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/raid1/www/Hosts/bankrupt/TCR_Public/030305.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, March 5, 2003, Vol. 7, No. 45 Headlines ACANDS INC: Wants to Stretch Lease Decision Time through May 14 ACORN HOLDING: Nasdaq Knocks-Off Shares Effective Today ADVANCED LIGHTING: Continuing Restructuring Talks with Committee AGERE SYSTEMS: Ventures into Wireless Power Amplifier Market AHOLD: Fitch Lowers Grocer's Senior Unsecured Rating to BB- AIRTRAN AIRWAYS: Revenue Passenger Miles Jump 30.9% in February ALLEGIANCE TELECOM: Dec. 31 Working Capital Deficit Tops $289MM ALLIED WASTE: Fitch Revises B-Level Ratings Outlook to Stable AMERCO: Banks Agree to Standstill Pacts until April 30, 2003 AMERICA WEST: William A. Franke Discloses 5.7% Equity Stake AMERICAN RESTAURANT: Redeems Outstanding 11% Sr. Secured Notes APPALACHIAN REGIONAL: Fitch Ups $87MM Bond Rating to BB+ from BB ARIBA INC: AMR Says Contract Mgt. Component Yield Compelling ROI AUSPEX SYSTEMS: Cash Insufficient to Meet Capital Requirements BAYOU STEEL: Wins Final Approval to Obtain $45MM DIP Financing BEA SYSTEMS: S&P Revises Outlook to Stable over Steady Cash Flow BIOTRANSPLANT INC: Nasdaq Will Delist Shares Effective Tuesday BUDGET GROUP: Plan Filing Exclusivity Extended Until April 2 BURLINGTON INDUSTRIES: Vanguard Discloses 8.4% Equity Stake CALPINE: Reclassifies Sale-Leasebacks as Financing Transactions CAMBRIAN: Gets Plan Filing Exclusivity Extension Until April 18 CB TECHNOLOGIES: Voluntary Chapter 11 Case Summary CENTERPOINT ENERGY: Fitch Affirms Ratings with Negative Outlook COMDISCO INC: Completes Partial Redemption of $75MM of 11% Notes CREST DARTMOUTH: S&P Assigns Low-B Class D & Preferred Ratings DICE: Says Survey Highlights New Trends in Technology Salaries DICE INC: Turns to Pacific Crest Securities for Financial Advice DIVINE INC: Wants More Time to File Schedules and Statements DUN & BRADSTREET: Completes Acquisition of Hoover's for $119MM ENCOMPASS SERVICES: Court Okays Bracewell & Patterson as Counsel ENRON CORP: Earns Nod to Consent to Exit Agreement Consummation EOTT ENERGY: Emerges from Chapter 11 Proceeding Effective Mar. 1 FAO INC: Court to Consider Chapter 11 Plan on April 4, 2003 GENTEK INC: Noma Company Brings-In Deloitte Canada as Auditor GEO SPECIALTY: Liquidity Concerns Spur Junk & Low-B Ratings GLOBAL CROSSING: Gary Winnick Discloses 8.88% Equity Stake HIGH SPEED ACCESS: Intends to Make Initial Cash Distribution HOLLYWOOD CASINO: Completes Asset Sale to Penn National Gaming HOLLYWOOD CASINO: Fails to Win Shreveport Debtholders' Consents INCO LTD: S&P Rates US$250 Mill. Subordinated Debentures at BB+ KEMPER INSURANCE: AM Best Cuts Financial Strength Ratings to B KEY3MEDIA: Signs-Up Ernst & Young as Independent Accountants KINETIC CONCEPTS: Charles N. Martin Steps Down from Board KMART CORPORATION: Court Extends Exclusive Period to June 30 LA QUINTA: Board Declares Dividend on 9% Preferred Shares LAKE TROP: UST Wants to Convert Case To Chapter 7 Liquidation LEATHERLAND CORP: Looks to Helston Capital for Financial Advice LTV CORP: Court Extends Plan Filing Exclusivity Until June 30 MOBILE COMPUTING: Dec. 31 Net Capital Deficit Widens to C$7.7MM MSU DEVICES: Case Summary & 20 Largest Unsecured Creditors NACIO SYSTEMS: Emerges from Reorganization Proceedings NAT'L CENTURY: Court OKs Williams & Prochaska as Special Counsel NETDRIVEN SOLUTIONS: Dec. 31 Balance Sheet Upside-Down by C$1MM NTELOS INC: Commences Chapter 11 Reorganization in E.D. Virginia NTELOS INC: Case Summary & 30 Largest Unsecured Creditors NUEVO ENERGY: Closes Brea Olinda Field Asset Sale to BlackSand ON SEMICONDUCTOR: Tinkers with Senior Bank Facilities ON SEMICONDUCTOR: Completes Senior Secured Debt Offering ORBITAL SCIENCES: Launches Exchange Offer for 12% Secured Notes PENN NAT'L: Gets Financing to Fund Hollywood Casino Acquisition PEREGRINE SYSTEMS: Committee Taps Blackstone for Fin'l Advice PETROLEUM GEO-SERVICES: Commences Trading on OTC and Pink Sheets POLAROID CORP: Has Until July 31 to Make Lease-Related Decisions PREMIER LASER SYSTEMS: Withdraws Form S-3 Registration Statement PRIME HOSPITALITY: S&P Cuts Corporate Credit Rating to BB- PRUDENTIAL SECURITIES: Fitch Junks Class G & H Note Ratings SEALY CORP: Dec. 1 Net Capital Deficit Narrows to $116 Million SEDONA CORP: Applauds SEC's Commitment to Probe Short Sales SEMX CORP: Fails to Comply with Nasdaq Min. Listing Requirements SERVICE MERCHANDISE: Selling Brentwood Headquarters for $9 Mill. SHAW GROUP: Liquidity Issues Prompt S&P to Drop Rating to BB+ SLI INC: Inks Definitive Pacts to Sell Two Lighting Divisions SLI INC: Delaware Court Establishes March 31 as General Bar Date STRUCTURED ASSET: Fitch Rates Unoffered Class B2 Certs. at BB+ SUN HEALTHCARE: J.P. Morgan Chase Discloses 5.5% Equity Stake SUPERIOR TELECOM: S&P Drops Ratings to D after Bankruptcy Filing TIDEL TECHNOLOGIES: Prevails in Montrose Investments Lawsuit TRIMAS CORP: S&P Revises Low-B Ratings Outlook to Stable UNITED AIRLINES: Wins Nod to Assume Glen Tilton Employment Pact UNITED PAN-EUROPE: Majority of Creditors Vote in Favor of Plan US AIRWAYS: Fails to Make Payments on 2000-3 P-T Certificates US AIRWAYS: Michelle Bryan to Leave Company After Emergence US AIRWAYS: Court Extends Plan Proposal Period Until March 31 U.S. RESTAURANT: Board Approves April Common Stock Dividend USG CORP: Appoints Karen L. Leets as VP and Treasurer USG CORP: Court Approves Maple Energy Purchase Agreement VALEO INVESTMENT: S&P Ratchets 3 Class Ratings to Lower-B Level VIEWPOINT: Defaults on Smithfield & Portside Purchase Agreement WILLIAM LYON: S&P Assigns Preliminary B- Rating to Note Offering WINSTAR COMMS: Ch. 7 Trustee Taps Mark Peterson as Co-Counsel YOUTHSTREAM MEDIA: Red Ink Continues to Flow in December Quarter Z-TEL TECHNOLOGIES: Dec. 31 Balance Sheet Upside-Down by $99MM * Meetings, Conferences and Seminars ********* ACANDS INC: Wants to Stretch Lease Decision Time through May 14 --------------------------------------------------------------- ACandS, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for more time to determine whether to assume, assume and assign, or reject its unexpired nonresidential real property leases. The Debtor wants an extension of its Lease Decision Period until May 14, 2003. The Debtor had previously identified and determined, in its business judgment, certain leases to reject because they were not useful to the Debtor's ongoing business. Nonetheless, the Debtor requires additional time to analyze the benefit to its estate of assuming or rejecting the remaining Leases. It would be imprudent at this time, for the Debtor to make a final decision as to which of the Leases it will ultimately assume or reject. Since the Petition Date, the Debtor's management and professionals have been consumed with: i) obtaining interim and final approval of first day and subsequent motions, ii) numerous matters involving litigation with Travelers Casualty and Surety Company, iii) formulating and finalizing the proposed plan and disclosure statement and iv) responding to numerous information requests and concerns of parties, among whom are the Committee and creditor constituencies. Importantly, the Debtor says, it and its professionals are focusing their efforts on negotiating a confirmable plan, and are engaged in discussions with certain key parties and constituencies in order to further the plan process and attempt to reach a consensual resolution of this case. As a result, the Debtor has not had a sufficient amount of time to properly determine whether to assume or reject the Leases. Accordingly, absent a further extension of time for the Debtor to evaluate the Leases, the Debtor is at risk of prematurely and improvidently assuming Leases that otherwise may be burdensome to the Debtor's estate. AcandS, Inc., was an insulation contracting company, primarily engaged in the installation of thermal and mechanical insulation. In later years, Debtor also performed a significant amount of asbestos abatement and other environmental remediation work. The Company filed for chapter 11 protection on September 16, 2002 (Bankr. Del. Case No. 02-12687). