond fiscal 2003, the Company will require additional funding in order to continue operations and service the commitments under significant agreements. The Company's successful execution of its revised business plan is dependant upon a number of factors that involve risks and uncertainty. In particular, revenues in the specialty television industry, including subscription and advertising revenues, are dependant upon audience acceptance, which cannot be accurately predicted. In addition, the distribution of the Company's specialty television channel, PrideVision TV, is limited to digital subscribers. While Management expects the digital television market will continue to grow and that the number of subscribers to the service will increase, the rate and extent to which this subscriber base will grow is uncertain. Initial consumer acceptance is encouraging, however, it remains uncertain that the penetration rates required to ensure profitability will be achieved. The Company is actively pursuing alternative financing with potential lenders and investors, which if successful, will, in management's view, enable the Company to achieve its business plans in the long-term. No agreements with potential lenders or investors have been reached yet and there can be no assurance that such agreements will be reached. In addition, the Company continues to review other alternatives, which could involve renegotiating existing cash commitments, further reducing its work force, a further restructuring of the business units, which may include the divestiture of certain assets of the Company, or attracting a strategic investor that would assist in developing the business of the Company. Cash flow from investment activities for the three months ended August 31, 2002 was $5.5 million compared to cash flow used in investment activities of $25.3 million in the prior year. The increase in cash flow from investment activities reflects the sale of short-term investments to fund operations. Cash flow from investment activities for the year ended August 31, 2002 was $23.3 million compared to cash flow used in investment activities of $29.8 million in the prior year, reflecting the sale of short-term investments in the current year. Investment activities in the prior year included the acquisition of St. Clair. Fixed asset additions were $0.6 million for the year ended August 31, 2002 compared to $2.1 million in the prior year. Fixed asset additions in the prior year included capital required for the launch of PrideVision TV. "It has been a challenging year for companies everywhere. Despite these conditions, Headline Media Group was able to increase overall revenues, dramatically raise viewership levels on The Score and launch PrideVision TV, the world's first gay and lesbian television network" said John Levy, chairman and chief executive officer of Headline Media Group Inc. "There are many exciting opportunities ahead, which we believe will position us for future success. Our plans include the continued growth of The Score as we move forward through our licence renewal, the pursuit of strategic partners to take PrideVision TV to the next level, and the implementation of innovative marketing packages to new and existing clients of St. Clair. We look forward to reporting to you on our progress in 2003." About Headline Media Group Inc. Headline Media Group Inc. (TSX: HMG) is a media company that owns and operates three unique Canadian businesses: The Score Television Network Ltd., PrideVision Inc. ("PrideVision TV") and St. Clair Group Investments Inc. The Score is the Corporation's first specialty television network, which provides sports news, information and highlights, as well as live event sports programming. The Score is distributed in Canada by cable and DTH companies to approximately 5.2 million paying subscribers. PrideVision TV is the Corporation's Category 1 digital specialty television service focused on the Canadian gay, lesbian, bisexual, transgendered ("GLBT") community and is the world's first network of its kind to broadcast 24/7. PrideVision TV launched on September 7, 2001 with informational programming, entertainment and news on issues of interest to the GLBT community. St. Clair is a sports marketing and specialty publishing company. St. Clair acquires broadcasting, promotional, sponsorship, signage and print program rights in respect of live sporting events. St. Clair also publishes a number of special interest guides and magazines. The company's August 31, 2002 balance sheet shows a total shareholders' equity deficit of $3,453,000. HOST MARRIOTT POOL: Class F & G Note Ratings Cut to Low-B Level --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on five classes of commercial mortgage pass-through certificates from Host Marriott Pool Trust's series 1999-HMT. At the same time, the rating on one other class is affirmed from the same transaction. The downgrades reflect the deterioration in the pool's overall operating performance as evidenced by a decrease in the debt service coverage and an increase in the loan-to-value ratio since issuance. This is the result of a 19% decrease in net cash flow since issuance. However, the rating actions also reflect the fact that the loan is amortizing on a 20-year amortization schedule and has paid down by 8% to $610.4 million since issuance. The ratings also reflect the sponsorship provided by Host Marriott Corp. ('BB-'), as well as the brand name recognition afforded by Marriott International Inc. ('BBB+'), and Hyatt Corp. (unrated), which manage four of the eight hotels. Using results for the year ending December 31, 2002 and accounting for the business cycle, Standard & Poor's adjusted the royalty fees, incentive management fees, marketing and advertising expenses, and ground rent contained in the borrower's net operating income, to arrive at a stabilized net cash flow of $87.2 million. Utilizing a blended capitalization rate of 10.98%, the LTV is estimated at 77% and the debt service coverage ratio is 1.39x, based on a refinance rate of 10.25%. These levels have deteriorated from those at the 1999 issuance, when the LTV was 66% and the DSCR was 1.58x. This transaction comprises a single fixed-rate loan secured by eight cross-collateralized and cross-defaulted hotels including: the New York Marriott Marquis; The Drake Swissotel in Manhattan; the San Francisco Airport Hyatt Regency; the Chicago Swissotel; the Cambridge Hyatt Regency; the Reston Hyatt Regency; the Boston Swissotel; and the Atlanta Swissotel. Marriott, Hyatt, and Swissotel each manage the hotel(s) flagged in their name. The largest asset is the New York Marriott Marquis (representing 51% of the pool's total NCF in 2002), which has seen revenue per available room (RevPar) decline by 6% since issuance. This portfolio of hotels is geographically concentrated, as the Marriott Marquis and the Drake Swissotel in New York City represent 52% of the allocated loan balance of the pool. The properties in this portfolio are full-service, business-oriented hotels located primarily in downtown CBD locations that have been impacted by the downturn in business travel. The San Francisco Airport Hyatt Regency has seen its DSCR decline to 0.30x in 2002 from 1.16x in 2001. The DSCR for the Chicago Swissotel also declined to 1.00x in 2002 from 1.35x in 2001. The Drake Swissotel in Manhattan has yet to recover from the events of Sept. 11, 2001 and the downturn in business travel, as NCF declined by two-thirds in 2001 from 2000 levels. As a result, the DSCR for this hotel has remained below 1x (0.71x in 2001 and 0.86x in 2002). The operating performance for this portfolio of hotels has declined during the last year (overall occupancy at 75.9%, the average daily rate (ADR) at $177.76, and RevPar at $139.24, in 2002, compared to 73.1%, $194.29, and $145.65, respectively, in 2001). Based on conversations with the borrower and industry- wide projections, the rating actions reflect the belief that operating performance for this portfolio of hotels will remain at 2002 levels in 2003, but will begin to recover in 2004 and beyond. The loan agreement calls for the servicer, Wells Fargo Bank N.A., to withhold all excess cash in the event that the base profit for any trailing 12-month period for the subject portfolio of hotels falls below $96 million (the "cash trap"). The loan went into the cash trap period as of July 3, 2002. When triggered, all excess cash flow after debt service and certain reserves is held as additional collateral. The release of the funds back to the borrower is dependent on maintaining a base profit in excess of $96 million for two consecutive quarters. As of December 2002, $10.2 million had been set aside in an escrow account. RATINGS LOWERED Host Marriott Pool Trust Commercial mortgage pass-thru certs series 1999-HMT Rating Balance Class To From (Mil. $) LTV (%) DCSR (x) C A+ AA- 56.5 49 2.18 D BBB+ A 99.0 62 1.74 E BBB- A- 35.9 66 1.62 F BB BBB 46.8 72 1.49 G B BBB- 38.9 77 1.39 RATING AFFIRMED Host Marriott Pool Trust Commercial mortgage pass-thru certs series 1999-HMT Class Rating Balance (Mil. $) LTV (%) DSCR (x) A AAA 159.6 20 5.33 IMC GLOBAL: Selling Colorado Assets to AmerAlia Unit For $20MM+ --------------------------------------------------------------- IMC Global Inc. (NYSE: IGL) announced that it has signed a definitive agreement to sell its White River Nahcolite Minerals sodium bicarbonate mine and plant in northwest Colorado to AmerAlia, Inc. (OTC Bulletin Board: AALA) of Centennial, Colorado for approximately $20.7 million cash. White River Nahcolite Minerals is an indirect, wholly owned subsidiary of IMC Chemicals Inc., a unit of IMC Global. Opened in 1991, the facility produces natural sodium bicarbonate, commonly called baking soda, through solution mining technology and has an annual capacity of about 100,000 short tons. Revenues for 2002 are estimated at $11 million. Sodium bicarbonate is used primarily in food, industrial, agricultural and pharmaceutical applications. The transaction is anticipated to close by the end of January 2003. "With this agreement to sell our sodium bicarbonate business, we have taken another important step toward the planned divestiture of our non-core IMC Chemicals business, which has been classified as a discontinued operation," said Douglas A. Pertz, Chairman and Chief Executive Officer of IMC Global. "We continue to actively pursue the sale of our remaining soda ash and boron businesses." With 2001 revenues of $2.0 billion, IMC Global is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. For more information, visit IMC Global's Web site at http://www.imcglobal.com As previously reported, Fitch Ratings has assigned a 'BB' rating to IMC Global Inc.'s new 11.25% senior unsecured notes due June 1, 2011. Fitch has affirmed the 'BB+' rating on the senior secured credit facility, the 'BB' rating on the existing senior unsecured notes with subsidiary guarantees and the 'B+' rating on the senior unsecured notes with no subsidiary guarantees. The Rating Outlook has been changed to Negative from Stable. INTEGRATED TELECOM: Court Denies Motion to Dismiss Case ------------------------------------------------------- Integrated Telecom Express, Inc., announced that the United States Bankruptcy Court for the District of Delaware denied the motion filed by the Company's former landlord and largest creditor to dismiss its bankruptcy case and to change the venue of the bankruptcy case to the United States Bankruptcy Court for the Northern District of California. The Company has proposed a plan of reorganization that would provide for the liquidation of the Company and distribution of substantially all of the Company's cash and assets. Prior to court approval of the plan of reorganization, the Company will solicit acceptances from its creditors and stockholders. At Sept. 30, 2002, the company's balance sheet shows $109 million in cash assets and $2.2 million in total liabilities. Headquartered in San Jose, California with worldwide branch and sales representative offices, Integrated Telecom Express is a leading innovator and provider of Asymmetric Digital Subscriber Line ("ADSL") chipsets, network protocol software and development tools to meet ADSL market demand. ITeX's products have been specifically designed to promote the rapid deployment of ADSL CO and CPE equipment. On October 8, 2002, the Company filed with the United States Bankruptcy Court for the District of Delaware a voluntary petition for relief under chapter 11 of title 11 of the United States Code. The Company's chapter 11 bankruptcy case was assigned to the Honorable Peter J. Walsh and will be administered