TCR_Public/030117.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

             Friday, January 17, 2003, Vol. 7, No. 12


360NETWORKS: Committee Sues Nortel to Recoup $101 Million
ABRAXAS: Extends Exchange Offer for 11.50% Notes Until Jan. 22
ACTRADE FINANCIAL: Fires President & CEO Alexander C. Stonkus
AIRGATE PCS: Sept. 30 Net Capital Deficit Widens to $293 Million
ALLCITY INSURANCE: Leucadia Offers to Acquire Outstanding Shares
AMERCO: S&P Cuts Preferred Stock Junk Rating to Default Level

AMES DEPARTMENT: Pulling Plug on TracFone Activation Agreement
AMI SEMICONDUCTOR: S&P Rates New $200M Subordinated Notes at B
APPLIED EXTRUSION: Fails to Comply with Nasdaq Listing Guideline
ARIBA INC: Fails to Meet Nasdaq Continued Listing Requirements
ARMSTRONG HOLDINGS: AWI Balks at Southwest Recreational's Claim

ASIA GLOBAL CROSSING: Lease Decision Time Extended Until Apr. 30
ASSET SECURITIZATION: S&P Slashes Class B-1 Notes' Rating to D
BETHLEHEM STEEL: Wants to Sell New Jersey Property for $6 Mill.
BGF INDUSTRIES: Insufficient Cash Spurs S&P to Cut Ratings to D
CAPTEC FRANCHISE: S&P Drops Class B Note Rating to Default Level

CASELLA WASTE: S&P Rates $325MM & $150MM Facilities at BB- & B
CENARGO INT'L: Irish Ferry Operator Files Chapter 11 Petitions
CENTENNIAL HEALTHCARE: Signing-Up King & Spalding as Attorneys
COMM 2000-FL2: Fitch Cuts 5 Note Class Ratings to Low-B Levels
COGENTRIX: S&P Cuts Rating on NEG & Dynegy Credit Deterioration

CONGOLEUM CORP: S&P Drops Low-B Ratings to Junk Level
CONSECO INC: S&P Drags Ratings on Related Loan Trusts to D
CONSECO INC: Finance Unit Wants to Obtain $25MM Unsecured Credit
CONSTELLATION BRANDS: S&P Concerned about Planned BRL Merger
COTTON GINNY: Seeks CCAA Protection in Ontario, Canada

CRESCENT REAL ESTATE: Board Declares Dividends for Dec. Quarter
DIGEX INC: Reports Preliminary Fourth Quarter Cash Metrics
ELCOM INT'L: Commences Trading on OTCBB Effective January 16
EMAC OWNER: Fitch Junks Ratings on Franchise Loan Transactions
ENCHIRA BIOTECHNOLOGY: Shareholders Approve Plan of Dissolution

ENRON CORP: Examiner Neal Batson Hires Eight Contract Attorneys
ESSENTIAL THERAPEUTICS: Considering Seeking Bankruptcy Relief
EXIDE: Has Until June 30, 2003 to Move Actions to Delaware Court
FARMERS & MECHANICS: S&P Ratchets Counterparty Ratings to Bpi
FASTNET CORP: Hires DH Capital to Render Financial Advice

FEDERAL-MOGUL: Wants More Time to Move Actions to Delaware Court
FRISBY TECHNOLOGIES: Files for Chapter 11 Relief in No. Carolina
GENUITY: Honoring Up to $5 Million of Prepetition Foreign Claims
GEORGIA-PACIFIC: S&P Rates $500MM Sr. Unsecured Notes at BB+
GILAT SATELLITE: Fails to Comply with Nasdaq Listing Guidelines

GLOBAL CROSSING: Wants Filing Exclusivity Extended to March 31
GLOBALSTAR LP: New Valley Comes to the Rescue & Takes Control
GUESS? INC: S&P Ratchets Corp. Credit Rating Down to BB- from BB
IEC ELECTRONICS: Completes $7.3-Million Financing Transaction
INTERPUBLIC: Taps Goldman Sachs to Review Strategic Alternatives

KAISER ALUMINUM: Seeks Approval of Aussie Tax Office Agreements
KEMPER INSURANCE: Selling Renewal Rights to Old Republic Entity
KMART CORP: S&P Equity Analysts Note Impact of Store Closures
KMART CORP: Footstar Inc. Comments on Planned Store Closings
KMART: Federal Realty Expects Limited Impact from Store Closings

KMART CORP: Kramont Realty Reports One Kmart Store Closing
LAIDLAW INC: Files Third Amended Plan and Disclosure Statement
LESLIE'S POOLMART: S&P Affirms B Corporate Credit Rating
LEVI STRAUSS: Fitch Rates $100-Mill. Senior Unsecured Debt at B+
LISANTI FOODS: Wants More Time to File Schedules & Statements

LYNX THERAPEUTICS: Board Approves 1-for-7 Reverse Stock Split
MORGAN STANLEY: S&P Assigns Lower-B Ratings to 6 Note Classes
NATIONAL CENTURY: Court Approves Jones Day as Chapter 11 Counsel
NATIONAL STEEL: Seeks OK for U.S. Steel Asset Purchase Agreement
NETIA HOLDINGS: Shareholders Adopt Proposed Resolutions at EGM

NTL INC: When-Issued Equity Traders Run to Bankr. Court for Help
NTL: Maxcor Fears $4 Million Loss from When-Issued Trading
NYACK HOSPITAL: Fitch Affirms B+ $25-Mill. Revenue Bonds Rating
OCTAGON INVESTMENT: S&P Rates $4.5-Million Class D Notes at BB
OWENS CORNING: Asks Court to Approve South Carolina Settlement

PACIFIC GAS: Wants More Time to Pay Main Line Extension Pacts
PEACHTREE FRANCHISE: Fitch Junks Class D & E Notes at CCC/CC
PER-SE TECH.: S&P Raises Credit and Debt Ratings to B+ from B
PIONEER-STANDARD: S&P Places BB- Credit Rating on Watch Negative
PIONEER-STANDARD: Arrow Electronics Acquiring Electronics Div.

PROTECTION ONE: Possible Sale Spurs S&P to Keep Ratings Watch
QUESTRON: Delaware Court Fixes January 21 Admin. Claims Bar Date
QWEST COMMS: Files Long-Distance Service Application with FCC
SAKS INC: Acquires Former Macy's Store in Birmingham, Alabama
SALOMON BROTHERS: Fitch Affirms Low-B Ratings on 5 Note Classes

SHELBOURNE PROPERTIES: Inks Pact to Sell Livonia, MI Property
SHELBOURNE: JVs Acquire 100% Interest in 20 Motel Properties
SIRIUS: FCC Approves Application Related to Recapitalization
SO. CALIFORNIA EDISON: S&P Assigns BB Rating to Mortgage Bonds
SUN HEALTHCARE: Receives Notices of Default from Landlords

TRANSTECHNOLOGY: Net Capital Deficit Widens to $26MM at Dec. 29
UNITED AIRLINES: Wants Nod to Assume Escrow Account Agreement
US AIRWAYS: Proposes Alternative Dispute Resolution Procedures
U.S. HOME & GARDEN: Fails to Maintain Nasdaq Listing Standards
WARNACO GROUP: New York Court Confirms Plan of Reorganization

WHEELING-PITTSBURGH: Gains Fifth Lease Decision Period Extension
WORKFLOW MANAGEMENT: Gets New Credit Pact with Existing Lenders
WORLDCOM INC: ADP Seeks Stay Relief to Setoff Prepetition Claims
XM SATELLITE: Investors Lower Participation Threshold to 75%

* Fitch Maintains Stable Outlook on North American Life Industry
* Piper Rudnick Enters Boston Market with 33 More Attorneys
* TMA Poll Forecasts "Most Troubled" Industries For 2003

* BOOK REVIEW: A Legal History of Money in the United States,


360NETWORKS: Committee Sues Nortel to Recoup $101 Million
Pursuant to Rule 7001 of the Federal Rules of Bankruptcy
Procedure and Sections 547 and 550 of the Bankruptcy Code, the
Official Committee of Unsecured Creditors, appointed in the
chapter 11 cases involving 360networks inc., and debtor-
affiliates, seeks the avoidance, recovery and turnover of
certain preferential transfers amounting to at least
$101,099,024 made to Nortel Networks Corporation and Nortel
Networks, Inc. on or within 90 days of the Petition Date.

Norman N. Kinel, Esq., at Sidley Austin Brown & Wood LLP, in New
York, notes that the Committee is authorized and has the
exclusive right to commence and prosecute this Action on behalf
of the Debtors' bankruptcy estates and in the name of and for
the benefit of the Debtors pursuant to the Confirmation Order.
Pursuant to the Plan and the Confirmation Order, the Committee
is deemed the representative of the Debtors' estates under
Section 1123(b) of the Bankruptcy Code solely for purposes of
commencing and prosecuting the claims asserted in this Action.

Mr. Kinel relates that 90 days before the Petition Date, the
Debtors made preferential transfers to or for the benefit of
Nortel amounting to $101,099,024, consisting of at least
$55,101,024 in cash and $45,695,000 in equipment returns.  On
March 28, 2002, the Debtors demanded Nortel to return the
Transfers.  However, Nortel failed to do this.

According to Mr. Kinel, each of the Transfers was made to Nortel
for or on account of an antecedent debt the Debtors owed before
the Transfer was made.  "The Transfers were made by the Debtors
during the 90-day period preceding the Petition Date, while they
were insolvent," Mr. Kinel adds.

By reason of the Transfers, Mr. Kinel contends, Nortel was able
to receive more than it would otherwise receive if:

    (a) these cases were cases under Chapter 7 of the Bankruptcy

    (b) the Transfers had not been made; and

    (c) Nortel received payment of the debts in Chapter 7
        proceeding in the manner specified in the Bankruptcy

Accordingly, the Committee asks the Court to:

    (a) declare that the Transfers are avoidable;

    (b) direct Nortel to pay at least $101,099,024, representing
        the amount owed by Nortel, plus interest from the date
        of the Debtors' Demand Letter as permitted by law;

    (c) declare that any and all claims against the Debtors
        filed in these cases by Nortel will be disallowed until
        it repays in full the Transfer amount, plus all
        applicable interest; and

    (d) award to them all costs, reasonable attorneys' fees
        and interest. (360 Bankruptcy News, Issue No. 41;
        Bankruptcy Creditors' Service, Inc., 609/392-0900)

ABRAXAS: Extends Exchange Offer for 11.50% Notes Until Jan. 22
Abraxas Petroleum Corporation (AMEX:ABP) extended the exchange
offer for its 11-1/2% Senior Secured Notes due 2004, Series A,
CUSIP No. 003831AG9, and 11-1/2% Senior Notes due 2004, Series
D, CUSIP No. 003831AF1, which commenced on Dec. 9, 2002.

Abraxas has extended the expiration date of the Offer until
12:00 midnight, EST, on Jan. 22, 2003, unless the Offer is

As of the close of business on Jan. 14, 2003, $158.1 million
principal amount of the Notes had been validly tendered or

Abraxas has reduced the minimum percentage of the outstanding
principal amount of the Notes required to be tendered in the
Offer from 99% to 94%. The consummation of the Offer is subject
to certain conditions, which are described in Abraxas' Offer to
Exchange dated Dec. 9, 2002.

The notes and shares of Abraxas common stock to be issued in the
Offer have not been registered under the Securities Act of 1933,
as amended, and may not be offered or sold in the United States
without registration under the Securities Act or pursuant to an
exemption from registration.

Jefferies & Company Inc., is acting as dealer manager and Mellon
Investor Services LLC is acting as information agent for the

Abraxas Petroleum Corporation is a San Antonio-based crude oil
and natural gas exploitation and production company that also
processes natural gas. The Company operates in Texas, Wyoming
and western Canada.

As reported in Troubled Company Reporter's November 27, 2002
edition, Standard & Poor's Ratings Services withdrew its 'CC'
corporate credit rating on Abraxas Petroleum Corp. In addition,
the ratings on Abraxas' $63.5 million first lien notes and $191
million second lien notes were also withdrawn.

Abraxas Petroleum Corp.'s 12.875% bonds due 2003 (ABP03USR1) are
trading at about 45 cents-on-the-dollar, says DebtTraders. See
real-time bond pricing.

ACTRADE FINANCIAL: Fires President & CEO Alexander C. Stonkus
Actrade Financial Technologies Ltd., said that, effective
January 14, 2003, it had terminated the employment of Alexander
C. Stonkus, formerly the Company's President and Chief Executive

On October 23, 2002, the Company issued a press release which
included an announcement that Mr. Stonkus had taken a paid leave
of absence from his positions as President and Chief Executive
Officer of Actrade.  Richard McCormick has been serving as Chief
Executive Officer since that date and will continue to serve as
Actrade's Chief Executive Officer.

Actrade Financial Technologies Ltd., and one of its
subsidiaries, Actrade Capital Inc., have filed voluntary
petitions for relief under Chapter 11 of the United States
Bankruptcy Code in the Bankruptcy Court for the Southern
District of New York. Chapter 11 allows the Company to continue
operating its business while under the jurisdiction of the
Bankruptcy Court. Except for Capital, the Chapter 11 filings do
not include any of the Company's other subsidiaries.

AIRGATE PCS: Sept. 30 Net Capital Deficit Widens to $293 Million
AirGate PCS, Inc., (NASDAQ/NM: PCSA), a PCS Affiliate of Sprint,
announced financial and operating results for its fourth quarter
and fiscal year ended September 30, 2002, and the filing of its
Annual Report on Form 10-K.

Total revenues for the fourth fiscal quarter ended September 30,
2002 were $137.2 million compared with $62.3 million for fiscal
2001. The 2001 results did not include iPCS, Inc., which was
acquired by the Company on November 30, 2001. The Company
reported a net loss of $615.0 million for the three months ended
September 30, 2002, compared with a net loss of $25.0 million in
the fourth fiscal quarter of 2001. The loss included a $556.2
million charge associated with the impairment of goodwill and
tangible and intangible assets related to iPCS, Inc.

For the fiscal year ended September 30, 2002, the Company
reported revenues of $456.6 million compared with revenues of
$172.1 million for fiscal 2001. The Company reported a net loss
of $996.6 million for the fiscal year ended September 30, 2002,
compared with a net loss of $111.0 million for fiscal 2001. The
loss included a total of $817.4 million associated with the
impairment of goodwill and tangible and intangible assets
related to iPCS, Inc.

EDITDA, defined as earnings before interest, taxes, depreciation
and amortization, excluding non-cash stock compensation
expenses, loss on disposal of property and equipment, and
impairment charges, was a deficit of $8.9 million for the fourth
quarter of fiscal 2002. EBITDA was a deficit of $40.0 million
for fiscal 2002.

During 2002, the Company recorded significant write-downs in the
carrying value of goodwill and tangible and intangible assets
associated with its wholly-owned unrestricted subsidiary, iPCS.
These impairment write-downs were taken in accordance with the
accounting guidance prescribed by SFAS No. 142 and No. 144. The
purpose of the write-downs was to record property and equipment,
goodwill and other intangible assets at their fair value. In the
second fiscal quarter, the Company recorded a goodwill
impairment of $261.2 million. In the fourth fiscal quarter, the
impairment of goodwill and tangible and intangible assets
related to iPCS was $556.2 million.

As indicated in a December 30, 2002 press release, a delay in
filing AirGate's Annual Report on Form 10-K provided additional
time to allow the Company to complete a review of balances owed
to the Company by Sprint, as well as the Company's subscriber
accounts receivable balances. This review did not impact
financial information or disclosures in prior reports on Form
10-Q or 10-K.

In connection with this review of accounts receivable, the
Company has reclassified approximately $10 million of subscriber
accounts receivable for the fiscal year ended September 30, 2002
to a receivable from Sprint. The Company believes at least $10
million is payable from Sprint, but Sprint has acknowledged only
$5.8 million is owed to AirGate. The Company is in discussions
with Sprint regarding the differences and has provided for these
discussions in its consolidated financial statements.

Filing of the Form 10-K and the delivery of the Company's
audited financial statements and related information to AirGate
lenders under its senior secured credit facility and the trustee
for its notes cure any potential AirGate default.

As previously announced, liquidity is an issue for iPCS in the
near term. The Company retained Houlihan Lokey Howard & Zukin
Capital to review iPCS' revised long range business plan, the
strategic alternatives available to iPCS, and to assist iPCS in
developing and implementing a plan to improve its capital
structure. iPCS has undertaken efforts to restructure its
arrangements with its secured lenders, its public note holders
and others. Based upon a review of the historical and expected
operating results of iPCS, the Company believes that iPCS will
be required to seek protection from its creditors under the
federal bankruptcy laws in the near term either as part of a
consensual restructuring or in an effort to affect a court
administered reorganization.

At September 30, 2002, the Company's balance sheet shows a total
shareholders' equity deficit of about $273 million.

"During this challenging period, we realized we had to
reposition the Company for the next phase in the wireless
industry," said Thomas M. Dougherty, president and chief
executive officer of AirGate PCS. "We are taking aggressive
actions to elevate our business efficiency and effectiveness by
restructuring our organizations, reducing capital and other
expenditures, and improving cash flow. We also are focused on
strengthening the credit quality of new subscribers and reducing
churn while continuing to build a mutually-beneficial
relationship with Sprint. Although 2003 is likely to see
significantly slower growth in net new subscribers, we expect
that the pace of growth will be complemented by improved
liquidity and financial performance.

"Further, we anticipate that the launch of PCS VisionSM,
Sprint's third-generation technology, in our territories will
provide an additional vehicle to support future subscriber and
revenue growth," Dougherty added. "Vision-enabled PCS devices
take and receive pictures, check personal and corporate e-mail,
play games with full-color graphics and polyphonic sounds, and
browse the Internet wirelessly with speeds that equal or exceed
a home computer's dial-up connection. We are pleased to be able
to offer a broad portfolio of Vision-enabled devices that
incorporate voice and data functionality, expanded memory, high-
resolution and larger color screens that allow greater mobility,
convenience and productivity."

Additional financial and operating highlights for the fourth
quarter of fiscal 2002 include the following:

     -- The Company added 22,387 net new customers, net of an
adjustment for subscribers not reasonably expected to pay. As a
result, the Company had a total of 554,833 subscribers as of
September 30, 2002.

     -- Average revenue per subscriber (ARPU) was $60 for the
quarter, an increase from $56 in the third quarter of 2002.

     -- Total roaming revenue was $35.7 million for the fourth
fiscal quarter of 2002, compared with $32.0 million for the
third quarter of 2002. Roaming expense was $25.4 million for the
quarter, compared with $21.8 million for the previous quarter.
During 2002, the reciprocal roaming rate paid by Sprint and its
affiliates was $0.10 per minute. Sprint has notified the Company
it is decreasing this rate to $0.058 per minute on January 1,

     -- Churn was 4.0 percent in the fiscal fourth quarter,
compared with 3.2 percent in the prior quarter.

     -- Capital expenditures in the quarter were $19.7 million,
compared with $28.9 million in the previous quarter, bringing
total capital expenditures for the year to $97.1 million.

AirGate PCS, Inc., including its unrestricted subsidiary iPCS,
is the PCS Affiliate of Sprint with the exclusive right to sell
wireless mobility communications network products and services
under the Sprint brand in territories within seven states
located in the Southeastern and Midwestern United States. The
territories include over 14.6 million residents in key markets
such as Grand Rapids, Michigan; Charleston, Columbia, and
Greenville-Spartanburg, South Carolina; Augusta and Savannah,
Georgia; Champaign-Urbana and Springfield, Illinois; and the
Quad Cities areas of Illinois and Iowa. AirGate PCS is among the
largest PCS Affiliates of Sprint.

Sprint operates the nation's largest all-digital, all-PCS
wireless network, already serving more than 4,000 cities and
communities across the country. Sprint has licensed PCS coverage
of more than 280 million people in all 50 states, Puerto Rico
and the U.S. Virgin Islands. In August 2002, Sprint became the
first wireless carrier in the country to launch next generation
services nationwide delivering faster speeds and advanced
applications on Vision-enabled phones and devices. For more
information on products and services, visit
Sprint PCS is a wholly-owned tracking stock of Sprint
Corporation trading on the NYSE under the symbol "PCS." Sprint
is a global communications company with approximately 75,000
employees worldwide and $26 billion in annual revenues and is
widely recognized for developing, engineering and deploying
state-of-the-art network technologies.

ALLCITY INSURANCE: Leucadia Offers to Acquire Outstanding Shares
Allcity Insurance Company (OTCBB:ALCI) received a proposal from
its indirect parent company, Leucadia National Corporation, the
beneficial owner of approximately 91% of the outstanding Allcity
common stock, for a possible tender offer to acquire all the
outstanding shares of common stock of Allcity not already owned
by Leucadia for $2 per share.

The proposal states that the acquisition of such shares by
Leucadia would take the form of a tender offer by Leucadia,
subject to customary conditions, as well as enough shares of
Allcity's common stock being tendered so that, together with the
shares Leucadia currently beneficially owns, Leucadia would
beneficially own at least 95% of the outstanding shares of
Allcity's common stock. Promptly following consummation of the
tender offer and subject to the approval of New York Insurance
Department, the remaining shares of Allcity's common stock would
be acquired by Leucadia's wholly-owned subsidiary, Empire
Insurance Company, at the same cash price pursuant to a short
form merger between Empire and Allcity under Section 7118 of the
New York Insurance Law. The proposal would not be contingent on
any financing conditions.

Leucadia has requested that a Special Committee of the Allcity
Board of Directors formed to consider any offers from Leucadia
evaluate the fairness of this proposal for the purpose of making
a recommendation with respect to this proposal.

Leucadia's proposal is detailed in Leucadia's latest amended
Schedule 13D filed with the Securities and Exchange Commission,
which shareholders can obtain free of charge from the U.S.
Securities and Exchange Commission's Web site at http:

As reported in Troubled Company Reporter's November 19, 2002
edition, Allcity Insurance announced its operating results for
the nine month period ended September 30, 2002 and reported a
net loss of $2,420,000 for the nine months ended September 30,
2002 compared to a net loss of $18,913,000 for the comparable
2001 period.

Net earned premium revenues of the Company were $3,727,000 and
$14,949,000 for the nine month periods ended September 30, 2002
and 2001, respectively. The Company's earned premiums declined
in all lines of business during the nine month period ended
September 30, 2002 as a result of actions announced during late
2000 and the first quarter of 2001. As announced in December
2001, the Group (which includes the Company and Empire Insurance
Company, the Company's parent) determined that it was in the
best interest of its shareholders and policyholders to commence
an orderly liquidation of all of its operations. The Group will
only accept business that it is obligated to accept by contract
or New York insurance law; it will not engage in any other
business activities except for its claims runoff operations. The
voluntary liquidation of its operations is expected to be
substantially complete by 2005. Given the Group's and the
Company's current financial condition, the expected costs to be
incurred during the claims runoff period, and the inherent
uncertainty over ultimate claim settlement values, no assurance
can be given that the Company's shareholders will be able to
receive any value at the conclusion of the voluntary liquidation
of its operations.

AMERCO: S&P Cuts Preferred Stock Junk Rating to Default Level
Standard & Poor's Ratings Services lowered its preferred stock
on AMERCO, the parent of U-Haul International Inc., to 'D' from
'C' and removed it from CreditWatch. At the same time, Standard
& Poor's affirmed its 'SD'  corporate credit rating on the
company. The 'CC' unsecured debt ratings remain on CreditWatch
with developing implications, where they were placed July 10,

"The downgrade of AMERCO's preferred stock reflects the
company's failure to pay the dividend to holders of the Series A
preferred stock that was payable on Dec. 1, 2002," said Standard
& Poor's credit analyst Betsy Snyder. AMERCO's auditors have
also determined that its continuation as a going concern is
dependent, in part, on its success in completing a financial
restructuring that it is currently pursuing. The company hopes
to complete the restructuring process by March 31, 2003, and has
executed term sheets for up to $650 million in connection with
this restructuring, proceeds of which would be used to repay its
$205 million revolver, and a $100 debt maturity that was due
Oct. 15, 2002, that was not paid; as well as to meet 2003
maturities. If the company is successful, ratings could be
raised modestly. However, if the company is unsuccessful, it
would very likely default on other financial obligations, which
could result in a Chapter 11 bankruptcy filing.

The ratings on Reno, Nevada-based AMERCO reflect its constrained
liquidity and weakened financial flexibility. AMERCO's major
operating subsidiary is U-Haul International Inc., the largest
provider of truck and trailer rentals to retail customers in
North America. The only other major competitor is this industry
is Budget Group Inc., acquired by Cendant Corp. in November
2002, but the fate of its truck rental operation is uncertain
under its new ownership. U-Haul accounts for the major portion
(approximately 76%) of AMERCO's consolidated revenues. The
consumer truck rental business is seasonal, with a large
percentage of rentals occurring in the spring and summer, and
has tended to be very price competitive. AMERCO's other
subsidiaries include Amerco Real Estate Co., which owns and
manages most of AMERCO's real estate assets, including its
corporate-owned U-Haul truck rental and self-storage facilities;
and two insurance companies--Republic Western Insurance Co. and
Oxford Life Insurance Co. AMERCO's insurance operations, which
are involved in insurance of property and casualty and
reinsurance of life, health, and annuity insurance products, are
relatively small within the industry. Both companies have
been negatively affected by unprofitable lines of business as
well as write-downs of investments, resulting in reduced
profitability and cash flow for AMERCO. However, results have
begun to show improvement. In addition, AMERCO has had to
consolidate the results of SAC Holdings Corp. and its
consolidated subsidiaries (the owner of self-storage properties
managed by AMERCO) with AMERCO.

AMES DEPARTMENT: Pulling Plug on TracFone Activation Agreement
Pursuant to a letter agreement dated September 7, 2001, Ames
Department Stores, Inc., its debtor-affiliates, and TracFone
Wireless, Inc. entered into an activation agreement to
restructure the parties' pre-existing business relationship.
TracFone provided the Debtors with wireless phones, services
necessary to activate phones and phone calling cards.  However,
TracFone has asserted that the Debtors are in default of the
parties' Activation Agreement by failing to pay $1,473,861 and
that the sum is entitled to administrative priority status.

Recently, the parties have agreed to terminate their business
relationship.  The parties have reached a reached a compromise
regarding TracFone's claims.  Pursuant to the Stipulation
approved by Judge Gerber, the parties agree that:

  A. The Activation Agreement as well as any other related
     agreements between them are rejected and terminated;

  B. TracFone will waive any and all claims it may have arising
     out of the rejection of the Agreements, including, without
     limitation, any rejection damages;

  C. The Debtors have returned 7,312 digital phones to TracFone
     and in consideration for the return, TracFone has paid the
     Debtors $75,000;

  D. TracFone's administrative expense claim will be reduced at
     the rate of $64 per phone, aggregating up to $467,968;

  E. The Debtors agree and acknowledge that TracFone is entitled
     to an administrative priority claim for $1,005,893;

  F. The Debtors will pay the Administrative Claim on the
     earlier of:

       (i) the date that all other holders of allowed
           administrative claims are paid in these cases; and

      (ii) on terms otherwise agreed upon by the parties and as
           approved by the Bankruptcy Court; and

  G. TracFone will no longer file any proof of claim in these
     cases.  If it does, that claim will be expunged and
     superseded to the extent set forth in this Stipulation.
     (AMES Bankruptcy News, Issue No. 31; Bankruptcy Creditors'
     Service, Inc., 609/392-0900)

AMI SEMICONDUCTOR: S&P Rates New $200M Subordinated Notes at B
Standard & Poor's Ratings Services assigned its 'B' rating to
AMI Semiconductor Inc.'s $200 million senior subordinated notes
due 2013. The 'BB-' corporate credit and senior secured bank
loan ratings were affirmed. The notes are expected to redeem
approximately $81 million in preferred shares related to funding
for the company's recent acquisition of Alcatel S.A., and to
repay about $111 million in bank debt. The outlook is negative.

Pocatello, Idaho-based AMI supplies customized semiconductor
chips, called application-specific integrated circuits, for
industrial, communications, military, and other applications.

"The recent acquisition of Alcatel's mixed signal ASIC unit is
expected to enhance AMI's mixed-signal process technology and
market position and increase sales of mixed-signal ASICs to more
than 50% of total sales," said Standard & Poor's credit analyst
Emile Courtney.

Standard & Poor's expects AMI to improve profitability at its
new MSB unit through headcount reductions, improved
manufacturing, materials efficiencies, and a migration of MSB
test activities to AMI's lower-cost facility in the Philippines.

"While sole-source long-term contracts are expected to limit
revenue and cash flow volatility, challenging industry
conditions are expected to persist, creating a degree of
uncertainty," Mr. Courtney added.

APPLIED EXTRUSION: Fails to Comply with Nasdaq Listing Guideline
Applied Extrusion Technologies, Inc., (Nasdaq:AETC), on
January 15, 2003, received a notification from the Nasdaq
Listing Qualifications Department that the Company has failed to
comply with the filing requirement for continued listing set
forth in NASD Marketplace Rule 4310(c)(14), and that its
securities are, therefore, subject to delisting from The Nasdaq
Stock Market, Inc.  NASD Marketplace Rule 4310(c)(14) requires
that Nasdaq issuers timely file their periodic reports in
compliance with the reporting obligations under the federal
securities laws.

As previously announced on January 14, 2003, the Company has not
timely filed its Annual Report on Form 10-K for the fiscal year
ended September 30, 2002. The 2002 10-K has been substantially
completed and is currently in the stage of its final review by
the Company's auditors. The Company expects to be able to file
the 2002 10-K within the next two weeks. Also as previously
announced, the Company will restate its financial statements for
fiscal years 1998 through 2001, and the first three quarters of
fiscal year 2002.

At the opening of business on January 17, 2003, the Company's
trading symbol, "AETC", will be amended to include the fifth
character "E" to denote the Company's filing delinquency.

The Company intends to request an appeal hearing before a Nasdaq
Listing Qualification Panel to review the Staff determination in
accordance with NASD Marketplace Rule 4820(a). The time and
place of such a hearing will be determined by the Panel.
Pursuant to the same NASD Marketplace Rule 4820(a), a request
for a hearing will stay the scheduled delisting of the Company's
securities pending the Panel's determination. Were the Company
not to request an appeal hearing before the Panel to review the
Staff's determination, its securities would be delisted from
Nasdaq at the opening of business on January 24, 2003 without
further notice. There can be no assurance that the Panel will
grant the Company's request for continued listing. However, the
Company believes that, if it files the 2002 10-K prior to the
hearing, the Panel will grant the Company's request for
continued listing.

Applied Extrusion Technologies, Inc., is a leading North
American developer and manufacturer of specialized oriented
polypropylene films used primarily in consumer products labeling
and flexible packaging applications.

                          *    *    *

As reported in Troubled Company Reporter's October 11, 2002
edition, Standard & Poor's affirmed its single-'B' corporate
credit rating on Applied Extrusion Technologies Inc., and
removed the rating from CreditWatch, where it was placed on
July 8, 2002. The outlook is now negative.

The rating reflects the company's below-average business risk
profile, very aggressive debt leverage, and limited financial
flexibility. The company enjoys a leading share of the OPP
market and benefits from a low-cost position.

ARIBA INC: Fails to Meet Nasdaq Continued Listing Requirements
Ariba, Inc., (Nasdaq: ARBA) received a Nasdaq Staff
Determination indicating that it has failed to timely file its
annual report on Form 10-K for the fiscal year ended
September 30, 2002, as required by Nasdaq Marketplace Rule
4310(C)(14), and that its common stock is therefore subject to
delisting from The Nasdaq Stock Market. As the next step in the
process, Ariba will be requesting a hearing before a Nasdaq
Listing Qualifications Panel to review the Staff Determination.
There can be no assurance that the Panel will grant Ariba's
request for continued listing. As a result of the company's
filing delinquency, Ariba's stock ticker symbol will become
"ARBAE" beginning on Friday, January 17, 2003, reflecting the
Nasdaq convention for companies making delayed public filings.