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of over $100 million. ACORN HOLDING: Nasdaq Knocks-Off Shares Effective Today ------------------------------------------------------- Acorn Holding Corp., announces that the Nasdaq Listing Qualification Panel has determined to delist the Company's Common Stock from The Nasdaq Stock Market effective with the open of business on Wednesday, March 5, 2003. The Company's Common Stock will be immediately eligible for quotation on the OTC Bulletin Board effective with the open of business on March 5, 2003. The OTC Bulletin Board symbol assigned to the Company will remain "AVCC". * * * Going Concern Uncertainty Acorn Products' September 29, 2002, balance sheet shows that its total current liabilities exceeded total current assets by about $16 million. In its Form 10-Q filed with the Securities and Exchange Commission on November 13, 2002, the Company reported: "The Company's consolidated financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company is substantially dependent upon borrowing under its credit facility. "On June 28, 2002, the Company entered into a recapitalization transaction, obtaining a new $10.0 million investment from its majority stockholders representing funds and accounts managed by TCW Special Credits and Oaktree Capital Management, LLC. The Company also entered into a new $45.0 million credit facility, agented by CapitalSource Finance, LLC, consisting of a $12.5 million term loan and a $32.5 million revolving credit component. The term loan bears interest at prime plus 5.0% and the revolving credit component bears interest at prime plus 3.0%. The Lender's facility terminates initially in December 2004 which is automatically extended to June 2007 upon completion of an offering of common shares to minority stockholders and conversion of certain convertible notes and preferred stock described below. The majority of the proceeds from this transaction went to pay off borrowings under the Company's previous credit facility ($33.7 million was borrowed as of June 27, 2002), that otherwise expired on June 30, 2002. Relative to the extension and termination of its previous credit facility, the Company paid $2.0 million of success fees during the second quarter of fiscal 2002. At September 29, 2002, the Company had $8.4 million available to borrow under its new credit facility." ADVANCED LIGHTING: Continuing Restructuring Talks with Committee ---------------------------------------------------------------- Advanced Lighting Technologies, Inc., (OTCBB:ADLQE) is continuing negotiations with the Official Committee of Unsecured Creditors, appointed by the bankruptcy court, to achieve a mutually acceptable plan of reorganization in its voluntary Chapter 11 bankruptcy proceeding. The Debtors also continued to investigate the reasonable likelihood of alternatives to the offer made by the Committee, consistent with fiduciary duties. The Company's view that common equity holders may have value to protect in the bankruptcy proceedings is based on a recent valuation estimate received from Debtors' financial advisors, as well as recent operating results, including performance in the month of January. As a result, it is the Company's view that the Debtors' creditors can be paid in full, that the Company's preferred shareholder is "in the money," and that there is a possibility that a meaningful amount would be available for common shareholders. The continued improved operating results, in the face of the Company's well-publicized financial difficulties, provide the prospect for enhanced common shareholder value. Of course, the Company can give no assurance that an alternative plan of reorganization will be proposed, that such a plan would enhance the ultimate recovery by common shareholders or that such a plan could be implemented over the objection of the Committee. Wayne Hellman, Chairman and CEO of ADLT, explained: "The performance of the Company's operating subsidiaries continue to show improvement despite the costs of the restructuring process -- including costs of consultants and attorneys for both the Company and its creditors. The Company believes that the value of the Company will permit payment of all of its creditors. Therefore, the value of improved performance should belong to its equity investors, rather than its creditors. The Company is committed to fair treatment for all of its stakeholders." "In the meantime, the Chapter 11 process allows us to preserve jobs, continue to pay our vendors, and work to realize the greatest possible value for all stakeholders. We plan to emerge from Chapter 11 as quickly as possible, and we are confident in our ability to continue to serve our customers' needs and to maintain service levels." Advanced Lighting Technologies, Inc., is an innovation-driven designer, manufacturer and marketer of metal halide lighting products, including materials, system components, systems and equipment. The Company also develops, manufactures and markets passive optical telecommunications devices, components and equipment based on the optical coating technology of its wholly owned subsidiary, Deposition Sciences, Inc. AGERE SYSTEMS: Ventures into Wireless Power Amplifier Market ------------------------------------------------------------ Agere Systems (NYSE: AGR.A, AGR.B) unveiled 21 breakthrough transistors targeting the wireless base station power amplifier market. Agere's innovative products -- the world's coolest temperature wireless radio frequency power transistors -- are targeted for third-generation (3G), 2.5 generation (2.5G), and second generation (2G) base station equipment. Agere's power amplifier transistors can enable much cooler, smaller, and less expensive wire less base stations than are possible using any other RF power transistor technology. The transistors lower overall wireless amplifier and base station costs, and deliver lower capital and operating expenses for wireless service providers. Agere's products have the potential to save billions of dollars annually in combined operating and capital expenses for the wireless service provider industry.