under Case Number 02-12945. The Company is continuing to operate its business and manage its property as a debtor in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. J. CREW GROUP: December 2002 Revenues Up By 5.9% ------------------------------------------------ J. Crew Group, Inc. announced that revenues for the five weeks ended January 4, 2003 were $132.0 million compared to $124.6 million for the five weeks ended January 5, 2002, an increase of 5.9%. Comparable store sales for the Retail division declined 6.1% for the five weeks ended January 4, 2003 versus the comparable period last year. Net sales for the Direct division increased 11.9% for the comparable five week period. For the 48 weeks ended January 4, 2003, revenues were $732.6 million versus $742.1 million for the 48 weeks ended January 5, 2002, a decrease of 1.3%. Comparable store sales for the Retail division declined 10% for the 48 weeks ended January 4, 2003 versus the comparable period last year. Net sales for the Direct division decreased 3.9% for the comparable 48 week period. Ken Pilot, Chief Executive Officer, stated, "December sales results and increased conversion rates were primarily driven by improved customer service and higher markdowns versus a year ago. Importantly, we remain comfortable with our previous guidance for full year EBITDA. We're making progress on focusing our assortments and leveraging our multi-channel business, which will continue to be top priorities in the new year." J. Crew Group, Inc. is a leading retailer of men's and women's apparel, shoes and accessories. As of January 4, 2003, the Company operated 152 retail stores, the J. Crew catalog business, jcrew.com, and 43 factory outlet stores. * * * As previously reported, Standard & Poor's had lowered its corporate credit rating on J. Crew Group Inc., to single-'B'- minus from single-'B' based on the company's poor operating performance over the past 16 months and weakening credit protection measures. The outlook's negative. KAISER: Retired Employees Seek Reactivation to Core Group List -------------------------------------------------------------- Pursuant to the Order authorizing their appointment, the Official Committee of Retired Salaried Employees in the Chapter 11 cases of Kaiser Aluminum Corporation and its debtor- affiliates notifies the Court of its intention to be reactivated to the "Core Group List." The Retirees' Committee ceased its initial term on September 30, 2002. Frederick B. Rosner, Esq., at Jaspan Schlesinger Hoffman LLP, in Wilmington, Delaware, relates that, on November 19, 2002, the Debtors' Vice-President for Human Resources sent a letter to the salaried retirees about the establishment of January 31, 2003 as General Claims Bar Date. The Debtors' Vice-President also sent a Notice of the Bar Date and a Proof of Claim form. Unfortunately, not all of the salaried retirees received a copy of the letter, the Bar Date Notice and Proof of Claim form. In some cases, also, some retirees received a Notice of Bar Date and Proof of Claim form without the letter. Some received no documents at all. According to Mr. Rosner, the Debtors' Letter purports to assure retirees that they need not be concerned with the bar date, but it does not address: -- the rights to life insurance, which are retiree benefits that have been earned but will become owing in the future; -- the claims, if any, for prior reductions in benefits; or -- the legal basis for exemption of fully earned medical and pension benefits from the Bar Date. The Letter does not also advise retirees clearly whether they need to file a claim to preserve their right to benefits that would be paid in the future, if the Debtors further reduce retiree benefits. As a result, the Retirees' Committee has received and expects to continue to receive requests from the retirees for advice and information on whether or not they need to file Proofs of Claim and, if so, how they should do so in order to preserve their various retiree benefits. The Retirees' Committee believes that these matters need to be resolved on an urgent basis given the impending Bar Date. There are two sensible approaches to resolve the oversights and ambiguities in the Debtors' communications with retirees, Mr. Rosner says. A third approach is both wasteful of estate resources and unnecessarily alarming to retirees. The Retirees' Committee wants to avoid the wasteful approach. The two approaches are: 1. The Debtors could stipulate that all the retiree claims are preserved, specifying that no retiree need file a Proof of Claim at this time; or 2. Absent a stipulation, the Retirees' Committee could assist retirees in filing thousands of protective claims, causing great alarm among the retirees and a wasteful avalanche of filed claims. But this approach would also be incomplete, as the Retirees' Committee does not have current addresses for many retirees. The third approach would be to reactivate the Retirees Committee, to give it the power ordinarily provided to retirees committees "to enforce the rights of persons under [the Bankruptcy Code] as they relate to retiree benefits." This would enable the Retirees' Committee to file one timely Proof of Claim to protect all salaried retirees. Early in December, Mr. Rosner relates that he called the Debtors' lead reorganization counsel and left detailed messages on December 3 and December 9, 2002, proposing a stipulation without the reactivation of the Retirees' Committee. However, the calls have not been returned. This prompted to Retirees' Committee to file a notice of reactivation. Stipulation with Retirees Committee The Debtors reviewed the Notice of Reactivation filed by the Retirees' Committee and determined that they would not benefit from requiring 4,500 salaried retirees to file claims for retirement and pension benefits at this time. The Debtors note that their retired salaried employees are currently receiving a variety of retirement and pension benefits. Accordingly, the Debtors entered into a stipulation with the Retirees' Committee regarding the inapplicability of the General Bar Date to the salaried retirees' claims for retirement and pension benefits. Specifically, the Debtors and the Retirees' Committee stipulate and agree that: A. The claims by the retired salaried employees or active disabled salaried employees of any of the Debtors and their covered dependents, beneficiaries and heirs are exempt from the General Bar Date, to the extent those claims are for: (a) medical benefits, including unpaid medical benefit claims in process, retiree medical plan benefits, prescription drug program benefits, prescription drugs or custodial care option benefits, vision expense benefits, bankruptcy COBRA benefits or COBRA continuation benefits; (b) pension benefits under any defined benefit or defined contribution plan covering salaried employees, including unpaid deferred vested pension benefits and unpaid lump- sum pension benefit distributions; (c) retiree life insurance benefits; and (d) disability benefits, including long-term disability benefits; B. Any other claims of retired salaried employees against any of the Debtors, including, without limitation, the claims for benefits under the Kaiser Aluminum Supplemental Benefits Plan, long-term incentive amounts or severance, will not be exempt from the General Bar Date. The retired salaried employees who have received notice of the General Bar Date must file proofs of claim for any of the non-exempt claims on or before the General Bar Date; C. This Stipulation is without prejudice to the Debtors' right to seek Court approval, on notice to the Retirees' Committee, of a bar date with respect to any claims by the retired salaried employees or their covered dependents, beneficiaries or heirs for Medical Benefits, Pension Benefits, Retiree Life Insurance or Disability Benefits, should the Debtors conclude that it is necessary or appropriate to have that a bar date in these cases; and D. The 20-day notice period in the Reactivation Notice will be deemed tolled. The Notice will be deemed withdrawn upon Court approval of this Stipulation. (Kaiser Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392- 0900) KEMPER INSURANCE: S&P Cuts Ratings to BB+ over Management Change ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on the members of the Kemper Insurance Cos. Intercompany Pool and reinsured affiliates to 'BB+' from 'BBB-' because of unexpected changes in Kemper's senior management. Standard & Poor's also said that its lowered its subordinated debt rating on Lumbermens Mutual Casualty Co.'s $700 million surplus notes to 'B+' from 'BB'. The outlook on all these companies is negative. "The changes in Kemper's senior management, which were announced on December 30, 2002, contribute to some uncertainty as to the future direction of the company," explained Standard & Poor's credit analyst Frederic A. Sklow. "The recently announced retirement of Kemper's president and COO occurred at a time when the company is in transition. Standard & Poor's views the current senior management structure as an interim step, which-- when finalized--could result in a reassessment of decisions initiated by previous senior management." The members of the Illinois-based property/casualty pool are Lumbermens (77% of the pool), American Motorists Insurance Co. (15%), and American Manufacturers Mutual Insurance Co. (8%). The ratings on the pool members are based on the business position of Lumbermens, the pool's lead insurer. Lumbermens is one of the top 10 players in the U.S. workers' compensation market. Kemper remains committed to maintaining balance-sheet strength, customer focus, and a strong workers' compensation franchise. Kemper is exposed to execution risk as it exits business units that account for a significant part of its book. Kemper had a 9% share of the U.S. workers' compensation market in 2001 based on net premiums written. Kemper has been working to leverage its strong brand name in the workers' compensation market to build a foothold into the excess casualty market. At the same time, it is looking to broaden its product line and reduce its dependence on workers' compensation. Standard & Poor's considers this is an effective strategy given that the workers' compensation market is experiencing significant rate increases, intense competitive pressures, modification to underwriting practices, and reserve-adequacy questions. KMART CORP: Court Approves S&P Corporate Value's Engagement ----------------------------------------------------------- Kmart Corporation and its affiliate debtors sought and obtained the U.S. Bankruptcy Court for the Northern District of Illinois' authority to employ Standard & Poor's Corporate Value Consulting, a division of The McGraw-Hill Companies, Inc. as valuation consultant to appraise their tangible and intangible assets as necessary for their emergence from Chapter 11. CVC will estimate the value of the Debtors' other tangible and intangible assets that will not be covered by the valuation analyses to be conducted by Miller Buckfire Lewis & Co. LLC, Abacus Advisory & Consulting Corp., LLC and Rockwood Gemini Advisors. In particular, CVC's analysis will include the valuation of the Debtors' tangible and intangible assets, including but not limited to: (i) the furniture and fixtures at 1,800 stores, and the Debtors' headquarters and distribution centers; (ii) all leasehold improvements at leased stores and leased distribution centers; (iii) Kmart-related brand rights like names and marks; (iv) key brand license agreements; (v) the pharmacy lists at 1,300 stores; (vi) proprietary software; (vii) Kmart.com and Bluelight.com domain names; (viii) certain contractual agreements; and (ix) the Debtors' equity interest in the Meldisco subsidiaries of Footstar, Inc., which operate footwear departments in Kmart stores. Upon completion of its valuation analysis, CVC will provide the Debtors with a final report on its findings. The Debtors will compensate CVC for its services in accordance with its customary hourly rates. The Debtors will also refund the firm its necessary out-of-pocket expenses. CVC's hourly rates are: Professional Rate ------------ ---- Managing Director $395 Director 375 Manager 325 Senior Associate 245 Associate 175 Analyst 110 Administrative 50 (Kmart Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) LUCENT TECH: Will Host Webcast to Discuss Q1 Results on Jan. 22 --------------------------------------------------------------- Lucent Technologies (NYSE: LU) invites investors and others to listen to its quarterly results conference call to be broadcast live over the Internet on Wednesday, Jan. 22, 2003, at 8:30 a.m. EST. What: Lucent Technologies First Fiscal Quarter 2003 Financial Results Conference Call When: Wednesday, Jan. 22, 2003, 8:30 a.m. EST Where: http://www.lucent.com/investor/conference/webcast How: Simply log on to the Web at the address above, then click on the "audio" button The call will be available for replay on Lucent's Web site through Jan. 29, 2003, at: http://www.lucent.com/investor/conference/webcast Lucent Technologies, headquartered in Murray Hill, N.J., USA, designs and delivers networks for the world's largest communications service providers. Backed by Bell Labs research and development, Lucent relies on its strengths in mobility, optical, data and voice networking technologies as well as software and services to develop next-generation networks. The company's systems, services and software are designed to help customers quickly deploy and better manage their networks and create new, revenue-generating services that help businesses and consumers. For more information on Lucent Technologies, visit its Web site at http://www.lucent.com Lucent Technologies' 7.700% bonds due 2010 (LU10USR1), DebtTraders says, are trading between 32 and 35. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LU10USR1for real-time bond pricing. LUMENON: Will Likely File If Unable to Restructure Notes -------------------------------------------------------- Lumenon Innovative Lightwave Technology Inc.'s Canadian unit received court approval granting it protection from its creditors, Dow Jones reported. Lumenon's LILT Canada Inc., unit had filed a petition under the Canadian Companies' Creditors Arrangement Act with the Superior Court of Quebec. All of Lumenon's operations and activities are performed through LILT. In a press release on January 8, 2003, Lumenon said the deterioration and the continuing uncertainty in the telecommunications sector made it "extremely" difficult to obtain adequate financing to allow it to continue its operations. If Lumenon fails to restructure its obligations under the notes or if the noteholders exercise the default remedies that they are entitled to exercise upon a default under the notes, Lumenon will be required to seek protection under chapter 11 of the U.S. Bankruptcy Code, Dow Jones reported. (ABI World, Jan. 9) N2H2: First Quarter 2003 Results Webcast Scheduled for Jan. 23 -------------------------------------------------------------- N2H2 Inc. (OTC: NTWO) announces the following Webcast: What: N2H2 Inc. First Quarter 2003 Results Webcast When: 01/23/03 @ 5:00 p.m. Eastern Where: http://www.firstcallevents.com/service/ajwz371807857gf12.html How: Live over the Internet -- Simply log on to the web at the address above. Contact: David Burt, Public Relations Manager, +1-206-892-1130, or dburt@n2h2.com If you are unable to participate during the live webcast, the call will be archived at http://www.n2h2.com N2H2 is a global Internet content filtering company. N2H2 software helps customers control, manage and understand their Internet use by filtering Web content, monitoring Internet access and delivering concise reports on user activity. These safeguards enable organizations of any size to limit potential legal liability, increase user productivity and optimize network bandwidth. N2H2's Bess and Sentian product lines are powered by N2H2's premium- quality filtering database -- a list consistently recognized by independent and respected third-parties as the most effective in the industry. Based in Seattle, WA and serving millions of users worldwide, N2H2's software products are Cisco Verified, Microsoft Gold Certified and Check Point OPSEC compliant and are available for major platforms and devices. Additional information is available at http://www.n2h2.comor 206-336-1501 or 800-971-2622. * * * The company's September 30, 2002 Form 10K filing states: "If we are unable to achieve profitability as planned, we may need additional funding to continue operations. We may be unable to obtain additional funding and any funding we do obtain could dilute our shareholders' ownership interest in N2H2. Our future revenues may be insufficient to support the expenses of our operations and the expansion of our business. We may therefore need to raise additional capital to finance our operations. If we cannot raise funds on acceptable terms, we may not be able to develop or enhance our products and services, take advantage of future opportunities or respond to competitive pressures or unanticipated requirements. In addition, if we cannot raise funds on acceptable terms and do not achieve profitability, we may be forced to reduce or cease operations. We believe that our existing cash and cash equivalents will be sufficient to meet our capital requirements for at least the next 12 months. However, we may seek additional funds before that time through public or private equity financing or from other sources to fund our operations and pursue our business strategy. We have no commitment for additional financing, and we may experience difficulty in obtaining additional financing on favorable terms, if at all. The recent delisting of our common stock from the Nasdaq National Market, and commencement of trading on the OTC-BB may also make it even more difficult for us to obtain financing. Further, if we issue additional equity securities, shareholders may experience significant dilution, and the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. We have a history of losses and may not achieve profitability, which could force us to reduce or cease operations. We have incurred net losses in each quarter since we incorporated in 1995. We incurred net losses of $881,000 for 1997, $2.6 million for 1998, $7.7 million for 1999, $39.3 million for 2000, $35.5 million for 2001 and $6.6 million for 2002. If we fail to achieve and maintain profitability, our stock price will decline, our future capital raising efforts will be impaired and we may be forced to reduce or cease operations. Our recent restructuring initiatives have reduced our costs and operating expenses. However, despite these initiatives, our operating expenses will continue to consume a significant amount of our cash resources in the near term. In addition, the restructuring may adversely affect our business and operating results. As a result, we will need to significantly increase our revenues in order to achieve profitability. Although our revenues have grown in recent quarters, we may not be able to continue this growth to achieve or maintain profitability. Our continued losses and financial condition may cause some of our potential customers to question our viability, which may hamper our ability to sell our products." As of September 30, 2002, the company's balance sheet posted total assets of $8,635,000 against total liabilities of $10,407,000. NAT'L CENTURY: Taps Williams & Prochaska as Litigation Counsel -------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates seek the Court's authority to employ Williams & Prochaska, PC as special litigation counsel in these Chapter 11 cases, pursuant to Section 327(e) of the Bankruptcy Code and Rule 2014 of the Federal Rules of the Bankruptcy Procedure, nunc pro tunc to October 8, 2002. The Debtors anticipate that W&P will render litigation services in certain pending matters in the State of Tennessee and other additional matters that may arise in the State of Tennessee during the course of these Chapter 11 cases. Since July 28, 1999, W&P has represented the Debtors as creditors in various bankruptcy matters, most significantly in the Medshares Cases in the U.S. Bankruptcy Courts for the Western District of Tennessee. The Medshares Cases involve healthcare receivables the Debtors purchased in aggregate amounts exceeding $100,000,000. W&P has represented the Debtors in numerous matters arising during the more than three years that the Medshares Cases have been pending, including, but not limited to: a) the entry of orders approving the Debtors' sale and subservicing agreements on a postpetition basis under Sections 363 and 364 of the Bankruptcy Code; b) the resolution of discovery litigation; c) the replacement of Medshares management; d) the proposal of plans of reorganization; and e) a negotiated sale of Medshares' assets, which has yet to be submitted to the Court under Section 363 of the Bankruptcy Code, or to be consummated. W&P also represented the Debtors in the State Court litigation captioned, "Columbia/HCA Healthcare Corporation v. Medshares Consolidated, Inc. and National Century Financial Enterprises, Inc." that is pending in the Chancery Court of Davidson County, Tennessee. In this case, the plaintiffs are asserting claims exceeding $10,000,000. In addition, W&P has represented the Debtors in additional matters and assisted the Debtors' attorneys in developing legal strategies and writing briefs, which include: (a) issues involving the sale/finance of Medicare and Medicaid accounts, including the purported "anti- assignment" provisions of the Social Security Act and related regulations; (b) issues surrounding asserted government claims, including governmental "singular-entity" theories; (c) bankruptcy and postpetition financing issues; and (d) the operation of Article 9 of the Uniforms Commerce Code with respect to the sales and finance of medical Receivables and other collateral. Joseph M. Witalec, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, informs the Court that the Debtors have retained Jones, Day, Reavis & Pogue as counsel and Bricker & Eckler, LLP as special litigation counsel and may file applications to hire additional law firms as special counsel for other identified projects. Because of Jones Day and Brickler & Eckler's well- defined roles as counsels to the Debtors, Mr. Witalec assures Judge Calhoun that W&P and any additional special counsel will not duplicate the services that they provide to the Debtors. Mr. Witalec contends that W&P is well qualified to represent the Debtors in Tennessee bankruptcy and litigation matters involving the Debtors' purchase or financing of healthcare receivables and the preservation of those receivables. Specifically, Ernest B. Williams, IV, Managing Shareholder of W&P, has represented many healthcare receivable financiers acting as creditors both inside and outside of bankruptcy. Mr. Williams has lectured extensively on the subject of financing healthcare receivables and has written articles and course materials on the subjects of financing and the preservation and collection of healthcare receivables in bankruptcy. Moreover, Mr. Williams formed what is now the healthcare bankruptcy subcommittee of the American Bar Association Business Section, Business Bankruptcy Committee, and assisted the drafters of the new Article 9 of the UCC with respect to healthcare receivables. Furthermore, W&P is familiar with the Debtors' sales and subservicing agreements and other existing agreements, and has conducted evidentiary hearing based on these documents. W&P is familiar with issues concerning reimbursement of accounts receivable by third party obligators, the factoring of healthcare receivables and the various legal and regulatory matters concerning the operation of healthcare providers. In addition, W&P members are duly licensed to practice before District Courts for the Middle, Western and Eastern Districts of Tennessee, the U.S. Court of Appeals for the Sixth Circuit and the U.S. Supreme Court. Mr. Witalec reports that, as compensation for the services, W&P intends to: -- charge for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date services are rendered; -- seek reimbursement of actual and necessary out-of-pocket expenses. Currently, W&P's hourly rates of its professionals are: Professional Position Rate ------------ -------- ---- Connie M. Bembrey paralegal $95 Michael Bursi attorney 235 Victoria Ferraro attorney 150 Allison C. Hill paralegal 95 Tiffany Israel paralegal 70 Anna K. Maggard paralegal 95 Shelly Miles paralegal 55 Joseph R. Prochaska attorney 235 Harris P. Quinn attorney 250 Jacqualine Recht attorney 150 Margaret Samples paralegal 95 Diane C. Spears attorney 185 Randall J. Spivey attorney 150 Sabin T. Thompson attorney 250 Vicki Thompson paralegal 95 Ernest B. Williams, IV attorney 250 Mr. Witalec notes that W&P's hourly rates may change from time to time in accordance with their established billing procedures. Accordingly, W&P will maintain detailed records of time and any actual expenses incurred in rendering legal services. During the 12 months prior to the Petition Date, Mr. Witalec says, W&P has received payments amounting to $710,880 from the Debtors for compensation and