Ariba, Inc., is the leading Enterprise Spend Management (ESM)
solutions provider. Ariba helps companies develop and leverage
spend management as a core competency to drive significant
bottom line results. Ariba Spend Management software and
services allow companies to align their organizations with a
spend-centric focus and deploy closed-loop processes for
increased efficiencies and sustainable savings. Ariba can be
contacted in the U.S. at 650-390-1000 or at

                         *     *     *

                 Liquidity and Capital Resources

In its report for the period ended June 30, 2002, filed with the
Securities and Exchange Commission, the Company stated:

"As of June 30, 2002, we had $167.6 million in cash, cash
equivalents and short-term investments, $80.2 million in long-
term investments and $30.6 million in restricted cash, for total
cash and investments of $278.4 million and ($1.4 million) in
working capital. As of September 30, 2001, we had $217.9 million
in cash, cash equivalents and short-term investments, $43.1
million in long-term investments and $32.6 million in restricted
cash, for total cash and investments of $293.6 million and $57.6
million in working capital. Our working capital declined $59.0
million from September 30, 2001 to June 30, 2002, reflecting a
reduction of current assets by $90.8 million (of which $37.1
million related to transfers of investments to non-current
investments due to longer maturities) and a $31.9 million
reduction of current liabilities.

"Net cash used in operating activities was approximately $19.0
million for the nine months ended June 30, 2002, compared to
$17.6 million of net cash provided by operating activities for
the nine months ended June 30, 2001. Net cash used in operating
activities for the nine months ended June 30, 2002 is primarily
attributable to decreases in accounts payable, accrued
compensation and related liabilities, accrued liabilities and
deferred revenue, and to a lesser extent, the net loss for the
period (less non-cash expenses). These cash flows used in
operating activities were partially offset by decreases in
accounts receivable and, to a lesser extent, prepaid expenses
and other assets.

"Net cash provided by investing activities was approximately
$42.8 million for the nine months ended June 30, 2002 compared
to $135.6 million of net cash used in investing activities for
the nine months ended June 30, 2001. Net cash provided by
investing activities for the nine months ended June 30, 2002 is
primarily attributable to the redemption of our investments
partially offset by the purchases of property and equipment.
Although the recent restructuring of our operations will reduce
our capital expenditures over the near term, these expenditures
may increase over the longer term.

"Net cash provided by financing activities was approximately
$8.1 million for the nine months ended June 30, 2002 compared to
$80.5 million of net cash provided by financing activities for
the nine months ended June 30, 2001. Net cash provided by
financing activities for the nine months ended June 30, 2002 is
primarily from the proceeds from the exercise of stock options
offset by the repurchase of our common stock and payment of
capital lease obligations.

"In March 2000, we entered into a new facility lease agreement
for approximately 716,000 square feet constructed in four office
buildings and an amenities building in Sunnyvale, California as
our headquarters. The operating lease term commenced in phases
from January through April 2001 and ends on January 24, 2013.
Minimum monthly lease payments are $2.2 million and will
escalate annually with the total future minimum lease payments
amounting to $347.9 million over the lease term. We also
contributed $80.0 million towards leasehold improvement costs of
the facility and for the purchase of equipment and furniture of
which approximately $49.2 million was written off in connection
with the abandonment of excess facilities. As part of this
agreement, we are required to hold certificates of deposit
totaling $25.7 million as a form of security through fiscal
2013, which is classified as restricted cash on the condensed
consolidated balance sheets. In the quarter ended March 31,
2002, a certificate of deposit totaling $2.5 million as a
security deposit for our headquarters was released.

"Operating lease payments shown above exclude any adjustment for
lease income due under noncancelable subleases of excess
facilities, which amounted to $82.9 million as of June 30, 2002.
Interest expense related to capital lease obligations is
immaterial for all periods presented.

"We do not have commercial commitments under lines of credit,
standby lines of credit, guarantees, standby repurchase
obligations or other such arrangements.

"We expect to incur significant operating expenses, particularly
research and development and sales and marketing expenses, for
the foreseeable future in order to execute our business plan. We
anticipate that such operating expenses, as well as planned
capital expenditures, will constitute a material use of our cash
resources. As a result, our net cash flows will depend heavily
on the level of future sales, our ability to manage
infrastructure costs and our assumptions about estimated
sublease income related to the estimated costs of abandoning
excess leased facilities.

"Although our existing cash, cash equivalent and investment
balances together with our anticipated cash flows from
operations will be sufficient to meet our working capital and
operating resource expenditure requirements for at least the
next 12 months, given the significant changes in our business
and results of operations in the last 12 to 18 months, the
fluctuation in cash, cash equivalents and investments balances
may be greater than presently anticipated. After the next 12
months, we may find it necessary to obtain additional equity or
debt financing. In the event additional financing is required,
we may not be able to raise it on acceptable terms or at all."

ARMSTRONG HOLDINGS: AWI Balks at Southwest Recreational's Claim
Nitram Liquidators, Inc., and Armstrong World Industries jointly
object to the allowance of the proofs of claim filed by
Southwest Recreational Industries, Inc., in August 2001.

Rebecca Booth, Esq., at Richards Layton & Finger, tells the
Court that before June 1999, Nitram was in the business of
manufacturing, selling and installing floor products, including
synthetic running tracks and artificial grass surfaces.  Under
an Asset Purchase Agreement, Nitram sold substantially all of
its assets and transferred some of its liabilities to Southwest
for an adjusted price of approximately $9,200,000.  Southwest
paid this price by:

       (i) delivering a subordinated promissory note payable to
           Nitram amounting to $4,500,000;

      (ii) depositing $2,000,000 in an escrow account; and

     (iii) remitting the balance by wire transfer to Nitram.

The Note will mature on October 31, 2003.

After the sale, Nitram no longer has any employees or
operations. Nitram filed its Chapter 11 case only to resolve its
contingent liabilities and wind up its operations.

The parties' material obligations under the APA were performed
by the Closing Date -- i.e., Nitram's assets and certain
liabilities were transferred to Southwest in exchange for
Southwest's payment to Nitram of the purchase price.  Both
Nitram and Southwest have certain limited continuing obligations
under the APA.  Specifically, Nitram agreed not to compete with
Southwest for a period of time, and AWI agreed to guarantee
Nitram's performance of its obligations under the APA.  In
addition, certain contractually defined warranties for products
Nitram used in turf jobs before the Closing Date will remain in

Shortly after the Petition Date, Nitram notified Southwest that
any claims to enforce warranties contained in the APA are
subject to the automatic bankruptcy stay because they are
prepetition claims.  Nitram further informed Southwest that it
could not continue to pay any such claims in the ordinary
course, as it had been doing, but that the claims would have to
be asserted as prepetition, unsecured claims against Nitram's

Nitram has asserted that the APA could not be assumed or
rejected because the APA is not an executory contract.  That
issue has not yet been decided in connection with the Southwest

Before the Petition Date, Southwest, with AWI's knowledge and
consent, honored certain claims by customers that had purchased
Nitram products.

The products were covered by warranties from Nitram, and the
amount of the prepetition warranty payments for which Southwest
did not receive reimbursement from Nitram reached $28,802.  AWI
has no objection to allowance of a claim for Southwest in this
amount.  However, disallowance of the balance is appropriate
because no other amounts are owed to Southwest because of
warranty claims. (Armstrong Bankruptcy News, Issue No. 34;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

ASIA GLOBAL CROSSING: Lease Decision Time Extended Until Apr. 30
The only unexpired lease of non-residential property that Asia
Global Crossing Ltd., and its debtor-affiliates are party to is
the lease for their corporate headquarters at 11150 Santa Monica
Boulevard in Los Angeles, California.

Richard F. Casher, Esq., at Kasowitz Benson Torres & Friedman
LLP, in New York, informs the Court that the Headquarters Lease
governs 12,536 rentable square feet of space.  The Headquarters
Lease is integral to the AGX Debtors' continued business
operations pending the consummation of the Sale and is expected
to be essential during the wind-down period after the Sale.  The
AGX Debtors will require office space to:

    -- continue their day-to-day business operations until the
       Successful Bid is consummated; and

    -- wind down their business after the Successful Bid is

Because the Auction and the Sale Hearing are not scheduled to
occur until January 16 and 21, 2003, Mr. Casher explains that
the Debtors presently do not know the nature of the Successful
Bid or the timeframe reasonably required to close the
transaction. Using the Asia Netcom Transaction as a rough guide,
the Debtors will require additional time through April 30, 2003
to close the Successful Bid and wind down their operations after

Mr. Casher contends that the uncertainty surrounding the
specific transaction that will be determined to be the
Successful Bid at the Auction and approved by the Court at the
Sale Hearing mandates an extension of the Initial
Assumption/Rejection Period through April 30, 2003.  The
extension will have no adverse effect on the Lessor as the
Debtors have prepaid their rent through April 30, 2003.
Moreover, the Debtors enjoyed a substantial cash position at the
Petition Date and project a substantial cash position under the
economic "floor" established by the Asia Netcom Transaction.
Accordingly, the Debtors assert that an extension of the
deadline to assume or reject the Headquarters Lease to April 30,
2003 is reasonable and appropriate under the circumstances
because of the:

  -- short 3-1/2 month extension requested to accommodate the
     Debtors' unquestionable need for the leased space under the
     Headquarters Lease;

  -- prepayment of rent through the date of the requested
     extension; and

  -- absence of harm that the requested extension will cause
     the Lessor.

If the lease decision period is not extended, Mr. Casher says,
the Debtors may be forced to prematurely assume the Headquarters
Lease, which could lead to unnecessary administrative claims if
the Headquarters Lease ultimately is terminated.  Conversely, if
the Debtors were to reject the Headquarters Lease prematurely,
they would lack office space in which to conduct current
operations or the winding down of their businesses, and would
incur unnecessary expense to their estates by having to search
in a very short time frame for replacement office space.

Accordingly, the Debtors obtained a Court order extending the
lease decision period to April 30, 2003. (Global Crossing
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

Asia Global Crossing's 13.375% bonds due 2010 (AGCXUS10R1) are
trading at about 11 cents-on-the-dollar, DebtTraders says. See
for real-time bond pricing.

ASSET SECURITIZATION: S&P Slashes Class B-1 Notes' Rating to D
Standard & Poor's Ratings Services lowered its rating on Asset
Securitization Corp.'s commercial mortgage pass-through
certificates series 1995-D1 to 'D' from 'B+'.

The rating action reflects the determination of
nonrecoverability of advances on an REO loan secured by a
congregate care facility and the resultant interest shortfalls
that are occurring as partial recovery of outstanding servicer
advances takes place. The rating action also reflects the fact
that the interest shortfalls to class B-1 are not expected to be
recovered until the REO assets are disposed of.

There are presently three loans totaling $9.255 million (6% of
the outstanding pool balance) in special servicing, all of which
are REO. One loan, with a principal balance of $3.175 million
and secured by an empty congregate care facility, is primarily
responsible for the interest shortfalls, as the servicer,
Midland Loan Services Inc., recovers some of its outstanding
advances, which currently total $684,000, after the January
distribution. Midland intends to reduce its outstanding advances
to $550,000. The other two loans are secured by limited service
hotels in Georgia with principal balances of approximately $3.7
million and $2.4 million and combined outstanding advances of
approximately $988,000 for both. In discussions with the special
servicer, Criimi Mae, these two loans appear to have brighter
prospects for recovery than the congregate care facility.
However, the timing of the dispositions of the REO properties is
uncertain and depends on market conditions.

                         Rating Lowered

                    Asset Securitization Corp.
     Commercial mortgage pass-thru certificates series 1995-D1

               Class     To         From
               B-1       D          B+

BETHLEHEM STEEL: Wants to Sell New Jersey Property for $6 Mill.
Bethlehem Steel Corporation and its debtor-affiliates want to
sell a 45.6-acre parcel of unimproved property located in North
Arlington and Kearny, New Jersey to Russo Development LLC,
subject to higher or better offers.  The Debtors intend to sell
the Property free and clear of all liens, claims, security
interests and encumbrances.

The Debtors will sell the Property in accordance with the terms
and conditions of a Contract for Sale of Real Estate between
Bethlehem Steel Corporation's direct subsidiary, Encoat-North
Arlington, Inc. and Russo dated December 26, 2002.  Jeffrey L.
Tanenbaum, Esq., at Weil, Gotshal & Manges, in New York, reports
that the Property is owned by Encoat, which is a company that
Bethlehem acquired as a result of a merger in 1998.  However,
neither Encoat nor Bethlehem has used the Property since the

"Bethlehem and Encoat have actively marketed the Property since
1998.  Although located in a desirable setting, the Property has
been difficult to market because of perceived environmental
issues and the need for use or development approval," Mr.
Tanenbaum tells Judge Lifland.  Mr. Tanenbaum also relates that
the local authorities are requiring the construction of a new
access to the Property and a new road to traverse the Property,
which will result in expense and the loss of some acreage.

As part of its efforts to market the Property, Bethlehem and
Encoat contacted 25 entities other than Russo.  Subsequently,
seven chose to perform more significant due diligence and sale
agreements were ultimately executed with two companies in 1999
and 2001.  The sale prices were $5,600,000 and $6,300,000.  But
neither transaction closed, according to Mr. Tanenbaum, because
the prospective purchasers were unable to obtain the necessary
support from the local government for their intended use of the

The Debtors and Russo discussed the sale of the Property in late
2000.  Russo visited the Property in early 2001.  Subsequently,
both parties undertook negotiations on the terms for the sale in
November 2001.  The parties signed the Contract on December 26,

The salient terms of the Contract for Sale of Real Estate are:

Property:       45.6 acres of land, consisting of tax lots in
                the Borough of North Arlington in Bergen County,
                New Jersey and the Town of Kearny in Hudson
                County, New Jersey, which includes:

                  (i) all improvements on the land; and

                 (ii) Encoat's right, title and interest, in and
                      to all contract rights, licenses, permits,
                      approvals, rights of way and easements,
                      relating to the land.

Purchase Price: $6,000,000

Deposit:        $240,000

Closing:        The Closing will occur on or before the 30th
                calendar day after the expiration of Russo's
                Initial Due Diligence Period or the Extended Due
                Diligence Period.

Condition of
the Property:   The Property is being sold "as is," with no
                claims or promises about its condition or value.
                Until the Closing, Russo will have the right to
                examine the Property provided that without the
                prior written consent of Encoat, which will not
                be unreasonably withheld:

                  (i) Russo will not conduct any tests to
                      determine the environmental condition of
                      the Property; and

                 (ii) Russo will not drill any monitoring wells
                      on the Property or sample any groundwater.

Due Diligence:  Russo has 10 months after a Sale Order is
                entered to complete due diligence as to the:

                  (1) environmental condition of the Property;

                  (2) the geo-technical condition of the soil;

                  (3) wetlands delineation;

                  (4) availability of utilities;

                  (5) local zoning and building laws;

                  (6) general economic viability of the Property
                      for development; and

                  (7) any other investigations or inspections or
                      activities that Russo finds necessary to
                      evaluate the economic development of the

                Russo may extend the due diligence period for
                another six months by increasing the Deposit by
                $200,000.  It may also terminate the Contract at
                any time during the due diligence period.  If
                Russo so terminates the Contract, Encoat may
                retain the Deposit.

& Warranties:   Encoat represents that:

                -- there are no existing actions or proceedings
                   threatened against the Property or Encoat's
                   assets, to the extent these actions or
                   proceedings against its assets would
                   adversely affect its ability to fulfill
                   its obligations under the Contract; and

                -- there are no storage or treatment tanks,
                   underground storage tanks, gas or oil wells
                   or asbestos containing materials on or under
                   the Property, and except for one identified
                   instance, no investigation or claim of any
                   kind has been asserted by any person since
                   1998 with respect to the Property.

                Encoat will indemnify Russo and its managers and
                employees from any claims arising directly or
                indirectly out of its breach of any
                representation, warranty or covenant first
                discovered after the Closing.

Covenants:      Until the Closing, Encoat must maintain certain
                Engineering controls required by the New Jersey
                Department of Environmental Protection and
                comply with terms and conditions relating to
                wetlands monitoring and maintenance, as well as
                monitoring and maintenance relating to certain
                property of the New Jersey Transit Corporation
                located adjacent to and east of the Property.
                Encoat will indemnify Russo from and against
                damages, losses, liabilities, costs and expenses
                incurred in connection with its failure to
                comply with these environmental covenants.

to Obligation
to Close:       As to Russo:

                (1) Encoat's representations and warranties will
                    be true and accurate as of the Closing;

                (2) Encoat will have performed all duties
                    required by the Contract to be performed by
                    the Closing;

                (3) all contingencies contemplated by the
                    Contract will have been satisfied or waived
                    by Russo;

                (4) Encoat will be able to deliver title to the
                    Property as required by the Contract;

                (5) the Court will have entered the Bidding
                    Procedures Order and the Sale Order, and
                    orders will have become final and non-

                (6) the absence of any "material adverse change"
                    in the condition of the Property since the
                    date of execution of the Contract; and

                (7) Encoat will have received a "No Further
                    Action" letter from the NJDEP in compliance
                    with the Contract.

                As to Encoat:

                (a) Russo's representations and warranties will
                    be true and accurate as of the Closing;

                (b) Russo will have performed all duties
                    required by the Contract to be performed by
                    the Closing;

                (c) the Court will have entered the Bidding
                    Procedures Order and the Sale Order and
                    these orders will have become final and
                    non-appealable; and

                (d) Encoat will have received a No Action

Contingency:    The Contract is contingent on the approval of
                the proposed Bidding Procedures with respect to
                the sale.  The Bidding Procedures Order and the
                Sale Order must remain unmodified and in full
                force and effect, or Russo may terminate the
                Contract and receive a return of the Deposit and
                the Contract will be deemed null and void.  In
                this case, neither Russo nor Encoat will have
                any further rights or obligations, except for
                those that expressly survive termination.

Breach by Russo: Encoat will retain the Deposit as liquidated
                damages.  Encoat also may assert claims
                against Russo arising from its breach of the
                Contract, relating to Russo's right to
                examine the Property before the Closing.

Breach by Encoat:

                If Russo terminates because of a failure of
                any of the conditions precedent to Russo's
                obligation to Close, the Deposit will be
                returned to Russo and the Contract will be
                null and void.  If the Contract is terminated
                because of breach, Russo will also have the
                right to pursue other remedies at law or in
                equity, including the compulsion of specific

Brokers:        Neither party owes any real estate brokerage
                commission in connection with the sale of the

Mr. Tanenbaum contends that the sale of the New Jersey Property
is warranted because it provides favorable terms for the
disposition of surplus real estate that the Debtors have been
marketing for over four years.

Russo was founded in 1969 and designs, constructs, owns and
manages office and industrial properties in Northern New Jersey.
Russo has developed over fifty buildings while earning a
reputation for well-planned, highly functional developments that
are distinguished by an emphasis on detail and quality.  Russo
is a custom developer servicing the specific needs of major
commercial enterprises.  Its clients include many large
corporations, like JP Morgan Chase, Wachovia Corporation, Fuji
Photo Film and Pioneer Electronics. (Bethlehem Bankruptcy News,
Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900)

Bethlehem Steel Corp.'s 10.375% bonds due 2003 (BS03USR1) are
trading at about 3 cents-on-the-dollar, says DebtTraders. See
real-time bond pricing.

BGF INDUSTRIES: Insufficient Cash Spurs S&P to Cut Ratings to D
Standard & Poor's Ratings Services lowered its 'CCC-' corporate
credit rating and 'CC' subordinated debt rating on glass fiber
fabrics manufacturer BGF Industries Inc., to 'D' following the
company's announcement that it does not have sufficient cash
available to make the January 15, 2003, interest payment on its
$100 million senior subordinated notes due 2009.

At the same time, Standard & Poor's affirmed its 'CCC-' senior
secured debt rating on BGF's bank credit facility. The company
is current on bank loan principal and interest payments. The
outstanding balance was $16.9 million as of Sept. 30, 2002 and
has been significantly reduced since then.

"BGF is working on some alternatives that would permit it to
make the bond interest payment within the 30-day grace period
and, if it is successful, ratings could be raised slightly",
said Standard & Poor's credit analyst Cynthia Werneth. BGF is
operating under a forbearance agreement with its bank lenders
that extends until March 31, 2003. Under this agreement,
financial covenants have been waived or amended and credit
availability has been declining each month.

Greensboro, North Carolina-based BGF Industries Inc., has
experienced prolonged weak market conditions in electronics and
aerospace end markets and the recent bankruptcy filing of a
major supplier and affiliate, Advanced Glassfiber Yarns LLC. BGF
has downsized operations, reduced operating and capital
expenditures, and engaged a crisis management consulting firm.
Nevertheless, there is substantial doubt about the company's
ability to continue as a going concern.

CAPTEC FRANCHISE: S&P Drops Class B Note Rating to Default Level
Standard & Poor's Ratings Services lowered its rating on the
class B notes issued by Captec Franchise Trust 1999-1 to 'D'.

The rating action follows the complete interest distribution
shortfall experienced by the class B notes on the Nov. 27, 2002
distribution date in the amount of $27,194. As of the Dec. 27,
2002 distribution date, there remained a partial interest
distribution shortfall in the amount of $8,240.

The cash flow required to pay the monthly expenses of the trust
continues to be stressed, primarily as a result of the poor
performance displayed by the underlying pool of franchise loans.
As of the Dec. 27, 2002 payment date, the underlying pool
displayed nearly $21.454 million in delinquencies, representing
21.23% of the current pool balance. The majority of the
underlying loans were extended to obligors in the quick-service
and casual-dining segment of the restaurant industry.

Adding further stress to liquidity, the servicer, BNY Asset
Solutions, exercised its right to cease making future principal
and interest advances with respect to several obligors, deeming
them nonrecoverable.

In addition, the trust paid more than $976,000 on the Nov. 27
payment date to reimburse Captec Asset Solutions, acting as sub-
servicer, and BNY for various expenses, including property
protection advances that were attributable to recent liquidation
sales. This compares to approximately $522,400 in aggregate
expenses paid by the trust during the 12 months prior to the
Nov. 27 payment date.

Based upon conversations with BNY and Captec Asset Solutions,
Standard & Poor's expects the class B notes to experience
interest distribution shortfalls over the near term as BNY has
communicated plans to recover more than $600,000 in outstanding
principal and interest advances over the next five to six
distribution periods.

Previously, on July 30, 2002, Standard & Poor's lowered the
ratings on the class A-2 and A-IO notes to 'A', from 'AAA'. In
addition, the 'A' rating assigned to the class B notes was
lowered to 'BBB-' and removed from CreditWatch negative where it
had been placed on April 23, 2002. The 'AAA' rated class A-1
notes were not affected at that time.

Standard & Poor's will continue to monitor the performance of
this franchise loan securitization to assure that the remaining
ratings continue to accurately reflect the risks associated with
this transaction.

                         Rating Lowered

                  Captec Franchise Trust 1999-1
             Franchise receivable notes series 1999-1

               Class     To          From      Balance (Mil. $)
               B         D           BBB-      4.327

CASELLA WASTE: S&P Rates $325MM & $150MM Facilities at BB- & B
Standard & Poor's Ratings Services assigned its 'BB-' rating to
solid waste services company Casella Waste Systems Inc.'s new
$325 million senior secured credit facilities and its 'B' rating
to the company's $150 million senior subordinated notes due

At the same time, Standard & Poor's affirmed its 'BB-' corporate
credit rating on Rutland, Vermont-based Casella. The outlook
remains stable.

The credit facilities will consist of a $175 million revolving
credit facility and a $150 million term loan B. Proceeds of the
term loan and the notes will be used to repay about $275 million
of borrowings under an existing credit facility, the rating on
which is being withdrawn.

"The ratings on Casella reflect its position as a major regional
solid waste services company and a below-average financial
profile", said Standard & Poor's credit analyst Roman Szuper.
"The recently completed divestiture of noncore assets allowed
for a material debt reduction from fairly high levels. As a
result, credit protection measures have improved to levels
appropriate for the rating".

Casella provides vertically integrated collection, recycling,
transfer, and disposal services to residential, commercial, and
industrial customers in several Northeastern states.

CENARGO INT'L: Irish Ferry Operator Files Chapter 11 Petitions
Cenargo International plc and most of its key subsidiaries filed
voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code
on Tuesday in Manhattan.  Cenargo's operations will continue
with no disruption to service.  Cenargo will conduct its
logistics and transport businesses, including its leading Irish
Sea ferry service on a business as usual basis.  Cenargo says
the chapter 11 filing will give the Group the chance to
reorganise its finances in an orderly, court supervised process.

Cadwalader, Wickersham & Taft provides legal counsel to the
Company in its restructuring.

American Marine Advisors is providing financial advisory
services to the Debtors.  Established in 1987 and with offices
in New York and Oslo, American Marine Advisors is the only
Merchant Banking firm in the U.S. exclusively focused on the
Maritime Industry.

Cenargo CEO, Michael Hendry said, "This step was taken to
stabilise Cenargo's financial situation and enable us to
continue our quality of service to customers.  After many weeks
of careful consideration of alternatives, we determined that
restructuring our debt could best be accomplished through a
Chapter 11 process.  Entering into these proceedings will enable
us to fully evaluate the best alternatives for the Company
without pressure to sell or give up valuable assets that could
benefit the Company and all its stakeholders in the future."

Mr. Hendry emphasised that the Company's businesses will
continue operations and local suppliers will be paid in
the normal course of ongoing business.

Chapter 11 of the U.S. Bankruptcy Code enables a company to
continue operating its business and managing its assets
in the normal course of trading.  The process gives companies
the chance to reorganise their finances in an orderly fashion.

Cenargo International Plc is the holding company of the Cenargo
Group.  Cenargo is one of the largest private ship owning groups
in the UK.  The Company operates freight and passenger ferry
services in the Irish Sea under the Merchant Ferries Plc and
Norse Irish Ferries Ltd. names on routes running to and from
Liverpool, Dublin, Belfast and Heysham; operates Ferrimaroc to
provide year-round ferry service between the ports in Almeria,
in southern Spain, and Nador, in north eastern Morocco; handles
air and sea freight forwarding; and provides logistics and
distribution services; and manages 500,000 square feet of
customs bonded warehousing space at three U.K. locations.

CENTENNIAL HEALTHCARE: Signing-Up King & Spalding as Attorneys
The U.S. Bankruptcy Court for the Northern District of Georgia
gave Centennial HealthCare Corporation and its debtor affiliates
authority to employ King & Spalding as their bankruptcy counsel.

Employing King & Spalding under a general retainer is
appropriate and necessary, Centennial argues, to enable the
Debtors to execute faithfully their duties as debtors and
debtors-in-possession and to implement the reorganization of the
Company's financial affairs.

King & Spalding is expected to:

      (a) advise the Debtors with respect to their powers and
          duties as debtors-in- possession in the continued
          management and operation of their businesses;

      (b) take all necessary action to protect and preserve the
          estates of the Debtors, including the prosecution of
          actions on the Debtors' behalf, the defense of any
          actions commenced against the Debtors, the negotiation
          of disputes in which the Debtors are involved, and the
          preparation of objections to claims filed against the
          Debtors' estates;

      (c) prepare on behalf of the Debtors all necessary
          motions, applications, answers, orders, reports, and
          other papers in connection with the administration of
          the Debtors' estates;

      (d) negotiate and prepare on behalf of the Debtors a plan
          of reorganization, a disclosure statement, and all
          related documents;

      (e) negotiate and prepare documents relating to the
          disposition of assets, as requested by the Debtors;

      (f) advise the Debtors, where appropriate, with respect to
          federal, state, and foreign regulatory matters; and

      (g) perform such other legal services for the Debtors as
          may be necessary and appropriate.

King & Spalding will be compensated at hourly rates ranging

     attorneys                $140 to $675 per hour
     document clerks and
       legal assistants        $50 to $175 per hour

Centennial HealthCare Corporation, which operates and manages 86
nursing homes in 19 states, filed a 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.

COMM 2000-FL2: Fitch Cuts 5 Note Class Ratings to Low-B Levels
COMM 2000-FL2's commercial mortgage pass-through certificates
$43.9 million class C is downgraded to 'A' from 'A+' by Fitch
Ratings. In addition, Fitch downgrades the following classes:
$35.6 million class D to 'BBB+' from 'A', $8.8 million class G-
CO to 'BB+' from 'BBB+', $10.8 million class H-CO to 'BB' from
'BBB', $10.4 million class J-CO to 'BB-' from 'BBB-', $1 million
class G-WH is downgraded to 'B+' from 'BB+', $1.4 million class
H-WH to 'B' from 'BB' and $1.5 million class J-WH to 'B-' from

Fitch affirms the following classes: $221.8 million class A and
interest-only $463.4 million class X at 'AAA' and $36 million
class B at 'AA'. Fitch does not rate the $34.6 million class E,
$33 million class F, $7.1 million class G-NS, $8.8 million class
H-NS, $8.8 million class J-NS, $1.1 million class G-LP, $1.3
million class H-LP, and $1.9 million class J-LP. The ratings for
classes G-FS, H-FS, and J-FS; G-NW and H-NW; G-CH, H-CH, and J-
CH; G-HM, H-HM, and J-HM; and G-EA were withdrawn due to the
payoff of the One East 57th Street loan, the News Building loan,
the Chelsea Market loan, the Hampshire loan and the Eastridge
Mall loan, respectively.

The downgrades are due to the declining performance of the
remaining three loans in the pool. The overall Fitch stressed
net cash flow for the pool declined 18.3% compared to
origination. As of the January 2003 distribution date, the TMA's
total principal balance has been reduced by 41% to $463.4
million from $785.3 million at origination.

Each first mortgage loan is split into an A, B and C note. Each
A note and B note has been contributed to form the Trust
Mortgage Asset. While the A notes are pooled, the B and C notes
provide credit enhancement only to the loan to which it relates.

As part of its review, Fitch analyzed the performance of each
loan and the underlying collateral and compared each loan's debt
service coverage ratio at closing to the most recent trailing
twelve month available. DSCRs are based on a Fitch stressed NCF
and a stressed debt service on the TMA loan balance. Fitch also
considered in its analysis the additional stress of the C note
on the three loans and the mezzanine financing on Colonnade and

The Colonnade loan is the largest loan, representing 53.8% of
the TMA. The loan is collateralized by seven cross-
collateralized and cross-defaulted office properties totaling
4.8 million square feet in 34 buildings and located in Georgia
(60% by allocated loan balance), Texas (22%) and Minnesota
(18%). Fitch NCF for TTM Sept. 30, 2002 decreased by 21.8% from
closing. The decline in NCF is due to a Fitch adjustment to the
NCF as a result of the depletion of the TI/LC escrow without a
commensurate increase in occupancy or net operating income. The
corresponding DSCR, based on a 9.66% Fitch stressed constant, is
at 1.18 times compared to 1.50x at closing. The all-in current
DSCR was 1.13x. Overall occupancy is flat at 77.2% as of Nov.
2002 compared to 78.3% at closing. The three office markets in
which the buildings are located are experiencing high vacancy
rates, ranging from 15.4% in Minneapolis to 23.4% in Dallas.
Fitch is concerned that expiring leases in the next year-
approximately 14% of the portfolio-and the currently vacant
space will be released at lower rates than at origination. The
master servicer, Midland Loan Services, Inc., is currently
working with the borrower for a 12-month extension, including an
extension of the interest rate cap. The loan matured in January

The Northstar loan, representing 39.9% of the TMA, is
collateralized by four boutique hotel properties. With hotels in
New York City, Los Angeles, and Miami, Northstar had an adjusted
NCF for TTM Sept. 30, 2002 which decreased 13.6% compared to
underwritten numbers at origination. The corresponding DSCR,
based on a 10.48% Fitch stressed constant, is at 1.42x compared
to 1.64x at closing. The all-in current DSCR was 1.03x. This
loan matures in July 2003 and the borrower is currently in the
market seeking refinancing.

The Whitehall loan properties are four garden style apartment
buildings, of which 88% by allocated loan balance is located in
the Atlanta suburbs. Atlanta has experienced significant job
losses and significant inflow of multifamily supply. These
factors coupled with low interest rates and an abundance of
affordable single family homes, have put tremendous downward
pressure on demand for multifamily units. Consequently, the
properties have experienced declining occupancy: 85.3% compared
to 94% at origination. The Fitch net cash flow for TTM June 30,
2002 has dropped 24.4% from origination, mostly due to lost
revenue and increased expenses. The corresponding DSCR, based on
a 10.35% Fitch stressed constant, was 1.07x compared to 1.41x.
The all-in current DSCR was 0.81x.

Although credit enhancement levels for the pooled classes have
increased significantly since origination, Fitch is concerned
about the poor performance of the three remaining loans. Fitch
resized each loan based on current Fitch adjusted cash flow and
on original sizing hurdles. The resulting higher credit
enhancement levels are the primary reason for downgrades to
classes C and D. Fitch will continue to monitor this
transaction, as surveillance is ongoing.