* In addition, Agere's new products help accelerate the industry trend to shrink the size and shift the location of today's typical base stations, about the size of a backyard toolshed and installed on the ground, to the size of a suitcase and installed above the ground on wireless antenna towers. With these products, the company is the first to achieve the transistor temperature (thermal) performance level the industry has been striving to attain for the past 10 years. The transistors achieve 10-15 percent lower operating temperatures than all other competing transistors available today. Agere's lower temperature transistors can cut in half the number of cooling fans in base stations compared with hotter transistor products. Reducing the number of fans also reduces noise pollution, a major issue in the base station market. "The wireless transistor market represents an important new growth opportunity for Agere, and with our technological breakthroughs, we believe we are poised for success in this space," said Sohail Khan, executive vice president of Agere's Infra structure Systems Group. "By delivering significant cost reductions, our new products will enable wireless service providers to accelerate delivery of lower-cost, feature-rich, high data rate services to cell phone users, such as video streaming, instant messaging and gaming. These products are a strong strategic fit with our existing portfolio for wireless base station manufacturers, and will allow us to further expand our position as a leading provider of components to the wireless infrastructure market." Agere Making "Bold and Positive" Move An RF power transistor is a packaged stand-alone electronic device roughly the size of a nickel. The transistor is the key active building block on power amplifier circuit boards, which are about the size of a laptop computer and installed within base stations. The transistor boosts voice, data, and video signals in various frequency ranges before the signals are delivered to wireless subscribers. A wireless base station functions as the conduit for routing, transmitting and receiving wireless voice, data, and video signals. Agere is targeting sales of its product to manufacturers of base stations who also build their own amplifiers, as well as companies that manufacture amplifiers that are sold to base station manufacturers. More than 20 companies are evaluating Agere's transistors. "Entering this market is a bold and positive move by Agere that has resulted from the company's technical innovation and smart investment," said Edward Rerisi, a wireless semiconductor analyst with Allied Business Intelligence. "The potential performance gains enabled by these devices could yield enormous operational savings for existing technologies, while easing some of the financial burden of 3G deployment." Two Breakthroughs Agere's transistor technology consists of two key innovations aimed at improving power transistor performance and reliability. The first innovation resolves the issue of how to eliminate defects in chips when making ultra-thin silicon wafers, which are roughly half the width of a human hair. Thicker chips tend be warmer because they don't conduct heat as well as thin chips. Agere created a proprietary wafer scale low cost, and high yield "die (chip) thinning" technique that eliminates chip defects that occur using other companies' approaches. Agere's method results in thinner and more thermally efficient (cooler) chips. Agere's technology breakthrough results in unparalleled transistor performance. They can be designed to be 30 percent shorter in length and are 50 percent thinner than all competing transistors. These thinner and shorter transistors get rid of heat more effectively than thicker and longer transistors. The second advance improves the transistor's performance when amplifying wireless signals. Using its patent-pending, high- density, low resistance electrical connections, Agere created a transistor with reduced resistance and parasitic capacitance. This leads to transistors with higher gain and efficiency, two key parameters in selecting transistors for use in wireless power amplifiers. Transistors Use High Performance LDMOS Technology The new product family features laterally diffused metal oxide semiconductor process technology, the highest performing and most widely deployed for RF power transistors. These 21 new products substantially broaden Agere's leading portfolio of base station components, such as digital signal processors and network processors, and help the company offer a comprehensive system solution for these applications. Agere plans to sell these transistors both in tandem with and separate from all the other components it sells for wireless base stations. Agere is shipping the transistors in sample quantities and expects to ship in production quantities in the third quarter of this year. Prices for Agere's transistors range from $12 to $207 in quantities of 10,000. Agere Systems, whose $220 million Convertible Notes are rated by Standard & Poor's at 'B', is a premier provider of advanced integrated circuit solutions that access, move and store network information. Agere's access portfolio enables seamless network access and Internet connectivity through its industry-leading WiFi/802.11 solutions for wireless LANs and computing applications, as well as its GPRS offering for data-capable cellular phones. The company also provides custom and standard multi-service networking solutions, such as broadband Ethernet- over-SONET/SDH components and wireless infrastructure chips, to move information across metro, access and enterprise networks. Agere is the market leader in providing integrated circuits such as read-channel chips, preamplifiers and system-on-a-chip solutions for high- density storage applications. Agere's customers include the leading PC manufacturers, wireless terminal providers, network equipment suppliers and hard-disk drive providers. More information about Agere Systems is available from its Web site at http://www.agere.com AHOLD: Fitch Lowers Grocer's Senior Unsecured Rating to BB- ----------------------------------------------------------- Fitch Ratings, the international rating agency, downgraded the Senior Unsecured and Short-term ratings of Koninklijke Ahold N.V., the Netherlands-based international food retailer, to 'BB-' (BB minus) from 'BBB-' (BBB minus) and to 'B' from 'F3', respectively. The ratings remain on Rating Watch Negative. The ratings change reflects substantial tightening of the group's liquidity and new funding that worsens the position of parent bondholders due to their expected legal and structural subordination following drawing of the intended EUR1.35 billion secured facility. Recent information highlights that the level of liquidity likely to be available to the group is more constrained than originally thought. In addition to approximately USD550 million of drawings outstanding under the existing USD2bn term facility, a further approximate USD600 to USD650 million of uncommitted drawings will require near-term refinancing. The secured EUR1.35 billion element of the new total EUR3.1 billion bank financing package is therefore earmarked for immediate use, with little additional headroom. As a result it will be critical for the company to achieve the conditions precedent (including satisfactory sign- off of audited accounts for certain subsidiaries) in order to drawdown the unsecured element of the hastily-arranged bank financing package. Conceivably, further secured funding may be arranged if unsecured funding is not forthcoming. Fitch believes that the ability of the group to quickly raise further secured funding will take into consideration negative pledge covenants in existing capital markets issues. A typical weakness in European bonds is the exclusion of bank secured debt from such negative pledge provisions. Updated information shows that the EUR1.35 billion loan is sized to match the immediate near-term funding requirements. Ahold is providing as security for this funding a charge over the share capital of certain operating companies, probably over the shares in its prime