reimbursement. They also hold a $10,000 prepetition retainer. Joseph R. Prochaska, Esq., Managing Shareholder of W&P, assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code because: (a) W&P does not represent, and has not represented, any entity other than the Debtors in matters related to these Chapter 11 cases; (b) Prior to the Petition Date, W&P performed certain legal services for the Debtors. After reconciliation of the prepetition payments and the completion of any necessary adjustments to the amount and application of retainer proceeds, W&P does not believe that it will be owed any outstanding prepetition amounts by the Debtors; (c) From time to time, W&P likely has represented, and likely will continue to represent, certain other creditors of the Debtors and various other parties actually or potentially adverse to the Debtors in matters unrelated to the Debtors or these Chapter 11 cases. Mr. Prochaska also informs the Court that W&P had researched its client database to determine whether it had any relationship with any parties-in-interest in these cases. However, because the Debtors are a large enterprise, W&P is unable to state with certainty that every client representation has been disclosed. Thus, if W&P discovers additional information, W&P will file a supplemental disclosure with the Court. W&P intends to apply to the Court for payment of compensation and reimbursement of expenses in accordance with applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules of the Court. (National Century Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONAL STEEL: Settlement Pact with Russel Parties Approved ------------------------------------------------------------ National Steel Corporation, together with its debtor-affiliates ask the Court to approve their settlement agreement with Robert E. Russell, Molten Steel Products, Inc., and Steel Services & Specialties, Inc., which compromises their claims against the Russell Parties. Mark P. Naughton, Esq., at Piper Rudnick, in Chicago, Illinois, explains that the claims arise out of Mr. Russell's entry of a guilty plea on July 23, 2002 before the U.S. District Court for the Southern District of Illinois to one count of mail fraud and one count of false tax return, in connection with a bribery scheme against National Steel. In pleading guilty, Mr. Russell, whose companies supplied raw materials to National Steel, confessed that he paid a high-ranking officer at National Steel $991,763 in bribes between 1994 and 1999 to help secure National Steel business for the Russell Parties. National Steel had urged the U.S. Attorney's Office and the U.S. Probation Office to seek $3,553,742 in criminal restitution for National Steel from Mr. Russell. The restitution charges consist of three categories of damages: (a) $991,763 for the illegal kickbacks bestowed on the National Steel employee, which National Steel would otherwise have obtained in the form of a discount on the materials it purchased from the Russell Parties; (b) $1,374,719 for cost incurred to employ the NSC officer during his years of disloyalty; and (c) $1,187,260 for the Debtors' cost of lost use of funds as a result of the bribery scheme. Russell vigorously opposed the restitution claim, arguing that: (1) the claims for the cost the Debtors incurred as a result of the employment of the disloyal officer and the cost of lost use of funds as a result of the bribery scheme were not appropriate under restitution statutes; (2) he is entitled to set off the Debtors' claims for the illegal kickbacks based on his prepetition and administrative claims against NSC; and (3) he is entitled to a further set-off as a result of the Debtors' January 2001 settlement, worth at least $3,000,000, with the officer receiving the bribes. Based on the arguments presented by the National Steel and the Russell Parties, the Probation Office subsequently informed the sentencing court that it recommended $991,773 in criminal restitution to National Steel and that it was not aware of statutory authority to support the rest of National Steel's claims for damages. Mr. Naughton relates that National Steel and the Russell Parties have decided to enter into a settlement agreement as an alternative to litigating their claims and defenses. The pertinent terms of the Settlement Agreement include: -- The Russell Parties will cause to be paid by wire transfer to National Steel in immediately available funds the sum of $2,200,000 to be paid in three installments: (1) $1,000,000 was paid on December 13, 2002 as the first installment; (2) $750,000 will be paid on January 31, 2003 as second installment; and (3) $450,000 will be due by May 31, 2003 as final installment. The Settlement Amount will be reduced to $2,175,000 if the Russell Parties make their final payment by January 31, 2003; -- Any payments will be held in an interest-bearing trust account by Williams & Connolly LLB, National Steel's counsel pending Bankruptcy Court Approval; -- Within five business days after receiving the full payment of each of the Second and Third Installments, National Steel will return to the Russell Parties' counsel a letter of credit securing the installment for which the payment was made; -- The Russell Parties will cooperate fully with National Steel in any litigation to the subject matter of Mr. Russell's guilty plea. The Russell Parties also waive any and all claims against National Steel; and -- National Steel will not seek further restitution from any Russell Party relating to the subject matter of the Plea. Mr. Naughton contends that the Settlement Agreement provides the Debtors and their estates with substantial benefits because: (i) National Steel will recoup a substantial portion of its actual damages pursuant to the Russell Parties' obligation to make substantial restitution; (ii) While National Steel believes that the likelihood of success in the underlying litigation is high, the Settlement Agreement provides for prompt payment of a substantial portion of the amounts it claimed; (iii) The Settlement requires the Russell Parties to cooperate in connection with any other litigation involving the misconduct; (iv) The parties will exchange mutual releases; and (v) The Settlement avoids the uncertainty, risk and expense associated with the litigation of National Steel's claims against the Russell Parties. To date, National Steel has incurred considerable expense prosecuting these. National Steel believes it is likely to incur other significant expense if not for the Settlement. For these reasons, the settlement should be approved. (National Steel Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) NATIONAL STEEL: USWA Supports U.S. Steel's Buyout Offer ------------------------------------------------------- The United Steelworkers of America (USWA) reacted positively to the opportunity that it said U. S. Steel's (NYSE: X) offer to buy the assets of National Steel presents for the Union to continue playing a leading role in the consolidation process, similar to the one that led to the International Steel Group's (ISG) announcement earlier this week that it will purchase the operating assets of Bethlehem Steel. The Union said that the U. S. Steel offer provides an attractive alternative in the event National is unable to emerge from bankruptcy as a strong, viable stand-alone company. "While the USWA will continue to work on a stand-alone plan for reorganization," said USWA international president Leo W. Gerard, "we have been strong advocates for consolidation for a long time. Should consolidation prove to be the better alternative for our members, our long relationship with U. S. Steel will be helpful in building upon the consolidation process that got a major boost with ISG's offer to buy Bethlehem." Gerard stated that the principles for a humane consolidation in the American steel industry were set by the USWA's Basic Steel Industry Conference (BSIC). In its policy statements, the union has encouraged negotiations with distressed companies by buyers committed to adequately capitalizing steel- making operations and growing a strong domestic steel industry in the U.S. The USWA has already reached a tentative agreement with ISG, which had previously purchased the steelmaking assets of LTV Steel. The tentative agreement with ISG establishes industry- leading wages, pensions and profit sharing, broadens worker input into production decisions, establishes ground- breaking company commitment to maintain, operate and invest in domestic steel operations and to maintain prudent debt levels, maintains strong limits on outside contracting, creates a new training program directed by the Union, which will rectify years of neglect, and funds health care for current and future retirees. "These fundamental improvements in the structure of labor- management relations will provide better pay, more secure retirement and greater long- term employment security for our members while increasing productivity and profits," Gerard said. "We look forward to discussing the progress we have already made in the ISG negotiations with U. S. Steel as it pursues purchasing National." In the meantime, the Union said, it will continue working with National's management on a stand-alone plan of reorganization. DebtTraders reports that National Steel Corp.'s 9.875% bonds due 2009 (NSTL09USR1) are trading between 50 and 65. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NSTL09USR1 for real-time bond pricing. NATIONSLINK: Fitch Affirms Certain Series 1999-1 Note Ratings ------------------------------------------------------------- NationsLink Funding Corp.'s pass-through certificates, series 1999-1, are upgraded by Fitch Ratings as follows: $64.2 million class B to 'AA+' from 'AA', $61.1 million class C to 'A+' from 'A' and $67.2 million class D to 'BBB+' from 'BBB'. In addition, the following classes are affirmed by Fitch: $137 million class A-1, $659.7 million class A-2, and interest-only class X are affirmed at 'AAA', $9.2 million class G at 'BB-' and $30.6 million class H at 'B'. Fitch does not rate classes E, F, J and K. The rating affirmations follow Fitch's annual review of the transaction which closed in August 1999. The upgrades are primarily due to loan amortization and the continued strong performance of the transaction. The certificates are collateralized by 330 fixed-rate mortgage loans. The most significant property type concentrations are multifamily (32%) and retail (25%). The properties are located in 34 states, with a significant concentration in CA (30%). As of the December 2002 distribution date, the pool's aggregate principal balance has been reduced by 5% to $1.16 billion from $1.22 billion at closing. There has been one realized loss in the transaction, totaling $1.7 million. ORIX, the master servicer, collected year-end 2001 property financial statements for 96% of the loans by principal balance. Based on these borrower provided financials, the pool's 2001 weighted average debt service coverage ratio (DSCR) increased to 1.81 times up from 1.70x YE 2000 and 1.49x at issuance. 