COGENTRIX: S&P Cuts Rating on NEG & Dynegy Credit Deterioration
Standard & Poor's Ratings Services lowered its corporate credit
ratings on Cogentrix Energy Inc., to 'BB' from 'BB+', following
the recent credit deterioration of National Energy Group and
Dynegy Inc., ('B'/CreditWatch Negative) and the significant
investment associated with gas turbines for a project that
never broke ground. The credit remains on CreditWatch with
negative implications.

"The credit deterioration of NEG and Dynegy had a significant
impact on Cogentrix's offtaker credit profile," said credit
analyst Tobias Hsieh. "Cogentrix has three 810-MW gas-fired
combined-cycle projects selling to NEG and Dynegy under long-
term tolling agreements. Even though Dynegy is current with its
payments and plants selling to NEG are still in construction, we
expect these projects to dividend minimal cash flow to
Cogentrix," continued Mr. Hsieh.

The credit rating continues to be on CreditWatch with negative
implications because of the need to renew a $250 million
corporate revolver by October of 2003 in a challenging
environment that confronts many energy industry participants. A
downgrade is likely if the negotiation proves to be more
challenging than expected or the renewal terms are onerous
enough to warrant a lower rating. Failure to complete
the sell down of a project to generate $60 million could also
place downward pressure on the rating.

Cogentrix had purchased $185 million of turbines and heat
recovery steam generator equipment for a project in Indiana.
However, the downturn in the U.S. power sector led to the
project's abandonment and the project never reached the
construction stage. Cogentrix is actively trying to place the
equipment in a new project. If Cogentrix is unsuccessful, it may
attempt to sell the equipment in the secondary market.

These negative developments lowered Cogentrix's cash flow to
parent interest coverage down to 2.0x-2.5x. Prior to these
negative developments, Cogentrix had consistently generated an
above 3.0x cash flow to parent interest coverage.

The company had December 2002 cash on hand of approximately $37
million and is expected to generate $88 million of operating
cash flow in 2003 without assuming any asset sales. Except for
$30 million of installment payments for the turbines, all of its
foreseeable capital expenditure and investment commitments have
been financed.

Debt maturities include a $20 million bond principal due in
March and a $250 million corporate revolver due in October.
Cogentrix should have adequate cash on hand to pay the bonds,
but given the worsened financials and the negative sentiments
toward the power sector, renewing the corporate revolver may
require arduous negotiations and the terms of the renewal may be
more onerous. Nevertheless, the banks are likely to renew
the revolver because Cogentrix has many projects outside of NEG
and Dynegy projects that are performing well and should continue
to generate stable long-term contractual cash flow.

CONGOLEUM CORP: S&P Drops Low-B Ratings to Junk Level
Standard & Poor's Ratings Services lowered its ratings on vinyl-
flooring manufacturer Congoleum Corp., to 'CCC' from 'B+' and
placed them on CreditWatch with developing implications as the
company seeks to resolve financial implications of its asbestos
litigation. Developing implications means the ratings could be
affirmed, raised, or lowered.

Standard & Poor's said that it took the actions following
Mercerville, New Jersey-based Congoleum's announcement that it
is negotiating a global settlement with current asbestos
plaintiffs. If negotiations are successful, the company intends
to file a prepackaged plan of reorganization under Chapter 11 of
the U.S. Bankruptcy Code. The company had cash of $14.9 million,
a fully available revolving credit facility, and debt of $100
million at September 30, 2002.

"Standard & Poor's will monitor the asbestos claims negotiation
process and bankruptcy filing proceedings", said Standard &
Poor's credit analyst Pamela Rice. "The ratings could be raised
if Congoleum successfully negotiates a settlement that allows it
to operate on a business as usual basis and meet all financial
obligations". However, Ms. Rice added that if the company does
not make interest or principal payments when due, or if the
bankruptcy filing causes the company to default on or extend the
maturity of its obligations, the ratings would be lowered. The
ratings could also be lowered if Congoleum experiences
substantial business disruptions, dramatic increases in
asbestos-related claims, or interruptions in insurance coverage.

Standard & Poor's noted that Congoleum's position as a leading
U.S. vinyl-flooring manufacturer is tempered by product
maturity, competitive market conditions, and industry

CONSECO INC: S&P Drags Ratings on Related Loan Trusts to D
Standard & Poor's Ratings Services lowered its ratings to 'D' on
three classes from various Conseco Finance Corp.-related
transactions issued by Home Improvement Loan Trust and Conseco
Finance Home Equity Loan Trust 2000-B.

Conseco Finance Corp., did not make any payments under the
limited guarantee on the Jan. 15, 2003 distribution date,
resulting in principal distribution shortfalls on the two Home
Improvement Loan Trusts and an interest shortfall on Conseco
Finance Home Equity Loan Trust 2000-B.

The ratings on the two Home Improvement Loan Trust certificates
were lowered to 'CCC-' from 'CCC+' on Sept. 12, 2002, as an
analysis determined that the monthly excess spread alone might
not be sufficient to offset the weakening credit quality of the
guarantor, Conseco Finance Corp.

Each of the certificates has credit support from a limited
guarantee provided by Conseco Finance Corp., and from monthly
excess spread.

                         Ratings Lowered

                   Home Improvement Loan Trust

          Series    Class             To                 From
          1994-BI   B-2               D                  CCC-
          1996-B    (single class)    D                  CCC-

           Conseco Finance Home Equity Loan Trust 2000-B

          Series    Class       To          From
          2000-B    BF-2        D           CCC+

CONSECO INC: Finance Unit Wants to Obtain $25MM Unsecured Credit
The Conseco Finance Corporation and its debtor-affiliates ask
the Court for authorization to obtain unsecured postpetition
financing of $25,000,000 -- a Junior DIP Facility -- with
$9,000,000 for working capital needs to be made available on an
interim basis pending a final hearing.

Richard L. Wynne, Esq., at Kirkland & Ellis, tells Judge Carol
Doyle that the CFC Debtors have determined that Postpetition
Financing is necessary to operate their businesses in Chapter 11
and for a successful reorganization.  Calling the CFC Debtors'
liquidity situation "dire," Mr. Wynne explains that even with
their cash on hand and the approval of first day motions, the
funding will not be sufficient to permit them to continue
operations for more than a few weeks.  The CFC Debtors, Mr.
Wynne says, do not have enough money to fund the completion of
the restructuring process without this additional borrowing.

For the past few months, the CFC Debtors have aggressively
pursued a variety of paths in attempts to secure cash to fund
operations, while simultaneously attempting to restructure and
streamline their existing debt service obligations.  Some
options pursued include asset sales, restructuring fee receipt
services, obtaining the right to use cash that was trapped in
securitized facilities and pursuing postpetition financing.

Prepetition, the CFC Debtors approached FPS, the current
stalking horse bidder for CFC's assets, Lehman Brothers, U.S.
Bank and other financial institutions about providing
postpetition financing.  Initially, the CFC Debtors and their
professionals approached these institutions separately.

It became apparent that the CFC Debtors would have to provide a
postpetition lender with sufficient collateral and security as a
condition for any loan.  However, the most promising source of
collateral, the stock of Mill Creek Bank, had significant liens
and the remainder of CFC's assets were pledged to Lehman.  After
lengthy discussions and negotiations, it became apparent that
the only way the CFC Debtors would be able to obtain
postpetition financing would be to include the participation of
both Lehman and U.S. Bank, two of the CFC Debtors' key
prepetition lenders, in the Postpetition Agent's proposed
facility.  Additionally, the financial institutions demanded a
first senior secured interest in the stock of Mill Creek Bank,
ahead of the pledge to the Parity Public Debt - thus priming the
Parity Public Debt lien. Therefore, the CFC Debtors' primary
lender, Lehman, has agreed to allow approximately $35,000,000
that would otherwise be payable to Lehman, to be lent to CFC as
a superpriority administrative expense, junior to the Public
Parity Debt lien.

The funding will be derived from funds pledged to Lehman by
Green Tree Financial Corp., pursuant to terms of a
$1,200,000,000 credit facility funded by the Lehman Warehouse
Facility. (Conseco Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

Conseco Finance Tr III's 8.796% bonds due 2027 (CNC27USR1) are
trading at about 20 cents-on-the-dollar, says DebtTraders. See
real-time bond pricing.

CONSTELLATION BRANDS: S&P Concerned about Planned BRL Merger
Standard & Poor's Rating Services revised the outlook for
beverage alcohol producer Constellation Brands Inc., to negative
from stable. The revision follows the company's recent
announcement that it is discussing a possible acquisition or
merger with Australian wine producer BRL Hardy.

At the same time, Standard & Poor's affirmed its 'BB' corporate
credit and senior unsecured debt ratings on Constellation
Brands, as well as the 'B+' subordinated debt rating on the

The Fairport, New York-based Constellation Brands had about
$1.35 billion of total debt outstanding at November 30, 2002.

Standard & Poor's believes (based on publicly available
information) that a combination with BRL Hardy would strengthen
Constellation Brands' business profile, making the company one
of the largest global wine producers. In addition, the company's
credit measures have improved in recent periods, providing some
financial flexibility for debt-financed acquisitions.

Constellation Brands said that no agreement on a structure or
transaction value has been reached. However, based on its
history of financing acquisitions largely with debt, Standard &
Poor's believes that another debt financing is likely for a
significant portion of the new transaction, if completed.

"It is likely that an acquisition of this size will initially
weaken credit measures in the near term and create both
integration and financing risk for the company," said Standard &
Poor's credit analyst Nicole Delz Lynch.

The ratings on Constellation Brands reflect its strong cash
generation from a diverse portfolio of beverage alcohol
products, offset in part by the competitive nature of the
company's markets and a leveraged financial profile reflecting
its acquisitive growth strategy. Constellation Brands is the
second-largest U.S. supplier of wines, the second-largest U.S.
importer of beer, and the third-largest U.S. supplier of
distilled spirits. The company is also the No. 2 producer of
cider in the U.K. and a leading U.K. beverage alcohol

Acquisition risk has been, and will likely continue to be, a key
issue in Constellation Brands' business profile. The company
made almost $1.5 billion of mostly debt-financed acquisitions
and joint ventures between November 1998 and February 2002,
including Matthew Clark PLC, selected Canadian whisky brands
from Diageo Inc., Franciscan Estates, Simi Winery, Ravenswood
Winery Inc., the assets of Turner Road Vintners and Corus
Brands Inc., and a 50% investment in Pacific Wine Partners LLC
(with partner BRL Hardy).

Nevertheless, these transactions have broadened Constellation's
business lines and product portfolio, significantly increased
the company's international revenue base, and, in some
instances, created distribution synergies. A combination with
BRL Hardy would further broaden the business portfolio and
provide the company with a key presence in the growing
Australian wine market.

COTTON GINNY: Seeks CCAA Protection in Ontario, Canada
Cotton Ginny Limited, a wholly owned subsidiary of Arbos Company
Limited, is seeking protection under the Companies' Creditors
Arrangement Act (CCAA) to facilitate a reorganization of its
business as a retailer of women's clothing and apparel.

In an affidavit submitted Wednesday to the Ontario Supreme Court
of Justice, the company acknowledged that sales during the key
December season fell well below its mid-November forecasts. In
addition, the company identified that it does not have adequate
capital to replenish inventories for the spring season, or to
finance inventory purchases for the 2004 fiscal year.

"We are convinced that beginning this restructuring process is
the best way to protect the valuable franchise we've spent more
than 20 years building," said Larry Gatien, acting president and
chief executive officer of Cotton Ginny Limited. "We are
determined to preserve Cotton Ginny. The CCAA filing will allow
us to continue our operations and give us the time necessary to
take corrective actions. We fully expect Cotton Ginny to emerge
from CCAA protection as a stronger and healthier company."

Richter and Partners Inc., have been appointed to monitor the
company's financial and business affairs during the
restructuring. In an effort to generate immediate capital and
reduce operating costs, it is anticipated that Cotton Ginny may
liquidate inventory in - and close - up to 100 locations. There
are 205 Cotton Ginny stores across Canada. It is also
anticipated that the company will seek a buyer for the Cotton
Ginny stores.

Cotton Ginny also operates Tabi International stores as a
separate division. The company expects that operations at its
Tabi International stores will be unaffected by this CCAA
filing. Since being acquired by Cotton Ginny in 1994, the Tabi
brand has continued its strong performance as evidenced by an
increase in Tabi brand stores from 30 to 90. The Tabi business
is a long- standing successful operation which has continued to
perform well as part of Cotton Ginny, producing positive
financial results in each of the last two fiscal years.

"This remains a challenging business climate for retailers, and
the company is looking at every aspect of its business to ensure
that it emerges from CCAA protection with restored health and
significant long term prospects," added Mr. Gatien.

CRESCENT REAL ESTATE: Board Declares Dividends for Dec. Quarter
Crescent Real Estate Equities Company (NYSE:CEI) announced that
its Board of Trust Managers has declared the following cash
dividends for the quarter ended Dec. 31, 2002:

                                 Fourth Quarter 2002  Annualized
                                 -------------------  ----------
Common                                  $0.375000     $1.5000
6.75% Series A Convertible Preferred    $0.421875     $1.6875
9.50% Series B Redeemable Preferred     $0.593750     $2.3750

The dividends are payable Feb. 14, 2003, to shareholders of
record on Jan. 31, 2003.

Crescent Real Estate Equities Company (NYSE:CEI) is one of the
largest publicly held real estate investment trusts in the
nation. Through its subsidiaries and partners, Crescent owns and
manages a portfolio of 74 premier office buildings totaling over
29 million square feet and centered in the Southwestern United
States, with major concentrations in Dallas, Houston, Austin and
Denver. In addition, the company has investments in world-class
resorts and spas and upscale residential developments.

                          *    *    *

As previously reported in Troubled Company Reporter, Standard &
Poor's affirmed its ratings on Crescent Real Estate Equities
Co., and Crescent Real Estate Equities L.P., and removed them
from CreditWatch, where they were placed on Jan. 23, 2002.  The
outlook remains negative.

        Ratings Affirmed And Removed From CreditWatch

      Issue                           To            From

Crescent Real Estate Equities Co.
   Corporate credit rating            BB            BB/Watch Neg
   $200 million 6-3/4%
         preferred stock               B             B/Watch Neg
   $1.5 billion mixed shelf  prelim B/B+   prelim B/B+/Watch Neg

Crescent Real Estate Equities L.P.
    Corporate credit rating           BB            BB/Watch Neg
    $150 million 6 5/8% senior
       unsecured notes due 2002       B+            B+/Watch Neg
    $250 million 7 1/8% senior
       unsecured notes due 2007       B+            B+/Watch Neg

DIGEX INC: Reports Preliminary Fourth Quarter Cash Metrics
Digex, Incorporated (Nasdaq: DIGX), a leading provider of
managed Web and application hosting services, announced
preliminary fourth quarter cash and borrowing metrics for the
period ending December 31, 2002. Digex did not require any
external funding in the fourth quarter. Additionally, Digex grew
its available cash balance to approximately $21 million up from
$16 million last quarter.

"We expect full fourth quarter results will reflect the
financial benefits we have achieved from all of the work we have
done over the last six months to properly align our expense
levels with our recurring revenue," said George Kerns, president
and CEO of Digex. "In the quarter Digex was able to cover its
operating and capital expenses with no external funding. As we
detailed previously, had WorldCom been in a position to pay
Digex the re-seller receivables owed from periods prior to their
bankruptcy filing, Digex would not have required any borrowing
in the third quarter as well."

Digex plans to announce its complete results for the fourth
quarter of 2002 on March 19, 2003.

Digex, with a total shareholders' equity deficit of about $2.5
million (as of September 30, 2002), is a leading provider of
managed Web and application hosting services. Digex customers,
from mainstream enterprise corporations to Internet-based
businesses, leverage Digex's services to deploy secure,
scaleable, high performance e-Enablement, Commerce and
Enterprise IT business solutions. Additional information on
Digex is available at

ELCOM INT'L: Commences Trading on OTCBB Effective January 16
The common stock of Elcom International, Inc. (Nasdaq: ELCO), a
leading international provider of remotely-hosted eProcurement
and private eMarketplace solutions, was delisted by the Nasdaq
National Market from the Nasdaq SmallCap Market, effective with
the open of business on Thursday, January 16, 2003. The Company,
as noted by the Panel, did not meet the minimum bid requirements
for continued listing on the Nasdaq SmallCap Market.

The Panel decision indicated that the Company's common shares
were immediately eligible for quotation on the OTC Bulletin
Board effective with the open of business on January 16, 2003.
No application for inclusion on the OTC Bulletin Board was
required, provided a market maker enters a quote on the first
day of eligibility. Investors will continue to have access to
quotes, press releases, and other information from the Internet site or at

The Nasdaq Listing and Hearing Review Council may decide on its
own to review the Panel's determination on or before
February 27, 2003, and the Company would be notified of any such
review. Review by the Nasdaq Listing and Hearing Council would
not delay the delisting.

The Company will keep the letters ELCO as its ticker symbol and
intends to apply for listing on Nasdaq's automated BBX automated
exchange -- when it is available
later this year.

Robert J. Crowell, Elcom's Chairman and CEO stated, "The
transition to the OTCBB does not affect the strategic
positioning of the Company. We will maximize the efficient use
of our cash reserves as we move several business initiatives
forward, each of which, importantly, is expected to generate
variable fees based on usage of the PECOS system."

                      Company Product Offerings

For detailed information on our PECOSTM technology and optional
Dynamic Trading functionality, please visit its Web site at

Elcom International, Inc. (Nasdaq: ELCO), operates elcom, inc.,
a leading international provider of remotely-hosted eProcurement
and private eMarketplace solutions. elcom, inc.'s innovative
remotely-hosted technology establishes the next standard of
value and enables enterprises of all sizes to realize many of
the benefits of eProcurement without the burden of significant
infrastructure investment and ongoing content and system
management. PECOS Internet Procurement Manager, elcom, inc.'s
remotely-hosted eProcurement and eMarketplace enabling platform
was the first "live" remotely-hosted eProcurement system in the
world. Additional information can be found at

                         *     *     *

In its SEC Form 10-Q filed on November 14, 2002, the Company

"The Company's consolidated financial statements as of
December 31, 2001, were prepared under the assumption that the
Company will continue as a going concern for the year ending
December 31, 2002.  The Company's independent accountants, KPMG
LLP, issued an audit report dated March 29, 2002 that included
an explanatory paragraph expressing substantial doubt regarding
the Company's ability to continue as a going concern through
December 31, 2002, without additional capital becoming
available.  The Company's ability to continue as a going concern
is dependent upon its ability to generate revenue, attain
further operating efficiencies and attract new sources of
capital. The Company is in the process of seeking additional
capital.  Alternatively, the Company may seek to sell certain
assets and/or rights to its technology in certain specific
vertical markets and/or geographic markets. There can be no
assurance that the Company will be able to raise capital or sell
certain assets and/or rights to its technology, or if so, on
what terms or what the timing thereof might be. The consolidated
financial statements do not include any adjustments that might
result from the outcome of this uncertainty."

EMAC OWNER: Fitch Junks Ratings on Franchise Loan Transactions
Fitch Ratings downgrades EMAC Owner Trust 1998-1 class A,
including class IO to 'B' from 'BBB', class B to 'CCC' from
'BB', class C to 'CC' from 'B' and class D to 'C' from 'CCC'.
Classes A through C will remain on Rating Watch Negative.

The downgrades are a result of the continuous deterioration of
the collateral performance of the pool. The 1998-1 pool
currently has $103 million (32%) of collateral which is
currently delinquent greater then 90 days or defaulted. In
addition, this deal currently has $14.2 million in unreimbursed
principal and interest advances. The recoupment of certain
advances as well as the discontinuing of advances on certain
borrowers has resulted in interest shortfalls to every class.

Fitch downgrades EMAC Owner Trust 1999-1 class A, including
class IO to 'CCC' from 'BB', class B to 'CCC' from 'B', class C
to 'CC' from 'CCC' and class D to 'C' from 'CC'. Classes A and B
will remain on Rating Watch Negative.

The 1999-1 transaction is by far the most impaired of any of the
EMAC deals. Cumulative defaults currently stand at 65% of the
initial pool that has resulted in approximately 10% of
cumulative losses. Current defaults total 62.5% of the pool or
just over $133 million. If 90+ day delinquencies are included
the amount of impaired collateral totals $146 million (68.4%).
In addition to the overwhelming losses expected this deal has
also severe liquidity concerns. The advances on several
borrowers have been halted and there is currently $18.8 million
in unreimbursed P&I advances outstanding.

Fitch downgrades EMAC Owner Trust 2000-1 class A, including
class IO to 'B' from 'BB', class B to 'CCC' from 'B', class C to
'CC' from 'CCC' and classes D and E are affirmed at 'CC' and
'C', respectively. Classes A, IO and B will remain on Rating
Watch Negative.

The 2000-1 deal currently has $116 million (30%) in collateral
delinquent greater then 90 days or defaulted. This deal is also
suffering from a liquidity stress similar to the ones in the
previous deals with $17.7 million in P&I advances outstanding
and none of the classes below class A receiving interest for the
past 5 months.

ENCHIRA BIOTECHNOLOGY: Shareholders Approve Plan of Dissolution
Enchira Biotechnology Corporation's (OTC Bulletin Board: ENBC)
stockholders approved its plan of complete liquidation and
dissolution at the adjournment of the special meeting of
stockholders held on Tuesday, January 14, 2003. The Company
intends to file a certificate of dissolution with the Delaware
Secretary of State as soon as practicable which will have the
effect of terminating the Company's existence for all purposes
except certain wind-down activities.

                         *    *    *

Since its inception in December 1989, Enchira has devoted
substantially all of its resources to research and development.
To date, all of the Company's revenues have resulted from
interest and investment income and sponsored research payments
from collaborative agreements.  Enchira has incurred cumulative
losses since inception and expects to incur continued losses for
the remainder of the year.  As of September 30, 2002, the
Company's accumulated deficit was approximately $95.5 million.

The Company has an additional 51,200 shares of Series B
Preferred Stock outstanding.  If these shares were redeemed at
the closing price in effect on November 6, 2002, the Company
would be required to issue 64,000,000 shares of its common stock
for the redemption and an additional 33,230,887 shares of its
common stock in payment of accrued but unpaid dividends.  The
number of shares of common stock issuable upon such redemption
is based on the 10-day average of the closing prices of the
Company's common stock at the time of redemption.  If required
to be redeemed for cash, the Company does not have sufficient
funds (approximately $3.9 million) and would be required to file
for bankruptcy protection.

For the nine months ended September 30, 2002, the Company used
$4,136,550 in operating activities, incurred $39,129 in capital
and patent expenditures and used $56,814 in financing
activities.  At September 30, 2002, the Company had cash
totaling $254,340, and working capital of $415,352.

The Company has experienced negative cash flow from operations
since its inception and has funded its activities to date
primarily from equity financings and sponsored research
revenues.  The Company believes that its available cash will be
adequate to fund the anticipated liquidation and dissolution.

ENRON CORP: Examiner Neal Batson Hires Eight Contract Attorneys
Enron Corporation Examiner Neal Batson seeks the Court's
authority to retain eight attorneys to process hundreds of
thousands of pages of documents produced by the various
respondents to the subpoenas authorized under Rule 2004 of the
Federal Rules of Bankruptcy Procedure, nunc pro tunc to
November 11, 2001.  The Attorneys are:

    -- Todd J. Grates, Esq.,
    -- Paul Leavitt, Esq.,
    -- Ross Miller, Esq.,
    -- Alan Nichols, Esq.,
    -- Sean Rogers, Esq.,
    -- David Savoy, Esq.,
    -- Eric Taylor, Esq., and
    -- Delbert Winn, Esq.

The Examiner further asks the Court for the ability to add, on
notice to the Debtors, the Creditors' Committee, the Employment-
Related Issues Committee and the U.S. Trustee, certain
additional contract attorneys, not exceeding 10 at a time, to
the extent necessary as the document production process unfolds.
The Examiner proposes to file a notice with the Court attaching
the affidavit of disinterestedness of each additional designated
contract attorney and the retention would be approved absent any
objection filed by any party-in-interest within 10 days of the
notice filing.

Dennis J. Connolly, Esq., at Alston & Bird LLP, in Atlanta,
Georgia, explains that the subpoena respondents have commenced
production of the documents and the volume of material are
specialized.  Thus, additional assistance is necessary.

The Examiner has reviewed resumes of a number of contract
attorneys and has selected the eight he believes to be well
qualified to undertake the document review task.

Mr. Connolly informs Judge Gonzalez that the Examiner will
charge the estate $175 an hour for each Attorney as compensation
for the services it will render with the Examiner.  The Examiner
will reflect the charges incurred with respect to the Attorneys
on the Alston & Bird fee statements and fee applications to be
filed in these cases.

According to Mr. Connolly, the Attorneys do not hold any
disqualifying interest adverse to the Debtors' estates in
matters they are to be engaged in. (Enron Bankruptcy News, Issue
No. 53; Bankruptcy Creditors' Service, Inc., 609/392-0900)

DebtTraders reports that Enron Corp.'s 9.125% bonds due 2003
(ENRN03USR1) are trading at about 14 cents-on-the-dollar. See
for real-time bond pricing.

ESSENTIAL THERAPEUTICS: Considering Seeking Bankruptcy Relief
Essential Therapeutics, Inc., (Nasdaq: ETRX) plans to adjourn
the Special Meeting of Stockholders called for the purpose of
considering proposals to (1) approve the conversion of its
Series B Preferred Stock into common stock, (2) increase the
authorized capital stock of the Company and (3) approve an
amendment to its Restated Certificate of Incorporation to effect
any of certain specified reverse stock splits.

By Notice of the Special Meeting dated December 3, 2002, the
Special Meeting is scheduled to be convened on January 17, 2003
at 9:30 a.m. at the Doubletree Guest Suites located at 550
Winter Street, Waltham, Massachusetts. The Company intends to
convene the Special Meeting at 9:30 a.m. on January 17, 2003 for
the sole purpose of adjourning the Special Meeting to Thursday,
January 23, 2003 at a place and time to be announced at the time
of adjournment.

The Company announced that despite the endorsement of
Institutional Shareholder Services, the nation's leading proxy
advisory service, and despite the recommendation of the
Company's Board of Director's that the proposals under
consideration are in the best interest of the Company's common
stockholders, the holders of a sufficient number of the
Company's outstanding shares of common stock have not yet
submitted proxies indicating how such shares should be voted at
the Special Meeting on the proposals. Mark Skaletsky, President
and CEO of the Company, stated, "While we are encouraged that
over 75 percent of the shares voted on the conversion of the
Series B Preferred Stock have been voted in favor of the
approval of the conversion of the Series B Preferred Stock, we
simply have not yet received proxies from the holders of a
sufficient number of shares of common stock to secure the
required vote." Mr. Skaletsky added, "Due to the nature of the
vote required, a non-vote amounts to a vote against the
proposal, and given the potentially severe consequences to all
of the common stockholders of the failure to secure this vote,
we want to be sure all stockholders have had an adequate
opportunity to vote their shares in the manner in which the
stockholder intends."

After considerable deliberation and a comprehensive evaluation
of the alternatives available, on November 13, 2002, the Company
announced that it had entered into separate Conversion
Agreements with certain holders of its outstanding shares of
Series B Preferred Stock. The conversion of the outstanding
shares of Series B Preferred Stock into common stock is part of
the Company's comprehensive plan to achieve compliance with the
Nasdaq National Market System listing criteria which require the
Company to maintain a minimum stockholders' equity of $10
million. As previously announced, if the Company's stockholders
fail to approve the conversion of all outstanding shares of
Series B Preferred Stock, then the Company does not expect that
it will be able to maintain its listing of its common stock on
the Nasdaq National Market. In the event of delisting, the terms
of the Series B Preferred Stock provide that the Series B
Preferred Stockholders have the right to cause the Company to
redeem their shares of Series B Preferred Stock at a price of
$1,000 per share. The redemption of all 60,000 shares of Series
B Preferred Stock would result in the Company being obligated to
pay the holders of the Series B Preferred Stock an aggregate of
$60.0 million.

The Company currently does not have the funds available to
redeem all of the outstanding shares of Series B Preferred
Stock, and in the face of a redemption election by sufficient
holders of its Series B Preferred Stock, the Company would
likely need to consider taking action that may result in the
Company's dissolution, insolvency or seeking protection under
bankruptcy laws or similar actions.

As a result of the potentially severe consequences to the
holders of common stock that could result from the failure of
the common stockholders to approve the conversion of the Series
B Preferred Stock, combined with the fact that to date holders
of only approximately 42 percent of the outstanding shares of
common stock have submitted proxies indicating how their shares
of common stock should be voted on the proposal to approve the
conversion of the Series B Preferred Stock, the Company plans to
adjourn the Special Meeting of Stockholders until January 23,
2003, to provide all common stockholders with adequate
opportunity to take a position on the proposals. The Company
encourages all common stockholders to read the Proxy Statement
distributed on or about December 3, 2002 and to submit a proxy
indicating how to vote their shares of common stock at the
Special Meeting on the proposals described in the Proxy
Statement. Stockholders who need Proxy materials are encouraged
to contact the Secretary of the Company at 781-672-1332.

Essential Therapeutics is committed to the development of
breakthrough biopharmaceutical products for the treatment of
life-threatening diseases. With an emerging pipeline of product
candidates, Essential Therapeutics is dedicated to
commercializing novel small molecule products addressing
important unmet therapeutic needs. Additional information on
Essential Therapeutics can be obtained at

EXIDE: Has Until June 30, 2003 to Move Actions to Delaware Court
Exide Technologies and its debtor-affiliates obtained extension
of time by which they may file notices of removal through and
including June 30, 2003, with respect to civil actions pending
as of the Petition Date. (Exide Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

Exide Technologies' 10% bonds due 2005 (EXDT05FRR1) are trading
at about 15 cents-on-the-dollar, DebtTraders reports. See
for real-time bond pricing.

FARMERS & MECHANICS: S&P Ratchets Counterparty Ratings to Bpi
Standard & Poor's Ratings Services lowered its counterparty
credit and financial strength ratings on Farmers & Mechanics
Mutual Insurance Co., of WV to 'Bpi' from 'BBpi' because of
F&M's continuing weak operating performance, geographic
concentration, and reduced capitalization and surplus levels.

Based in Martinsburg, West Virginia, this mutual company writes
mainly homeowners multi-peril, fire, and farmowners insurance in
West Virginia, which is its only licensed state. Its products
are distributed primarily through independent agents. The
company began business in 1878.

"The company, which is unaffiliated with any other insurance
company, is rated on a stand-alone basis," noted Standard &
Poor's credit analyst Alan Koerber.

FASTNET CORP: Hires DH Capital to Render Financial Advice
FASTNET Corporation (Nasdaq:FSST) retained DH Capital, LLC as a
financial advisor to assist in raising equity capital and
evaluating acquisition opportunities.

Stephen Hurly, chief executive officer of FASTNET said, "Our
business plan calls for select acquisitions to add capabilities
which will enable us to compete more effectively. Through DH
Capital, we will be outsourcing the research, and much of the
groundwork associated with finding those new opportunities in
the marketplace. DH Capital has a deep well of expertise in our
industry, which they will use on our behalf to help FASTNET
shorten this process. We have worked with Peter Hopper, founder
and principal of DH Capital, previously, and have benefited from
his knowledge and experience. We believe our relationship with
DH Capital will benefit not only our investors, but also the
backbone of FASTNET - our customers."

FASTNET (NASDAQ:FSST) provides high-performance, dedicated and
reliable broadband services to businesses that need to drive
productivity, profitability and customer service via the
Internet. Through private, redundant peering arrangements with
the national IP backbone carriers, FASTNET delivers customer
data through the fastest, least congested route to enhance
reliability, improve performance, and eliminate downtime.
Founded in 1994, FASTNET provides a complete suite of solutions
for dedicated and broadband access, Internet security and data
backup as well as wireless Internet connectivity, VPN design and
implementation, managed hosting, Web site and e-commerce
development and co-location.

Based in Bethlehem, PA, FASTNET serves the greater Mid-Atlantic
region from Northern Virginia to New England.