subsidiaries. As well as the control this affords, the value of the pledged assets is expected to materially exceed the EUR1.35bn obligation. It is likely, given the comfort that such an approach typically provides to bankers, that any such additional lending would also be at the operating company level. This further weakens the position of parent bondholders who will thus be structurally subordinated by these initial facilities. Although Fitch welcomes the news that following investigation of Disco Ahold no material impact from this is expected to affect Ahold's financial results, concerns remain as to the potential level of overstatement of US Foodservice operating earnings. This latter entity accounted for about EUR538 million or some 20% of group operating earnings in FY01. Ahold has thus far been unable to further clarify the potential worst case amount of overstated earnings. Supporting a 'BB' category rating, Fitch maintains the view that Ahold remains a viable operating entity. US Food retail, the Dutch operations as well as ICA Ahold continue to support the sales and cash generative ability of the group. US Foodservice is but one business within the group. Food retail, and especially US food retail, remains the core area of operations although recent figures demonstrate that US food retail has suffered to some extent from both increased competition and the general weakness in US consumer demand. However, potentially controlling creditors will have to decide if any continued financial support maximises the cash-generative qualities of this company or prompt asset sales at distressed values in order to realise liquidity. Ahold remains on Rating Watch Negative. The potential need for negotiation of additional liquidity lines, the continuing uncertainty over the amount of overstated earnings, and a requirement for further details of assets pledged as security, leave Fitch with little option but to maintain the Rating Watch Negative status. Further uncertainty has been engendered by investigation and reported potential litigation against both the company and individuals in both the United States and the Netherlands. Ahold is the owner of the Stop & Shop, Giant and TOPS supermarket chains. Outside The Netherlands Koninklijke Ahold N.V., being its registered name, presents itself under the name of "Royal Ahold" or simply "Ahold". The company maintains a Web site at http://www.ahold.com AIRTRAN AIRWAYS: Revenue Passenger Miles Jump 30.9% in February --------------------------------------------------------------- AirTran Airways, a subsidiary of AirTran Holdings, Inc., (NYSE:AAI) reported record traffic results for the month of February 2003. AirTran Airways' traffic, measured by revenue passenger miles, increased by 30.9 percent for the month of February 2003 versus the prior year on 24.9 percent more capacity, measured by available seat miles, resulting in a load factor of 66.2 percent, compared to 63.2 percent for February 2002. The airline enplaned 757,515 passengers in the month of February 2003, a 20.1 percent increase from February 2002. "We are very pleased with our traffic results, particularly given the adverse weather we experienced through much of our system during the second half of the month," said Kevin Healy, vice president of planning and sales. Airtran Airways February 2003 Traffic (Preliminary) February 2003 February 2002 Change ------------- ------------- ------ Revenue Passenger Miles (000) 464,445 354,861 30.9% Available Seat Miles (000) 701,104 561,528 24.9% Load Factor 66.2% 63.2% 3.0 points Passengers Enplaned 757,515 630,811 20.1% Y-T-D 2003 Y-T-D 2002 Change ---------- ---------- ------ Revenue Passenger Miles (000) 961,295 707,214 35.9% Available Seat Miles (000) 1,485,004 1,122,155 32.3% Load Factor 64.7% 63.0% 1.7 points Passengers Enplaned 1,571,056 1,268,598 23.8% AirTran Airways is America's second-largest low-fare airline - employing more than 5,000 professional Crew Members and serving 448 flights a day to 41 destinations. The airline's hub is at Hartsfield Atlanta International Airport, the world's busiest airport (by passenger volume), where it is the second largest carrier operating 172 flights a day. The airline never requires a roundtrip purchase or Saturday night stay, and offers an affordable Business Class, assigned seating, easy online booking and check-in, the A-Plus Rewards frequent flier program, and the A2B corporate travel program. AirTran Airways also is a subsidiary of AirTran Holdings, Inc., (NYSE:AAI), and the world's largest operator of the Boeing 717, the most modern, environmentally friendly aircraft in its class. For more information, visit http://www.airtran.com As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its single-'B'-minus corporate credit ratings on AirTran Holdings Inc., and subsidiary AirTran Airways Inc., and removed all ratings from CreditWatch, citing the airline's relatively good operating performance amid difficult industry conditions. The ratings were placed on CreditWatch on September 13, 2001. Approximately $166 million of rated debt is affected. The outlook is negative. "Ratings have been affirmed and removed from CreditWatch due to AirTran's relatively good operating performance, within an industry that continues to incur massive losses," said Standard & Poor's credit analyst Betsy Snyder. ALLEGIANCE TELECOM: Dec. 31 Working Capital Deficit Tops $289MM --------------------------------------------------------------- Allegiance Telecom, Inc. (Nasdaq: ALGX), a national local exchange carrier (NLEC), announced results for its fourth quarter and year-end 2002. Allegiance reported fourth quarter revenues of $204.9 million, a decrease of 6.7 percent compared with 3Q02 and an increase of 35.0 percent compared with 4Q01, and full-year revenue of $771.0 million, an increase of 49.2 percent compared with 2001. Excluding the revenue impact of the Company's customer premise equipment provisioning and maintenance business, which had 4Q02 revenue of $33.0 million versus $40.3 million in 3Q02, revenue for 4Q02 declined by $7.3 million from the third quarter, a reduction of 3.3 percent. EBITDA loss margin for the fourth quarter was 7.7 percent, with a consolidated EBITDA loss of $15.7 million for 4Q02. Allegiance Telecom also reported it achieved adjusted free cash flow from operations of negative $33.4 million, representing compliance with its senior secured credit facility covenants level of negative $34.0 million. For the year ending December 31, 2002, Allegiance Telecom had an EBITDA loss of $71.6 million, a 36.2 percent decrease from 2001. Capital expenditures for 2002 totaled $129.4 million versus $364.4 million in 2001, a reduction of 64.5 percent. At December 31, 2002, the Company's balance sheet shows that its total current liabilities eclipsed its total current assets by about $289 million. "During the fourth quarter, Allegiance Telecom reoriented its focus from rapid top line growth to a goal of moving rapidly to free cash flow positive which is targeted to occur by mid-2003," said Royce J. Holland, Allegiance chairman and chief executive officer. "Along with our interim agreement with senior bank creditors announced in late November 2002, our focus has shifted dramatically to an operating mode more appropriate in the continuing poor capital markets environment. We also continue to work with our bankers on a permanent amendment to the credit facilities reflecting a focus on generating cash rather than high revenue