33 loans (10%) were reported to be on the master servicer watchlist. Of these, only four loans (5%) were found to be of concern. In addition, there are currently five loans (1%) in special servicing. Of the specially serviced loans, four are current, and one is 60 days delinquent. The Aplex Building, an industrial property located in Sunnyvale, CA, with a current loan balance of $4.6 million, representing 0.4% of the pool, is 60 days delinquent. The loan transferred to the special servicer because two consecutive loan payments were missed. The special servicer is confident that the loan will be brought current by the borrower. Five loans (3%) reported YE 2001 DSCRs below 1.0x. Fitch Ratings obtained a copy of the document exception report from Wells Fargo, the trustee, and found one loan (3%) with a document defect. Fitch modeled the transaction taking into account the specially serviced loans, loans below 1.0x and other loans of concern assuming they would default. Based on this analysis and the transaction's improved performance, upgrades to certain classes were warranted. Fitch will continue to monitor this transaction, as surveillance is ongoing. NETZEE INC: Terminates SEC Reporting and Proceeds to Liquidate -------------------------------------------------------------- Netzee, Inc. (OTCBB:NETZ), announced that it filed a Form 15 with the SEC terminating Netzee's obligation to file periodic and current SEC reports. As a result, prices for Netzee's common stock will cease to be quoted on the OTC bulletin board. As previously announced, Netzee recently completed the sale of substantially all of its assets to a subsidiary of Certegy Inc. and will proceed to liquidate and dissolve Netzee. As previously announced, Netzee intends to make a liquidating distribution to holders of Netzee common stock of up to $0.50 per share in the liquidation. Netzee intends to begin its liquidation and commence dissolution proceedings as soon as practicable. OWENS CORNING: Inks Stipulation Resolving Crompton Corp.'s Claim ---------------------------------------------------------------- Prior to the Petition Date, Owens Corning, together with its debtor-affiliates and Crompton Corporation were parties to a Purchase Agreement dated January 1, 1990, by which Crompton agreed to sell and deliver to the Debtors, and the Debtors agreed to purchase from Crompton, certain products. By virtue of an amendment to the Purchase Agreement dated July 12, 1999, Crompton became obligated to pay to Owens Corning certain rebates amounting to $250,000 per quarter; provided, however that these rebates were payable only after Owens Corning's performance. As of the Petition Date, the Debtors owed Crompton $1,197,907.81 on account of product purchases. The Debtors also assert that it was owed $250,000 by Crompton on account of unpaid rebates. Crompton asserted a $1,197,907.81 proof of claim and a $353,198.58 reclamation claim against the Debtors, under which Crompton seeks the return of products that allegedly was delivered to the Debtors before the Petition Date. On February 15, 2002, the Debtors sought to allow the Crompton Reclamation Claim as a $113,075.83 administrative expense priority claim. The Debtors also asked the Court to deny the administrative expense priority status for the remainder of the Compton Reclamation Claim on several bases, including the assertion that certain of the product subject to the claim was either wholly or partially consumed as of the date the Crompton Reclamation Claim was made. The Debtors and Crompton have discussed this issue, as well as the assumption or rejection of the Purchase Agreement and have agreed on a resolution of the Reclamation Motion as well as the assumption of the Purchase Agreement on these terms: A. The Debtors will be authorized and directed to assume the Purchase Agreement in exchange for a $405,497 "cure" payment; B. The assumption of the Purchase Agreement will resolve any and all issues relating to the Debtors' Reclamation Motion and the Crompton Reclamation Claim and no additional amount will be payable to Crompton on account of the Crompton Reclamation Claim; C. Crompton will file an amended proof of claim indicating that the amended amount of the Crompton Proof of Claim is $0; D. The modified Purchase Agreement will no longer be subject to timely appeal once approved by the Court and will supersede and replace the Purchase Agreement and will become the agreement governing the relationship between the parties; E. The stipulation resolves all outstanding claims that existed as of the Petition Date between the Debtors and Crompton including without limitation those related to the Crompton Proof of Claim and the Crompton Reclamation Claim; provided, however, that the Debtors will retain any and all claims against Crompton on account of any warranties provided in connection with the product purchased by the Debtors from Crompton; and F. After receipt by Crompton of the Cure Amount, the Reclamation Motion, insofar as it relates to the Crompton Reclamation Claim, will be deemed settled and resolved. (Owens Corning Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) PACIFIC GAS: Wants Exclusive Period Extended through April 30 ------------------------------------------------------------- Pacific Gas and Electric Company, and its debtor-affiliates ask the Court to further extend the period during which it maintains plan exclusivity pursuant to Section 1121(c)(3) of the Bankruptcy Code -- except with respect to the California Public Utilities Commission and the Official Committee of Unsecured Creditors -- until April 30, 2003. Although no other party has formally sought to file a competing Chapter 11 plan, PG&E believes that if another party were to fie a plan at this time, it would be both confusing and counterproductive. There are now two competing Chapter 11 Plans for which the Court has approved the Disclosure Statements, for which balloting has been completed, and for which the confirmation hearing is still ongoing. Gary M. Kaplan, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, points out that, among other things, it would be impossible for another plan to be included on the same time track as the PG&E Plan and CPUC Plan, and would serve no useful purpose. Mr. Kaplan reminds Judge Montali that during the June 27, 2002 Hearing on PG&E's most recent motion to extend exclusivity, the Court even stated that: "I do think there would be some unnecessary disruption and confusion to have a wholesale invitation for anyone to file a plan who feels a need to do so . . . . And so I think I will leave the burden on other plan proponents at this time to come to court and show why they -- it or they ought to be entitled to break the exclusivity that I will continue for the debtor . . . . [I]f there is a serious proponent who wishes to file a plan, I will be willing to take a request to break exclusivity on an expedited basis." Mr. Kaplan further contends that the sheer size and complexity of PG&E's Chapter 11 case is enough "cause" to extend the Plan Exclusivity Period. The PG&E case involves tens of billions of dollars of assets and claims of more than 13,000 creditors. The case is also exceedingly complex, based on PG&E's status as a utility company subject to a myriad of state and federal statutes, rules and regulations, and the fact that PG&E continues to grapple with the effects of an unprecedented energy crisis. Mr. Kaplan assures Judge Montali that the requested extension will protect this process while the PG&E Plan confirmation efforts are concluded, which could take several months. "There is nothing to suggest that PG&E seeks the requested extension in order to pressure its creditors to accede to its reorganization demands," Mr. Kaplan says. "Rather, PG&E has continued to diligently work the plan confirmation process, in an effort to accelerate the resolution of this case for creditors and other interested parties as quickly as possible." The Court will convene a hearing on January 22, 2003 to consider PG&E's request. Accordingly, Judge Montali extends PG&E's exclusive filing period until the conclusion of that hearing. (Pacific Gas Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 609/392-0900) PERMAGRAIN PRODUCTS: Creditors Meeting Tomorrow in Philadelphia --------------------------------------------------------------- The United States Trustee will convene a meeting of Permagrain Products, Inc.'s creditors on January 14, 2003, at 10:00 a.m., at the UST's office in Philadelphia, located in The Curtis Center, Room 950 West, at 9th and Walnut Streets. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Permagrain Products, Inc., operated a flooring manufacturing business and used radioactive cobalt-60 to mold plastics with wood to harden and extend the life of commercial flooring. The company ceased operations November 11, 2002. The Company filed for Liquidation under Chapter 7 of the Bankruptcy Code on December 17, 2002 in the U.S. Bankruptcy Court for the Eastern District of Pennsylvania. Jeffrey Kurtzman, Esq., at Klehr, Harrison, Harvey, Branzburg & Ellers LLP represent the Debtor as it winds up its operations. REMINGTON ARMS: S&P Assigns B+ Corporate Credit Rating ------------------------------------------------------ Standard & Poor's Rating Services assigned its 'B+' corporate credit rating to Remington Arms Co. Inc. At the same time, Standard & Poor's assigned its 'B-' rating to the company's $175 million senior notes due 2011. The outlook is stable. Madison, North Carolina-based Remington had pro forma total debt of $274 million, including $30 million of RACI Holding Inc. debt, as of September 30, 2002. "The firearms and ammunition industry has mature growth prospects reflecting long product life cycles, industry regulation, and safety concerns. The company's EBITDA has been relatively flat since 1998 reflecting the mostly trade-up nature of demand and the weak economy," said Standard & Poor's credit analyst Andy Liu. "Competition in the ammunition segment is intense, and is based largely on price, with two other major players in the industry. Regulatory proposals regarding gun control, even if never enacted, may affect consumer perceptions and sales prospects," added Mr. Liu. The hunting and shooting sports business is expected to exhibit mature growth over the intermediate term. Standard & Poor's expects that the company will restrain future dividends to levels that maintain appropriate credit measures for the current ratings. Remington is the only major U.S. manufacturer of both firearms and ammunition, which reinforces its strong brand name. The company is the leading U.S. rifle manufacturer, the second- largest shotgun maker, and the largest producer of ammunition. Standard & Poor's analyzes RACI Holding Inc. and its Remington Arms operating subsidiary on a consolidated basis due to Remington Arms' obligation to service $30 million of holding company notes. RENT-WAY: S&P Further Junks Corp. Credit & Bank Loan Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services lowered its corporate credit and bank loan ratings on Rent-Way Inc. to 'CCC' from 'CCC+'. Standard & Poor's also removed the ratings from CreditWatch with negative implications. The outlook is developing. The Erie, Pa.- based company had $277 million of debt outstanding on the bank loan as of Sept. 30, 2002. "The rating action is based on our ongoing concern about Rent- Way's ability to refinance its bank loan that matures in December 2003 amid the uncertain outcome of federal investigations and class action lawsuits against the company," said Standard & Poor's credit analyst Robert Lichtenstein. "The ratings could be downgraded if the outcome of the investigations and lawsuits are to the detriment of the company, negatively impacting its ability to refinance its bank loan. However, if the company is able to refinance its bank loan or obtain cash from other sources, the ratings could be upgraded," added Mr. Lichtenstein. Improper accounting entries were made in fiscal 2000, 1999, and 1998 that overstated assets and income and understated liabilities and expense. The class action alleges that as a result of accounting irregularities, the company's previously issued financial statements were materially false and misleading. The lawsuits seek damages in unspecified amounts. In addition, there are pending federal governmental investigations by the SEC and the U.S. Attorney regarding the accounting irregularities. In an effort to improve its liquidity, the company entered into an agreement to sell 295 of its stores to Rent-A-Center Inc. for $101.5 million in cash. The transaction is expected to close in the second quarter of fiscal 2003. Proceeds from the sale will be used to pay down existing bank debt. Rent-Way is the second largest operator of rental-purchase stores in the U.S. Rent-Way rents name-brand merchandise, such as home entertainment equipment, computers, furniture, and appliances from 1,062 stores located in 42 states. SOLUTIA INC: Sees Loss in Fourth Quarter Operating Results ---------------------------------------------------------- Solutia Inc. (NYSE: SOI) indicated that fourth quarter earnings are expected to be a loss of approximately 20 cents per share, including a net charge of approximately 4 cents per share related to Solutia's interest in the Flexsys rubber chemicals joint venture. Operating results versus previous guidance were negatively impacted by weaker downstream markets, elevated raw material costs and reduced earnings from joint ventures. This estimate of fourth quarter results includes the operations of the resins, additives and adhesives businesses. These businesses will be reported in Solutia's Annual Report on Form 10-K for the period ended Dec. 31, 2002, as discontinued operations due to their pending sale to UCB S.A. "We continue to operate in a very difficult environment characterized by weak global demand and high raw material and energy costs," said Chairman and Chief Executive Officer John C. Hunter. "Despite these challenging business conditions, our focus on cash generation has allowed us to reduce overall debt by approximately $110 million over the prior year. We will continue to manage the company with a keen