The Company's common shares are listed on the NASDAQ National
Market under the symbol "FSST." For more information on FASTNET,
visit the Company's Web site at

DH Capital is a private investment banking partnership. DH
Capital's principals have extensive background in the media,
Internet and telecommunications industries. The firm capitalizes
on the more than forty years of combined experience in
financing, acquiring, selling and operating media, Internet and
telecommunications companies. DH Capital specializes in
providing a full range of advisory services to companies and
financial institutions including private placements, mergers &
acquisitions, financial restructuring, and operational
consulting. The principals of DH Capital have completed more
than 100 transactions with an aggregate value in excess of $25
billion, including more than $300 million in private equity
capital placed and over $3 billion in debt financing arranged.

                           *    *    *

                   Liquidity and Going Concern

FASTNET's September 30, 2002 balance sheet shows that total
current liabilities exceeded total current assets by about $14

The Company's business plan has required substantial capital to
fund operations, capital expenditures, and acquisitions. The
Company modified its business strategy in October 2000.
Simultaneous with the modification of its strategic plan, the
Company recorded a charge primarily related to network and
telecommunication optimization and cost reduction, facility exit
costs, realigned marketing strategy, and involuntary employee
terminations. These actions reduced the Company's cash
consumption. In December 2001, the Company recorded an
additional charge related to excess data center facilities and
office space that are non-cancelable commitments of the Company.
The Company periodically re-evaluates the adequacy of this
reserve and may adjust the reserve as required.

The Company has incurred losses since inception and expects to
continue to incur losses in 2002. As of September 30, 2002, the
Company's accumulated deficit was $55,009,447. As of September
30, 2002, cash and cash equivalents and marketable securities
were $4,734,968. The Company's working capital deficit is
$13,613,423 as of September 30, 2002. In October 2002, the
Company liquidated restricted certificates of deposit of
$4,800,000 in order to repay a bank note. The Company believes
that its existing cash and cash equivalents, marketable
securities, cash flows from operations, anticipated debt and
lease financing will be sufficient to meet its working capital
and capital expenditure requirements to the end of 2003 assuming
satisfactory negotiation of capital lease obligations which are
included in current liabilities and repayment of the receivables
collected on behalf of the Company due to the estate of
AppliedTheory. In order to finance the Company's strategic
acquisition plan and other operating strategies, the Company is
actively seeking additional debt and equity financing. If
additional funds are raised through the issuance of equity
securities, existing shareholders may experience significant
dilution. Furthermore, additional financing may not be available
when needed or, if available, such financing may not be on terms
favorable to the Company. If such sources of financing are
insufficient or unavailable, or if the Company experiences
shortfalls in anticipated revenue or increases in anticipated
expenses, the Company may need to make operational changes to
decrease cash consumption. These changes may include closing
certain markets and making further reductions in head count,
among other things. Any of these events could harm the Company's
business, financial condition, cash flows or results of

FEDERAL-MOGUL: Wants More Time to Move Actions to Delaware Court
Federal-Mogul Corporation and its debtor-affiliates, and the
Official Committee of Unsecured Creditors jointly ask the Court
to grant another five month extension of the period within which
the Debtors may remove actions pursuant to 28 U.S.C. Section
1452 and Rules 9006 and 9027 of the Federal Rules of Bankruptcy

The Debtors and the Creditors' Committee propose to extend the
Removal Periods through and including:

  (a) June 1, 2003, with respect to civil actions pending as of
      the Petition Date; and

  (b) July 1, 2003 for all matters specified in Federal Rule
      9027(a)(2)(A), (B) and (C).

Rule 9027(a)(2) provides in pertinent part that:

  "If the claim or cause of action in a civil action is
  pending when a case under the [Bankruptcy] Code is
  commenced, a notice of removal may be filed in the Court
  only within the longest of:

    (A) 90 days after the order for relief in the case under
        the [Bankruptcy] Code,

    (B) 30 days after entry of an order terminating a stay, if
        the cause of action in a civil action has been stayed
        under Section 362 of the [Bankruptcy] Code, or

    (C) 30 days after a trustee qualifies in a Chapter 11
        reorganization case but not later than 180 days after
        the order of relief.

James E. O'Neill, Esq., at Pachulski, Stang, Ziehl, Young &
Jones, in Wilmington, Delaware, informs the Court that, since
the Petition Date, the Debtors have been in an ongoing process
of evaluating those actions suitable for removal.  With respect
to actions unrelated to asbestos, the Debtors believe that their
analysis was largely complete as of July 1, 2002 and the Debtors
do not presently intend to remove any of those actions.

Mr. O'Neill explains that, with the support of the Creditors'
Committee, the Debtors seek another extension in order to
preserve whatever ability they may have to remove claims against
them, including asbestos claims or claims for contribution,
indemnity and subrogation to this Court.  Mr. O'Neill ascertains
that the rights of the Debtors' adversaries will not be
prejudiced by another extension since any party to a prepetition
action that is removed may seek to have it remanded to the state
court from which the action was removed pursuant to 28 U.S.C.
Section 1452(b).

Judge Newsome will convene a hearing to consider the request on
January 29, 2003.  Under Rule 9006-2 of the Local Rules of the
Delaware Bankruptcy Court, the Debtors' Removal Period is
preserved until the conclusion of that hearing. (Federal-Mogul
Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

Federal-Mogul Corp.'s 8.80% bonds due 2007 (FMO07USR1) are
trading at about 18 cents-on-the-dollar, says DebtTraders. See
real-time bond pricing.

FRISBY TECHNOLOGIES: Files for Chapter 11 Relief in No. Carolina
Frisby Technologies, Inc., (OTC Bulletin Board: FRIZ) filed a
voluntary petition for Chapter 11 reorganization with the U.S.
Bankruptcy Court for the Middle District of North Carolina.

In connection with the company's Chapter 11 filing, the Company
further announced that it has reached agreement with its secured
creditor group to provide debtor-in-possession financing. Upon
court approval, the new funding will be available immediately on
an interim basis to supplement the Company's existing capital
and help the company fulfill obligations associated with
operating its business, including its payroll and employee-
related expenses, and payments to suppliers and service
providers for goods and services provided after Thursday's

In conjunction with Thursday's petition for Chapter 11
reorganization, the Company will ask the Bankruptcy Court to
consider a variety of "first day motions" to support its
employees, suppliers, customers and other constituents. These
include motions seeking court permission to continue payments
for employee payroll and health benefits; obtain interim
financing authority and use of cash collateral; and retain
legal, financial and other professionals to support the
company's reorganization actions.

According to Mark Gillis, the Company's recently appointed Chief
Restructuring Officer, "[Thurs]day's action was a necessary
first step in the process to reorganize the business and
maximize value for all of the Company's creditors. We are
grateful to the secured lenders for providing the DIP financing
that will enable the Company to continue to conduct business as
usual as we carefully explore our strategic alternatives and
develop a reorganization plan that is satisfactory to all
parties with an interest in this case."

Duncan R. Russell, President and Chief Operating Officer, added,
"It is important for our customers, licensees and global
business partners to know that [Thurs]day's action was made in
order to ensure that they continue to be able to order and we
will still be able to supply the full range of COMFORTEMP(R)
branded products, including our fabrics and nonwovens. It is our
intention to do everything possible to preserve the value of our
brand, retain our leadership status in the temperature-balancing
materials market and emerge from bankruptcy as a stronger

The Company's principal legal advisor with regard to the Chapter
11 filing and related matters is Ivey, McClellan, Gatton, &
Talcott LLP of Greensboro, NC.

Frisby Technologies Inc., is a global leader in the development
of temperature balancing materials for the apparel, footwear,
sporting goods, and home furnishings industries. For more
information visit

GENUITY: Honoring Up to $5 Million of Prepetition Foreign Claims
Judge Beatty authorizes Genuity Inc., and its debtor-affiliates
to pay the prepetition Foreign Creditor Claims of Foreign
Creditors on a final basis, in the Debtors' sole discretion and
in the ordinary course of business in amount not to exceed
$5,000,000. (Genuity Bankruptcy News, Issue No. 4; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

GEORGIA-PACIFIC: S&P Rates $500MM Sr. Unsecured Notes at BB+
Standard & Poor's Ratings Services assigned its 'BB+' senior
unsecured debt rating to Georgia-Pacific Corp.'s $500 million
notes due 2010. The notes will be guaranteed by Georgia-
Pacific's wholly owned subsidiary, Fort James Corp.

Standard & Poor's said that at the same time it affirmed its
'BB+' corporate credit rating on the company. The outlook
remains negative. Debt at Georgia-Pacific, excluding capitalized
operating leases, totals about $11.6 billion.

"Conditions in many of Georgia-Pacific's markets have been
negatively affected by the weak economy, and the company has
generated nominal free operating cash flow since the primarily
debt-financed acquisition of Fort James two years ago", said
Standard & Poor's credit analyst Cynthia Werneth. "The company
also has significantly increased its reserve for asbestos
liabilities". Standard & Poor's said that the ratings could be
lowered if the company's financial profile does not begin to
strengthen to appropriate levels in the near term. They could
also be lowered if asbestos-related liabilities continue to
escalate or hamper Georgia-Pacific's access to capital for debt
refinancing, if liquidity deteriorates for other reasons, or if
the amount of secured debt increases.

Atlanta, Georgia-based Georgia-Pacific is a major diversified
forest products company. The ratings reflect broad product
diversity, with good market and cost positions in tissue,
disposable tableware, and containerboard. This is offset by more
cyclical building products, pulp, and paper operations;
aggressive debt leverage; and weak credit protection measures.

GILAT SATELLITE: Fails to Comply with Nasdaq Listing Guidelines
Gilat Satellite Networks Ltd., (Nasdaq: GILTF) said that on
January 8, 2003, it received notice from the Nasdaq National
Market advising the company that it is not in compliance with
Nasdaq's annual meeting and proxy solicitation requirement,
Marketplace Rule 4350(e) and 4350(g).

The Company met with the Nasdaq hearing panel on January 10,
2003, to address this issue and to discuss upcoming corrective
action by the Company.

The Nasdaq Marketplace Rules 4350(e) and 4350(g) require listed
companies to hold an annual meeting and solicit a proxy during
each calendar year. The Company rescheduled its annual meeting
from the fourth quarter 2002 to the second quarter of 2003 in
anticipation of the forthcoming creditors' meetings scheduled
for February 2003. The Company expects to hold its Annual
General Meeting during the second quarter 2003 and believes that
it can take the appropriate measures to ensure that it is in
compliance with NNM's requirements for continued listing.

The Company also states that its debt restructuring plan remains
on-track and expects to bring the process to closure during the
first quarter 2003. The Company operations continue as normal
throughout this process.

Gilat Satellite Networks Ltd., with its global subsidiaries
Spacenet Inc. and Gilat Latin America, is a leading provider of
telecommunications solutions based on Very Small Aperture
Terminal (VSAT) satellite network technology - with nearly
400,000 VSATs shipped worldwide. Gilat markets the Skystar
Advantage, DialAw@y IP, FaraWay, Skystar 360E and SkyBlaster*
360 VSAT products in more than 70 countries around the world.
The Company provides satellite-based, end-to-end enterprise
networking and rural telephony solutions to customers across six
continents, and markets interactive broadband data services. The
Company is a joint venture partner in SATLYNX, a provider of
two-way satellite broadband services in Europe, with SES GLOBAL.
Skystar Advantage(R), Skystar 360(TM), DialAw@y IP(TM) and
FaraWay(TM) are trademarks or registered trademarks of Gilat
Satellite Networks Ltd. or its subsidiaries. Visit Gilat at (*SkyBlaster is marketed in the United States by
StarBand Communications Inc. under its own brand name.)

GLOBAL CROSSING: Wants Filing Exclusivity Extended to March 31
Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New
York, tells the Court that Global Crossing Ltd., and its debtor-
affiliates have made significant progress toward emerging from
Chapter 11 since the second extension of the exclusive periods.
Most notably, on December 26, 2002, the Court entered an order
confirming the Plan.

However, the Plan is contingent on the occurrence of the
"Closing" described in the Purchase Agreement.  The Transaction
is, in turn, contingent on the occurrence of several events.
Most importantly, the GX Debtors must:

    -- obtain approvals of the Transaction from various federal
       and state governmental authorities; and

    -- satisfy certain financial tests specified in the Purchase

According to Mr. Walsh, the GX Debtors are working diligently to
obtain the requisite regulatory approvals.  They have already
received Hart Scott Rodino clearance, as well as approvals from
public utility commissions for most states in which they are
licensed.  However, several key regulatory approvals are still
needed, and the GX Debtors anticipate that the process of
obtaining these consents will take several more weeks.

Mr. Walsh adds that the Debtors are also working to finalize
their financial reporting for the end of 2002.  Although the
Debtors are confident that they will meet the financial tests in
the Purchase Agreement, the reports are necessary to verify
compliance.  That process will not be completed until late
January or early February 2003.

By this motion, the Debtors ask the Court to extend the
Exclusive Filing Period beyond the time required to complete
these tasks in order to protect their estates.  In particular,
the Debtors seek an extension of the Exclusive Filing Period to
the earlier of:

    -- March 31, 2003, or

    -- in the event the Purchase Agreement is terminated in
       accordance with its terms by any of the parties, two
       weeks from the date of termination.

The Debtors also seek an extension of the Exclusive Solicitation
Period until 60 days after the Extended Exclusive Filing Period.
These extensions will provide the Debtors with sufficient time
to formulate and file a new plan of reorganization if any of the
conditions to "Closing" are not met without having the
destabilizing effects of competing plans.

Each factor set forth by the Second Circuit in McLean Indus.
weighs toward granting an extension of the Exclusivity Periods.
Mr. Walsh points out that the Debtors' Plan has been accepted by
their creditors and confirmed by the Court.  This is more than
ample proof of good faith progress towards reorganization.  This
is not a case where the Debtors are seeking to extend
exclusivity to pressure creditors "to accede to [the debtors']
reorganization demands," but rather, a case where the Debtors,
the Investors, and the Debtors' creditors have all agreed to a
Plan and are simply waiting to implement it.

At this point in these Chapter 11 cases, Mr. Walsh explains that
the Debtors require the extension simply to preserve exclusivity
while the Debtors meet the requirements of the Purchase
Agreement.  The Debtors have already begun to work with their
special counsel to obtain approval of the Purchase Agreement
from the Federal Committee on Foreign Investment in the United
States. The CFIUS-review process, however, is ongoing and may
extend past the current January 21, 2003, deadline for

The Debtors also need additional time to prepare their final
balance sheets for 2002.  Mr. Walsh notes that one of the
Closing Conditions imposed by the Investors requires the Debtors
to meet certain financial tests as of December 31, 2002.
Although the Debtors are confident that they have met these
financial tests, the Debtors must compile an official balance
sheet for the Investors' review.  The Debtors project that the
balance sheet will not be completed until late January or early
February 2003.

In the event the regulatory bodies do not approve the Purchase
Agreement, the financial tests are not met, and the Debtors are
forced to abandon the Plan, the Debtors seek an opportunity to
propose and solicit a new plan of reorganization without
competing plans.  Without an extension of exclusivity, Mr. Walsh
is concerned that the Debtors would be left not only to operate
their business, but to do so while scrambling to formulate and
negotiate a new plan, assess competing plans that are filed, and
contend with the destabilizing effect that these events would
have on their business, employees, vendors, and customers.  The
Debtors seek to maintain the healthy balance with its creditor
constituencies that only an extension of the Exclusivity Periods
can provide.

Mr. Walsh insists that the loss of exclusivity would have a
deleterious effect on the Debtors, their estates, their
creditors, and all parties-in-interest.  It would be nearly
impossible for the Debtors to dedicate sufficient resources to
formulate a new plan if they were required to focus on analyzing
and responding to competing plans submitted by other parties.
Moreover, the Exclusivity Periods have permitted the Debtors to
negotiate and reach reasonable agreement with the Creditors'
Committee and the Debtors' prepetition lenders without the
pressure of entertaining competing plans of reorganization.  If
the Debtors cannot preserve the exclusive right to present and
file a plan of reorganization and solicit acceptances, the
balance that has permitted the parties-in-interest to forge
reasonable terms of reorganization will be lost. (Global
Crossing Bankruptcy News, Issue No. 32; Bankruptcy Creditors'
Service, Inc., 609/392-0900)

Global Crossing Holdings' 9.625% bonds due 2008 (GBLX08USR1) are
trading at about 4 cents-on-the-dollar, says DebtTraders. See
for real-time bond pricing.

GLOBALSTAR LP: New Valley Comes to the Rescue & Takes Control
Globalstar, the world's most popular handheld satellite phone
service, and New Valley Corporation (NASDAQ:NVAL) announced an
agreement under which New Valley will provide Globalstar with
debtor-in-possession financing as the first step toward assuming
majority ownership of a new, reorganized Globalstar company.
Subject to approval by the U.S. Bankruptcy Court in Delaware,
the agreement calls for New Valley to make a total investment of
$55 million in Globalstar.

Under the terms of the purchase and reorganization plan, New
Valley will assume majority ownership of the new Globalstar
company, with the remainder of the equity to be held by the
company's creditors, which include Loral Space & Communications,
Qualcomm Incorporated and holders of Globalstar L.P. bonds.
Creditors will also receive preferred shares in the new company,
along with warrants to buy additional equity. At the conclusion
of the restructuring process and assuming full dilution of all
outstanding warrants, this plan would provide New Valley with a
controlling interest in the new company.

Holders of Globalstar Telecommunications Ltd., shares may have a
limited opportunity to purchase shares in the new company,
though this would be subject to review by the Bankruptcy Court.
The terms of the plan announced today include no other
compensation for GTL shares.

Upon approval by the Bankruptcy Court, New Valley will provide
DIP financing of $20 million over the course of the Chapter 11
and FCC approval process, subject to certain conditions. Under
the terms of the agreement, New Valley would provide an
additional $35 million at the conclusion of the restructuring
later this year. Upon Court approval of the DIP financing,
Globalstar and its creditors committee will not be able to
either seek or accept a better offer.

"We strongly believe that Globalstar is best positioned to meet
the increasing demand for high-quality, low-cost mobile
satellite telephony, data collection and Internet
communications," said Bennett S. LeBow, chairman and chief
executive officer of New Valley. "We are confident that New
Valley's investment in Globalstar will enable the company to
further expand its growing customer base and progress toward

"This new investment will give us the resources to both
strengthen our existing service and broaden our portfolio of
voice and data products, making Globalstar the most cost-
effective, high-quality satellite service available," said Olof
Lundberg, chairman and chief executive officer of Globalstar.
"Throughout our restructuring process, Globalstar has maintained
and even expanded its service for most of its customers with
virtually no interruptions. Customers can be assured that
service will not only continue in the same fashion, but also,
over time, will be expanded to include still more products and

With service coverage today in over 100 countries, serving over
83,000 subscribers, Globalstar has made substantial progress in
implementing its new business plan, including the introduction
of substantially lower prices in North America last year, the
consolidation of sales and technical operations in the U.S.,
Canada, the Caribbean and parts of Europe, and the establishment
of a new marketing and sales structure targeting specific
vertical industries. With this new financing, Globalstar will
immediately begin work toward further augmenting its marketing
and sales efforts around the world. The new, reorganized
Globalstar will retain ownership of existing sales and technical
operations in North America and Europe, and expects to finalize
new business agreements with its service provider partners in
all other parts of the world to provide seamless service and
support to customers in all locations, particularly businesses
with requirements across multiple geographies.

Globalstar now intends to accelerate its program of new product
development and service offerings in the months ahead. This work
will include particular emphasis on developing next-generation
products for maritime, aviation and other specialized markets,
building on Globalstar's technical strengths such as multi-
channel capabilities and high-quality CDMA signals. Globalstar
will also restart its program of gateway deployment, allowing
the company to further improve its coverage and service quality.

Copies of the debtor in possession financing agreement and the
form of investment agreement will be filed with the SEC shortly
by Globalstar as exhibits to a Form 8-K.

New Valley is currently engaged in the real estate business and
is seeking to acquire additional operating companies.

Globalstar is a leading provider of global mobile satellite
telecommunications services, offering both voice and data
services from virtually anywhere in over 100 countries around
the world. For more information, visit Globalstar's Web site at

GUESS? INC: S&P Ratchets Corp. Credit Rating Down to BB- from BB
Standard & Poor's Ratings Services lowered its corporate credit
rating on apparel manufacturer and retailer Guess? Inc., to
'BB-' from 'BB'.

At the same time, Standard & Poor's lowered its subordinated
debt rating on the company to 'B' from 'B+'. The outlook is
negative. The Los Angeles, California-based company had
approximately $86 million in total debt outstanding as of
September 28, 2002.

"The downgrade reflects the continued erosion of Guess?'s
operating performance and weakened credit protection measures.
The company's performance in recent years has been hurt by the
intensely competitive retail environment, waning consumer
confidence, and consumers' poor response to its product line,"
said Standard & Poor's credit analyst Diane Shand.

Guess? recently lowered its fourth quarter 2002 profit guidance
due to increased price pressure. "In fiscal 2002, the company
has experienced revenue declines and margin pressures in its
wholesale and retail operations, resulting in operating losses
in both business segments through the first nine months of 2002.
We believe that the weak 2002 holiday season was very
challenging for Guess? and that credit protection measures will
be below expectations," added Ms. Shand.

Standard & Poor's also said that the ratings could be lowered if
Guess? is unable to refinance the $80 million of subordinated
notes that mature this year. In addition, Standard & Poor's
expects that Guess? will be challenged to stem its sales decline
in the near term amid the current weak retail environment. The
ratings could also be lowered if the company's operating
performance and credit ratios weaken further.

IEC ELECTRONICS: Completes $7.3-Million Financing Transaction
IEC Electronics Corp., (OTC: IECE.OB) completed a $7.3 million
refinancing involving a $5 million Senior Secured Facility with
Keltic Financial Partners, LP, a $2.2 million Secured Term Loan
with SunTrust Bank and a $100,000 cash infusion from certain of
its directors.

The closing of this refinancing has enabled the Company to repay
all but $100,000 of its indebtedness to HSBC USA and GE Capital
Corporation, its prior lenders.

W. Barry Gilbert, Chairman of the Board and Acting CEO, stated,
"We are extremely pleased to have arrived at this important
milestone in the Company's restructuring and planned return to
profitability. I am profoundly grateful for the support and
loyalty of our customers, suppliers, employees and shareholders
during the difficult times we have recently experienced, and we
look forward to renewed growth."

IEC also announced that for the fourth quarter of fiscal 2002,
ending September 30, 2002, the company achieved profitability of
$0.24 per share of which $0.06 was attributable to discontinued
operations on revenue of $8,640,000. This compared to a loss of
($3.08) per share of which ($0.63) was attributable to
discontinued operations for the like quarter one year earlier on
revenue of $10,735,000. Gilbert said, "We believe that our
fourth quarter results, which demonstrate significant
improvement over previous quarters, may indicate that the
actions taken by the company in 2002 are beginning to allow the
company to achieve the desired results. It has been a difficult
period for IEC and the entire EMS industry as a whole due to
current economic conditions. We are hopeful that this quarter
may signal a return to IEC's historical revenue growth and

The company also reported that for fiscal 2002, ending
September 30, 2002 net sales were $39,365,000 with a net loss of
$1.43 per share, of which $0.94 was attributable to discontinued
operations. This compared to revenue in fiscal 2001 of
$114,771,000 with a net loss of $3.83 per share, of which $1.55
was attributable to discontinued operations. Gilbert noted that
although IEC's revenue decreased substantially from the previous
year, the company achieved significant improvements in reduction
of the net loss. "Our plan has always been to get IEC's cost
structure under control and then to grow the sales of the
company. This past year, especially the last quarter,
demonstrates that we appear to be on the right track and can now
direct our efforts to increasing the business of the company.

IEC is a full service, ISO-9001 registered EMS provider. The
Company offers its customers a wide range of services including
design, prototype and volume printed circuit board assembly,
material procurement and control, manufacturing and test
engineering support, systems build, final packaging and
distribution. Information regarding IEC can be found on its Web

At September 30, 2002, IEC Electronics' balance sheet shows a
working capital deficit of about $3.6 million. The Company's
total shareholders' equity narrowed to about $800,000 from about
$12 million in the year-ago period.

INTERPUBLIC: Taps Goldman Sachs to Review Strategic Alternatives
The Interpublic Group of Companies, Inc., (NYSE: IPG) engaged
Goldman Sachs to explore strategic alternatives regarding its
NFO WorldGroup unit. Operating in 40 countries, NFO is one of
the world's leading providers of research-based marketing
information and counsel.

Separately, Interpublic indicated that it reached an agreement
with its lenders to extend the due date for amending its major
credit agreements from the previously-announced January 15 date
to February 10. In addition to the terms described in its last
quarterly report on Form 10-Q, Interpublic has agreed to new
interim terms that will apply during the next three and half
weeks. The new interim terms the company agreed to are that it
will limit its cash acquisitions and will not take any dividend
action until these negotiations are completed.

Interpublic is one of the world's largest advertising and
marketing organizations. Its five global operating groups are
McCann-Erickson WorldGroup, the Partnership, FCB Group,
Interpublic Sports and Entertainment Group and Advanced
Marketing Services. Major brands include Draft Worldwide, Foote,
Cone & Belding Worldwide, Golin/Harris International, NFO
WorldGroup, Initiative Media, Lowe & Partners Worldwide, McCann-
Erickson, Octagon, Universal McCann and Weber Shandwick.

As reported in Troubled Company Reporter's December 16, 2002
edition, Fitch Ratings downgraded the following debt ratings for
The Interpublic Group of Companies, Inc.: senior unsecured debt
to 'BBB-' from 'BBB', multi-currency bank credit facility to
'BBB-' from 'BBB', convertible subordinated notes to 'BB+' from
'BBB-' and the short-term debt rating to 'F3' from 'F2'. The
Rating Outlook remains Negative. Approximately $3.0 billion of
debt is affected by this action.

Weak revenue trends and lower than expected operating results
have heightened uncertainties about the ability of IPG to
improve credit measures to a level consistent with the previous
'BBB' senior debt rating, with debt/EBITDA now expected to
operate in a range between 3.0 times and 3.5x and adjusted
debt/EBITDAR in a range between 4.5x and 5.0x, as compared with
Fitch's previous expectations of 2.5x-3.0x and 4.0x-4.5x,

KAISER ALUMINUM: Seeks Approval of Aussie Tax Office Agreements
In January 1998, the Australian Taxation Office initiated a
formal audit of Kaiser Alumina Australia Corporation, a
subsidiary of Kaiser Aluminum & Chemical Corporation, for the
years 1988 to 1996.  The ATO later expanded the audit period to
include years 1997 to 2000, and the parties subsequently agreed
to include year 2001 in the settlement.

During the course of the audit, Daniel J. DeFranceschi, Esq., at
Richards, Layton & Finger, relates that the ATO issued technical
papers in March 2000 outlining possible grounds for increasing
Kaiser Australia's income tax liabilities for certain years
under audit.  The issue led to several correspondences between
the ATO and Kaiser Australia.  In July 2001, the ATO notified
Kaiser Australia of three remaining outstanding audit issues.
Consequently, the parties commenced settlement negotiations
throughout 2001, but without success.

Following the submission of an additional technical paper by the
ATO and a response by Kaiser Australia in 2002, and after
negotiations in October 2002, the parties reached an agreement
in principle to settle all remaining audit issues relating to
the December 31, 1998 through December 31, 2001 Audit Period.
The settlement will eliminate any possibility of litigation,
thus avoiding associated fees and expenses and the uncertainty
inherent in litigation.

In conjunction with the Settlement Agreement, the parties also
agreed to enter into a related agreement to address certain
issues with respect to Kaiser Australia's future income tax
liabilities.  The purpose of this related agreement is to avoid
future differences of interpretation between Kaiser Australia
and the ATO.

Mr. DeFranceschi tells the Court that the agreements in effect:

  (a) conclude and resolve the Audit issues by the ATO on terms
      favorable to the Debtors;

  (b) eliminate the risk and uncertainty of future litigation
      with the ATO in Australia;

  (c) eliminate Kaiser Australia's ongoing fees and expenses
      incurred in connection with the Audit; and

  (d) provide certainty with respect to certain elements of
      Kaiser Australia's future income tax liabilities.

Thus, the Debtors ask the Court to approve both the Settlement
Agreement and related agreement and authorize any payments as
may be required.

Mr. DeFranceschi explains that the Debtors have carefully
reviewed the probability of success of their tax positions and
ATO's positions, and believe that the resolution of the disputes
is fair and reasonable.  Mr. DeFranceschi notes that, because
the issues involved in calculating the amount of Kaiser
Australia's income tax liabilities for the Audit Period are
complex and subject to varying interpretations, the Settlement
Agreement avoids doubt and years of costly, protracted
litigation.  The settlement also eliminates the possibility
that, under applicable Australian law, Kaiser Australia would
have to post substantial funds or otherwise agree to encumber
assets located in Australia to preserve its right to contest the
Audit.  It will also eliminate the Debtor's additional expenses
associated with resolving the Australian tax dispute.  Given the
complexity of the issues involved, the Debtors estimate that the
litigation of the audit issues could take four to six years and
could cost at least US$1,500,000 without regard to the
litigation risk.

Mr. DeFranceschi further elaborates that the related agreement
between Kaiser Australia and the ATO is a necessary component of
the Settlement Agreement.  The related agreement sets forth the
tax treatment of certain transactions between KACC and Kaiser
Australia.  The related agreement will prevent similar
disagreements between the parties in the future.

                Debtors to File Agreements Under Seal

Due to their confidential nature, the Debtors propose to file
the Agreements under seal.

Mr. DeFranceschi explains that the Agreements contain sensitive
information regarding the deductibility of certain expenses and
Kaiser Australia's income tax position.  The Debtors want to
protect the entities from potential harm that may result from
the disclosure of confidential information.  Nonetheless, Mr.
DeFranceschi relates that the Settlement Agreement will be made
available for review on a confidential basis to the Creditors'
Committee, the Asbestos Committee, the DIP Lenders and the U.S.
Trustee. (Kaiser Bankruptcy News, Issue No. 20; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

KEMPER INSURANCE: Selling Renewal Rights to Old Republic Entity
Old Republic International Corporation (NYSE: ORI) announced
that its wholly owned subsidiary, Old Republic Insurance
Company, has reached a definitive agreement to purchase the
renewal rights to certain large risk national accounts of the
Kemper Insurance Companies.

Old Republic is purchasing the renewal rights to Kemper's
unbundled risk management accounts and will not be assuming any
liabilities incurred prior to any of its renewals. With
unbundled accounts, the underwriting and policy issuance portion
of a program is purchased from one insurer while ancillary
services in support of that program can be obtained from another
provider, usually a non-affiliated third party administrator.
Based on a preliminary review, Old Republic understands that the
subject book of business incorporates slightly more than 100
assureds and that gross premium volume before reinsurance
cessions for the aggregate of most such accounts totals
approximately $140 million on an annualized basis.

Through Old Republic Risk Management, Old Republic is a leader
in the unbundled risk management area. "The acquisition is in
line with our Company's commitment to the large account risk
management business," said Jim Kellogg, President of Old
Republic's property and liability insurance segment. "We're
excited about this opportunity. Although there is no assurance
we'll renew each of the accounts, we feel that this book of
business represents a good strategic fit for Old Republic.
Customers renewing their accounts with Old Republic can expect
to receive excellent service, as they have with Kemper, and we
plan to effect a seamless transition for each account

Chicago-based Old Republic International Corporation is an
insurance holding company whose subsidiaries market, underwrite
and provide risk management services for a wide variety of
coverages in the property and liability, mortgage guaranty,
title and life and health insurance fields. One of the nation's
50 largest publicly owned insurance organizations, Old Republic
International Corporation currently has assets of approximately
$8.4 billion and capitalization of $3.4 billion. Its current
stock market valuation is approximately $3.5 billion. Old
Republic Insurance Company, its flagship property and liability
insurance carrier, is rated A+ by A.M. Best, Aa2 by Moody's and
AA by Standard & Poor's.

                         *     *     *

As reported in Troubled Company Reporter's January 9, 2002
edition, Fitch Ratings downgraded the insurer financial strength
ratings  of three primary insurance underwriters of the Kemper
Insurance Companies to 'B+' from 'BBB'. Additionally, Fitch has
downgraded the surplus notes issued by group member Lumbermens
Mutual Casualty Company to 'CCC' from 'BB-'. All ratings remain
on Rating Watch Negative.

The rating actions reflect Fitch's concerns regarding the
prospective financial condition of KIC. Included in these
concerns is the increasing likelihood that future interest
payments on Lumbermen's surplus notes may not be made as
scheduled. Given the regulatory oversight of surplus notes
payments, and the organization's strained capital position,
Fitch is concerned that Lumbermens will have difficulty
maintaining minimum capital requirements and therefore could
experience difficulties in maintaining approvals from regulators
to pay interest on its surplus notes.