growth." Holland said many of the actions taken in the fourth quarter to refocus the Company's operations resulted in the Company's first sequential quarterly revenue downtick (excluding the revenue impact from Allegiance's CPE business) of $7.3 million. Holland further indicated that these actions included: -- Reduction of field sales teams from a high of 128 in the first half of 2002 to 66 at year-end. -- Focus on selling the Company's most profitable products and in areas with excess network capacity. -- Phase out of unprofitable and marginally profitable products. -- Substantial progress on a major effort to improve collectability of its accounts receivable, resulting in a reduction of receivables aged more than 90 days for the Company's retail telecom services products from $25.9 million in August 2002 to approximately $7.0 million at year-end. With the completion of the rollout of the Singl.eView billing system with its superior accounts receivable management tools, the reductions realized can be sustained. -- In conjunction with the reduction in accounts receivable, credit standards were tightened for new customers. -- Negotiated settlements with major carriers regarding disputes over intercarrier compensation and increased revenue reserves for a number of financially ailing CLECs with respect to intercarrier compensation. "We made tremendous strides in improving accounts receivables in the fourth quarter with receivables for business customers that had aged over 90 days being reduced dramatically," added Holland. "We also are in the best shape in several years regarding receivables for intercarrier compensation. This has resulted in days sales outstanding (DSO) for retail accounts dropping to 36 days and overall DSO being at a historical low of 67 days." "The result of all this activity was a significant hit to revenue in 4Q02 as well as bad debt expense of about $17.7 million, which resulted in a larger than expected EBITDA loss," Holland said. "The benefits of our efforts in the fourth quarter should be reflected in lower churn and bad debt expense and a resumption of double digit revenue growth during 2003." Allegiance is simultaneously pursuing financial and strategic negotiated alternatives to reduce its total indebtedness, which under the terms of the interim amendment must be reduced from the current $1.2 billion level to $645 million by April 30, 2003. This debt reduction could include the issuance of new equity or equity derivative securities for cash to retire outstanding debt, the use of cash to retire outstanding debt or the issuance of equity or equity derivative securities or debt securities in exchange for outstanding debt. If this debt reduction has not been consummated prior to the issuance of the 2002 audit report by KPMG LLP, Allegiance Telecom's independent accountants, and in a manner that provides the Company with sufficient available cash to fund operations for at least the next 12 months, Allegiance has been informed by KPMG LLP that the report will contain a "going concern" qualification. Operational and Financial Highlights The Company continues to see improved productivity and efficiency as it focuses its business on profitability. In 4Q02, the Company's revenue per employee surged to a record level of $204,600, an increase of $5,600 or approximately 2.8 percent over the revenue per employee for 3Q02 of $199,000 and an increase of $54,400 or approximately 36.2 percent over the revenue per employee for 4Q01 of $150,200. "Continued gains in efficiency and productivity indicate our programs to enhance efficiency are working well," said Dan Yost, Allegiance Telecom president and chief operating officer. Reflecting the Company's focus on making progress toward positive free cash flow, cash burn from operations was reduced to $34.7 million, a decrease of 15.8 percent from the third quarter and a drop of 52.5 percent from 4Q01. Allegiance experienced a decline in cash burn from operations of 57.8 percent in 2002 compared with 2001. "The implementation of our new consolidated billing system, completed in November 2002, that works in concert with our customer provisioning systems has bolstered our initiative to minimize customer churn percentages," said Tony Parella, Allegiance Telecom president of telecom and retail services. "We ended 2002 with an automated system for tracking disconnects, giving us a much better handle on churn statistics, and the lowest level of billing disputes and bad debt in the history of our retail operations. For 2003, we are in a much better position to serve and retain our customers." "Allegiance Telecom continued to dramatically reduce cash consumed in the quarter, using approximately $26.7 million of its cash and short-term investments during the fourth quarter to fund its operations and capital expenditures, to service debt and to account for changes in working capital which were favorable in 4Q02," said Thomas M. Lord, Allegiance executive vice president of corporate development and chief financial officer. "This improvement in cash burn from operations is consistent with our bank covenants. While the EBITDA loss sets us back in terms of our trend towards positive cash flow from operations, investors should understand that to a great extent it reflects the shift in the fourth quarter from our historic high octane revenue growth mode to our current managed growth, cash preservation mode." Allegiance Telecom -- http://www.algx.com-- is a facilities- based national local exchange carrier headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecom(TM)" -- a complete telecommunications package, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source approach. Allegiance's common stock is traded on the Nasdaq National Market under the symbol ALGX. ALLIED WASTE: Fitch Revises B-Level Ratings Outlook to Stable ------------------------------------------------------------- Fitch Ratings has affirmed the ratings on Allied Waste and related entities, and revised the Rating Outlook to Stable from Negative. The change in Rating Outlook results from the company's steady debt reduction, which has occurred despite a weak operating environment that has impacted margins and operating cash generation. The company's current level of cash generation provides a sufficient buffer so that even in the event of further weakness in economic conditions, the company should still be in a position to generate positive cash flow and further reduce debt. The company also retains supplemental liquidity in the form of unused bank revolving credit facilities, and has demonstrated continued access to external capital. Over the intermediate term, any improvement in the economic conditions should result in margin expansion toward previous levels, and an acceleration of debt reduction. Allied's EBITDA margin for 2002 slipped below 32% as compared to slightly over 35% in 2000, with EBITDA falling 2% in 2002 to $1.753 billion. Excluding 2001 costs associated with acquisitions and divestitures, 2002 EBITDA fell 9.3%. Nevertheless, total debt fell to $8.882 billion from $9.260 billion in 2001 (with net divestitures accounting for less than $50 million in proceeds). Industry conditions are likely to remain relatively weak over the short term, with flat-to-modest price and volume increases. Nevertheless, cash available for debt reduction should be in the range of $400 million, providing ample flexibility in the event of further economic weakness. Remaining maturities