focus on cash generation and strengthening of the balance sheet, which will give us the flexibility to manage future business risk and uncertainty, while capitalizing on our commercial opportunities," Hunter noted. The fourth quarter charge associated with the Flexsys joint venture relates to the write-down of assets to fair market value at its Nitro, West Virginia, facility. This charge of approximately 4 cents per share represents Solutia's 50 percent interest in the results of operations of the joint venture. Solutia plans to discuss its earnings in greater detail at its fourth quarter earnings conference call on Friday, Jan. 31, 2003, at 9 a.m. central time. The teleconference will be webcast on its Web site at: http://www.solutia.com/pages/corporate/investors/investor_relati ons.asp under the presentations and speeches tab. Solutia -- http://www.Solutia.com-- uses world-class skills in applied chemistry to create value-added solutions for customers, whose products improve the lives of consumers every day. Solutia is a world leader in performance films for laminated safety glass and after-market applications; resins and additives for high-value coatings; process development and scale-up services for pharmaceutical fine chemicals; specialties such as water treatment chemicals, heat transfer fluids and aviation hydraulic fluid and an integrated family of nylon products including high-performance polymers and fibers. The Troubled Company Reporter's December 9, 2002 edition reports that Fitch Ratings has affirmed the ratings of Solutia Inc. Fitch currently rates Solutia's senior secured bank facility at 'BB-' and senior secured notes at 'B'. The Rating Outlook's Negative. Solutia had announced that it has signed a definitive agreement to sell its resins, additives and adhesives business to UCB S.A. for $500 million. Although the application of net sale proceeds toward debt reduction could be significant, Solutia would be loosing a solid EBITDA-contributing business and interest coverage may only be mildly affected. In addition, the company still faces challenging industry conditions and the unknown impact of the final resolution to ongoing polychlorinated biphenyl-related litigation. SYNSORB BIOTECH: Icoworks to Auction Pharmaceutical Mfg. Assets --------------------------------------------------------------- Paragon Polaris Strategies.com Inc. DBA Icoworks, Inc. (OTCBB:ICOW) and (ICOW.BE: BERLIN) announced that it will be conducting an auction for the complete liquidation of the biotech lab & pharmaceutical manufacturing equipment assets of Synsorb Biotech Inc.'s 30,000 square foot, state-of-the-art pharmaceutical manufacturing facility located in Calgary, Alberta. The auction will be held at 9:00 AM MST on January 15 and 16, 2002 at the Icoworks Services Ltd. auction facility located at 2020 Pegasus Rd NE, Calgary, Alberta, Canada. Over 1000 lots of late model biotech lab and pharmaceutical equipment will be auctioned, of which the majority was purchased and installed in 1998 and has seen limited use. Items can be previewed by downloading the Synsorb auction catalogue online at www.icoworks.com. "We are extremely pleased to have won the Synsorb contract. Millions of dollars worth of specialized equipment will be auctioned over two days, and bids will be coming in 'live' from around the world," stated Graham Douglas, President of Icoworks. As part of Icoworks' continued strategy to maximize auction item values and increase exposure, interested bidders will be able to bid on-site or online through Icoworks' live Internet auction partner, BidSpotter, Inc. BidSpotter has been involved in the setup, implementation, administration and reconciliation of consumer, industrial and real estate auctions around the world. To date, BidSpotter.com has provided webcast services to over 100 auction houses, has completed more than 400 successful live Internet auction webcasts and represents thousands of bidders from 87 different countries and every state in the USA. Paragon Polaris Strategies.com Inc. DBA Icoworks, Inc. has entered into a merger agreement to acquire Icoworks. Icoworks -- http://www.icoworks.com-- is an integrated Commercial/Industrial Auction company. Icoworks, through its subsidiaries, offers a complete array of industrial, oilfield and commercial appraisal, liquidation and auction services. Every Icoworks auction or liquidation benefits from many years of experience in the industry, and a corresponding network of almost 200,000 proven purchasers. As a private firm, they have a 25-year history of profitability, qualified experienced management, very good industry contacts and a high-quality reputation for finding qualified buyers for their sellers. THAON COMMS: Executes Reverse Split as Part of Restructuring ------------------------------------------------------------ Thaon Communications, Inc. (OTC Bulletin Board: THAO) announced that it is executing a 50 to 1 reverse split of its common stock effective at the opening of business on Friday, January 10, 2003 for all shareholders of record as of January 9, 2003. Also effective at the opening of business on Friday, January 10, 2003, Thaon's stock ticker symbol will change to "THON.OB". Thaon will have a total of approximately 2,684,312 shares of common stock outstanding after the split, allowing a slight variance for rounding. All fractional shares will be rounded up to the next whole share. Additionally, Thaon announced that its subsidiary, Prime Time Media Solutions, filed Chapter 7 bankruptcy on December 31, 2002. Thaon's President, Adam Anthony said, "These activities are part of our overall effort to get the company prepared to move forward with the acquisition we announced in September of last year. We have been pleased with the progress thus far and hope to complete the process in the near future." On October 7, 2002, Thaon announced that it had signed a Letter of Intent to acquire a medical billing and practice management company. According to the Letter of Intent, the Company has agreed to be acquired by Thaon under the condition that Thaon is able to resolve outstanding legal, creditor and capital structure issues to the satisfaction of the Company. TYCO INT'L: Using Cash to Purchase Convertible Debentures --------------------------------------------------------- Tyco International Ltd. (NYSE: TYC, BSX: TYC, LSE: TYI) announced its intent to purchase, through its wholly-owned subsidiary, Tyco International Group S.A., Tyco International Group's Zero Coupon Convertible Debentures due February 12, 2021 with cash. Under the terms of the debentures, Tyco has the option to pay for the debentures with cash, Tyco common shares, or a combination of cash and shares. Tyco has elected to pay for the debentures solely with cash. If all outstanding debentures are surrendered for purchase, the aggregate cash purchase price will be approximately $1,850,809,508. It is anticipated that debenture holders' opportunity to surrender debentures for purchase will commence on January 14, 2003, and will terminate on February 12, 2003. Under the terms of the debentures that may be surrendered for purchase, Tyco is required to pay for all debentures surrendered during such time period. On the date debentures may first be surrendered for purchase, Tyco will file a Schedule TO with the SEC and will give notice to debenture holders specifying the terms of Tyco's obligation to purchase the debentures. Debenture holders are encouraged to read these documents carefully before making any decision with respect to the surrender of debentures, because these documents will contain important information regarding the details of Tyco's obligation to purchase the debentures. Tyco International Ltd., whose Senior Unsecured Debt Rating was downgraded by Fitch to BB, is a diversified manufacturing and service company. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. DebtTraders reports that Tyco International Group's 6.875% bonds due 2002 (TYC02USR1) are trading at 96 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=TYC02USR1for real-time bond pricing. UNIFORET INC: Confirmation Hearing on CCAA Plan Set for March ------------------------------------------------------------- UNIFORET INC. and its subsidiaries, Uniforet Scierie-Pate Inc. and Foresterie Port-Cartier Inc. announced that the Superior Court of Montreal has fixed the hearing of their motion asking the Court to sanction and approve their amended plan of arrangement under the "Companies' Creditors Arrangement Act" from March 3 until March 14, 2003. The Company will issue a press release once judgment will have been rendered on its motion. The Company keeps on its current operations. Suppliers who provide goods and services necessary for the operations of the Company are paid in the normal course of business. Uniforet Inc. is an integrated forest products company which manufactures softwood lumber and bleached chemi-thermomechanical pulp. It carries on its business through its subsidiaries located in Port-Cartier (pulp mill and sawmill) and in the P,ribonka area in Quebec (sawmill). Uniforet Inc.'s securities are listed on The Toronto Stock Exchange under the trading symbol UNF.A, for the Class A Subordinate Voting Shares, and under the trading symbol UNF.DB, for the Convertible Debentures. UNITED AIRLINES: Honoring Prepetition Employee Obligations ---------------------------------------------------------- UAL Corporation/United Airlines Inc., and its debtor-affiliates sought and obtained Court approval to honor their prepetition obligations to their employees. The largest components of this request are: $225,000,000 for accrued prepetition wages, salaries, and overtime earned by the Debtors' current and former employees prior to the Petition Date; and $387,000,000 for accrued vacation days, sick days and personal holidays. Paying employees what they're owed, James H.M. Sprayregen, Esq., at Kirkland & Ellis says, is critical and necessary to United's restructuring. If United doesn't honor its prepetition employee obligations, the Company will be unable to retain its current employees and maintain positive employee morale. These are the two factors Judge Lifland deemed critical to the rehabilitation of Eastern Air Lines in In re Ionosphere Clubs, Inc., 98 B.R. 174 (Bankr. S.D.N.Y. 1989) (citing H.R. Rep. No. 595 95th Cong. 1st Sess. 16 (1977)), and has been recognized on Day One in every airline restructuring since that time. "Yes," Judge Wedoff said at the First Day Hearing, finding that the "necessity of payment" doctrine authorizes the Debtors to pay prepetition employee-related obligations and provide continued benefits to their workforce. Judge Wedoff sees that many employees live from paycheck to paycheck and rely exclusively on receiving their full compensation or reimbursement of their expenses to continue to pay their daily living expenses. These employees will be exposed to significant financial and health related problems if the Debtors are not permitted to pay certain of the unpaid reimbursable expenses and employee obligations, particularly wages, salaries and medical benefits. Judge Wedoff agrees that if United is unable to honor its employee obligations, employee morale and loyalty will be jeopardized at a time when employee support is critical. Employee uncertainty and anxiety needs to be minimized at this time when the Debtors need their employees to perform their jobs at peak efficiency. Subject to a $4,650 cap per employee, Judge Wedoff authorizes the Debtors to continue to pay wage, salary and other compensation in the ordinary course of business including the payment of prepetition obligations and authorizes the Debtors to continue to maintain their benefit programs, including the payment of prepetition obligations. (United Airlines Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) United Airlines' 10.670% bonds due 2004 (UAL04USR1), DebtTraders reports, are trading at 8 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. U.S. STEEL: Acquiring National Steel's Assets for $950 Million -------------------------------------------------------------- United States Steel Corporation (NYSE: X) has signed an Asset Purchase Agreement with National Steel Corporation to acquire substantially all of National's steelmaking and finishing assets for approximately $950 million, which includes the assumption of liabilities of approximately $200 million. Net working capital will account for at least $450 million of this amount. With these assets, U. S. Steel will have total annual raw steel production capability of approximately 25 million tons, making it the fifth largest steelmaker in the world. The