KMART CORP: S&P Equity Analysts Note Impact of Store Closures
Standard & Poor's downgraded its equity STARS ranking on New
Plan Excel (NYSE: NXL), from two-STARS "Avoid" to one-STARS
"Sell," and reiterated its three-STARS "Hold" ranking on Fleming
Cos. (NYSE: FLM). In addition, Standard & Poor's has upgraded
its equity STARS opinion on Footstar (NYSE: FTS) from one-STARS
"Sell" to three-STARS "Hold." These announcements were made
based on news of additional Kmart store closings, released
yesterday. A leading provider of independent research, indices
and ratings, Standard & Poor's made these announcements through
Standard & Poor's MarketScope, its real-time market intelligence

"Bankrupt retailer Kmart is planning to close another 326
locations. New Plan Excel Realty Trust was hard hit in the
previous round of closures, and Kmart continues to be its second
largest tenant," says Raymond Mathis, Standard & Poor's REIT
Equity Analyst. "Thus far, Kmart has rejected 12 NXL leases, and
has negotiated rent reductions at 10 additional locations.
Although it anticipated additional Kmart closings, we believe
the impact will exceed NXL's estimate of $0.04 per share in
2003. The company continues to have significant exposure to
Kmart, which contributes an estimated $0.17 to annual per share
results. Also, New Plan Excel's dividend has exceeded its cash
available for distribution for several quarters. With little
possibility for near-term dividend growth, we view the shares as
overvalued. NXL has enjoyed a run-up since early Q4, but we
expect an adverse impact from the Kmart news," Mathis concludes.

"Fleming Cos. shares are down substantially on the company's
lowered Q4 guidance and on reports that Kmart will close 326
stores," says Joseph Agnese, Standard & Poor's Supermarkets &
Drugstores Equity Analyst. "The company sees Q4 EPS $0.10-$0.12
vs. year-ago $0.19, which is $0.19-$0.21 below Street consensus.
Sales rose about 18% on acquisitions and better Kmart sales than
expected. However, profitability was hurt by a shift in mix amid
slumping supermarket operations, and by higher pension,
healthcare and insurance costs. Despite the poor environment, we
recommend investors hold Fleming at only 3.8X our 2003 EPS
estimate of $1.30, excluding Kmart business, which is well below
peers," Agnese concludes.

"We see a cloud over Footstar's stock being partially lifted by
the expected closure of 326 Kmart stores, which was at the lower
end of expectations," notes Yogeesh Wagle, Standard & Poor's
Specialty Retail Equity Analyst. "The closings are expected to
reduce 2003 EPS by $0.30, but have minimal impact on '03 cash
flows. FTS, which posted 2% same-store sales growth in December
after a string of declines, should also benefit from an enhanced
alliance with Nike. However, given a pending accounting
restatement and shareholder actions, we feel the shares are
fairly priced at 7X our '03 EPS estimate of $1.43, below that of
peers," Wagle concludes.

Standard & Poor's Stock Appreciation Ranking System (STARS),
which was first introduced on December 31, 1986, reflects the
opinions of Standard & Poor's equity analysts on the price
appreciation potential of more than 1,230 U.S. stocks for the
next 6-12 month period. Rankings range from 5-STARS (strong buy)
to 1-STARS (sell).

A model portfolio comprised of Standard & Poor's equity STARS
recommendations was recently recognized by as
outperforming those of other equity research firms who analyze
more than 500 stocks, over the 12-month period ending
December 31, 2002.(1)

Standard & Poor's analytic services are performed as entirely
separate activities in order to preserve the independence of
each analytic process. In this regard, STARS, which are
published by Standard & Poor's Equity Research Department,
operates independently from, and has no access to information
obtained by Standard & Poor's Ratings Services, which may in the
course of its operations obtain access to confidential

Standard & Poor's has the largest U.S. equity coverage count
among equity research firms that are not affiliated with a Wall
Street investment bank, analyzing more than 1,230 U.S. stocks.
Standard & Poor's, a division of The McGraw-Hill Companies
(NYSE: MHP), is a leader in providing widely recognized
financial data, analytical research and investment and credit
opinions to the global capital markets. With 5,000 employees
located in 19 countries, Standard & Poor's is an integral part
of the world's financial architecture. Additional information is
available at

DebtTraders reports that Kmart Corp.'s 9.00% bonds due 2003
(KM03USR6) are trading at about 13 cents-on-the-dollar. See
real-time bond pricing.

KMART CORP: Footstar Inc. Comments on Planned Store Closings
Footstar, Inc., (NYSE:FTS) reported that the footwear
departments in the 326 stores that Kmart announced it intends to
close accounted for $193.8 million of the $2.3 billion in total
sales that Footstar reported for 2002.

Estimated operating profits for 2002 from these licensed
departments were approximately $20 million. On a pro-forma
basis, after excluding Kmart's 49% equity interest in the
footwear departments, Footstar's fiscal 2002 operating profit
from these licensed footwear departments was approximately $10.2

Kmart has provided Footstar with a list of the stores it intends
to close. Footstar currently operates licensed footwear
departments within each of these stores and is in the process of
finalizing plans to liquidate the related inventory. The Company
had already partially reset expected inventory levels in
anticipation of these closings and is in the process of
developing plans to adjust its overhead structure to a level
appropriate for a reduced store base.

While Kmart store closings negatively impact the Company, the
number of store closings is not currently expected to have a
materially negative effect on the Company's ongoing operations
or performance under the terms of its $325 million credit
facility, of which $146.8 million was outstanding as of the end
of 2002. Based on prior experience, Footstar currently expects
the effect of the store closings on 2003 cash flows to be
minimal, as the cash generated from the inventory liquidations
and lower working capital requirements are expected to offset
most of the reduced cash flows from lower earnings as a result
of the closings of these stores.

Footstar, Inc., is a leading footwear retailer. The Company
offers a broad assortment of branded athletic footwear and
apparel through its two athletic concepts, Footaction and Just
For Feet and their Web sites at http://www.footaction.comand and discount and family footwear
through licensed footwear departments operated by Meldisco,
including 1,832 in Kmart stores of which Kmart has a 49% equity
interest. As of December 28, 2002, the Company operated 459
Footaction stores in 41 states, Puerto Rico, and the U.S. Virgin
Islands, 95 Just For Feet superstores located predominantly in
the Southern half of the country and 5,532 Meldisco licensed
footwear and 20 Shoe Zone stores.

KMART: Federal Realty Expects Limited Impact from Store Closings
Federal Realty Investment Trust (NYSE:FRT) announced that three
of the Trust's five Kmart locations were on the list of 326
stores that Kmart Corporation intends to close as part of its
chapter 11 bankruptcy reorganization.

The Kmart stores at Fresh Meadows in Queens, New York, Flourtown
Shopping Center in Flourtown, Pennsylvania and Leesburg Plaza in
Leesburg, Virginia were on the list of store closings issued by
the troubled retailer on January 14, 2003. The Trust's two other
Kmart locations, Rutgers Plaza in Franklin, New Jersey and
Saugus Plaza in Saugus, Massachusetts, are not impacted at this

None of Federal Realty's properties were among the 284
underperforming Kmart stores that Kmart announced it was closing
in March 2002.

"Over the past several years, Kmart's anchor presence has not
contributed to Federal Realty's tenanting and merchandising
objectives at these properties," commented Chris Weilminster,
vice president of anchor tenant leasing. "A stronger, more
vibrant retailer at these locations will improve traffic, sales
and rents at these already successful properties."

Donald Wood, Federal Realty's president and chief executive
officer stated, "Over the past several years, the Trust has
demonstrated its ability, notwithstanding a short-term occupancy
hit, to create value when leases have been re-claimed by Federal
Realty due to rejection in bankruptcy. In light of the
demographics of these properties and Kmart's in place rents, we
expect these cases to be no different. To the extent that these
locations aren't reclaimed by the Trust, but instead are
assigned or subleased to other tenants by Kmart, we'd expect our
returns at these properties to be enhanced by the improved
tenant mix."

Federal Realty Investment Trust is an equity real estate
investment trust specializing in the ownership, management,
development and re-development of shopping centers and street
retail properties. Federal Realty's portfolio contains over 15
million square feet located in major metropolitan markets across
the United States.

The operating portfolio is currently approximately 95.5%
occupied by over 2,000 national, regional and local retailers
with no single tenant accounting for more than 2.6% of rental

Federal Realty has paid quarterly dividends to its shareholders
continuously since its founding in 1962, and has increased its
dividend rate for 35 consecutive years, the longest consecutive
record in the REIT industry. Shares of Federal Realty are traded
on the New York Stock Exchange under the symbol FRT. Additional
information about Federal Realty can be found on the Internet at

KMART CORP: Kramont Realty Reports One Kmart Store Closing
Kramont Realty Trust (NYSE:KRT), a neighborhood and community
shopping center real estate investment trust, reported that one
of the seven Kmart stores in its shopping center portfolio are
among the 326 stores scheduled for closing, as reported by the
major discount retailer Tuesday.

Kmart filed for Chapter 11 bankruptcy reorganization in January

As previously reported in the Company's 10K for 2001, Kmart
annualized minimum rents represent approximately 3% of Kramont's
total minimum rents. In the event the Kmart closing in
Manchester, Connecticut, results in the lease being rejected,
such rejection would represent three-tenths of one percent of
Kramont's total annualized minimum rents.

Kramont Realty Trust is a self-administered, self-managed equity
real estate investment trust specializing in neighborhood and
community shopping center acquisitions, leasing, development and
management. The company owns, operates, manages and has under
development 88 properties in 15 states aggregating 11.5 million
square feet of leasable space. For more information please visit

LAIDLAW INC: Files Third Amended Plan and Disclosure Statement
Garry M. Graber, Esq., at Hodgson Russ LLP, in Buffalo, New
York, advises that Laidlaw Inc., and its debtor-affiliates
delivered their Third Amended Plan of Reorganization and a
further amended Disclosure Statement explaining that plan to the
U.S. Bankruptcy Court for the Western District of New York
earlier this week.

              Changes in the Third Amended Plan

The amended filing contains updated projected financial
statements reflecting Laidlaw's latest $500,000,000 EBITDA
estimate for 2003 before restructuring charges, and
contemplating that the Plan's Effective Date will occur on
March 31, 2003.  The Debtors report that behind-the-scenes
disputes with the Pension Benefit Guaranty Corporation over
Greyhound's Pension Plan that stalled confirmation of the Second
Amended Plan are now resolved and the $150 million settlement is
embodied in the Third Amended Plan.  As disclosed late last
week, Laidlaw will contribute the $150 in three installments:

      * $50 million in cash on exit from bankruptcy protection;

      * $50 million in cash in June 2004; and

      * $50 million from the sale of Laidlaw Stock placed in
        trust upon exit from bankruptcy and sold over the period
        to December 30, 2004.

                  New Disclosure Statement Hearing
                   Scheduled for January 23, 2002

At the Debtors' behest, Judge Kaplan will convene a hearing to
consider the adequacy of the Disclosure Statement at a hearing
on January 23, 2003 at 2:00 p.m. in Buffalo.  An expedited
Disclosure Statement hearing is appropriate in Laidlaw's cases
because, Judge Kalpan observes, all of the parties having the
major economic stake in the outcome of Laidlaw's restructuring
are at the negotiating table and are intimately involved in the
plan approval process.

If Judge Kaplan finds on Jan. 23 that the Disclosure Statement
provides adequate information to creditors and allows them to
make reasoned decisions about whether to cast their votes for or
against the Third Amended Plan, he will approve the Disclosure
Statement.  This is a more-than-likely result at the January 23
Hearing given Judge Kaplan's approval of the Second Amended
Disclosure Statement.

                Getting Ballots into Creditors' Hands

Once the Disclosure Statement is approved, copies of both
documents will be mailed to every known creditor together with a
ballot.  Impaired creditors will be asked to vote to accept or
reject the Plan and return their ballots to the tabulation
agent. Laidlaw will ask the Court to fix a new record date to
determine who can and who can't vote on the Plan; generally,
that date is the day an order approving a disclosure statement
is signed. Laidlaw previously asked for a much earlier record

                     The Road to Confirmation

Once the votes are in, the Debtors will return to Judge Kaplan's
courtroom and ask him to confirm the Plan.  At that Confirmation
Hearing, the Debtors must present evidence to the Court that the
Plan complies with 13 tests laid out in 11 U.S.C. Sec. 1129.
Those tests require the Debtors to demonstrate that, among other
things, the Plan complies with the Bankruptcy Code, the Debtors
have complied with the Bankruptcy Code, creditors are properly
classified, similarly situated creditors are treated equally,
the plan is feasible and the company will not need to undergo
further restructuring post-confirmation, and creditors get more
under the Plan than they would in a liquidation scenario.
Additionally, in the event creditors vote to reject, the Debtors
must show that the plan strictly complies with the absolute
priority rule.  The absolute priority rule prohibits any junior
class from recovering anything under a plan unless and until all
senior classes are paid in full. (Laidlaw Bankruptcy News, Issue
No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900)

LESLIE'S POOLMART: S&P Affirms B Corporate Credit Rating
Standard & Poor's Ratings Services affirmed its 'B' corporate
credit rating on pool supply retailer Leslie's Poolmart Inc.,
and revised its outlook on the company to stable from negative.

Approximately $90 million of the Phoenix, Arizona-based
company's debt is affected by this action.

"The outlook change reflects Leslie's improved operating
performance over the past two years following two years of
declining operations. Through improvements primarily in shrink
control, inventory management, and customer service, the company
increased lease-adjusted EBITDA to $38 million in 2002 from $23
million in 2000," said Standard & Poor's credit analyst Patrick
Jeffrey. "We believe Leslie's will continue to maintain this
better operating performance over the next 18 months as it
focuses on refinancing its bank loan that matures in January
2004 and its $90 million of senior notes that mature in July

The rating on Leslie's reflects the company's highly leveraged
balance sheet, small sales and earnings base, and the highly
seasonal nature of its business, which can be impacted by
unfavorable weather. These risks are somewhat offset by the
company's leading position in the stable retail pool supply
industry and improved operating performance over the past two

Although Leslie's 410 stores in 33 states represent the largest
national chain, the company competes with many local stores and
regional chains in a highly fragmented industry.

LEVI STRAUSS: Fitch Rates $100-Mill. Senior Unsecured Debt at B+
Levi Strauss & Co.'s expected $100 million 12.25% senior
unsecured note issue, due 2012, is rated 'B+' by Fitch Ratings.
Proceeds from the issuance will be primarily used to repay a
portion of its 6.8% notes due November 2003 and Fitch is viewing
this issuance as a pre-funding. This issuance is an add-on to
Levi's December 12.25% $425 million senior unsecured debt
issuance and is subject to the same indenture. The Rating
Outlook remains Negative, reflecting the ongoing challenges Levi
faces in stimulating top-line sales growth.

The ratings reflect Levi's solid brands with leading market
positions as well as its geographically diverse revenue base and
adequate cash flow generation. Of ongoing concern is the
difficulty the company has faced in growing sales, coupled with
the slower than expected pace of improvement in credit
protection measures.

Levi reported revenue of $4.1 billion for its fiscal year ended
Nov. 24, 2002 and EBITDA of $507 million (before restructuring
charges and related expenses), in line with Fitch's
expectations. While these results were weaker than its fiscal
2001 performance (as expected), the $111 million reduction in
its debt burden enabled the company to maintain relatively
stable credit measures. Leverage (total debt/EBITDA) and
coverage (EBITDA/interest) for fiscal 2002 were 3.6 times and
2.7x as compared to 3.5x and 2.4x in fiscal 2001.

Levi Strauss & Co.'s 6.80% bonds due 2003 (LEVI03USR1) are
trading at par. For real-time bond pricing, see

LISANTI FOODS: Wants More Time to File Schedules & Statements
Lisanti Foods, Inc., and its debtor-affiliates ask the U.S.
Bankruptcy Court for the District of New Jersey for additional
time to file their lists of creditors, equity security holders,
schedules, and statements of financial affairs.

The Debtors have been diligently working to prepare a complete
list of the names and addresses of all creditors and equity
security holders as of the Petition Date and their schedules and
the statements of financial affairs.  In order to complete these
tasks, the Debtors must gather information from books, records
and documents relating to a multitude of transactions from
various locations.  Consequently, collection of the necessary
information requires an expenditure of substantial time and
effort on the part of the Debtors' employees and professionals.

Since the inception of the Company's chapter 11 cases, the
Debtors and their professionals have also been preoccupied with
the efforts to locate a strategic partner or purchaser for the
Debtors' businesses and to obtain debtor in possession financing
to enable the Debtors' businesses to continue as going concerns.

Given the significant burdens, the Debtors will require
additional time to put the raw data into the format acceptable
to file the required lists, schedules, and statements as
prescribed by the Bankruptcy Code, the Federal Rules of
Bankruptcy Procedure, and the Local Rules of this Court.
The Debtors anticipate that they will need until January 23,
2003 to finish the job.

Lisanti Foods, Inc., leading suppliers of products to
restaurants and pizza parlors, filed a chapter 11 petition on
November 20, 2002 in the U.S. Bankruptcy Court for the District
of New Jersey. Boris I. Mankovetskiy, Esq., Gail B. Cooperman,
Esq., and Jack M. Zackin, Esq., at Sills Cummis Radin Tischman
Epstein & Gross, P.A., represent the Debtors in their
restructuring efforts.  When the Company filed for protection
from its creditors, it listed $30 million in assets and $33
million in debts.

LYNX THERAPEUTICS: Board Approves 1-for-7 Reverse Stock Split
Lynx Therapeutics, Inc.'s (Nasdaq: LYNX) board of directors has
approved a 1-for-7 reverse split of its common stock, following
approval by the company's stockholders on January 14, 2003. The
company's common stock will begin trading on a post-split basis
on January 16, 2003, under the temporary trading symbol "LYNXD"
for approximately 20 trading days before reverting to "LYNX" on
or about February 13, 2003.

As a result of the reverse stock split, every seven shares of
Lynx common stock will be combined into one share of Lynx common
stock. The reverse stock split affects all Lynx common stock,
stock options and warrants outstanding immediately prior to the
effective time of the reverse stock split. Lynx will pay cash in
lieu of fractional shares based on Lynx's common stock closing
price on January 15, 2003. The reverse split will reduce the
number of shares of common stock outstanding from approximately
32.5 million to approximately 4.6 million.

Lynx received a Nasdaq Staff Determination on January 10, 2003,
indicating that, in addition to the minimum bid price
deficiency, Lynx fails to comply with Nasdaq's audit committee
composition requirement for continued listing as set forth in
Marketplace Rule 4350(d)(2), and that Lynx's securities are,
therefore, subject to delisting from the Nasdaq National Market.
Lynx intends to appoint an independent director to fill the
vacancy on the audit committee at the next regularly scheduled
meeting of the board of directors of Lynx, and Lynx expects to
be in compliance with the audit committee composition
requirement for continued listing as set forth in Marketplace
Rule 4350(d)(2) at that time.

Lynx has requested, and been granted, a hearing before a Nasdaq
Listing Qualifications Panel to review the Staff's
determination. However, there can be no assurance that the
Listing Qualifications Panel will grant Lynx's request for
continued listing. Lynx's common stock will continue to be
listed on the Nasdaq National Market pending a final ruling.

Lynx is a leader in the development and application of novel
genomics analysis solutions that provide comprehensive and
quantitative digital gene expression information important to
modern systems biology research in the pharmaceutical,
biotechnology and agricultural industries. These solutions are
based on Megaclone(TM) and MPSS(TM), Lynx's unique and
proprietary cloning and sequencing technologies. Megaclone(TM)
transforms a sample containing millions of DNA molecules into
one made up of millions of micro-beads, each of which carries
copies of one of the DNA molecules in the sample. MPSS(TM)
rapidly identifies the DNA sequence of the molecules on each
bead in a parallel process. Lynx is also developing a proteomics
technology, Protein ProFiler(TM), an automated two-dimensional
liquid-based electrophoresis system, which is expected to permit
high-resolution analysis of complex mixtures of proteins from
cells or tissues. For more information, visit Lynx's Web site at

                         *     *     *

In its SEC Form 10-Q filed on November 13, 2002, the Company

"We have a history of net losses, and we may not achieve or
maintain profitability.

"We have incurred net losses each year since our inception in
1992, including net losses of approximately $6.7 million in
1999, $13.3 million in 2000 and $16.7 million in 2001. As of
September 30, 2002, we had an accumulated deficit of
approximately $95.9 million. Future net losses or profits will
depend, in part, on the rate of growth, if any, in our revenues
and on the level of our expenses. Our research and development
expenditures and general and administrative costs have exceeded
our revenues to date. Research and development expenses may
increase due to planned spending for ongoing technology
development and implementation, as well as new applications. As
a result, we will need to generate significant additional
revenues to achieve profitability. Even if we do increase our
revenues and achieve profitability, we may not be able to
sustain profitability.

"Our ability to generate revenues and achieve profitability
depends on many factors, including:

       -- our ability to continue existing customer
          relationships and enter into additional corporate
          collaborations and agreements;

       -- our ability to discover genes and targets for drug

       -- our ability to expand the scope of our research into
          new areas of pharmaceutical, biotechnology and
          agricultural research;

       -- our collaborators' ability to develop diagnostic and
          therapeutic products from our drug discovery targets;

       -- the successful clinical testing, regulatory approval
          and commercialization of such products.

"The time required to reach profitability is highly uncertain.
We may not achieve profitability on a sustained basis, if at

"We will need additional funds in the future, which may not be
available to us.

"We have invested significant capital in our scientific and
business development activities. Our future capital requirements
will be substantial if we expand our operations and will depend
on many factors, including:

       -- the progress and scope of our collaborative and
          independent research and development projects;

       -- payments received under agreements with customers,
          collaborators and licensees;

       -- our ability to establish and maintain arrangements
          with customers, collaborators and licensees;

       -- the progress of the development and commercialization
          efforts under our collaborations and corporate

       -- the costs associated with obtaining access to samples
          and related information; and

       -- the costs involved in preparing, filing, prosecuting,
          maintaining and enforcing patent claims and other
          intellectual property rights.

"We anticipate that our current cash and cash equivalents,
short-term investments and funding to be received from
customers, collaborators and licensees will enable us to
maintain our currently planned operations for at least the next
12 months. Changes to our current operating plan may require us
to consume available capital resources significantly sooner than
we expect. If our capital resources are insufficient to meet
future capital requirements, we will have to raise additional
funds. We do not know if we will be able to raise sufficient
additional capital on acceptable terms, or at all. If we raise
additional capital by issuing equity or convertible debt
securities, our existing stockholders may experience substantial
dilution. If we fail to obtain adequate funds on reasonable
terms, we may have to curtail operations significantly or obtain
funds by entering into financing or collaborative agreements on
unattractive terms."

MORGAN STANLEY: S&P Assigns Lower-B Ratings to 6 Note Classes
Standard & Poor's Ratings Services assigned its preliminary
ratings to Morgan Stanley Dean Witter Capital I Trust 2003-
TOP9's $1.08 billion commercial mortgage pass-through
certificates series 2003-TOP9.

The preliminary ratings are based on information as of
January 15, 2003. Subsequent information may result in the
assignment of final ratings that differ from the preliminary

The preliminary ratings reflect the credit support provided by
the subordinate classes of certificates, the liquidity provided
by the fiscal agent, the economics of the underlying mortgage
loans, and the geographic and property-type diversity of the
loans. Classes A-1, A-2, B, C, and D are being offered publicly.
Standard & Poor's analysis determined that, on a weighted
average basis, the pool has a debt service coverage ratio of
1.73x, a beginning loan-to-value (LTV) ratio of 76.6%, and an
ending LTV of 62.2%.

               Preliminary Ratings Assigned

     Morgan Stanley Dean Witter Capital I Trust 2003-TOP9
  Commercial mortgage pass-thru certificates series 2003-TOP9

Class                 Rating                      Amount ($)
A-1                   AAA                        318,748,000
A-2                   AAA                        610,834,000
B                     AA                          32,333,000
C                     A                           35,028,000
D                     A-                          12,125,000
E                     BBB+                        14,819,000
F                     BBB                          6,737,000
G                     BBB-                         5,388,000
H                     BB+                         10,778,000
J                     BB                           4,042,000
K                     BB-                          5,389,000
L                     B+                           5,389,000
M                     B                            2,694,000
N                     B-                           2,695,000
O                     N.R.                        10,777,827
X-1                   AAA                      1,077,776,827
X-2                   AAA                        993,173,000

NATIONAL CENTURY: Court Approves Jones Day as Chapter 11 Counsel
Judge Calhoun authorizes National Century Financial Enterprises,
Inc., and its debtor-affiliates to employ Jones, Day, Reavis &
Pogue as counsel, nunc pro tunc to November 18, 2002, provided
that Jones Day's claims against the Debtors' estates in respect
of its Invoice No. 30839013 is deemed waived and released.

                         *    *    *

Jones, Day, Reavis & Pogue is one of the largest law firms in
the United States, with a national and international practice.
Jones has experience in virtually all aspects of the law that
may arise in these Chapter 11 cases.  Jones Day's Business and
Reorganization Practice Area consists of 60 attorneys practicing
nationwide, including six currently practicing in Columbus,
Ohio; and have played significant roles in many of the largest
and most complex bankruptcy cases.

Throughout the course of these Chapter 11 cases, Jones Day is
expected to:

  (a) advise the Debtors of their rights, powers and duties as
      debtors and debtors-in-possession continuing to operate
      and manage their businesses and properties under
      Chapter 11;

  (b) prepare on the Debtors' behalf all necessary and
      appropriate applications, motions, draft orders, other
      pleadings, notices, schedules and other documents and
      review all financial and other reports to be filed;

  (c) advise the Debtors concerning, and prepare responses to,
      applications, motions, other pleadings, notices and other
      papers that may be filed and served;

  (d) advise the Debtors and assist in negotiations and
      documentation of financing or cash collateral agreements
      and related transactions;

  (e) review the nature and validity of any liens asserted
      against the Debtors' property and advise the Debtors
      concerning the enforceability of the liens;

  (f) advise the Debtors regarding their ability to initiate
      actions to collect and recover property for the benefit of
      their estates;

  (g) counsel the Debtors in connection with the formulation,
      negotiation and promulgation of a Plan of Reorganization
      and related documents;

  (h) advise and assist the Debtors in connection with any
      potential property dispositions;

  (i) advise the Debtors concerning executory contract and
      unexpired lease assumptions, assignments and rejections
      and lease restructuring and re-characterizations;

  (j) assist the Debtors in reviewing, estimating and resolving
      claims asserted against the Debtors' estates;

  (k) commence and conduct any and all litigation necessary to
      assert rights held by the Debtors, protect the Debtors'
      Chapter 11 assets or further the goal of completing the
      Debtors' successful reorganization;

  (l) provide corporate governance, employee benefits,
      litigation, tax and other general non-bankruptcy services
      for the Debtors, to the extent requested by the Debtors;

  (m) perform all other necessary or appropriate legal services
      in connection with the Debtors' bankruptcy cases.

Pursuant to the terms and conditions of an Engagement Letter
entered into by the parties, Jones Day 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; and

  -- seek reimbursement of actual and necessary out-of-pocket

The hourly rates charged by Jones Day professionals differ based
on the professional's level of experience and the rate normally
charged in the location of the office where the professional is
resident. (National Century Bankruptcy News, Issue No. 5;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

NATIONAL STEEL: Seeks OK for U.S. Steel Asset Purchase Agreement
In connection with the sale of their primary steel making and
finishing assets, National Steel Corporation and its debtor-
affiliates ask the Court to approve an Asset Purchase Agreement
with U.S. Steel dated January 9, 2002.  The Debtors will sell
the assets free and clear of liens, claims and encumbrances.

In a press release on January 9, 2002, National Steel
Corporation Chairman and CEO Mineo Shimura remarked that the
sale transaction represents positive news for the Debtors'
stakeholders.  Under new ownership, the steel businesses that
are associated with the assets U.S. Steel is purchasing will
continue to operate and capitalize on the significant
improvements the Debtors have made during recent years.  Mr.
Shimura ascertained that the Asset Purchase Agreement was
negotiated, proposed and entered into by the parties in good
faith, and from arm's-length bargaining positions.

A full-text copy of the Asset Purchase Agreement is available at
the Securities and Exchange Commission at:

The salient terms of the Asset Purchase Agreement are:

A. Assets To Be Sold

  The Debtors will sell all assets associated with the
  production, sale, and transportation of coke and steel

  (a) All rights, titles and interests in these businesses:

      1. Two integrated steel plants -- Great Lakes, in Ecorse
         and River Rouge, Michigan, and the Granite City
         Division in Granite City, Illinois;

      2. The Midwest finishing facility in Portage, Indiana;

      3. The administrative office in Mishawaka, Indiana;

      4. ProCoil processing and distribution center in Canton,

      5. Various subsidiaries and their share of the Double G
         joint venture in Jackson, Mississippi; and

      6. The net working capital related to the acquired assets;

  (b) All the Debtors' machinery and equipment:

      1. All owned equipment, machinery, furniture, fixtures and
         improvements and tooling used or held for use in the

      2. All rights to leased equipment, machinery, furniture,
         fixtures and improvements and tooling used or held for
         use in the Businesses; and

      3. All rights to the warranties, express or implied, and
         licenses received from manufacturers and sellers of the
         Machinery and Equipment;

  (c) Certain leases and other contracts for real property, and
      Machinery and Equipment;

  (d) All supplies, items, spare parts and other materials
      utilized to operate and maintain the Machinery and
      Equipment or to process raw materials and work in process
      used or held for use in the Businesses;

  (e) All inventories of raw materials, slabs, works in process,
      finished products, goods, spare parts, replacement and
      component parts, and office and other supplies used or
      held for use in the Businesses;

  (f) All cars, trucks, fork lifts, other industrial vehicles
      and other motor vehicles the Debtors own or leased and
      used or held for use in the Businesses;

  (g) All railroad cars, railroad switching, service and repair
      facilities, rolling stock and vehicles, machinery and
      related equipment used or held for use in the Businesses;

  (h) All accounts receivable with respect to the Businesses;

  (i) All permits used in or necessary to conduct the

  (j) Records or files associated with the Businesses;

  (k) Any computer software, patents and patent registrations,
      Trademarks and other intellectual property rights
      associated with the Businesses;

  (l) All goodwill associated with the Businesses;

  (m) All the Debtors' prepaid expenses and deposits made in
      connection with the Businesses; and

  (n) All the Debtors' equity interest in:

      1. Double G Coatings, L.P.;

      2. Delray Connecting Railroad Company;

      3. Steel Health Resources LLC; and

      4. NSL Inc.

  U.S. Steel will also assume certain liabilities related to the
  Businesses to the real property and equipment leases it will

  The sale does not include National Steel Pellet Company,
  National Steel's iron ore pellet operation in Keewatin,
  Minnesota.  Other assets excluded in the sale are:

  (1) cash including checks received before the close of
      business on the Closing Date, and other cash equivalents;

  (2) the Debtors' shares of capital stock or securities
      convertible into, exchangeable or exercisable for the
      Debtors' shares of capital stock;

  (3) any assets of any pension or benefits plan;

  (4) all avoidance actions or similar causes of action, arising
      under Sections 544 through 553 of the Bankruptcy Code,
      other than any actions related to the contracts U.S. Steel
      will assume;

  (5) all rights to or claims for refunds, overpayments or
      rebates of taxes for periods ending on or before the
      Closing Date;

  (6) all claims that the Debtors may have against any third
      person with respect to the excluded assets;

  (7) all rights of the Debtors under any collective bargaining
      agreement, agreement with any labor union, employment
      agreement or severance agreement; and

  (8) the company seal, minute books, charter documents, stock
      or equity record books and other books and records as
      pertain to the Debtors' organization, existence or

B. Purchase Price

  U.S. Steel agrees to pay $950,000,000, subject to customary
  working capital adjustment.  The Purchase Price is comprised

  (a) $725,000,000 in cash consideration:

        (i) $6,500,000 has been deposited by U.S. Steel in an
            escrow account; and

       (ii) $718,500,000 will be paid at the Closing;

  (b) $200,000,000 in consideration of certain assumed
      liabilities; and

  (c) 1,881,964 shares of U.S. Steel's common stock.