of $164 million in 2003 and $604 million in 2004 are manageable, with $374 million of these amounts consisting of bank term loans. Allied is likely to continue tapping external financing on a regular basis in order to address maturities and reduce its reliance on bank funding. In November 2002, Allied issued $375 million in senior secured notes, demonstrating its continued access to the capital markets. Allied Waste North America -- $1.3 billion Senior Secured Credit Facility 'BB'; -- $2.4 billion Tranche A,B,C Loan Facilities 'BB'; -- $3.4 billion Senior Secured Notes 'BB-'; -- $2.0 billion Senior Subordinated Notes 'B'. Browning Ferris Industries (BFI) -- $690 million Sr Secured Notes, Debs and MTNS 'BB-'. AMERCO: Banks Agree to Standstill Pacts until April 30, 2003 ------------------------------------------------------------ AMERCO inked Standstill Agreements with its bankers. These extensions run through April 30, 2003. AMERCO entered into financial restructuring discussions with its debt holders in October of 2002. Those discussions are continuing productively. Holly Etlin, principal of Crossroads, LLC, stated, "We are making progress. [This] is another key step in our efforts to restructure AMERCO's debt with its lenders." Joe Shoen, Chairman and CEO of AMERCO said, "This will allow AMERCO to continue its steady progress toward successful new financing while reinforcing continued lender support for the restructuring." The JPMorgan-Led 3-Year Credit Facility The extension of the agreement will continue to provide AMERCO the time necessary to carry out plans to obtain new financing in order to pay its banks $205 million under the existing 3-Year Credit Agreement. During the extended standstill period, lenders will continue to receive interest payments on the outstanding balance, as well as information concerning the progress of the restructuring. Information obtained from http://www.LoanDataSource.comshows that AMERCO is the Borrower under a 3-YEAR CREDIT AGREEMENT Dated as of June 28, 2002, with a consortium of lenders: Lending Commitment -------------------------- Lending Institution Dollar Amount Percentage ------------------- ------------- ---------- JPMorgan Chase Bank $ 25,000,000 12.195% Bank of America, N.A $ 25,000,000 12.195% Bank One, NA $ 25,000,000 12.195% Citicorp USA, Inc. $ 20,000,000 9.756% Wells Fargo Bank, N.A $ 20,000,000 9.756% Fleet National Bank $ 20,000,000 9.756% U.S. Bank N.A. $ 20,000,000 9.756% Washington Mutual Bank $ 20,000,000 9.756% LaSalle Bank N.A. $ 20,000,000 9.756% KBC Bank N.V. $ 10,000,000 4.878% ------------ ------- Total $205,000,000 100.00% assembled by Bank of America, N.A., as Syndication Agent, and for which Bank One, NA, with its main office in Chicago, Illinois, serves as Documentation Agent and JPMorgan Chase Bank serves as Administrative Agent, with J.P. Morgan Securities Inc., acting as Sole Bookrunner and Sole Lead Arranger. The 3-Year Agreement paid-off amounts owed under a 5-Year Credit Agreement, dated as of June 30, 1997, among AMERCO, the Lenders named therein, and The Chase Manhattan Bank, N.A., as Administrative Agent, as amended, supplemented or otherwise modified from time to time. AMERCO's obligations to the Lenders under the 3-Year Credit Agreement are guaranteed by each present and future direct or indirect Subsidiary of AMERCO that executes a Guaranty except AMERCO's Insurance Subsidiaries, INW Company and U-Haul Co. (Canada) Ltd. The 3-Year Credit Agreement contains three key financial covenants: * AMERCO agrees not to incur, create, assume or permit to exist any Indebtedness if, at any time, the ratio of Consolidated Indebtedness to Adjusted Capitalization would exceed 0.65 to 1.0; * AMERCO promises to maintain Consolidated Tangible Net Worth of no less than the sum of: (a) $597,000,000 plus (b) 25% of cumulative Consolidated Net Income for each fiscal year ending after March 31, 2001, through the date of determination, with no reduction for losses, if any, in any fiscal year. * AMERCO covenants that at the end of any fiscal quarter the ratio of Adjusted Operating Earnings to Fixed Charges for the period consisting of the four consecutive fiscal quarters ending with such fiscal quarter to be no less than 1.50 to 1.0. Four layers of debt take priority over AMERCO's obligations under the 3-Year Credit Agreement: Amerco Real Estate Senior Notes Series A $ 95,000,000 Amerco Real Estate Senior Notes Series B $ 5,000,000 Subsidiary Mortgage Obligations $ 213,031 Subsidiary Guarantees under the 3-Year Credit Agreement $ 205,000,000 AMERCO is also party to four other key credit facilities: * the AMERCO Securitized Asset Defeasance Program Dated September 14, 1999 * Bank of Montreal Synthetic Lease Facility Dated as of July 27, 1999 * Royal Bank of Canada Synthetic Lease Facility Dated as of April 5, 2001 * Interest Rate and Currency Exchange Agreement with Chemical Bank Dated March 5, 1992 The Citibank-Led $101 Million Facility AMERCO and Citibank USA, Inc., executed a Standstill Agreement on the Company's $101 million lease obligation. The Company will continue to make all required payments under the lease facility, as well as provide timely information about the progress of its debt restructuring. AMERCO is the parent company to U-Haul International, Inc., Oxford Life Insurance Company, Republic Western Insurance Company and Amerco Real Estate Company. U-Haul has served the do-it-yourself household-moving customer for 57 years. U-Haul(R) trucks and trailers can be rented from more than 15,000 independent dealers and 1,350 company operated moving centers. U-Haul, the undisputed leader in the truck and trailer rental industry, is one of the industry's largest operators of self- storage facilities, the world's largest installer of permanent trailer hitches and the world's largest Yellow Pages advertiser. AMERICA WEST: William A. Franke Discloses 5.7% Equity Stake ----------------------------------------------------------- William A. Franke beneficially owns 1,853,334 shares of the Class B common stock of America West Holdings Corporation, representing 5.7% of the outstanding Class B common stock of the Company. Mr. Franke has sole power to both vote and dispose of the entire 1,853,334 shares held. America West Holdings is the holding company for America West Airlines, one of the top 10 US airlines. AWA serves more than 90 North American destinations, including seven in Mexico and two in Canada. It has a fleet of nearly 140 aircraft, which fly from hubs in Phoenix, Las Vegas, and Columbus, Ohio. AWA serves more than 180 destinations worldwide through code-sharing alliances with Continental, Northwest, British Airways, and Taiwan's EVA Airways. Another subsidiary, The Leisure Company, sells vacation packages. As previously reported in the Troubled Company Reporter, Standard & Poor's raised America West's junk corporate credit rating to 'B-'. AMERICAN RESTAURANT: Redeems Outstanding 11% Sr. Secured Notes -------------------------------------------------------------- On February 18, 2003 American Restaurant Group, Inc., fully redeemed in cash its outstanding 11% Series B Senior Secured Notes. The Company had $3.41 million in outstanding 11% Series B Senior Secured Notes. American Restaurant Group operated 193 sundry restaurants in five different flavors, from sports grills (Local Favorite) and casual dining (Spoons) to country cooking (Grandy's) and upscale dining (Spectrum Foods). Today, ARG can lay claim to only one type of eatery -- about 100 steak houses operating under the Stuart Anderson's Black Angus and Stuart Anderson's Cattle Company names. Founded by former CEO Anwar Soliman (who still owns 17%) in 1964, ARG has been burdened with debt. To settle those debts, the firm sold its four concept restaurants to NBACo (Non-Black Angus Concepts, now known as Spectrum Restaurant Group), which is majority-owned by Soliman. As reported in Troubled Company Reporter's November 18, 2002 edition, Standard & Poor's lowered its corporate credit and senior secured debt ratings on casual dining restaurant operator American Restaurant Group Inc., to 'B-' from 'B'. The outlook is negative. Los Altos, California-based American Restaurant Group had about $160 million of debt outstanding as of September 30 2002. "The downgrade is based on the company's declining operating performance, very weak credit protection measures, and limited liquidity," said Standard & Poor's credit analyst Robert Lichtenstein. "Operating performance continued to weaken in 2002. Same-store sales declined 3% in the first nine of 2002 after falling 4.2% in all of 2001. Moreover, the company's operating margin in the first nine months of 2002 decreased to 8.2% from 10% in 2001. The decline was due to a lower average check, which resulted from a change in menu mix designed to increase customer traffic, and higher labor costs." APPALACHIAN REGIONAL: Fitch Ups $87MM Bond Rating to BB+ from BB ---------------------------------------------------------------- Fitch Ratings has upgraded to 'BB+' from 'BB' its rating on $87,250,000 Kentucky Economic Development Finance Authority refunding and improvement revenue bonds (Appalachian Regional Healthcare), series 1997. The Rating Outlook is Stable. The rating reflects ARH's improved financial performance, solid debt service coverage, and limited competition due to its isolated service areas. In fiscal 2002, ARH posted a $3.0 million operating gain (0.7% operating margin), an improvement from a negative 3% operating margin in 1999. Operating improvements have continued through seven months ended Jan. 31, 2003 with a $3.9 million operating gain (1.5% operating margin). As a result, ARH had strong debt service coverage of 3.3 times at fiscal year-end 2002 and 3.0x through seven months of fiscal 2003. ARH's financial improvement is a direct result of the relatively new management team's strategic objectives, which include improved financial reporting, improved staffing, better supplies management, and revenue cycle management initiatives. Management implemented a full time equivalent reduction of 180 FTEs in January 2003 which is expected to produce savings of $2.5 million in fiscal 2003 after severance costs, and annualized savings of $7-8 million. ARH faces limited competition in most of its 9 separate service areas. Six of ARH's nine acute-care hospitals have a leading market share position, and two of the other facilities are designated as critical access hospitals. Primary credit concerns include ARH's high dependence on government payors, light liquidity position, weak service area characteristics and future capital needs. At fiscal 2002, ARH's liquidity position remained low at $42 million (41 days cash on hand), but has improved from $24.8 million (26 days) at fiscal 2001. In fiscal 2002, Medicare and Medicaid comprised nearly 70% of ARH's gross revenues, demonstrating high exposure to governmental cutbacks in reimbursement. Management indicated that ARH's revenue could be significantly impacted by cost containment in Kentucky's Medicaid program; however details of these reductions are not yet available. The majority of ARH's facilities are located in rural communities in Kentucky and West Virginia and are characterized by poor socioeconomic and demographic indicators. This has had a negative impact on ARH's bad debt as a percent of revenue which was a very high 8.9% as of fiscal year-end 2002. Lastly, while ARH has indicated that it will not re-enter the capital markets over the short term, capital needs going forward are a concern. ARH's average age of plant was 11.9 years as of fiscal year-end 2002. ARH's stable outlook reflects Fitch's belief that the current management team has implemented initiatives that will allow ARH to operate at current levels despite its challenging payor mix. However, any improvement in ARH's financial profile will likely be limited by potential cuts in Medicaid, and future capital needs of the system. ARH covenants to disclose only annual financial data to investors, which Fitch views negatively. However, the current management team has been proactive in providing quarterly and annual data to Fitch. ARH is headquartered in Lexington and is comprised of nine acute care hospitals, 17 outpatient clinics and other related health care businesses located throughout Kentucky and West Virginia. Total revenues in fiscal 2002 were $431 million. ARIBA INC: AMR Says Contract Mgt. Component Yield Compelling ROI ---------------------------------------------------------------- Contract Management solutions from companies such as Ariba, Inc. (Nasdaq: ARBAE), the leading Enterprise Spend Management (ESM) solutions provider, yield significant savings according to a recent study. A February 2003 report from AMR Research, titled "The Compelling ROI of Contract Management," found that "automating purchasing contracts delivers significant ROI in four key areas: supplier compliance, internal compliance, better sourcing and workflow efficiency." In addition, AMR Research discovered that "the best categories to choose are those that have not been previously addressed by existing procurement systems: this typically includes complex spending categories like facilities/real estate, telecommunications, large IT applications, and all manner of complex service agreements, such as outsourcing." In the report, AMR Research cites an Ariba user who is on track to save $1 million annually by cross-checking A/P data with contracts data for overcharges. "Contract visibility and compliance are critical elements of managing a company's enterprise spend," said Michael Schmitt, Ariba's EVP and chief marketing officer. "We are pleased to see that AMR recognizes the value that Contract Management applications and services are providing to leading companies." For information about Ariba(R) Contracts(TM), the contract management solution offered by Ariba, and other Ariba Spend Management solutions, please visit http://www.ariba.com 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. * * * 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." AUSPEX SYSTEMS: Cash Insufficient to Meet Capital Requirements -------------------------------------------------------------- As previously disclosed in a press release on February 11, 2003 and in a conference call on February 20, 2003, Auspex Systems, Inc., (Nasdaq: ASPX) has insufficient cash to meet its working capital requirements. Based on the financial situation, the Company has announced expense reductions and layoff notification. In compliance with The WARN Act (Worker Adjustment and Retraining Notification Act) and The California WARN Act, the Company has issued 60 day notice to all U.S. employees that their employment with the company may terminate in compliance with Federal and State and local requirements. The Company is pursuing cost reduction measures, which include facility closures, reducing subsidiary costs and curtailing all but the most essential expenses. During