transaction, which is targeted for completion early in the second quarter of 2003, is contingent on the successful negotiation of a new labor contract with the United Steelworkers of America, the approval of the bankruptcy court and other customary regulatory approvals. "The acquisition of these assets will be a significant step forward in our strategy to grow profitably and to strengthen our position as a leading global provider of high value-added steel products," said U. S. Steel Chairman Thomas J. Usher. "From the onset, the acquisition will enhance our ability to serve the current and future needs of our North American customers in key industries such as automotive, container, appliance and construction, while building upon our existing leadership position in these markets. "I believe this acquisition is also consistent with National's objective to develop a restructuring plan that is in the best interest of all its stakeholders and with the Bush administration's call for consolidation in the domestic steel industry." Based on a preliminary assessment, the company expects combined annual cost savings of approximately $170 million within two years of completing the transaction. These savings are expected to result from a number of actions including increased scheduling and operating efficiencies, the elimination of redundant overhead costs, the reduction of freight cost and the negotiation of an improved labor contract covering employees at the acquired National facilities. The transaction is expected to be accretive to U. S. Steel's earnings and cash flow within the first year. "The consolidation of National's assets into U. S. Steel will create real opportunities to improve product quality and customer service, to increase productivity and to earn an attractive return for our shareholders," added Usher. "But turning these opportunities into reality will require the efforts of all employees of the combined businesses. "We have had an ongoing dialogue with the Steelworkers union concerning our desire to participate in the consolidation process - a process that is necessary for the survival of the domestic steel industry. We know that the union is fully aware of National's difficult position and we are confident that they will recognize that this acquisition presents an excellent opportunity for the future of the National employees, their families, and their communities. We are convinced the Steelworkers union understands the need for change in the integrated industry's labor cost structure and that they are ready and able to provide leadership in effecting this necessary change. We believe that -- working together with the steelworkers and the other unions representing National's workers -- we will be able to make these facilities competitive and profitable in a post-201 environment." Under the terms of the APA, U. S. Steel will acquire the following: facilities at National's two integrated steel plants, Great Lakes Steel, in Ecorse and River Rouge, Michigan, and the Granite City Division in Granite City, Illinois; the Midwest finishing facility in Portage, Indiana, near Gary, Indiana; ProCoil Corporation in Canton, Michigan, and various other subsidiaries; and joint-venture interests including National's share of Double G Coatings, L.P. in Jackson, Mississippi. The $950 million transaction value will consist of $200 million of assumed liabilities, up to $100 million of U. S. Steel common stock, $25 million of which will be paid into an indemnity escrow account, and the balance in cash. U. S. Steel will not assume any liabilities related to pension or post-retirement benefit obligations for current National retirees and, consistent with the U. S. Bankruptcy Code, the transaction will exclude all liabilities except as have been agreed to by U. S. Steel. U. S. Steel intends to fund the cash component through a combination of existing cash balances, existing credit facilities, and the issuance of equity-linked and debt securities. As of December 31, 2002, U. S. Steel's liquidity totaled over $950 million. Under Section 363 of the Bankruptcy Code, several steps must be taken before completion of the asset purchase. National Steel will file a motion with the bankruptcy court within the next few days asking the court to approve the APA subject to establishment of a bidding procedure to allow other interested parties to bid on National's assets. National will ask the court to rule on this motion and establish a competitive bidding timeframe. U. S. Steel will use the competitive bidding period to negotiate with the United Steelworkers of America, and based on the outcome of the negotiations, will make a final decision on whether to proceed with the acquisition. The APA provides for fees of up to $15 million payable to U. S. Steel in the event the transaction does not occur under certain circumstances. JPMorgan is acting as financial advisor to U. S. Steel on this transaction. United States Steel Corporation is an integrated steel producer with annual raw steelmaking capability of 17.8 million tons. U. S. Steel is engaged in the production, sale and transportation of sheet, plate, tin mill and tubular steel mill products, coke, taconite pellets and coal; the management of mineral resources; real estate development; engineering and consulting services in the United States; and, through its subsidiary U. S. Steel Kosice, the production and sale of steel products and coke in Central Europe. In 2001, United States Steel Corporation generated revenues of $6.4 billion on worldwide steel shipments of 13.5 million tons and reported a net loss of $218 million. Through September 30, 2002, U. S. Steel had net income of $50 million on shipments of 10.9 million tons. National Steel Corporation is an integrated steel producer with annual raw steelmaking capability of 6.9 million tons. National Steel, with its principal executive offices in Mishawaka, Ind., is engaged in the production and sale of a wide variety of flat rolled steel products, including hot-rolled, cold-rolled, galvanized, tin and chrome plated steels. In 2001, National generated $2.5 billion of revenues on steel shipments of 5.9 million tons, all of which were flat rolled product. Its net loss for the year 2001 was $652 million. On March 6, 2002, National and 41 of its domestic subsidiaries filed for voluntary protection for relief under Chapter 11 of the Bankruptcy Code, in the U.S. Bankruptcy Court for the Northern District of Illinois. U.S. STEEL: On Watch Neg. over Planned Nat'l Steel Asset Buy-Out ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit rating on United States Steel Corp. on CreditWatch with negative implications following the company's announcement that it plans to acquire substantially all of bankrupt National Steel Corp.'s steelmaking and finishing assets. "Although the acquisition of National Steel would improve the United States Steel's market position and result in annual synergies of $170 million in two years", said Standard & Poor's credit analyst Paul Vastola, "Standard & Poor's is concerned that these benefits may be more than offset by weaker credit protection measures given the increase in debt leverage, declining steel prices and increasing pension costs at USS". Mr. Vastola added that the acquisition of National and the expected sale of United States Steel's more stable mining and transportation assets to Apollo Management LP would be somewhat detrimental to the company's business profile. Standard & Poor's said that in completing its review, it will monitor steel industry fundamentals and assess the impact of the acquisition as well as additional potential acquisitions on the company's financial profile. U.S. STEEL: Fitch Places Senior Debt Ratings on Watch Negative -------------------------------------------------------------- Fitch Ratings has placed the senior unsecured and senior secured debt ratings of U.S. Steel on Rating Watch Negative following the company's announced bid for certain assets of the bankrupt National Steel. Fitch currently rates the senior unsecured debt at 'BB' and the senior secured bank revolver at 'BB+'. This action contemplates higher leverage in combination with softening conditions in several of U.S. Steel's key markets as well as an added reliance on those markets to generate profits following the acquisition. Both U.S. Steel and National sell to service centers and direct into the automotive, construction and container industries. U.S. Steel's bid is tied to a satisfactory labor agreement. In concert with savings in selling, general and administrative expenses, and transportation, the business combination makes a reasonable argument that will strengthen U.S. Steel's position in the Midwest markets. U.S. Steel intends to finance the purchase price through a combination of equity, equity-related instruments, public, and bank debt. U.S. Steel's $800 million in bank facilities, secured by working capital, is undrawn. With the addition of National's working capital, U.S. Steel should not have any liquidity issues. VANGUARD HEALTH: S&P Downgrades Corp. Credit Rating to B from B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Vanguard Health Systems Inc.'s $150 million senior secured term loan due 2009. At the same time, Vanguard's existing corporate credit rating was lowered to 'B' from 'B+', and its subordinated debt rating was lowered to 'CCC+' from 'B-'. Vanguard's 'B+' senior secured debt rating was affirmed. The ratings have been removed from CreditWatch, where they had been placed on September 13, 2002. The outlook is stable. Vanguard Health's total outstanding debt, including the new term loan, is $450 million. "The ratings downgrade reflects Standard & Poor's concern about Vanguard's ability to earn a return consistent with a higher level of credit quality, considering the added debt to finance its acquisition of Baptist Health System in San Antonio, Texas," said Standard & Poor's credit analyst David Peknay. "The purchase of Baptist Health, a large five-hospital, not-for- profit system, cost Vanguard $295 million, and requires a capital expenditure commitment of $200 million over six years to upgrade the facilities." The secured bank facility is rated one notch higher than the corporate credit rating. The facility comprises a $125 million revolving credit facility and $150 million term loan. Possible additional borrowings under this agreement have been reduced, as a recent amendment eliminated a provision that made possible a significant increase in bank term debt outstanding. The facility is secured by first priority security interests in all tangible and intangible assets. Standard & Poor's review of the collateral package in a distressed default scenario suggests that estimated asset value will be sufficient to provide complete recovery of the full bank facility in the event of a default. The speculative-grade ratings on Nashville, Tennessee-based Vanguard Health systems reflect a portfolio of hospitals that has not been well diversified and that was built during the past three years primarily through a risky strategy of buying turnaround situations. With the completion of the Baptist Health System transaction, Vanguard now owns and operates 15 acute-care hospitals in Illinois, Arizona, California, and Texas. The majority of these hospitals were acquired from not-for-profit entities during the past three years. Vanguard is attempting to bolster the profitability of its newer operations by increasing the number of services offered, recruiting additional physicians, eliminating weak services, and rationalizing capital costs. However, the pace of improvement, which has been below Standard & Poor's expectations, highlights the competitive nature of Vanguard's markets and the challenge it faces to bolster its weak operating margins of 9% in 2002. WHEELING-PITTSBURGH: Overview of Chapter 11 Reorganization Plan --------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation and its debtor-affiliates present to the Court their Plan of Reorganization. The cornerstones of that plan are: * The Debtors re-invent themselves as a gussied-up mini-mill using scrap steel in an Electric Arc Furnace process, shutting down the Coke Batteries and one Blast Furnace by 2005; * The Debtors will sign a $250,000,000 New Term Loan Agreement under the Emergency Steel Loan Guarantee Program. For this, the Debtors will pay $7,500,000 in fees and expenses; * The Debtors will obtain a New Revolving Loan Agreement with advance rates and reserves similar to the DIP Facility; * $40,000,000 will be paid to prepetition creditors in cash; * The Debtors will issue New Secured Notes in the principal