  At U.S. Steel's sole discretion, it may reduce the Cash
  Consideration in the Purchase Price by any amount, not to
  exceed $75,000,000, and increase the amount of Share
  Consideration by an equivalent amount.

  Under a registration rights agreement between the parties,
  U.S. Steel will register the Share Consideration unless it is
  freely tradable under a securities or bankruptcy law

C. Indemnity Escrow

  The $25,000,000 comprising the initial Share Consideration
  will be held in an indemnity escrow for 12 months after
  the Closing as security for post-closing indemnification
  obligations, if any, of the Debtors.

D. Purchase Price Adjustment

  On the Closing Date, the cash portion of the purchase price:

  -- is subject to a post-closing dollar-for-dollar reduction to
     the extent the actual amount of the sum of (a) Debtors' Net
     Receivables Amount and (b) the estimated inventory value is
     less than $450,000,000 in the aggregate; and

  -- would be increased dollar-for-dollar with respect to the
     first $2,000,000 of all payments the Debtors made with
     respect to certain operating leases on or after January 1,

  All the payments exceeding $2,000,000 would be reimbursed
  by U.S. Steel at a rate of $0.75 per $1 expended.  After the
  Closing Date, if the aggregate amount of Accounts Receivable
  included in the Acquired Assets minus the company reserves,
  plus the inventory value is less than $450,000,000, then the
  Purchase Price will be decreased by the amount of the

E. Representations & Warranties

  The parties provide standard representations and warranties.
  Under the Agreement, a "Material Adverse Effect" is defined as
  any state of facts, events, changes or effects that,
  individually or aggregated with other states of facts, events,
  changes or effects:

  (a) is materially adverse to, or materially impairs:

        (i) the value, condition or use of the Acquired Assets
            taken as a whole or the value or condition,
            financial or otherwise, of the Business taken as a
            whole, other than:

            * the changes in economic or business conditions
              generally or in the steel industry specifically,
              provided that the Business is not materially
              disproportionately affected;

            * the changes in laws and regulations impacting the
              steel industry generally, except those changes
              that result from the termination or modification
              of the March 5, 2002 Steel Product Proclamation
              under the Trade Act of 1973; or

            * the changes or effects resulting from the
              execution or announcement of the Purchase
              Agreement; or

       (ii) the ability of each party to perform its obligations
            under the Purchase Agreement; or

  (b) prevents or materially delays consummation of any
      transaction contemplated by the Purchase Agreement.

F. Cure Amounts

  The Debtors are required to cure any pre-closing liabilities
  or defaults under the contracts U.S. Steel will assume,
  including the payment of cure amounts necessary for those

G. Indemnification

  The Debtors will indemnify U.S. Steel for any damages relating
  to these items:

  (a) any inaccuracy of their representation or warranty under
      the Agreement;

  (b) their failure to perform any covenant or agreement under
      the Agreement; and

  (c) any excluded liabilities or excluded assets.

  The obligations to indemnify under the Agreement terminate 12
  months from the Closing Date.  The Debtors are not obligated
  to pay any amounts under the indemnification provisions of the
  Agreement until the aggregate indemnification payments to be
  made total $1,250,000.  Once the Debtors' indemnification
  obligations are triggered, they must pay any and all
  indemnification obligations exceeding $1,250,000 up to the
  amount of the Indemnity Escrow.

H. Closing Conditions

  Among other things, U.S. Steel's obligation to close the
  transaction is subject to the satisfaction of these

  (a) the Debtors' performance in all material respects of their
      covenants under the Agreement;

  (b) the accuracy of the Debtors' representations and
      warranties except where the failure to be accurate does
      not have a Material Adverse Effect;

  (c) there having not occurred a Material Adverse Change; and

  (d) the existence of a collective bargaining agreement by and
      between U.S. Steel and the USWA, in form and substance
      satisfactory to U.S. Steel in its sole discretion -- the
      Labor Condition.

I. Union Negotiations

  U.S. Steel is required to use all reasonable efforts to
  initiate negotiations of a collective bargaining agreement
  with the USWA and to keep the Debtors reasonably informed of
  the progress of these negotiations.  Any collective bargaining
  agreement between U.S. Steel and the USWA must provide for
  these items:

  (a) The USWA must expressly waive or deem satisfied the
      provisions contained in the collective bargaining
      agreements between the Debtors and the USWA relating to
      restrictions, limitations or obligations the Debtors have
      with respect to selling, conveying, assigning or otherwise
      transferring any plant or significant part of the plant;

  (b) The USWA must expressly waive or deem satisfied any claims
      that the union employees hired by U.S. Steel may have
      against the Debtors under the collective bargaining
      agreements for any vacation benefits to the extent and
      amount that U.S. Steel's collective bargaining agreements
      with the USWA provide those benefits; and

  (c) The USWA must expressly acknowledge and agree that the
      consummation of the transaction does not constitute a
      severance event entitling union employees hired by U.S.
      Steel to the payment of severance under the collective
      bargaining agreements.

  U.S. Steel further agrees that, upon the successful completion
  of the negotiation of a collective bargaining agreement with
  the USWA, it would use all reasonable efforts to initiate
  negotiations of collective bargaining agreements with other
  unions representing the Debtors' employees and to keep the
  Debtors reasonably informed of the progress of those

J. Termination

  The Agreement may be terminated on these circumstances but
  not by a party that is in breach of the Agreement:

  (1) upon written agreement of the Debtors and U.S. Steel;

  (2) by either the Debtors or U.S. Steel if the closing will
      not have occurred prior to the earlier of:

        (i) April 21, 2003; and

       (ii) 10 business days after entry of the Sale Order;

  The Sale Hearing, however, must occur by April 7, 2003.
  (National Steel Bankruptcy News, Issue No. 20; Bankruptcy
  Creditors' Service, Inc., 609/392-0900)

National Steel Corp.'s 9.875% bonds due 2009 (NSTL09USR1) are
trading at about 55 cents-on-the-dollar, says DebtTraders. See
for real-time bond pricing.

NETIA HOLDINGS: Shareholders Adopt Proposed Resolutions at EGM
Netia Holdings S.A., (WSE: NET), Poland's largest alternative
provider of fixed-line telecommunications services (in terms of
value of generated revenues), announced that the Extraordinary
General Meeting of Shareholders held Wednesday adopted
resolutions on (i) changes of Netia's Statute, (ii) changes of
the composition of Netia's supervisory board, (iii) rules
regulating compensation of members of Netia's supervisory board,
and (iv) establishing security interests over Netia's assets in
connection with EUR 50 million Senior Secured Notes due 2008
issued by Netia's Dutch subsidiary, Netia Holdings B.V. These
resolutions were adopted in connection with the on-going
restructuring of the Netia group companies.

Pursuant to the resolution of the Extraordinary General Meeting
of Shareholders held on January 15, 2003, David Oertle, Donald
Mucha and Jan Guz were dismissed as members of Netia's
supervisory board as of January 15, 2003. Pursuant to the
resolution of the Extraordinary General Meeting of Shareholders
held on January 15, 2003, Przemyslaw Jaronski was dismissed as a
member of Netia's supervisory board as of the date of the
registration by the Polish court of changes to Netia's statutes
adopted by the Extraordinary General Meeting of Shareholders
held on January 15, 2003.

Pursuant to the resolution of the Extraordinary General Meeting
of Shareholders held on January 15, 2003, Jaroslaw Bauc, Andrzej
Michal Wiercinski and Richard James Moon were appointed members
of Netia's supervisory board.

As a result of these changes Netia's supervisory board currently
consists of the following 10 members: Nicholas N. Cournoyer
(Chairman of the supervisory board), Jaroslaw Bauc, Morgan
Ekberg, Richard James Moon, Andrzej Radziminski, Ewa Maria
Robertson, Andrzej Michal Wiercinski, Jan Henrik Ahrnell,
Przemyslaw Jaronski and Hans Tuvehjelm. As of the date of the
registration by the Polish court of the changes to Netia's
Statute adopted by the Extraordinary General Meeting of
Shareholders on January 15, 2003, Jan Henrik Ahrnell, Przemyslaw
Jaronski and Hans Tuvehjelm will cease to be members of Netia's
supervisory board.

One of the minority shareholders formally objected to all
resolutions of the Extraordinary General Meeting of Shareholders
that related to dismissal and appointment of Netia's supervisory
board members.

One of the minority shareholders formally objected to the
resolution of the Extraordinary General Meeting of Shareholders
establishing security interest over the entire enterprise of

Netia Holdings SA's 13.50% bonds due 2009 (NETH09NLN2) are
trading at about 17 cents-on-the-dollar, DebtTraders says. See
for real-time bond pricing.

NTL INC: When-Issued Equity Traders Run to Bankr. Court for Help
NTL Incorporated (formerly NTL Communications Corp.) said that
certain parties filed a motion before the Bankruptcy Court
relating to Nasdaq's determination on January 14, 2003 regarding
the settlement of when issued trading of the company's stock

This matter does not relate to the settlement of trades that
have occurred with respect to the Company's common stock (NTLI)
since it began trading on the Nasdaq National Market on
January 13, 2003.

The motion will seek an order from the Court that could have the
effect of requiring adjustment of the settlement of the when
issued trades. This adjustment would take into account the
previously disclosed, court authorized reduction in the number
of shares the Company issued on the effective date of its plan
of reorganization, which resulted in the issuance of
approximately 50 million shares rather than approximately 200
million shares.

NTL emerged from bankruptcy protection on Friday January 10,
2003, and issued 50,500,969 shares of new common stock. Four
hundred million shares of common stock were authorized. The
Company's common stock (CUSIP 62940M104) and Series A warrants
(CUSIP 62940M138) have begun to trade on NASDAQ commencing
Monday, January 13, 2003 under the symbols of NTLI and NTLIW,
respectively. Shares of common stock of Old NTL, which
previously traded under the symbol NTLDQ, have been cancelled.

NTL: Maxcor Fears $4 Million Loss from When-Issued Trading
Maxcor Financial Group Inc., (Nasdaq: MAXF) warned that it
expects to incur a significant first quarter 2003 loss from the
settlement processes expected to be applied to when-issued
trades executed by its broker-dealer subsidiary in the common
stock of NTL Inc.

An operations committee of the NASD Board of Governors charged
with interpreting NASD's Uniform Practice Code announced
yesterday afternoon that it will not cancel any when-issued
trading contracts effected in NTL's common equity, which had
been trading since September 2002 on a when, as and if issued
basis under the symbol NTIWV. The settlement of transactions in
that market was thrown into chaos this past Friday, January
10th, when NTL filed a Second Amended Joint Reorganization Plan
implementing a three-fourths reduction in the number of common
shares to be issued upon its emergence from bankruptcy that same

Market participants in the when-issued trading market expected
Nasdaq to clarify that all trades effected prior to the amended
NTL filing should be adjusted to reflect what NTL said, in its
own motion papers approved by the Bankruptcy Court, would be a
Plan modification that "should have the same effect as an
ordinary reverse stock split." Nasdaq, however, declined to
adopt this logic, expressing its view that although the shares
being issued by NTL under its Amended Plan had been reduced from
200 million to 50 million, the securities "are to be considered
the same securities as contemplated under the original Plan."
The decision, in effect, says one share and a 1/4 of a share are
equivalent. NTL, in a separate statement, said it "disagrees
with the decision."

Maxcor's broker-dealer subsidiary, a holder of NTL bonds that
were exchanged for equity under NTL's Plan, was a net seller in
the when-issued market in order to manage the risks associated
with holding the bonds. The subsidiary is now faced with the
prospect of having sold stock in the when-issued market at one-
fourth of the post-split adjusted value and still having to
settle the same number of shares.

Until all the trades settle, Maxcor will not be able to fully
assess and quantify the total losses its subsidiary faces, but,
based on Tuesday's closing market values for NTL's common stock,
it currently estimates the losses would approximate $4 million
on an after-tax basis.

Maxcor is assessing its various remedies, which may include
unjust enrichment or comparable proceedings against
counterparties who fail to adjust their trades and/or seeking to
overturn or modify the Nasdaq decision.

Maxcor noted that first quarter losses associated with the NTL
trades may be offset in whole or in part by an expected one-time
gain, as previously announced, that Maxcor will record upon
final settlement or resolution of its property insurance claims
against Kemper Insurance relating to the September 11 terrorist
attacks that destroyed its corporate headquarters in the World
Trade Center, although the precise timing of that gain is not
certain. Also as previously announced, Maxcor will record a one
time 4Q 2002 after-tax gain of approximately $5 million,
reflecting the settlement of the business interruption insurance
claims of it and its affiliates against Kemper stemming from the
September 11th attacks.

Maxcor Financial Group Inc. -- through
its various Euro Brokers businesses, is a leading domestic and
international inter-dealer brokerage firm specializing in
interest rate and other derivatives, emerging market debt
products, cash deposits and other money market instruments, U.S.
Treasury and federal agency bonds and repurchase agreements, and
other fixed income securities. Maxcor Financial Inc., the
Company's U.S. registered broker-dealer subsidiary, also
conducts institutional sales and trading operations in municipal
bonds, high-yield and distressed debt, and equities. The Company
employs approximately 500 persons worldwide and maintains
principal offices in New York, London and Tokyo.

NYACK HOSPITAL: Fitch Affirms B+ $25-Mill. Revenue Bonds Rating
The approximately $24.7 million Dormitory Authority of the State
of New York hospital revenue bonds (Nyack Hospital), series
1996, are affirmed at 'B+' and are removed from Rating Watch
Negative by Fitch Ratings. Fitch had maintained the bonds on
Rating Watch Negative on August 7, 2002 because of Nyack's very
low liquidity position. The Rating Outlook is Stable.

The affirmation of the 'B+' rating by Fitch is reflective of
Nyack's continued highly speculative credit worthiness level.
The removal of the bonds from Rating Watch Negative is supported
by Nyack's improved operating performance, as well as its recent
three-year contract with its nurses union, and decreasing days
in accounts receivable and accounts payable. After losing $3.7
million from operations in 2001 and $32.2 million in 2000, Nyack
has posted an operating surplus of $814,000 through 11 months of
2002, sustaining an operating turnaround which began two years
ago as current management arrived at Nyack and implemented
several improvement initiatives. Nyack's huge loss in 2000 was
primarily the result of a six-month nurses' strike.

Nyack's maximum annual debt service coverage through 11 months
of 2002 was 1.8 times, its highest level since 1998, and an
indication that it will not have a debt service rate covenant
violation for the first time since 1998. Days in accounts
receivable and bad debt expense have decreased to favorable
levels, with 56 days in accounts receivable and 4.5% bad debt
expense as a percent of total operating revenue as of Nov. 30,
2002. Although discharges are down slightly, Nyack's revenue has
improved because of increased rates from renegotiated managed
care contracts, improvements to the revenue cycle, and a decline
in average length of stay from 5.1 days at the end of 2001 to
4.9 days through 11 months of 2002.

Fitch maintains a 'B+' rating primarily because of Nyack's
precipitously low liquidity position, which eroded nearly
completely as a result of significant operating losses over the
past three years. Nyack's unrestricted cash and investments
totaled $5.5 million as of Nov. 30, 2002, representing a very
low 17 days cash on hand and 22% cash to debt. These levels,
while very thin, have improved since 2001's 7 days cash on hand
and 9% cash to debt. Nyack is also involved in several lawsuits
that could negatively affect Nyack's creditworthiness.

Fitch believes that management has positioned the organization
for slightly profitable operations. With a strong market
position and favorable service area characteristics, Nyack
should slowly continue to build its liquidity position. An
immediate concern is a potential adverse decision involving one
of several lawsuits, although management is confident that the
likelihood of such is very low. Long-term concerns include
deferred capital replacement and routine maintenance needs that
have grown due to turnaround priorities. Nyack will need to
address its capital needs in the near term, making it imperative
that management continue the pace of its operational
improvement. Nyack has discussed the possibility of enhancing
its current affiliation with the New York-Presbyterian
Healthcare Network.

Nyack is a 375-bed staffed hospital located in Nyack, NY,
approximately 25 miles north of New York City. Nyack had total
revenue of $131 million in fiscal 2001. Nyack's disclosure to
Fitch has been timely and thorough. Nyack has provided
bondholders with timely information, although it covenants to
supply bondholders with annual information only.

OCTAGON INVESTMENT: S&P Rates $4.5-Million Class D Notes at BB
Standard & Poor's Ratings Services assigned its ratings to
Octagon Investment Partners V Ltd./Octagon Investment Partners V
Corp.'s $276.75 million fixed- and floating-rate notes.

Octagon Investment Partners V is a CDO primarily backed by high-
yield loans and structured as a cash flow transaction.

The transaction is a revolving pool purchased by Octagon Credit
Investors LLC, and has a 120-day ramp-up period and a five-year
reinvestment period ending Feb. 28, 2008.

The ratings are based on the following:

    -- Adequate credit support provided by subordination;

    -- Characteristics of the underlying collateral pool,
       consisting primarily of high-yield loans;

    -- Hedge agreements entered into with an appropriately rated
       counterparty to mitigate the interest rate risk created
       by having certain fixed-rate assets in the collateral
       pool and having floating-rate liabilities;

    -- Scenario default rate of 32.0% for the class A notes,
       23.8% for the class B notes, 21.1% for the class C notes,
       and 15.7 for the class D notes; and a break-even loss
       rate of 47.3% for the class A notes, providing 15.3% of
       cushion; 34.8% for the class B notes, providing 11.0% of
       cushion; 27.0% for the class C notes, providing 5.9% of
       cushion; and 25.4% for the class D notes, providing 9.7%
       of cushion;

    -- Weighted average maturity of 5.68 years for the

    -- Default measure of 2.64% (annualized);

    -- Variability measure of 1.71% (annualized);

    -- Correlation measure (CM) of 1.21 for the portfolio; and

    -- Interest on the class B, C, and D notes may be deferred
       up until the legal final maturity of Nov. 28, 2014,
       without causing a default under these obligations. The
       rating on the class B, C, and D notes thus addresses the
       ultimate payment of interest and principal.

                         Ratings Assigned

                 Octagon Investment Partners V Ltd./
                 Octagon Investment Partners V Corp.

               Class    Rating    Amount (mil. $)

               A-1      AAA                229.00
               A-2 (a)  AAA                  7.25
               B        A                   21.00
               C-1      BBB                 12.00
               C-2      BBB                  3.00
               D        BB                   4.50

OWENS CORNING: Asks Court to Approve South Carolina Settlement
Owens Corning and its debtor-affiliates ask the Court to approve
their settlement agreement with the State of South Carolina
Department of Health and Environmental Control.

Norman L. Pernick, Esq., at Saul Ewing LLP, in Wilmington
Delaware, tells the Court that the Debtors are responsible for
the proper operation and maintenance of a wastewater treatment
facility serving the Debtors' Anderson Plant located in Anderson
County, South Carolina.  The Site is subject to certain
discharge control laws and rules of the Department of Health.

The Department of Health performed a review of the discharge
monitoring reports submitted by the Debtors and determined that
the facility failed to comply with permitted discharge limits
for ammonia-nitrogen, copper, fecal coliform, and chronic
toxicity contained in the National Pollutant Discharge
Elimination System Permit.  The Department of Health alleged
that the Debtors violated the Pollution Control Act and Water
Pollution Control Permits by failing to comply with the effluent
limitations as required.  Because of these alleged violations,
the Debtors could incur a civil penalty not to exceed $10,000
per day of violation.

The Debtors deny the Department of Health's allegations and

To resolve the dispute, the Department of Health and the Debtors
entered into a consent order.  The salient terms of the Consent
Order are:

  A. The Debtors agree to the terms of the Consent Order without
     admission of any liability or violation of the law;

  B. The Debtors agree to:

     -- operate and maintain the facility in accordance with
        applicable State and Federal regulations;

     -- submit to the Department of Health a summary report of
        the results of an investigation conducted by the Debtors
        to determine the causes and sources of the toxicity
        failures at the facility and corrective actions already

     -- submit to the Department of Health corrective action
        plans detailing measures to be taken to attempt to
        eliminate chronic toxicity failures at the facility; and

     -- conduct a conductivity analysis to accurately determine
        and confirm the extent that mixing is occurring at the
        present location of the outfall;

  C. The Department of Health agrees to assess a $12,950 penalty
     against the Debtors, which will be deemed to be an allowed
     administrative expense priority claim against the Debtors.
     The Debtors will pay to the Department of Health the
     allowed administrative claim without further delay.
     Payment of this penalty resolves any and all claims
     currently pending against the Debtors from the Department
     of Health for the violations cited in the Consent Order;

  D. The Consent Order constitutes full and final settlement
     of all matters addressed and the Department of Health
     agrees to withdraw all bankruptcy claims filed against the
     Debtors for alleged violations of the Water Pollution
     Control Act.

Mr. Pernick asserts that the Consent Order is favorable to the
Debtors' estate because:

  -- it resolves in full the Department of Health's claim
     for the Debtors' alleged non-compliance with certain
     discharge control laws and rules;

  -- the Debtors' estates will only have to pay $12,950 in
     penalties, which is far less than the potential statutory
     fine under the Pollution Control of up to $10,000 per
     day of violation for its alleged violations;

  -- the Debtors are protected from further enforcement for
     alleged violations during the existence of the Consent
     Order, provided that the Debtors are in compliance with the
     Order; this gives the Debtors time to develop a solution
     to the facility plant issues and allows the Debtors to work
     with the Department of Health on a new permit without
     having to divert resources to defend an enforcement action;

  -- the terms of the Consent Order are fair and reasonable.
     (Owens Corning Bankruptcy News, Issue No. 43; Bankruptcy
     Creditors' Service, Inc., 609/392-0900)

DebtTraders reports that Owens Corning's 7.70% bonds due 2008
(OWC08USR1) are trading at about 24 cents-on-the-dollar. See
real-time bond pricing.

PACIFIC GAS: Wants More Time to Pay Main Line Extension Pacts
On March 25, 2002, Pacific Gas and Electric Company obtained the
Court's permission to assume certain executory main line
extension contracts and to make payments validly owing to the
customers under all executory and non-executory contracts within
nine months.  The time for compliance expired on December 26,

Since then, PG&E has worked diligently to comply with the Court
Order.  To date, PG&E has reviewed and made payments on 97% of
the over 54,000 line extension contracts that were affected.  It
has issued over 21,683 separately processed checks.  However,
PG&E has anticipated that, in the light of the caseload of other
matters that it has to consider not to mention the tedious
process of going over in specific detail on a particular
contract, it would not finish by the imposed deadline.
Accordingly, PG&E's sought and obtained a Court order extending
the payment deadline until January 31, 2003.  There remains
1,500 line extension contracts to be reviewed and paid.

Under the line extension contracts, the customers are required
to make a number of different types of payment to PG&E; in turn,
PG&E may be required, depending on the nature of the development
for which the line extension is constructed and other
circumstances, to make a number of payments back to the
customers.  Five main types of payments may be made to the
customers pursuant to the line extension contracts:

    1. return of the project deposit;

    2. payment for work requested by PG&E that would otherwise
       be its responsibility;

    3. payment for inspection fees;

    4. the MLX refund; and

    5. service allowances.

To ascertain whether a customer is entitled to a payment under a
given contract, the amount outstanding to or from the customer
must be calculated with respect to all of these different
payments.  According to Ceide Zapparoni, Esq., at Howard, Rice,
Nemerovski, Canady, Falk & Rabkin, PC, the process of
calculating and reconciling these "refund" payments to the
customers is complex and involves a great deal of manual
oversight.  Although the MLX refunds are computer generated, Ms.
Zapparoni says, they require manual reconciliation with PG&E's
accounting systems before payments can be issued.  Calculating
the four other payment types, in addition to manual
reconciliation, also requires PG&E personnel to physically
obtain and manually review each contract.  Ms. Zapparoni relates
that this process requires field investigation, and cross-
checking various payments with PG&E's accounting systems to
validate the payments owed and issued.

"For all payments, PG&E calculated amounts owed and payments
actually issued, including interest, as calculated in the
March 25, 2002 Order," Ms. Zapparoni states.  "PG&E then
itemizes each check stub by project, payment type, amount and

Other factors also complicated and delayed the review.  Ms.
Zapparoni relates that, during the review process, it became
apparent that many prospective payees would be receiving
interest payments exceeding $600.  Under the Internal Revenue
Code, PG&E then is required to obtain Tax Payer Identification
Numbers for those individual or withhold 30% of the interest
payment.  But since it does not have the TINs for many of the
prospective payees, PG&E was compelled to contact over 16,000
customers in writing to request their TINs.  When PG&E received
the responses, it then had to revise its records for each of
these customers to include the TINs.

PG&E has made a manual review of more than 33,000 contracts, Ms.
Zapparoni says.  To accomplish task, PG&E needed 80,000 man-
hours, with an average dedicated staff of 30 full-time

"The extension would enable the Debtor to ensure that all line
extension contracts are carefully reviewed, notices properly
issued and that payments are remitted in the appropriate
amounts," Ms. Zapparoni notes. (Pacific Gas Bankruptcy News,
Issue No. 51; Bankruptcy Creditors' Service, Inc., 609/392-0900)

PEACHTREE FRANCHISE: Fitch Junks Class D & E Notes at CCC/CC
Fitch Ratings downgrades Peachtree Franchise Loan LLC 1999-A
class A including class A-X to 'A' from 'AAA', class B to 'BBB'
from 'AA', class C to 'B' from 'BBB-', class D to 'CCC' from 'B'
and class E to 'CC' from 'CCC'.  All classes are removed from
Rating Watch Negative.

The Peachtree transaction has been one of the better performing
franchise loan pools to date, benefiting from virtually no
exposure to the convenience and gas industry. Of the 15% ($25
million) of cumulative defaults occurring thus far, nearly 10%
($15 million) is due to a single large borrower (Westwind ALWA).
The Westwind loan was restructured in September 2001 resulting
in a $6.2 million write down to the trust. The loan was returned
to default status in September 2002 and it is expected that the
remaining $8.3 million will be completely written down. The
remainder of the pool has an additional $10 million (4 loans) of
defaulted loans and one $5.5 million loan in late stage

Noteworthy also is that as of the November report there are
ongoing interest shortfalls to classes C and below. The class C
has been receiving partial interest payments for the last 4
months while classes D and E have been receiving partial or no
interest since August 2001.

PER-SE TECH.: S&P Raises Credit and Debt Ratings to B+ from B
Standard & Poor's Ratings Services raised its corporate credit,
senior secured, and senior unsecured ratings on Per-Se
Technologies Inc., to 'B+' from 'B'. The upgrades reflect
Standard & Poor's belief that Per-Se will sustain profitability
and cash flow protection improvements achieved over the past
few years.

Atlanta, Georgia-based Per-Se provides business-outsourcing
services to hospital-based physician practices, medical
software, and electronic transaction processing, primarily to
physicians and health-care organizations. Total lease-adjusted
debt was about $220 million at September 2002. The outlook is

"Management's ongoing challenge is to successfully leverage its
large installed customer base to achieve continued revenue
growth, while maintaining profitable operations," said Standard
& Poor's credit analyst Emile Courtney. "While competitive
pressures in Per-Se's fragmented healthcare IT and services
market are likely to limit upside ratings potential, currently
good profitability and cash flow levels should provide a measure
of downside protection."

Standard & Poor's believes that litigation-related costs,
expected have been about $9 million for 2002 and to total $9
million in 2003, are manageable at current levels. Per-Se has
exposure to claims, litigation, and billing inquiries as a part
of its ongoing business operations.

Capital expenditures in 2003 are expected to remain moderate.
Standard & Poor's expects that Per-Se will continue to manage
expenses prudently as it attempts to further boost revenue
growth in 2003, generating more than $15 million in free cash
flow in 2003, after litigation-related expenditures.

PIONEER-STANDARD: S&P Places BB- Credit Rating on Watch Negative
Standard & Poor's Ratings Services placed its 'BB-' corporate
credit and its other ratings for Pioneer-Standard Electronics
Inc. on CreditWatch with a negative implication. The company
recently announced that it has agreed to sell the net assets of
its Industrial Electronics Division to Arrow Electronics
Inc., (BBB-/Negative/A-3) for about $285 million in cash.

The CreditWatch listing reflects uncertainty as to: the final
capital structure of the company; the use of proceeds (which
could potentially include cash dividends, share repurchases,
debt repayment and/or acquisitions); as well as the longer-term
business profile of Pioneer-Standard.

As of September 30, 2002, Cleveland, Ohio-based Pioneer-Standard
had cash balances of $69 million, and debt plus trust preferred
securities totaled $294 million. Gross proceeds from the pending
sales will be about $285 million.

"Although Pioneer-Standard is exiting its less profitable and
more volatile segment, the remaining business--the Computer
Systems Division--could not currently support a higher rating
level," said Standard & Poor's credit analyst Martha Toll-Reed.

Pioneer-Standard faces significantly larger competitors in an
increasingly global IT distribution industry. Standard & Poor's
will meet with management to determine the company's use of
proceeds, capital structure, and longer-term strategy before
resolving the CreditWatch.

PIONEER-STANDARD: Arrow Electronics Acquiring Electronics Div.
Arrow Electronics Inc., (BBB-/Negative/A-3) recently announced
that it will acquire substantially all of the assets of the
Industrial Electronics Division of Pioneer-Standard Electronics
Inc., (BB-/Watch Negative/--) for approximately $285 million in

Standard & Poor's Ratings Services does not expect the
acquisition to have an impact on Arrow's ratings or outlook.

Melvill, New York-based Arrow will utilize a portion of its cash
and short-term investments (approximately $650 million at year-
end) to fund the purchase price and is not expected to incur
additional debt. Current ratings reflect Arrow's leading market
position and liquid balance sheet, and the expectation that
profitability will improve over the near-to-intermediate term as
industry conditions improve. In addition, the acquisition is
expected to increase Arrow's earnings in the first full year
following the integration.

PROTECTION ONE: Possible Sale Spurs S&P to Keep Ratings Watch
Standard & Poor's Ratings Services placed its 'B' corporate
credit and other ratings for Protection One Alarm Monitoring
Inc., on CreditWatch with negative implications. The action was
taken because of concerns associated with the intention of 88%
owner Westar Energy Inc., (BB+/Watch Neg/--) to dispose of
Protection One and the potentially negative impact of recent
directives by the Kansas Corporation Commission.

Topeka, Kansas-based Protection One is the second-largest
security alarm monitoring company in the nation. As of September
2002, it had about $575 million of total debt outstanding.

Westar Energy intends to dispose of its unregulated
subsidiaries, including Protection One. In addition, Protection
One's ability to access funds through its credit facility has
become uncertain because of requirements placed on Westar Energy
by the Kansas Corporation Commission.

"Standard & Poor's will continue to monitor the credit impact of
the likely disposition of Protection One as well as Protection
One's liquidity if it is unable to access its credit facility on
a timely basis or to receive the funds due under the tax-sharing
agreement," said Standard & Poor's credit analyst Edward

Protection One relies on Westar Energy's financing arm, Westar
Industries Inc., to provide funds through its senior credit
facility, which is Protection One's primary source of liquidity.
Over the past two years, attempts by Protection One to obtain
external financing have been unsuccessful. The commission may
also nullify Protection One's right to receive $17 million-$29
million owed this year under a tax-sharing agreement with

QUESTRON: Delaware Court Fixes January 21 Admin. Claims Bar Date
The U.S. Bankruptcy Court for the District of Delaware fixes
January 21, 2003, as the Bar Date for Administrative Claimants
or holders of Rejection Damage Claims to file their proofs of
claim against Questron Technology, Inc., and its debtor-
affiliates, or be forever barred from asserting their claims.

Written requests for allowance of administrative priority claims
must be received by the Claims Agent before 4:00 p.m. (Eastern
Standard Time) on the Jan. 21. Those requests must be sent to:

      Proviti Inc.
      Attn: Questron Claims Processing
      48 BiState Plaza,
      P.M.B. 224
      Old Tappan, New Jersey 07675

Administrative Claims need not be filed if they are on account

      a. Expense claims of professionals employed by the Chapter
         11 Trustee, John Forte, and/or the Committee of
         Unsecured Creditors;

      b. Claims already properly filed with the Bankruptcy
         Court; and

      c. Claims previously allowed by Order of the Court.

Questron Technology Inc., is a leading provider of supply chain
management solutions and professional inventory logistics
management programs for small parts commonly referred to as "C"
inventory items (fasteners and related products) focused on the
needs of Original Equipment Manufacturers. The Company and its
debtor-affiliates filed for Chapter 11 protection on
February 03, 2002. Evelyn Rodriguez, Esq., at Kasowitz Benson
Torres & Friedman LLP and Amanda Kernish, Esq., at Richards
Layton & Finger PA, represent the Debtors in their restructuring

QWEST COMMS: Files Long-Distance Service Application with FCC
Qwest Communications International Inc., (NYSE: Q) filed an
application with the Federal Communications Commission for
authority to provide long-distance service to more than 2.5
million customer lines in Oregon, New Mexico and South Dakota.
Wednesday's filing comes a few weeks after the FCC unanimously
approved Qwest's nine-state application on December 23. Qwest
plans to file similar applications for long-distance authority
in its remaining two states, Arizona and Minnesota, within the
next few months.

Qwest filed the application with the FCC after regulators in the
three states completed extensive hearings by finding that Qwest
met all applicable requirements of the Telecommunications Act of
1996. The state commissions are scheduled to make formal
recommendations to the FCC supporting Qwest's application in
approximately 20 days.

"Soon, customers in Oregon, New Mexico and South Dakota will
enjoy the benefits of real long-distance competition," said
Steve Davis, Qwest senior vice president of policy and law. "The
FCC unanimously approved our application for nine states. We're
well on our way to offering long-distance service to every state
in our local service region."

Qwest has spent more than $3 billion to open its markets to
competitors and comply with the act. The filing contains
extensive evidence that Qwest has met all the requirements of
the act.

                         Systems Tests

The FCC application includes data from an extensive third-party
test of Qwest's systems and performance that demonstrates
Qwest's excellence in providing wholesale services. The test
covered 13 of the 14 states in Qwest's local service territory
and was conducted by regulators from throughout those states.
During the test, tens of thousands of transactions were
monitored to confirm Qwest's ability to facilitate orders,
installation, repair, billing and other services ordered by
competitive local telephone companies. Qwest has also passed a
separate and comparable systems test in Arizona.

               Consumer Savings, Performance Assurance

Residential and business customers in Qwest's region could save
more than $1 billion annually with Qwest's re-entry into the
regional long-distance business, according to a study by
Professor Jerry A. Hausman, director of the Massachusetts
Institute of Technology Telecommunications Research Program.
Qwest's long-distance service offering could save customers in
Oregon, New Mexico and South Dakota more than $172 million
annually, according to the study. On January 7, Qwest announced
its new long-distance offerings that continue to deliver the
Spirit of Service(TM) through simple pricing, the convenience of
one bill and additional savings for customers who purchase a
package of Qwest services.

Qwest is supporting its application with comprehensive
performance monitoring and enforcement plans to ensure the
service standards for its wholesale customers remain strong. The
plans provide individual competitors with damages if Qwest does
not provide competitive local exchange carriers the same level
of service that it provides its own retail operations or if
Qwest fails to meet applicable benchmarks standards.

               Local and Long-Distance Competition

Local phone service competition in Qwest's territory is strong,
underscoring that Qwest has met FCC requirements for its
application. In most Qwest states, competitors have captured a
far greater percentage of customers than they had in New York
and Texas -- eight and 12 percent respectively -- at the time
local phone companies there received FCC approval to offer long-
distance service.

Qwest Communications International Inc., (NYSE: Q) is a leading
provider of voice, video and data services to more than 25
million customers. The company's 53,000-plus employees are
committed to the "Spirit of Service" and providing world-class
services that exceed customers' expectations for quality, value
and reliability. For more information, please visit the Qwest
Web site at

Qwest Communications' 7.50% bonds due 2008 (Q08USR3) are trading
at about 86 cents-on-the-dollar, DebtTraders reports. See
real-time bond pricing.

SAKS INC: Acquires Former Macy's Store in Birmingham, Alabama
Retailer Saks Incorporated (NYSE: SKS) announced its acquisition
of the former Macy's store in the Riverchase Galleria in
Birmingham, Alabama from Federated Department Stores, Inc.

The Riverchase Macy's store was exchanged for the Company's
90,000 square foot Saks Fifth Avenue store located in the
Oakbrook Center in Oakbrook, Illinois, which closed in December

The Company is currently evaluating options for the 230,000
square foot, tri-level Riverchase Galleria store, with the
objective of enhancing its Saks Department Store Group franchise
in the Birmingham area and maximizing returns on invested
capital. SDSG currently operates six Parisian specialty
department stores and three McRae's department stores in the
Birmingham area. Parisian stores are located in the Riverchase
Galleria, Brookwood Village, The Summit, Eastwood Mall, Western
Hills, and downtown, and McRae's stores are located in the
Riverchase Galleria, Century Plaza, and Roebuck Plaza.

Saks Incorporated currently operates Saks Department Store Group
with 245 department stores under the names of Parisian,
Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie Scott,
Bergner's, and Boston Store. The Company also operates Saks
Fifth Avenue Enterprises, which consists of 60 Saks Fifth Avenue
stores and 52 Saks Off 5th stores.

                          *    *    *

As previously reported in Troubled Company Reporter, Fitch
Ratings affirmed its 'BB+' rating of Saks Incorporated's $700
million bank facility and its 'BB-' rating of the company's
senior notes. Approximately $1.2 billion of senior notes are
affected by the action, which follows Saks' announcement that it
has agreed to sell its credit card receivables to Household
International. The Rating Outlook remains Negative.

The ratings reflect Saks' solid position within its markets
balanced against its weak operating results and high financial
leverage. Saks' operations have been pressured by soft apparel
sales and growing competition from specialty and discount

Saks Incorporated's 8.25% bonds due 2008 (SKS08USR1) are trading
slightly below par at 99 cents-on-the-dollar, says DebtTraders.
for real-time bond pricing.

SALOMON BROTHERS: Fitch Affirms Low-B Ratings on 5 Note Classes
Salomon Brothers Mortgage Securities VII, Inc.'s commercial
mortgage pass-through certificates, series 2000-NL1 are upgraded
by Fitch Ratings as follows: $18.4 million class B certificates
to 'AA+' from 'AA', $16.7 million class C to 'A+' from 'A', $6.7
million class D to 'A' from 'A-', $15.9 million class E to
'BBB+' from 'BBB', $5 million class F to 'BBB' from 'BBB-'. In
addition, Fitch affirms the following classes: $162 million
class A-2, and interest-only class X certificates at 'AAA',
$10.9 million class G at 'BB+', $5.8 million class H at 'BB',
$4.2 million class J at 'BB-', $8.4 million class K at 'B' and
$3.3 million class L at 'B-'. Fitch does not rate the $8.4
million class M certificates. Class A-1 has been paid in full.
The upgrades follow Fitch's annual review of the transaction,
which closed in March 2000.

The upgrades are mainly due to increased subordination levels,
resulting from amortization and loan payoffs. As of the December
2002 distribution date, the pool's aggregate principal balance
has been reduced by approximately 21%, from $334.2 million at
closing to $266 million. Ten loans have paid off since issuance.
One loan (1.3%) secured by a limited-service hotel in Lexington,
KY is real estate-owned. The loan originally defaulted due to
occupancy issues and occupancy as of November 2002 remains low
at 24%. In addition, two loans (2.03%) reported year-end 2001
debt service coverage ratios below 1.00 times. However, both
loans remain current.

ORIX Real Estate Capital Markets, LLC, the master servicer,
collected YE 2001 financial statements for 97% of the pool
balance. According to the information provided, the YE 2001
weighted average is 1.74x, compared to 1.71x at YE 2000 and
1.42x at issuance for the same loans.

As part of Fitch's analysis, the loans identified as potential
problems were assumed to default at various stress scenarios.
The resulting subordination levels justified the aforementioned
rating actions. Fitch will continue to monitor this transaction,
as surveillance is ongoing.

SHELBOURNE PROPERTIES: Inks Pact to Sell Livonia, MI Property
Shelbourne Properties III, Inc., (Amex: HXF) entered into a
contract to sell its property located in Livonia, Michigan
commonly referred to as Livonia Plaza for a purchase price of
approximately $12,969,000. The closing of the sale of this
property is currently scheduled for January 29, 2003.

The Board of Directors and Shareholders of Shelbourne Properties
III, Inc. have previously approved a plan of liquidation for
Shelbourne Properties III, Inc. For additional information
concerning the proposed liquidation including information
relating to the properties being sold please contact Andy
Feinberg at (617) 570-4620 or John Driscoll at (617) 570-4609.

SHELBOURNE: JVs Acquire 100% Interest in 20 Motel Properties
Shelbourne Properties I, Inc. (Amex: HXD), Shelbourne Properties
II, Inc. (Amex: HXE), and Shelbourne Properties III, Inc. (Amex:
HXF) reported that their respective operating partnerships have
through a joint venture acquired a 100% interest in 20 motel
properties triple net leased to an affiliate of Accor S.A.  The
cash purchase price was approximately $2,700,000 and the
properties are also subject to approximately $74,220,000 of
existing mortgage indebtedness.

The Accor properties were acquired for the benefit of the holder
of the Shelbourne REITs operating partnerships Class A Preferred
Units in satisfaction of the liquidation preference and in
consideration for the elimination of certain restrictive terms
of the Preferred Units which limited the value of properties
that could be sold without paying a significant prepayment
penalty to the Preferred Unit holder and to satisfy, subject to
certain conditions, the liquidation preference payable on the
Preferred Units. The acquisition of the Accor properties and the
modifications to the terms of the Preferred Units should
facilitate the disposition of the other properties of the
Shelbourne REITs and the distribution to shareholders of the
sales proceeds in accordance with the plans of liquidation of
the Shelbourne REITs approved by stockholders in October 2002.

The holder of the Preferred Units has the right to require the
operating partnerships to acquire other properties for its
benefit at an aggregate cash cost to the operating partnerships
of $2,500,000. In that event the Accor properties would not be
held for the benefit of the holder of the Preferred Units and
would be disposed of as part of the liquidation of the
Shelbourne REITs.

SIRIUS: FCC Approves Application Related to Recapitalization
SIRIUS (Nasdaq: SIRI), the premier satellite radio broadcaster
and only service delivering uncompromised coast-to-coast music
and entertainment for your car and home, announced that the
Federal Communications Commission has approved the company's
application to transfer control of its operating licenses in
connection with its recapitalization.

In its order approving the application, the FCC indicated that
"the proposed restructuring will benefit the public interest,"
and that approval of the application will allow SIRIUS "to
access financial resources necessary to maintain and expand its
service to the public." SIRIUS filed the transfer application
because of the significant amount of common stock expected to be
issued to its debt holders and preferred stockholders in
connection with the restructuring.

"We are very pleased to have received swift approval of our
application from the FCC," said Patrick Donnelly, Executive Vice
President and General Counsel for SIRIUS. "This is an important
step in the process of completing our recapitalization, which we
continue to believe will be consummated this quarter."

SIRIUS is the only satellite radio service bringing listeners
100 streams of the best music and entertainment coast-to-coast.
SIRIUS offers 60 music streams with no commercials, along with
40 world-class sports, news and entertainment streams for a
monthly subscription fee of $12.95. Stream Designers create and
deliver uncompromised music in virtually every genre to our
listeners 24 hours a day. Satellite radio products bringing
SIRIUS to listeners in the car, truck, home, RV and boat are
manufactured by Kenwood, Panasonic, Clarion, Audiovox and
Jensen, and are available at major retailers including Circuit
City, Best Buy, Sears, Good Guys, Tweeter, Ultimate Electronics
and Crutchfield. SIRIUS is the leading OEM satellite radio
provider, with exclusive partnerships with DaimlerChrysler, Ford
and BMW. Automotive companies that have announced plans to offer
SIRIUS radios in select new car models include Chrysler, Dodge,
Jeep(R), Ford, Lincoln, Mercury, Mazda, Land Rover, Jaguar,
Volvo, Aston Martin, Nissan, Infiniti, BMW, MINI, Audi and

As reported in Troubled Company Reporter's November 19, 2002
edition, SIRIUS Satellite reaffirmed, in response to Thursday's
misleading Reuters headline that -- once again -- referenced a
possible bankruptcy, its plans to recapitalize the company
through a voluntary debt for equity exchange and investment of
new capital by existing stakeholders.

SO. CALIFORNIA EDISON: S&P Assigns BB Rating to Mortgage Bonds
Standard & Poor's Ratings Services assigned its 'BB' rating to
electric utility Southern California Edison Co.'s 8% first and
refunding mortgage bonds due 2007. SCE will issue up to $1
billion of bonds through a tender for outstanding 8.95% variable
rate notes due November 2003. SCE is pursuing the tender and
exchange to enhance liquidity by extending a near-term maturity
by four years. The outlook is developing.

"Without the tender, SCE would face $1.425 billion of 2003 debt
maturities, an amount representing about one-quarter of
outstanding debt," said Standard & Poor's credit analyst David

Whether SCE achieves its objective will be determined by the
tender's results.

SCE's ratings reflect the settlement reached by SCE with
California's Public Utilities Commission in litigation SCE
commenced in federal court asserting that it was unlawfully
barred from recovering power-procurement costs as they were
incurred in 2000 and 2001. The settlement yields robust cash
flows over a short time frame and enabled SCE to borrow $1.6
billion on a senior secured basis to discharge defaulted debt
and trade obligations. The settlement agreement's validity
remains the subject of a pending judicial challenge. An adverse
decision setting aside the settlement could negatively affect
SCE's ratings.

The ratings continue to be premised on a favorable resolution of
the judicial challenges to the SCE/CPUC settlement agreement.
The ratings will probably be lowered if the company fails to
successfully cross this hurdle. SCE's potential for investment-
grade ratings also hinge on the CPUC's establishment of a clear
track record of regulatory decisions that implement AB 57 and
translate into strong and predictable cash flows in coming
years. The CPUC's regulatory decisions will determine the
direction of SCE's future credit quality.

SUN HEALTHCARE: Receives Notices of Default from Landlords
Sun Healthcare Group, Inc., (OTC Bulletin Board: SUHG) announced
that THCI Company LLC, THCI Mortgage Holding Company LLC, THCI
Holding Company LLC and their affiliated entities have delivered
notices of termination to various affiliates of Sun seeking to
revoke Sun Tenants' rights to occupy and operate 32 long-term
care and rehabilitation hospital facilities.  Those notices of
termination are based upon Care Realty's assertion that the
Tenants are in default of various leasehold obligations,
including the failure to pay rent that Care Realty asserts was
due as of January 1, 2003.  As reported in Sun's Form 10-Q,
these leases have been the subject of a continuing dispute among
the parties.

In 2001, the parties engaged in litigation over various aspects
of these leases. This litigation was initiated in connection
with Sun's 1999 chapter 11 bankruptcy case. In January and
February 2002, the parties entered into stipulations, approved
by the Bankruptcy Court in that case, which were intended to
resolve this litigation. Those stipulations provided that the
parties were to terminate the existing leases and enter into new
leases, providing among other things for a reduction in rent,
for 32 leased facilities and two additional facilities that are
currently owned by Sun's subsidiaries. However, from the time
the stipulations were approved to the present, the parties have
not been able to reach agreement concerning these new leases and
have reached an impasse over a number of issues. Although
Tenants had paid the amounts demanded by Care Realty as rent for
the facilities through December 2002, Tenants have now declined
to pay the rent until the parties reach a mutually acceptable
resolution regarding this matter.

Rick Matros, Chairman and CEO of Sun stated, "The Tenants
notified Care Realty that no further payments will be delivered
to Care Realty until there is resolution of the existing court
orders and stipulations. Care Realty has reacted by purporting
to terminate leases that the court ordered to be replaced.
Although we have exerted every effort to work with Care Realty
to reach accord on the form of leases required under the
stipulation, we were unable to agree on the form and substance
of the new leases required under that document. Sun's continuing
payments to Care Realty allowed it to persist in prolonging
negotiations without cost to it. We have therefore elected not
to make further payments to Care Realty until negotiations
toward a mutually acceptable resolution regarding the new leases
has been completed." Mr. Matros continued, "Our ongoing and
long-standing dispute with Care Realty in no way affects our
ability to fulfill our commitment to quality patient care. Sun
and its subsidiaries continue to receive ongoing funding under
the existing lender arrangements while Sun and its lenders work
through the covenant defaults previously disclosed in the
company's quarterly reports to the SEC."

Care Realty is currently seeking to take possession of the 32
affected facilities together with leasehold damages that, if
awarded are anticipated to have a material adverse effect upon
Sun and its consolidated subsidiaries. Although Sun and the
Tenants intend to defend Care Realty's allegations vigorously,
no assurance can be given as to whether Care Realty will prevail
in its claims against the Tenants and Sun.

Mr. Matros advised that, "Care Realty's position is particularly
inappropriate given recent reductions in government support for
long-term caregivers. Congress has failed to restore Medicare
funding to the levels existing prior to October 1, 2002.
Moreover, severe cuts are proposed in Medicaid payments under
numerous State budgets. Prospective enforcement of other cuts in
reimbursement, such as the cap on reimbursement for
rehabilitation therapy, makes matters even worse. Sun must, and
will, continue to maintain its commitment to high quality
patient care. But under these circumstances, Sun also must, and
will, continue to make the hard decisions required to maintain
patient care while reducing costs wherever possible in light of
the government's deep cuts in funding."

Headquartered in Irvine, California, Sun Healthcare Group, Inc.
owns many of the country's leading healthcare providers. Through
its wholly-owned SunBridge Healthcare Corporation subsidiary and
its affiliated companies, Sun's affiliates together operate more
than 235 long-term and postacute care facilities in 25 states.
In addition, the Sun Healthcare Group family of companies
provides high-quality therapy, pharmacy, home care and other
ancillary services for the healthcare industry. More information
is available on the Company's Web site at

TRANSTECHNOLOGY: Net Capital Deficit Widens to $26MM at Dec. 29
TransTechnology Corporation (NYSE:TT) reported income from
continuing operations of $1.4 million for the third fiscal
quarter ended December 29, 2002, compared to a loss from
continuing operations of $0.7 million for the same period one
year ago.

The current quarter's results included a $1.2 million after-tax
non-cash gain from financial derivatives associated with a
change in the value of warrants to purchase the company's stock
during the quarter.

Net sales for the third quarter of fiscal 2003 increased 24% to
$15.6 million from $12.7 million in the same quarter a year ago.
Including a loss from discontinued operations of $3.5 million,
the company reported a net loss for the third quarter of fiscal
2003 of $2.0 million. For the same period last year the company
reported a net loss of $6.2 million including a loss from
discontinued operations of $5.5 million.

The company reported operating income before interest and taxes
of $3.5 million for the quarter, up 137% compared to $1.5
million in last year's third quarter, after adjusting each
period for charges for forbearance fees and corporate office
restructuring costs. Operating earnings before interest, taxes,
depreciation and amortization (EBITDA) rose 124% to $4.3 million
from $1.9 million in last year's third quarter level. Free cash
flow, or net income after cash taxes plus depreciation,
amortization and non-cash mark-to-market adjustments less
capital expenditures, rose to $1.1 million compared to negative
free cash flow of $0.6 million in last year's third quarter.

The company reported that the loss from discontinued operations
in the current quarter included operating income from
discontinued businesses of $1.8 million; allocated interest
expense of $1.7 million; and a $5.5 million non-cash charge to
recognize increased loss reserves associated with units that
have been divested, which were offset by a tax benefit of $1.9
million. The loss from discontinued operations reported for the
third quarter of fiscal 2002 included increases in the losses
anticipated upon the sale of the various retaining rings
businesses (the last of which were sold in the second quarter of
fiscal 2003), the forecasted operating income and interest
expense associated with the industrial products segment through
the anticipated closing dates of the divestitures of those
units, and the accrual of certain phase out costs through the
completion of the restructuring process.

For the nine months ended December 29, 2002, the company
reported a loss from continuing operations of $0.4 million
compared to a loss of $4.2 million in the prior year's nine-
month period. For the nine months of fiscal 2003 the company
reported a loss from discontinued operations of $7.6 million.
For the same period of the prior year the company reported a
loss from discontinued operations of $55.8 million. The net loss
for the nine months ended December 29, 2002 was $8.0 million
compared to a net loss of $60.0 million in the prior year's
nine-month period. Sales for the nine months of fiscal 2003 were
$41.3 million compared to $35.5 million in the prior year's same
period, an increase of 16%.

At December 29, 2002, the Company's balance sheet shows a total
shareholders' equity deficit of about $26 million.

                    Norco Subsidiary to be Sold

The Company intends to sell its Norco, Inc., subsidiary and that
it is in discussions relative to such a transaction. Norco is
the world's leading manufacturer of hold-open rods for aircraft
engine nacelles.

Michael J. Berthelot, Chairman, President and CEO of the
company, said, "On July 17th we stated that we would look at a
number of possible alternatives that might maximize the value of
our company for its shareholders, including the sale of all or
parts of the company or a restructuring of our balance sheet. At
the current time, we believe that our best is to focus our
efforts on the military and government markets. As a result, we
have decided to divest our Norco, Inc. subsidiary, which
generates more than 60% of its business from the commercial
aerospace markets. Following this divestiture, our company will
be comprised of a single business unit, Breeze-Eastern, which is
the world's leading designer and manufacturer of helicopter
rescue hoists and cargo hooks while also emerging as a leader in
the development of weapons loading systems and cargo winches for
the military market. Approximately 95% of our revenues will now
be derived through direct or indirect sales to military or
government agencies throughout the world."

Joseph F. Spanier, the Vice President and Chief Financial
Officer of TransTechnology, said, "As a result of our decision
to divest Norco, we will reclassify its financial results to
discontinued operations, effective immediately and all results
reflected in this release include only Breeze-Eastern as
continuing operations."

           Military Sales Continue to Drive Growth

The Company reported that a favorable mix of spares, repair and
overhaul business to new equipment deliveries as well as the
first shipments of the HLU-196 Munitions Hoist to the U.S. Navy
resulted in strong sales growth for the third quarter. As almost
95% of the company's sales are to the US or foreign military or
government agencies on a sole-source basis, the company is not
affected by the slowdown in the commercial aerospace sector. New
orders received during the third quarter were $20.4 million,
with a book to bill ratio for the quarter of 1.31, compared to
just .93 in last year's third quarter. The company's backlog at
the end of the third quarter was up $5.7 million or 15% to $42.7
million from $37.0 million at the end of the third quarter of
last year and up $4.8 million from $37.9 million at the end of
the second quarter of the current fiscal year.

Mr. Berthelot said, "Our Breeze-Eastern division has performed
above our operating targets, driven by strong growth in new
orders, shipments, and operating income. The initial shipments
of the HLU-196 Munitions Hoist, for which we have over $8.5
million of contracts with the U.S. Navy and an additional option
under negotiation, has provided a substantial boost to the
growth of our weapons handling product line."

Mr. Berthelot continued, "Third quarter results show the
continuing improvement not only in our core operating
businesses, but also in our efforts to reduce the size and cost
of our corporate office and to delever our balance sheet.
Corporate office expenses, without regard to amortization of
bank fees or severance costs associated with our continuing
restructuring, decreased $0.5 million from last year's third
quarter and are currently on a $4.2 million run rate, about
where our target was set last year. We see additional
opportunities for cost reductions at the corporate level, and
have recognized $0.5 million of severance costs this quarter to
reduce our corporate office staff from nine to six over the next
few months. As a result of these changes, we expect to save
about $1.0 million per year. We continue to look for further
such reductions. As a result of the reduction of our senior debt
through the application of proceeds from the divestiture of our
fastener businesses and other asset sales, our total interest
expense was reduced by $1.6 million from last year's third
quarter, even though third quarter interest expense from
continuing operations shows a $0.7 million increase as a result
of the allocation formula required under GAAP."

Robert L.G. White, President of TransTechnology's Aerospace
Products Group and its Breeze-Eastern division, said, "We
believe that Breeze-Eastern is a solid platform for our company.
Our revenues have grown from $34.5 million in fiscal 1997 to
$47.8 million in fiscal 2002, a compound annual growth rate of
7%. Our operating income, before corporate office expenses, has
grown from $6.9 million to $12.9 million over the same period, a
compound growth rate of 13%, as we have focused on lean
manufacturing and increased our spare parts, overhaul and repair

Mr. White continued, "We believe we are well positioned in the
military and government aerospace/defense markets. Our rescue
hoists are number one in the world, as are our cargo hooks. We
lead the market for aircraft cargo winches of less than 2,000-
pound capacity. Our weapons handling products are gaining rapid
acceptance, as shown by the commencement of shipments of the
HLU-196 Munitions Hoist this quarter. We continue to work on
weapons loading equipment for such new programs as the High
Mobility Artillery Rocket Systems and the Line of Sight Anti-
Tank Weapon System, both produced by Lockheed Martin, and
Boeing's Unmanned Combat Air Vehicle, the X-45, now in
development. Our cargo winch is standard equipment on the V-22
Osprey tilt rotor aircraft now in operational testing, and we
are working with Boeing to develop a rescue hoist to meet the
unique needs of this aircraft. Increased utilization of our
equipment in the field has resulted in strong aftermarket sales
of spare systems, spare parts, and repair and overhaul

          Divestiture of Fastener Businesses Completed

The company reported that the sale of substantially all of the
assets and business of its TCR Corporation on January 3, 2003,
completed its exit from the specialty fastener business. During
the course of this divestiture program, begun in December 2000,
the company shed eight business units with twelve factories, two
sales offices, and 2,000 employees in seven countries with
fiscal 2001 revenues of $257 million; generating more than $180
million of cash in the process, which reduced debt from a peak
of $285 million in 2000 to today's level of $96 million.

Mr. Spanier, said, "With regard to the current quarter's gain
from the financial derivatives associated with our second
quarter warrant amendment, last quarter we recognized a $1.2
million non-cash non-tax deductible expense associated with this
derivative as our share price rose from $10.64 on the date we
amended our subordinated debt and warrant agreements to $13.46
at the end of the second quarter. In the third quarter, however,
the price of our stock dropped back to $10.62, resulting in the
recognition of a non-cash, non-taxable gain of $1.2 million.

Until the provisions of the amended warrants that provide their
holders the ability to "put" the warrants to the company for $5
per share are extinguished, at the end of each subsequent
quarter we will recognize income or loss based upon changes in
the company's common stock price."

Mr. Spanier continued, "Because we did not redeem the warrants
before December 31, 2002, effective on that date we have 427,602
additional shares outstanding in computing earnings per share, a
dilution factor of approximately 7%. In addition, because the
sale of Norco will constitute a liquidity event under the terms
of our subordinated debt agreements, the warrant holders will
have the right to put these warrants back to the company at a
price of $5 per share for 120 days following the completion of
the sale of Norco. The maximum cash exposure of the company
related to these warrants and their put rights, if any, is $2.1
million. The interest rate on our subordinated debt increased to
18% effective December 31, 2002, with cash interest remaining at
13% and the payment in kind rate going to 5.0% from 3.0%. Until
the subordinated debt is repaid in full, at the end of each
quarter the PIK rate will increase 0.25%."

Mr. Berthelot stated "We believe that focusing our efforts upon
Breeze-Eastern and the military and government aerospace defense
markets is our best of course of action. As we complete the sale
of Norco, we will evaluate what options are available to
strengthen our balance sheet, improve our earnings and cash
flow, and provide a solid future for our customers, employees,
and shareholders."

TransTechnology Corporation, operating as Breeze-Eastern, is the
world's leading designer and manufacturer of sophisticated
lifting devices for military and civilian aircraft, including
rescue hoists, cargo hooks, and weapons-lifting systems. The
company, which employs approximately 180 people at its facility
in Union, New Jersey, reported sales from continuing operations
of $47.8 million in the fiscal year ended March 31, 2002.

UNITED AIRLINES: Wants Nod to Assume Escrow Account Agreement
In the normal operation of their businesses, UAL Corporation and
its debtor-affiliates collect and pay various taxes.
Specifically, the Debtors collect fuel taxes, Value Added Taxes,
and sales taxes from their customers on behalf of various taxing
authorities and incur use, liquor, gross receipts and fuel taxes
that must be paid to various taxing authorities.  The Debtors
also collect from their customers excise taxes on the amount
paid for air transportation.  The Debtors are also charged fees,
including the Aviation Security Infrastructure Fee, overflight
fees, landing and other access fees, licenses, airport
performance bond-related obligations, and other similar charges
and assessments by various taxing and licensing authorities.
The Debtors collect customs, immigration, security and
inspection fees from their customers.  The Debtors also collect
Passenger Facility Charges for payment to airport authorities.

The Sales and Use Taxes, Transportation Taxes, Fees, and PFCs
are paid on a monthly, quarterly or yearly basis depending on
the particular Sales and Use Tax, Transportation Tax, Fee, or
PFC at issue.

The Taxes that are collected but not immediately payable go into
a Trust Fund.  The Debtors have an obligation to remit the Trust
Funds to the Authorities no matter what the outcome of their
Chapter 11 Cases.  Given the importance of this responsibility,
an individual may be held personally liable for a company's non-
payment of trust funds if:

a) that individual is a "responsible person" for the collection
    and payment of the trust funds (i.e., has significant
    control over the company's finances); and

b) the individual willingly fails to comply with the applicable
    statutes requiring payment.

A responsible person "willfully fails" to pay trust funds when
the person uses funds to pay creditors other than the relevant
payee with knowledge that the funds are due.

Prior to the Petition Date, the Debtors opened an Escrow Account
to establish additional mechanisms for the collection and
payment of the Trust Funds.  The Escrow Account was created
pursuant to an Escrow Agreement dated November 29, 2002 between
UAL Corporation and LaSalle Bank N.A., a national banking
association duly organized and existing under the laws of the
United States of America, as the Escrow Agent.  On December 5,
2002, UAL made an initial deposit of $200,000,000 into the
Escrow Account.  If the Debtors are unable to remit the Trust
Funds, then pursuant to the terms of the Escrow Agreement,
disbursements from the Escrow Account can be made on the
Debtors' written request specifying:

   a) the amount to be disbursed,

   b) the date of disbursement,

   c) the recipient of the disbursement (which may be the
      Debtors), and

   d) the manner of disbursement and delivery instructions.

By this motion, the Debtors seek the Court's authority to assume
the Escrow Account Agreement.

James H.M. Sprayregen, Esq., notes that the Debtors intend to
continue to operate their business and, therefore, will be
required to collect Trust Funds for the benefit of the
Authorities.  Since the Trust Funds are not property of the
Debtors' estates, the Debtors will be required to remit the
amounts to the ultimate beneficiary no matter what the outcome
of the Debtors' Chapter 11 Cases.  Furthermore, absent payment
of the Trust Funds to the relevant Authorities, the Debtors and
their directors and officers could be subject to fines,
penalties and personal liability if the Trust Funds are not
timely remitted to the appropriate Authorities.  Clearly, Mr.
Sprayregen says, assumption of the Escrow Agreement will best
ensure that these deposits are made.

The Debtors have satisfied the other requirements of Section 365
of the Bankruptcy Code.  Specifically, there are no defaults
under the Escrow Agreement.  To the extent that any default
exists, the Debtors propose to cure all defaults under the
Escrow Agreement through their continued performance in the
ordinary course of their business.  Additionally, there is
adequate assurance of future performance under Section
365(b)(1)(C) because of the essential nature of the Escrow
Agreement to the Debtors and because of the Debtors' limited
obligations under the Escrow Agreement. (United Airlines
Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

United Airlines' 10.67% bonds due 2004 (UAL04USR1) are trading
at about 8 cents-on-the-dollar, DebtTraders reports. See
real-time bond pricing.

US AIRWAYS: Proposes Alternative Dispute Resolution Procedures
US Airways Group Inc., and its debtor-affiliates seek the
Court's authority to establish an Alternative Dispute Resolution
Program and liquidate certain prepetition Claims.

John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate Meagher &
Flom, informs Judge Mitchell that the Claims Agent mailed the
Bar Date Notice to over 141,000 creditors and USAir received
approximately 4,500 Proofs of Claim totaling over
$61,000,000,000.  However, it is believed that many of the
Claims are patently illegitimate, duplicative or grossly
overstated in amount.  Also, the sheer magnitude and the subject
matter of the Claims, makes the Bankruptcy Court neither a cost
effective forum nor jurisdictionally proper.  Therefore, the
Debtors will pursue a series of omnibus claim objections.