amount of $40,000,000 to prepetition creditors; * Postpetition financing from the States of Ohio and West Virginia, the Debtors' DIP Facility, and the WHX Loans are repaid; * $15,250,000 will be paid in reorganization expenses to cover professional fees, financing fees, mechanic's liens and other debts; * Administrative claims held by trade vendors and employees are paid according to the transaction and existing terms; * Settlement with Danieli and completion of roll- changing equipment; * Creation of new WPC Pension Plan; and * Creation of Management Incentive Plan. The Court will convene a hearing on February 7, 2003 to determine the adequacy of the information contained in the proposed Disclosure Statement. Objections to the Disclosure Statement must be filed by February 3, 2003. (Wheeling- Pittsburgh Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) WINDHAM COMMUNITY: S&P Cuts Bonds Rating to BB+ from BBB- --------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the Connecticut Health and Education Facilities Authority's bonds, issued for Windham Community Memorial Hospital, to 'BB+' from 'BBB-'. The downgrade reflects a significant drop in liquidity, to 52 days' operating expenses, in 2002; weaker operating and bottom line performance, generating debt service coverage of 1.7x; and a decline in the market value of pension investments, leading to a doubling of pension expense accrual in 2002 and 2003 and driving a $7 million reduction in net assets. A lower rating is precluded by the hospital's leading market position in its primary service area, with market share of 72%, and stable utilization. WORLDCOM: Court Okays Rejection of North Pacific Cable Pacts ------------------------------------------------------------ Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, informs the Court that many large telecommunications companies in the world are parties to the North Pacific Cable Construction and Maintenance Agreement dated February 2, 1989, as supplemented. Pursuant to the C&M Agreement, the parties built the North Pacific Cable, a fiber-optic cable originating in Japan connecting to the U.S. in Alaska and Oregon to provide a direct telecommunications link between the United States and Japan. Since the Petition Date, Worldcom Inc., and its debtor- affiliates have reviewed their network strategy and operating capacity, which is an ongoing, integral component of the Debtors' long-range business plan. In connection therewith, the Debtors determined that they do not require access to North Pacific Cable. Although NPC represented an important network route immediately following its construction, Ms. Goldstein contends that its utility has significantly diminished with the advent of other more advanced and cost-effective technology. In determining to terminate its access to NPC, the Debtors considered, network needs, overcapacity, costs and other inefficiencies, as well as the Debtors' ability to move traffic to alternative network sources in a more cost-effective manner. In view of these factors, pursuant to Sections 365(a) and 554(a) of the Bankruptcy Code and Rule 6006 of the Federal Rules of Bankruptcy Procedure, the Debtors sought and obtained the Court's authority to reject the NPC Agreements and abandon their ownership interests in NPC. Ms. Goldstein reports that the Debtors currently only have one customer on NPC, and that customer will no longer utilize NPC by the end of December 2002. The maintenance costs associated with the NPC under the C&M Agreement and the IRUs reach $300,000 per month while the lease costs in respect of Backhaul Leases equal to $45,800 per month. By rejecting the NPC Agreements, the Debtors will save the estates $3,682,000 in administrative expenses per annum. In addition, the Debtors will terminate their NPC costs for future years, including any costs in connection with dismantling NPC. The Debtors have reviewed the NPC Agreements and determined that there is likely no market for the assignment of the NPC Agreements. For these reasons, the NPC Agreements are rejected effective January 1, 2003. (Worldcom Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) Worldcom Inc.'s 7.550% bonds due 2004 (WCOE04USR2) are trading between 25 and 26. See http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOE04USR2 for DebtTrader's real-time bond pricing. WORLDCOM INC: Attorneys File Mass Arbitration Claim Today --------------------------------------------------------- Attorneys for nearly 100 small investors who lost their investments in WorldCom will deliver 1,000 pounds of documents today, Jan. 13, and hold a news conference regarding the filing of a mass arbitration claim at 10:30 a.m., eastern time, in front of the National Association of Securities Dealers offices, 1 Liberty Plaza, New York. The attorneys represent claimants who lost less than $25,000 -- yet a substantial portion of their savings -- and who bought shares of WorldCom based on recommendations by Salomon Smith Barney analyst Jack Grubman. "This filing will be unique in legal history," said attorney Robert H. Weiss, of the firm Hooper & Weiss (New York and Orlando, Fla.). "Traditionally, small investors in this situation would have to join a class action suit, where they might only recover pennies on their dollar. We intend to use techniques developed in other mass tort cases to help these investors." * BOND PRICING: For the week of January 13 - 17, 2003 ---------------------------------------------------- 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 38 Advanced Micro Devices Inc. 4.750% 02/01/22 63 AES Corporation 4.500% 08/15/05 45 AES Corporation 8.000% 12/31/08 59 AES Corporation 9.375% 09/15/10 62 AES Corporation 9.500% 06/01/09 58 Agro-Tech Corp. 8.625% 10/01/07 73 Akamai Technologies 5.500% 07/01/07 40 Alaska Communications 9.375% 05/15/09 72 Alexion Pharmaceuticals 5.750% 03/15/07 68 Allegheny Generating Company 6.875% 09/01/23 73 Alkermes Inc. 3.750% 02/15/07 62 Alpharma Inc. 3.000% 06/01/06 74 Amazon.com Inc. 4.750% 02/01/09 73 American Tower Corp. 2.250% 10/15/09 70 American Tower Corp. 5.000% 02/15/10 65 American Tower Corp. 6.250% 10/15/09 67 American & Foreign Power 5.000% 03/01/30 60 Amkor Technology Inc. 5.000% 03/15/07 49 AMR Corp. 9.000% 09/15/16 48 AMR Corp. 9.750% 08/15/21 42 AMR Corp. 9.800% 10/01/21 42 AMR Corp. 10.000% 04/15/21 43 AMR Corp. 10.200% 03/15/20 44 AnnTaylor Stores 0.550% 06/18/19 62 Argo-Tech Corp. 8.625% 10/01/07 72 Applied Extrusion 10.750% 07/01/11 63 BE Aerospace Inc. 8.875% 05/01/11 69 Best Buy Co. Inc. 0.684% 06?27/21 68 Borden Inc. 7.875% 02/15/23 56 Borden Inc. 8.375% 04/15/16 60 Borden Inc. 9.250% 06/15/19 57 Borden Inc. 9.200% 03/15/21 60 Boston Celtics 6.000% 06/30/38 65 Brocade Communication Systems 2.000% 01/01/07 70 Brooks-PRI Automation Inc. 4.750% 06/01/08 74 Building Materials Corp. 8.000% 10/15/07 74 Building Materials Corp. 8.000% 12/01/08 75 Burlington Northern 3.200% 01/01/45 56 Burlington Northern 3.800% 01/01/20 72 Calair LLC/Capital 8.125% 04/01/08 45 Calpine Corp. 4.000% 12/26/06 49 Calpine Corp. 8.500% 02/15/11 42 Case Corp. 7.250% 01/15/16 71 Cell Therapeutic 5.750% 06/15/08 60 Centennial Cellular 10.750% 12/15/08 53 Champion Enterprises 7.625% 05/15/09 41 Charter Communications, Inc. 4.750% 06/01/06 18 Charter Communications, Inc. 5.750% 10/15/05 23 Charter Communications Holdings 8.625% 04/01/09 45 Charter Communications Holdings 10.250% 01/15/10 45 Charter Communications Holdings 10.750% 10/01/09 45 Ciena Corporation 3.750% 02/01/08 70 Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 68 Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 69 CNET Inc. 5.000% 03/01/06 65 Comcast Corp. 2.000% 10/15/29 24 Comforce Operating 12.000% 12/01/07 56 Commscope Inc. 4.000% 12/15/06 74 Conexant Systems 4.000% 02/01/07 46 Conexant Systems 4.250% 05/01/06 51 Conseco Inc. 8.750% 02/09/04 10 Continental Airlines 4.500% 02/01/07 44 Continental Airlines 7.560% 12/01/06 46 Corning Inc. 3.500% 11/01/08 71 Corning Inc. 6.300% 03/01/09 75 Corning Inc. 6.750% 09/15/13 74 Corning Inc. 6.850% 03/01/29 61 Corning Inc. 8.875% 08/15/21 70 Corning Glass 8.875% 03/15/16 75 Cox Communications Inc. 3.000% 03/14/30 33 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 Crown Cork & Seal 7.375% 12/15/26 68 Cubist Pharmacy 5.500% 11/01/08 49 Cummins Engine 5.650% 03/01/98 63 Dana Corp. 7.000% 03/01/29 70 Dana Corp. 7.000% 03/15/28 71 DDI Corp. 5.250% 03/01/08 19 DDI Corp. 6.250% 04/01/07 16 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 62 Delta Air Lines 9.250% 03/15/22 60 Delta Air Lines 9.750% 05/15/21 63 Delta Air Lines 10.375% 12/15/22 66 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 36 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 Energy 8.050% 10/15/30 64 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 74 Equistar Chemicals 7.550% 02/15/26 69 E*Trade Group 6.000% 02/01/07 74 Finova Group 7.500% 11/15/09 37 Fleming Companies Inc. 5.250% 03/15/09 51 Ford Motor Co. 6.625% 02/15/28 75 Fort James Corp. 7.750% 11/15/23 74 General Physics 6.000% 06/30/04 51 Geo Specialty 10.125% 08/01/08 58 Georgia-Pacific 7.375% 12/01/25 74 Great Atlantic 9.125% 12/15/11 68 Gulf Mobile Ohio 5.000% 12/01/56 62 Health Management Associates Inc. 0.250% 08/16/20 66 Human Genome 3.750% 03/15/07 65 Human Genome 5.000% 02/01/07 72 I2 Technologies 5.250% 12/15/06 58 Ikon Office 6.750% 12/01/25 66 Ikon Office 7.300% 11/01/27 70 Imcera Group 7.000% 12/15/13 75 Imclone Systems 5.500% 03/01/05 70 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 55 Internet Capital 5.500% 12/21/04 37 Isis Pharmaceutical 5.500% 05/01/09 72 Juniper Networks 4.750% 03/15/07 73 Kmart Corporation 9.375% 02/01/06 10 Kulicke & Soffa Industries Inc. 4.750% 12/15/06 55 Kulicke & Soffa Industries Inc. 5.250% 08/15/06 59 LTX Corporation 4.250% 08/15/06 65 Lehman Brothers Holding 8.000% 11/13/03 64 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 62 Liberty Media 3.500% 01/15/31 63 Liberty Media 3.750% 02/15/30 51 Liberty Media 4.000% 11/15/29 55 LTX Corp. 4.250% 08/15/06 63 Lucent Technologies 5.500% 11/15/08 48 Lucent Technologies 6.450% 03/15/29 42 Lucent Technologies 6.500% 01/15/28 43 Lucent Technologies 7.250% 07/15/06 56 Magellan Health 9.000% 02/15/08 26 Mail-Well I Corp. 8.750% 12/15/08 65 Mapco Inc. 7.700% 03/01/27 59 Medarex Inc. 4.500% 07/01/06 65 Mikohn Gaming 11.875% 08/15/08 74 Mirant Corp. 5.750% 07/15/07 43 Mirant Americas 7.200% 10/01/08 49 Mirant Americas 7.625% 05/01/06 65 Mirant Americas 8.300% 05/01/11 43 Mirant Americas 8.500% 10/01/21 35 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 72 Missouri Pacific Railroad 5.000% 01/01/45 60 Motorola Inc. 5.220% 10/01/21 65 MSX International 11.375% 01/15/08 67 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 Nextel Communications 5.250% 01/15/10 72 Nextel Partners 11.000% 03/15/10 67 NGC Corp. 7.625% 10/15/26 56 Noram Energy 6.000% 03/15/12 72 Northern Pacific Railway 3.000% 01/01/47 54 Northern Telephone Capital 7.875% 06/15/26 61 NorthWestern Corporation 6.950% 11/15/28 72 ON Semiconductor 12.000% 05/15/08 73 ONI Systems Corporation 5.000% 10/15/05 74 OSI Pharmaceuticals 4.000% 02/01/09 70 Owens-Illinois Inc. 7.800% 05/15/18 68 PG&E Gas Transmission 7.800% 06/01/25 60 Providian Financial 3.250% 08/15/05 74 PSEG Energy Holdings 8.500% 06/15/11 75 Quanta Services 4.000% 07/01/07 56 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 26 Ryder System Inc. 5.000% 02/25/21 74 SBA Communications 10.250% 02/01/09 56 SC International Services 9.250% 09/01/07 65 Schuff Steel Co. 10.500% 06/01/08 73 SCI Systems Inc. 3.000% 03/15/07 71 Sepracor Inc. 5.000% 02/15/07 62 Sepracor Inc. 5.750% 11/15/06 66 Silicon Graphics 5.250% 09/01/04 54 Sotheby's Holdings 6.875% 02/01/09 75 TCI Communications Inc. 7.125% 02/15/28 74 TECO Energy Inc. 7.000% 05/01/12 73 Tenneco Inc. 11.625% 10/15/09 68 Teradyne Inc. 3.750% 10/15/06 72 Tesoro Pete Corp. 9.000% 07/01/08 66 Transwitch Corp. 4.500% 09/12/05 60 Tribune Company 2.000% 05/15/29 74 US Airways Passenger 6.820% 01/30/14 73 Universal Health Services 0.426% 06/23/20 63 US Timberlands 9.625% 11/15/07 61 Vector Group Ltd. 6.250% 07/15/08 64 Veeco Instrument 4.125% 12/21/08 72 Vertex Pharmaceuticals 5.000% 09/19/07 73 Weirton Steel 10.750% 06/01/05 70 Westpoint Stevens 7.875% 06/15/08 26 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 63 Williams Companies 7.750% 06/15/31 59 Williams Companies 7.875% 09/01/21 63 Williams Companies 9.375% 11/15/21 73 Witco Corp. 6.875% 02/01/26 70 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 2003. 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 $675 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 ***