Additionally, the Debtors will institute an Alternative Dispute
Resolution program so that disputed prepetition claims can be
resolved by negotiation, then if necessary, mediation in an
expeditious fashion.  This will provide for a cost effective
method for resolving claims through written exchange of offers
between the parties.  Mr. Butler asserts that this arrangement
is particularly appropriate since the distribution to general
unsecured creditors is anticipated to be in the range of 1.6 to
2.0 cents on the dollar of stock in the Reorganized Debtors.
Also, the Debtors maintain insurance policies that cover many of
the types of claims asserted.  Nearly all policies provide first
dollar coverage for personal injury tort claims.

Mr. Butler explains that mediation will permit the use of a
neutral third party to achieve a mutually beneficial settlement.
The setting is informal and the parties often dispense with the
regimented rules of evidence.  The mediator's role is to bring
the parties together, foster communication and provide creative
resolutions.  Mediation is no-risk because resolutions are not

The Debtors propose to mail to the Disputed Claimholders a copy
of a Court Order, a notice of the ADR procedures and a Statement
of Claim form.  Within 20 days, Claimants willing to participate
in the ADR program must mail in their Statement of Claim form.
Within 45 days of receipt, the Debtors will serve their initial
settlement offer.  The Claimant will have 15 days to respond.
The Debtors will then make a second offer.  If the Claimant
rejects this, the Debtors have the option of referring the Claim
to the ADR mediation.

The mediator's fee will be shared equally by the Debtors and the
Claimant and must be paid within 30 calendar days after the
session.  If the Claimant fails to pay, or does not comply with
any other mediation procedures, his or her claim will be
expunged. (US Airways Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

U.S. HOME & GARDEN: Fails to Maintain Nasdaq Listing Standards
U.S. Home & Garden Inc., (Nasdaq: USHG) received a letter from
the staff of Nasdaq indicating that the Company is not in
compliance with the stockholders' equity requirements of the
Nasdaq Marketplace rule 4310(C)(2)(B) for continued listing of
its common stock on the Nasdaq SmallCap Market.

The Company has requested a hearing before a Nasdaq Listing
Qualification Panel to review the staff determination. Under
applicable rules, the hearing request will stay the delisting of
the Company's securities, pending a decision by the panel. At
the time of the hearing, the Company will also be addressing the
failure of its common stock to maintain the required minimum bid
price of $1 per share. The hearing is expected to occur within
approximately 30 days.

Robert Kassel, Chairman & CEO of U.S. Home & Garden commented,
"We believe that as a result of the Company's previously
announced proposed sale of substantially all of its assets of
its lawn and garden product operating subsidiaries to a new
entity formed by current management that the Company will be
able to demonstrate, in addition to other factors, its ability
to regain and maintain compliance with the minimum stockholders'
equity requirements of the Nasdaq for continued listing of its
common stock on the Nasdaq SmallCap Market However, there can be
no assurances of continued listing of our common stock on
Nasdaq. We also believe that if our common stock were delisted
from the Nasdaq, it will not interfere with our proposed sale of
assets. Moreover in the event that the Company is unable to
maintain its listing on the Nasdaq SmallCap Market, its common
stock will continue to trade in the over-the-counter market via
the Electronic Bulletin Board."

As previously announced, U.S. Home & Garden has retained a
financial advisor to assist the Company in evaluating strategic
alternatives, including merger opportunities. The Company
currently intends to seek alliances or mergers with entities
that would meet the Nasdaq listing standards.

U.S. Home & Garden Inc. is a leading manufacturer and marketer
of a broad range of consumer lawn and garden products including
weed preventative landscape fabrics, fertilizer spikes,
decorative landscape edging, shade cloth and root feeders which
are sold under various recognized brand names including Weed
Block(R) , Jobe's(R), Emerald Edge(R), Shade Fabric(TM) Ross(R),
and Tensar(R). The Company markets its products through most
large national home improvement and mass merchant retailers. To
learn more about U.S. Home & Garden Inc., please visit its Web
site at

WARNACO GROUP: New York Court Confirms Plan of Reorganization
The Warnaco Group, Inc., (PK: WACGQ) announced that at a hearing
Thursday, the Honorable Richard L. Bohanon of the U.S.
Bankruptcy Court for the Southern District of New York confirmed
its Plan of Reorganization.

The effective date for the POR is expected to occur on
February 4, 2003, at which time Warnaco will emerge from Chapter

Tony Alvarez, president and chief executive officer of Warnaco,
said, "[Thurs]day's confirmation represents a new beginning for
Warnaco. We are extremely pleased with the Court's decision and
the support we have received from our creditors during this
critical time. Looking ahead, we are encouraged by the Company's
prospects. Warnaco will emerge from Chapter 11 with a very
comfortable capital structure. With a solid financial platform
and a valuable portfolio of brands, we believe Warnaco possesses
the key resources necessary to maintain a strong, competitive
position in the industry as well as a sound financial future."

The Company said that the creditors who voted on the POR voted
overwhelmingly in its favor.

Pursuant to the Plan, upon emergence:

     -- Warnaco's pre-petition secured lenders will receive the

     -- Cash payments of approximately $104 million

     -- Newly issued second lien notes in the principal amount
        of $200 million

     -- Approximately 96.26 percent of newly issued common stock
        in Warnaco;

     -- Holders of allowed general unsecured claims will receive
        approximately 2.55 percent of newly issued common stock
        in Warnaco;

     -- Holders of certain preferred securities issued by an
        affiliate of the Company, Designer Finance Trust, will
        receive approximately 0.60 percent of newly issued
        common stock in Warnaco;

     -- Pursuant to the terms of his Employment Agreement, as
        adjusted under the Plan, Tony Alvarez will receive an
        incentive bonus consisting of $1.95 million in cash,
        second lien notes in the principal amount of $0.94
        million and 0.59 percent of the newly issued common
        stock in Warnaco (increased from 0.45 percent to
        recognize his substantial contributions to the Company's

     -- Warnaco's existing common stock will be extinguished;

     -- Up to 10% of the newly issued common stock in Warnaco
        will be reserved for issuance pursuant to management
        incentive stock grants.

The Company said that since November 2001, it has substantially
improved its financial and operational performance. The
Company's success reflects a number of developments at Warnaco
including: the reorganization of the business into three
operating groups, Intimate Apparel, Swimwear and Sportswear; the
divestiture of non-core assets and business units; a
strengthened management team with the recruitment of new
leadership; a substantial reduction in corporate overhead costs;
and the imposition of new financial and operating disciplines
throughout the organization.

Alvarez continued, "I want to thank our employees for their hard
work and commitment during this process and I am gratified by
the continued support from our customers and suppliers who have
all contributed to our successful reorganization."

The Company said that it continues the search process for a
permanent CEO and CFO, as well as candidates for the Board of
Directors. Until the search is concluded and an orderly
transition has occurred, Alvarez and James P. Fogarty of Alvarez
& Marsal will continue to serve as CEO and CFO, respectively.
Alvarez & Marsal is a leading turnaround and crisis management
consulting firm.

The Warnaco Group, Inc., headquartered in New York, is a leading
manufacturer of intimate apparel, menswear, jeanswear, swimwear,
men's and women's sportswear, better dresses, fragrances and
accessories sold under such owned and licensed brands as
Warner's(R), Olga(R), Lejaby(R), Bodyslimmers(R), Chaps by Ralph
Lauren(R), Calvin Klein(R) men's and women's underwear, men's
accessories, and men's, women's, junior women's and children's
jeans, Speedo(R)/Authentic Fitness(R) men's, women's and
children's swimwear, sportswear and swimwear accessories, Polo
by Ralph Lauren(R) women's and girls' swimwear, Anne Cole
Collection(R), Cole of California(R) and Catalina(R) swimwear,
and A.B.S.(R) Women's sportswear and better dresses.

WHEELING-PITTSBURGH: Gains Fifth Lease Decision Period Extension
Wheeling-Pittsburgh Steel Corp., and its debtor-affiliates
sought and obtained a Court order further extending the deadline
by which they must assume, reject, or assume and assign leases
of non-residential real property until May 7, 2003.

The Debtors asserts that the next four months are "critical" in
terms of their reorganization.  There can be no doubt that the
Debtors have made progress in these Chapter 11 cases,
considering that they have already filed their Disclosure
Statement and Plan of Reorganization. (Wheeling-Pittsburgh
Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service,
Inc., 609/392-0900)

WORKFLOW MANAGEMENT: Gets New Credit Pact with Existing Lenders
Workflow Management, Inc. (NASDAQ: WORK), secured a new credit
agreement and that Tom D'Agostino, Sr., is stepping aside from
his duties as Chief Executive Officer and President to assume
the role of non-executive Chairman effective immediately.

Mr. D'Agostino will be replaced on an interim basis by Gerald F.
Mahoney, a current member of the Company's Board of Directors
and the former Chairman and CEO of Mail-Well, Inc. (NYSE: MWL),
a commercial printing, envelope and forms manufacturer.

The Company indicated that it has signed an agreement on a new
credit facility that stabilizes the Company's relationship with
its lenders and provides the Company time to strengthen its
balance sheet when more favorable capital markets exist. The new
credit agreement has a final maturity date of June 30, 2005.

Workflow's new credit agreement consists of three separate
facilities: a 30-month revolving credit facility of
approximately $100 million, a 30-month $30 million senior term
loan that will be paid down over its term and a one-year $50
million term loan. The blended LIBOR-based interest rate on the
new facilities will be approximately 9%.

The new credit agreement is an outgrowth of Workflow's business
plan that was delivered to the banks in accordance with the
terms of the Company's most recent credit facility amendment.
The plan was developed in cooperation with the Special Committee
of the Board of Directors and the Special Committee's outside
advisors. This Special Committee was comprised of four
independent members of the Board.

In connection with the development of the business plan
delivered to the Company's bank group, the Special Committee's
principal recommendations, which have been approved by the Board
as a whole, included the following:

     -  The Company should focus on its two key business units,
Printing and Solutions, which have had shown relatively strong
performance and consistent cash flow during difficult market

     -  The Company should not pursue significant asset sales in
the immediate future. Current market conditions are such that
major asset dispositions are unlikely to best serve the
interests of shareholders.

     -  In light of the strategic decision to keep the Printing
and Solutions Divisions, steps should be taken to achieve
additional operational efficiencies.

     -  The Company should explore opportunities and strategies
to reduce its debt and strengthen its balance sheet as soon as
market conditions permit. This could include a capital markets

In addition, Chairman and CEO Tom D'Agostino, Sr., announced
that he is assuming the role of non-executive Chairman effective
immediately. Mr. D'Agostino explained, "During our four years as
a public company, we have accomplished a great deal. Our revenue
base has grown from approximately $350 million to approximately
$650 million, and we have developed a robust Solutions Division
to participate in the high-growth outsourcing market."

Mr. D'Agostino continued, "This past year has been particularly
challenging. [Wednes]day's announcement of our strategic
direction provides an opportune time for me to announce my
decision to step aside from managing day-to-day operations,
while continuing to focus on the long-term initiatives of the
Company. I am proud of our accomplishments and have every
confidence in the team we have assembled. Jerry Mahoney brings
valuable industry experience, and I look forward to working with
him as I continue to be involved as Chairman of the Board, as
well as a significant and interested investor."

Jerry Mahoney, with his twenty years of printing and outsourcing
industry experience, will assume the position of interim Chief
Executive Officer and will be responsible for day-to-day
operations until a permanent replacement is hired. Mr. Mahoney
commented, "At the Board's request, I am accepting the CEO role,
because I am convinced that this is a solid Company with
exciting upside potential. I look forward to working with the
current management team as we focus on increasing profits."

The Company's Board of Directors has appointed a Search
Committee and has retained Heidrick & Struggles International,
Inc., to assist in the search for a permanent CEO.

In addition, Steve R. Gibson, Executive Vice President of
Workflow and President of the Printing Division, has elected to
pursue other opportunities and has resigned as an Officer and
Board member effective immediately.

Workflow Management, Inc., is a leading provider of end-to-end
print outsourcing solutions. Workflow services, from production
of logo-imprinted promotional items to multi-color annual
reports, have a reputation for reliability and innovation.
Workflow's complete set of solutions includes document design
and production consulting; full-service print manufacturing;
warehousing and fulfillment; and iGetSmart(TM) - the industry's
most comprehensive e-procurement, management and logistics
system. Through custom combinations of these services, the
Company delivers substantial savings to its customers -
eliminating much of the hidden cost in the print supply chain.
By outsourcing print-related business processes to Workflow,
customers streamline their operations and focus on their core
business objectives. For more information, go to the Company's
Web site at

                         *     *     *

As reported in Troubled Company Reporter's December 27, 2002
edition, the Company announced it was in the process of
finalizing a new long-term relationship with its lending group
and looks forward to completing that process by January 15,
2003, the end of the current waiver period. The goal was to
stabilize the Company's relationship with its lenders and
strengthen its balance sheet.

WORLDCOM INC: ADP Seeks Stay Relief to Setoff Prepetition Claims
Automatic Data Processing, Inc., seeks relief from the automatic
stay to permit set-off of certain prepetition obligations
against certain prepetition debts.

Sharon L. Levine, Esq., at Lowenstein & Sandler PC, in New York,
recounts that on March 1, 2000, Automatic Data Processing and
MCI WorldCom Communications, Inc., one of the Debtors, entered
into a certain Global Services Agreement, with MCI executing "on
behalf of itself and each of its affiliates and their
successors" so as to provide services and related equipment at
the rates, discounts and other terms and conditions provided in
the GSA to ADP. Although Automatic Data Processing is the only
ADP entity named in the GSA and is individually defined as
"Customer," MCI and its affiliates provided services and
equipment to and invoiced and received payment directly from
Automatic Data Processing and various domestic and foreign
affiliates under the GSA.  In addition, the GSA expressly
requires that future acquired ADP entities are entitled to do
business with MCI under the terms of the GSA.

As of March 31, 2002, Automatic Data Processing as "Customer"
and MCI entered into the First Amendment to the Global Services
Agreement to expand the relationship between ADP and the
Debtors, including ADP Investor Communication Services and
offering certain so-called Host Connect Services.

Ms. Levine reports that MCI owes ADP $2,368,749.50 on account of
certain prepetition services that ADP Investor Communication
Services provided to MCI.  On the other hand, ADP is indebted to
MCI in the aggregate amount much greater than the amount owed by
MCI for a variety of prepetition services provided to a variety
of entities and divisions, including ADP Investor Communication

Ms. Levine believes that ADP and its affiliates and MCI and its
affiliates intended to treat themselves and their affiliates as
each being only one entity as reflected in both the underlying
agreement and the parties' conduct.  Furthermore, the GSA
expressly provides for the right of set-off.  The invoices
issued in this matter do not expressly prohibit a right of set-

Ms. Levine points out that the course of dealings between the
parties demonstrate that there was a clear intention to treat
the related entities as one for the purposes of set-off in
connection with their business transactions.  Prior to the
Petition Date, the Debtors provided services to various ADP
affiliates under the GSA, billed the ADP affiliates separately
but in accordance with the terms of the GSA and accepted payment
directly from the ADP affiliates, all under the GSA, which only
names Automatic Data Processing, Inc. as the party designated as
"Customer." (Worldcom Bankruptcy News, Issue No. 17; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

XM SATELLITE: Investors Lower Participation Threshold to 75%
XM Satellite Radio (Nasdaq: XMSR) received the necessary
consents from an investor group and General Motors, which
together are providing $450 million in new financial investment
and support in conjunction with an exchange of the company's
outstanding 14 percent Senior Secured Notes due 2010, to reduce
the minimum exchange offer participation threshold from 90
percent to 75 percent.

Furthermore, XM has amended the exchange offer to reduce the
minimum participation condition to 50.1 percent. However, as
described above, the General Motors and investor group financing
transactions are currently conditioned upon 75 percent
participation by existing noteholders in the exchange offer, and
XM will close on the exchange offer only if the minimum
participation condition to the financing transactions are
satisfied or waived. This condition to the financing
transactions can be amended only if agreed to by both General
Motors and two-thirds of the investor group. All other terms and
conditions of the existing exchange offer and consent
solicitation remain unaffected and the deadline for acceptance
is midnight, January 23, 2003.

"We are encouraged by the support of our new investors and are
confident that the proposed financing package and exchange offer
will be well received by our financial constituencies," said
Gary Parsons, XM Chairman of the Board.

"We have also been heartened by the many words of support from
our existing stakeholders and are encouraged that the prices of
our bonds have appreciated nearly 25 percent during the past
month in response to the announced financing package and
proposed exchange offer, as well as the continued operational
success of XM," Parsons said. "However, we recognized that many
noteholders sought a higher degree of certainty in the exchange
offer, which prompted us to preemptively seek amendments from
our new financing sources to enhance the probability of

According to XM Chief Financial Officer Joe Euteneuer, "Under
the current scenario, existing noteholders have a choice: They
can either retain their existing securities and financial
attributes (subject to certain modifications to the covenant
package described in detail in the offering circular), or
exchange the securities for the new package of debt, warrant
securities and cash, subject of course to satisfying the minimum
participation conditions of the exchange offer and indirectly,
the minimum conditions necessary to consummate the General
Motors and new investor group financings."

Euteneuer added that the exchanging noteholders would retain the
same par claim (as of March 15, 2003), and would received $70
per bond in cash, 85 warrants per bond at a strike price of
$3.18 per share, enhanced collateral, improved call protection,
shorter maturity, and pari pasu treatment in all respects in
terms of collateral and ranking with the financing arrangements
associated with the new investor group and GM.

In addition, XM today filed a Form 8-K with the SEC attaching
various exhibits relating to the new securities proposed to be
offered to the noteholders, as well as other ancillary
agreements and documents related to the financing transactions.
XM is distributing to holders of its outstanding 14 percent
Senior Secured Notes a supplement to the Offering Circular dated
December 24, 2002, a copy of which will be filed on a Form 8-K
with the SEC.

There can be no assurance that the company will be able to
consummate the General Motors transactions, any transactions
with its new investor group or the exchange offer.

                         *     *     *

As reported in Troubled Company Reporter's November 21, 2002
edition, Standard & Poor's placed its triple-'C'-plus corporate
credit rating on XM Satellite Radio Holdings Inc., and XM
Satellite Radio Inc., (which are analyzed on a consolidated
basis) on CreditWatch with negative implications based on unmet
near-term funding needs.

"XM's cash needs remain significant, and current liquid assets
are only expected to fund XM's operations through the first
quarter of 2003," according to Standard & Poor's credit analyst
Steve Wilkinson. He added, "The company's near-term funding
needs are a growing concern, and failure to obtain a binding
commitment for a significant amount of new capital by mid-
December will result in a downgrade."

* Fitch Maintains Stable Outlook on North American Life Industry
In its annually published Review & Outlook for North American
Life Insurance, Fitch Ratings is maintaining the Stable Outlook
established at the conclusion of a comprehensive life industry
review in September 2002.

The expectation of increased consolidation activity is a
critical component of Fitch's Stable Outlook for the North
American life insurance industry. Generally, stronger companies
buy their weaker brethren. This often leads to rating upgrades.
This activity is expected to mitigate the continued negative
fundamental operating trends in this business and downgrades
that would otherwise result. If consolidation of the nature
described does not materialize as expected, Fitch will consider
returning to a Negative Rating Outlook.

The negative fundamental trends are driven by two core
challenges for the industry; intense competitive pressure from
inside and outside of the industry, and a shift in business mix
away from traditional life insurance and other protection
products to lower margin products such as variable annuities and
mutual funds. The manifestation of these two challenges has
resulted in increased earnings volatility, stressed risk-
adjusted profit margins, and henceforth declining sustainable
earnings and capital growth rates. Fitch believes these long-
term negative fundamentals will not dissipate in the near term.

The adverse investment environment continues for life insurers.
These challenges include the worst credit markets in more than a
decade, a bear market for equities, the lowest interest rates in
more than 40 years, and uncertainty related to accounting
issues. Fitch believes the investment outlook will continue to
be difficult for life insurance companies as the year begins.
Forecasted economic improvement in the second half of 2003 could
bring welcome relief after a three-year bearish investment
climate. Fitch believes that investment income in 2003 will be
affected by lower portfolio yields, moderate growth in general
account assets, and above-average realized and unrealized
investment-related losses will continue to pressure insurer
capital and surplus.

Fitch's biggest credit concern for the life insurance segment is
its ability to grow capital on a sustained basis. After several
years of solid increases buoyed by strong investment markets,
statutory capital growth for the industry slowed to a modest
1.3% in 2001. In 2002, this growth turned negative with capital
and surplus declining approximately 3%. Capital raising activity
in the second half of 2002 helped stave off even larger declines
from earlier in the year.

Companies are viewing their financial options with a heightened
sense of urgency, looking at ways to shore up their capital
positions to weather tough times ahead, defend their credit
ratings or take advantage of a flight to quality as financial
strength becomes an increasingly important competitive
advantage. Capital market options include issuing debt, equity
or hybrid securities, securitizing assets or cash flows and
reducing share repurchase programs. Fitch expects increased
capital market activity in 2003.

The report, which is titled 'Review & Outlook: 2002/2003 Life
Insurance (North America), can be found at
http://www.fitchratings.comunder the Insurance sector in the
Highlight Reports section or by contacting the Ratings Desk at

* Piper Rudnick Enters Boston Market with 33 More Attorneys
Piper Rudnick LLP, a leading national law firm, has entered the
Boston market with the addition of 33 real estate, litigation
and energy attorneys, including 17 partners, from the former
Hill & Barlow in Boston.

Piper Rudnick entered into active discussions with the attorneys
after Hill & Barlow voted to dissolve in early December. Based
on their reputation for professionalism and their track record
in the real estate, litigation and energy arenas, the attorneys
were highly sought-after by many local, regional and national
law firms seeking to expand or form a presence in Boston.

"Entering the Boston market has long been a strategic goal of
our firm, and this group of attorneys fills the bill perfectly,"
said Lee I. Miller and Francis B. Burch, Jr., co-chairs of Piper
Rudnick, in a joint statement. "Given the choices these
particular lawyers had to join any one of several major law
firms, we feel fortunate that they selected our firm as offering
the best opportunity for mutual growth."

"The skills and experience we bring to the table complement
Piper Rudnick's skills extremely well, to the benefit of both
our client bases," added partner Elliot Surkin, who has been
appointed managing partner of the new Boston office. "We chose
to join Piper Rudnick because we recognized that our clients'
needs required more scope and depth than we had previously been
able to respond to, and were becoming more national and
international in scope. Piper Rudnick offers the best setting
for us to serve our clients and to expand those relationships as
opportunities arise. We had a pre-eminent position in our
marketplace and we just got much better. So did Piper Rudnick."

Prior to the new additions, Piper Rudnick already had one of the
largest and best-known real estate practices in the nation. Key
real estate client relationships the Boston group brings to
Piper Rudnick include prominent projects and companies such as
the Fan Pier Development, Congress Group (Dean Stratouly),
Spaulding & Slye, AEW Capital Management, Lyme Properties,
Providence Place Mall, the North Point Project in Cambridge,
Suffolk Downs, Fidelity, Lend Lease, Massachusetts Housing
Investment Corporation, FPL Energy, and Mirant.

Piper Rudnick's move provides several strategic benefits for the

Expansion into Boston and New England. The addition of these 33
attorneys constitutes the first in a series of growth moves to
fulfill Piper Rudnick's long-term strategy for Boston. Over the
next few years, the Boston partners and the firm plan to add
additional capabilities to the Boston office's premier real
estate, litigation and energy practices by vigorously recruiting
quality attorneys in other areas, such as mutual funds, venture
capital, biosciences, intellectual property, and emerging

Depth of real estate and litigation experience. Piper Rudnick is
among the leading real estate law firms nationally, and the
addition of the real estate group in Boston furthers the firm's
goal of offering deep real estate knowledge in key markets
throughout the nation. Both the Boston group and the firm's
existing national real estate practice provide a full range of
transactional and advisory services to real estate-related
firms, such as developers, investors, lenders and asset
managers. The firm also provides relocation, zoning, economic
incentive, leasing, acquisitions, disposition, bankruptcy and
other related legal counsel to national companies.

In addition, the 10 litigators joining Piper Rudnick in Boston
add a focused local dimension to a national litigation practice
that is one of the largest in the country. The Boston litigators
and energy lawyers are a part of the Boston real estate practice
and are truly engaged in the real estate business with their
transactional colleagues. In addition, they are seasoned
commercial and business litigators, with experience in
securities, intellectual property and environmental litigation.

Building on National Growth and Momentum. The entry to Boston
comes at a time of dramatic growth and change at Piper Rudnick.
This momentum can be seen clearly in the firm's growth since
September 2002, which includes:

     -- Forming a strategic alliance with former Defense
Secretary William S. Cohen's international consulting firm, The
Cohen Group.

     -- The addition of the legal and consulting firm Verner
Liipfert Bernhard McPherson and Hand, including former Senator
and Senate Majority Leader George Mitchell and former Michigan
Governor and Ambassador to Canada Jim Blanchard to its partner

     -- Adding former Congressman and House Majority Leader Dick
Armey in January 2003.

Piper Rudnick is a business law firm of 925 lawyers with offices
in Chicago, Washington, Baltimore, New York, Reston, Boston,
Philadelphia, Dallas, Tampa, Los Angeles, Edison, and Las Vegas.
The firm's practice is focused on:

     -- Real Estate, comprising one of the largest and most
diverse practices in the U.S., covering every aspect of
industrial, commercial, retail, and residential property
transactions, finance, project finance and securities.

     -- Business and Technology, including corporate and
securities, corporate governance, franchise and distribution,
intellectual property, information technology, taxation,
biosciences, IPOs, private equity, mergers and acquisitions, and
other major transactions for companies of all sizes.

     -- Litigation, including a white-collar group led by a
former Watergate prosecutor, and national product liability,
securities, labor and commercial litigation practices.

     -- Governmental Affairs, including the nationally-known
federal affairs and legislation group formerly with Verner
Liipfert Bernhard McPherson and Hand; a government controversies
practice headed by the former general counsel of a leading
telecommunications company; and prominent regulatory practices
in government contracts, environmental, e-commerce and privacy,
tax legislation, antitrust and communications.

     -- International Commerce and Litigation, including
international dispute resolution and public international law,
supplemented by the firm's strategic alliance with The Cohen
Group, an international strategic business consulting firm
headed by former U.S. Secretary of Defense, William S. Cohen.

For more information, visit the firm's Web site at

* TMA Poll Forecasts "Most Troubled" Industries For 2003
Professionals in the turnaround management and corporate renewal
industry expect another year of financial and operational
difficulties for a variety of industries. Telecommunications,
which topped the list of troubled companies in 2002 in the
Turnaround Management Association Trend Watch poll, also headed
the list of industries that respondents believe will continue to
struggle in 2003.

Asked to pick the industries that suffered the most during 2002,
about 60 percent of the respondents to this December 2002 poll
named telecommunications followed by manufacturing. Other
industries commonly selected as experiencing significant
distress during 2002 were technology, airlines/aerospace, e-
commerce and transportation.

"The year 2002 will be remembered for large company Chapter 11
filings. Companies such as WorldCom, Global Crossing, Kmart, US
Airways and United Airlines marked the year with restructurings
of unprecedented size," said Randall Eisenberg, Certified
Turnaround Professional (CTP), the chairman of TMA and senior
managing director of FTI Consulting in New York. "With half of
the 10 largest bankruptcies in history occurring last year, the
professionals in TMA are working on some of the largest
assignments of their careers," he said. "We don't expect any
significant slowdown in activity."

Looking ahead to 2003, Trend Watch poll respondents predicted no
relief for the telecommunications industry, the most frequent
answer provided for industries anticipated to experience
difficulty this year. Retail was next on the list, with
manufacturing and automotive close behind. Airlines/aerospace
and transportation rounded out the list of industries
anticipated to struggle in 2003.

"Historically, retail shows up frequently when you're looking at
industries in distress," said Eisenberg. "The corporate renewal
professionals in TMA are well aware that after a disappointing
holiday season, retail in 2003 is at greater risk than in 2002.
In addition, airlines are aggressively responding to dramatic
changes in their industry, and are looking closely at how to
make their business models profitable in a very difficult

A faltering 2003 economy was predicted by 77 percent of the
respondents as the principal cause of these industries' troubled
outlooks. In addition, excessive debt, lack of access to capital
and changes in the competitive landscape were named by
respondents as significant factors that will adversely impact
these industries.

"The continued wariness of the consumer and an economy that
clearly is not going to recover as soon as expected will put
many companies into crisis circumstances," said John Rizzardi,
TMA president and attorney at Cairncross & Hempelmann PS in
Seattle. "Consumers will continue to watch for bargains, and
they will guard their cash. For example, the continuation of the
zero interest financing on new cars and the spirited competition
in most markets will make 2003 a very difficult year for many in
the new and used car markets."

The half-point interest rate reduction in November 2002
apparently did not help struggling companies. Nearly two-thirds
(62 percent) of those answering the Trend Watch poll said it had
"very little" or "no impact" on the recovery of the companies
with which they work. This approximates the negative response to
a 2001 Trend Watch poll on the effect of the 11 interest cuts
that year.

Poll respondents were optimistic about the recovery of a few
industries, however. Most commonly identified were the financial
services and followed pharmaceutical/medical industries.

The Turnaround Management Association -- is the only international non-
profit association dedicated to corporate renewal and turnaround
management. With headquarters in Chicago, TMA's 5,800 members in
31 regional chapters comprise a professional community of
turnaround practitioners, attorneys, accountants, investors,
lenders, venture capitalists, accountants, appraisers,
liquidators, executive recruiters and consultants. Members
adhere to a Code of Ethics, and the Certified Turnaround
Professional program recognizes professional excellence and
provides an objective measure of expertise related to workouts,
restructurings and corporate renewal.

* BOOK REVIEW: A Legal History of Money in the United States,
Author: James Willard Hurst
Publisher: Beard Books
Paperback: US$34.95
Review by Gail Owens Hoelscher
Order your personal copy today and one for a colleague at

This book chronicles the legal elements of the history of the
system of money in the United States from 1774 to 1970.  It
originated as a series of lectures given by James Hurst at the
University of Nebraska in 1973.  Mr. Hurst is quick to say that
he , as a historian of the law, took care in this book not to
make his own judgments on matters outside the law.  Rather, he
conducted an exhaustive literature review of economics, economic
history, and banking to recount the development of law over the
operations of money.  He attempted to "borrow the opinions of
qualified specialists outside the law in order to provide a
meaningful context in which to appraise what the law has done or
failed to do."

Mr. Hurst define money, for the purposes of this books, as "a
distinct institutional instrument employed primarily in
allocating scarce economic resources, mainly through government
and market processes," and not shorthand for economic, social,
or political power held through command of economic assets."

From the beginning, public and legal policy in the U.S.
Centered on the definition of legitimate uses of both law
affecting money, and allocation of power over money among
official agencies, both federal and state.  The foundations of
monetary policy were laid between 1774 and 1788.  Initially,
individual state legislatures and the Continental Congress
issued paper currency in the form of bills of credit.  The
Constitutional Convention later determined that ultimate control
of the money supply should be at the federal level.  Other
issues were not clearly defined and were left to be determined
by events.

The author describes how law was used to create and maintain a
system of money capable of servicing the flow of resource
allocations in an economy of broadly dispersed public and
private decision making.  Law defined standard money units and
made those units acceptable for use in conducting transactions.
Over time, adjustment of the money supply was recognized as a
legitimate concern of law.  Private banks were delegated
expansive monetary action powers throughout the 1900s and
private markets for gold and silver were allowed to affect the
money supply until 1933-34.  Although the Federal Reserve Act
was not aimed clearly at managing money for goals of major
economic adjustment, it set precedents by devaluing the dollar
and restricting the use of gold.

Mr. Hurst devotes a large part of his book to key issues of
monetary policy involving the distribution of power over money
between the nation and the states, between legal and market
processes, and among major agencies of the government.  Until
about 1860, all major branches of government shared in making
monetary policy, with states playing a large role.  Between 1908
and 1970, monetary policy became firmly centralized at the
national level, and separation or powers questions arose between
the Federal Reserve Board, the White House (The Council of
Economic Advisors), and the Treasury.

The book was an enormous undertaking and its research
exhaustive.  It includes 18 pages of sources cited and 90 pages
of footnotes.  Each era of American legal history is treated
comprehensively.  The book makes fascinating reading for those
interested in the cause and effect relationship between legal
processes and economic processes and t hose concerned with
public administration and the separation of powers.

James Willard Hurst (1910-1997) is widely regarded as the
grandfather of American legal history.  He graduated from
Harvard Law School in 1935 and taught at the University of
Wisconsin-Madison for 44 years.


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

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

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 Go 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 ***