this period, the Company will continue its discussions with other major storage companies and explore other potential relationships in an effort to complete a strategic sale, merger or reseller relationship that may include all or part of the business. "A combination of factors lead us to this decision," said Gary J. Sbona, CEO of Auspex Systems, Inc. "Current adverse economic and market conditions are hampering our efforts to raise capital or complete a merger or acquisition. Without the immediate availability of additional funding and/or a partnership arrangement, our Board has decided to pursue this action to give our employees notice of the situation as we continue to pursue other options available to us." Auspex introduced the world's first Network Attached Storage server shortly after its founding in 1987, creating a new breed of storage appliance offering significant performance and administrative benefits over general-purpose file servers. Auspex's enterprise-class network servers are used worldwide for consolidated information storage and delivery. Auspex also is leading the convergence of NAS with Storage Area Networks with the NSc3000 Network Storage Controller, the first multivendor SAN-to-NAS gateway. The company is headquartered in Santa Clara, California. Its shares are traded on the Nasdaq under the symbol ASPX. For more information, visit http://www.auspex.com BAYOU STEEL: Wins Final Approval to Obtain $45MM DIP Financing -------------------------------------------------------------- Bayou Steel Corporation (AMEX:BYX), a leading producer of light structural and merchant bar steel shapes, has received from the Bankruptcy Court final approval of a $45 million debtor-in- possession financing facility from Congress Financial and GE Credit Corporation. Based upon the borrowing formula, approximately $9 to $10 million would now be available. The facility, which matures in a year, will be used to fund the ongoing business operations of Bayou Steel, which filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. N.D. Tex. Case No. 03-30816). Jerry Pitts, President and Chief Operating Officer, stated, "This financing, together with cash flow from our business, will be a significant source of liquidity for Bayou Steel and will contribute to our ability to continue normal business operations as we organize for the future. It also provides a measure of reassurance to our employees, customers and suppliers of materials and services. We appreciate the loyalty and dedication of our employees and the continued support of our suppliers and customers." Bayou Steel Corporation manufacturers light structural and merchant bar products in LaPlace, Louisiana and Harriman, Tennessee. The Company also operates three stocking locations along the inland waterway system near Pittsburgh, Chicago, and Tulsa. BEA SYSTEMS: S&P Revises Outlook to Stable over Steady Cash Flow ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and its other ratings on BEA Systems Inc., and revised the company's outlook to stable from negative. The outlook revision reflects BEA's improving profitability and stable cash flow generation despite a difficult spending market for software products and growing competition from IBM Corp. San Jose, California-based BEA provides application server software, the software foundation upon which transaction- oriented E-commerce applications are developed and operate. The company had $560 million of funded debt as of January 2003. BEA also offers support and training services, generating recurring revenues to supplement its software licenses. BEA's growth is fueled by increased penetration of its existing client base, by marketing programs, and by new product releases. Key strategic alliances have helped the company expand market penetration and enhance product distribution. "We continue to expect that BEA will sustain profitability and cash flow measures, as well as maintain a solid position in the application server software market, despite challenging market conditions," said Standard & Poor's credit analyst Emile Courtney. However, the company operates in an evolving and fragmented industry with IBM Corp. as its key competitor. IBM is larger, more diversified, and financially stronger and has narrowed BEA's market lead. Continued high selling expenses are likely for BEA, as are R&D expenses in the mid-teen percentage area. While acquisitions have slowed in the past year, strategic purchases focused on bolstering product capability and expansion of geographic breadth may resume. BIOTRANSPLANT INC: Nasdaq Will Delist Shares Effective Tuesday -------------------------------------------------------------- BioTransplant Incorporated (Nasdaq: BTRN) received a Nasdaq Staff determination letter indicating that the Company's securities will be delisted from the Nasdaq National Market at the opening of business on March 11, 2003. This action is due to the Company's filing of a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code on February 27, 2003 (Bankr. Mass. Case No. 03-11585). The company has determined not to appeal Nasdaq's decision but will consider applying for a listing on the OTC Bulletin Board when appropriate. As a result of the company's Chapter 11 petition, effective with the opening of trading on March 4, 2003 the Company's stock will trade under the symbol BTRNQ. BioTransplant Incorporated, a Delaware corporation located in Medford, Massachusetts, is a life science company whose primary assets are intellectual property rights that it has exclusively licensed to third parties. The Company's strategy is to maximize the potential future value of these licensed intellectual property rights. The Company has exclusively licensed Siplizumab (MEDI-507), a monoclonal antibody product, to MedImmune, Inc. Siplizumab is in Phase II clinical trials for the treatment of psoriasis. The Company's assets also include the AlloMune System technologies, which are intended to treat a variety of hematologic malignancies and improve outcomes for solid organ transplants, and the Eligix HDM Cell Separation Systems, which use monoclonal antibodies to remove unwanted cells from bone marrow, peripheral blood stem cell and donor leukocyte grafts used in transplant procedures. BioTransplant also has an interest in Immerge BioTherapeutics, Inc., a joint venture with Novartis, to further develop both companies' individual technology bases in xenotransplantation. BUDGET GROUP: Plan Filing Exclusivity Extended Until April 2 ------------------------------------------------------------ William Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, argues that Budget Group Inc., and its debtor- affiliates have failed to present sufficient evidence to warrant the lengthy extension -- another 120 days to file a plan and another 180 days to solicit votes -- now being requested. The Debtors' assets have been substantially administered, and shortly the Debtors will cease all business operations. Given this, there is no reason why the Debtors cannot now expeditiously formulate and prosecute a plan to complete the administration of these cases. Mr. Bowden asserts that allowing the Debtors to maintain exclusivity for an additional 120 to 180 days will only lead to an increase in administrative expenses and a delay in distributing assets to creditors. Any further extension of the Debtors' exclusive periods should be limited in duration -- an additional 60 days to file a plan and a correlating 120 days to solicit votes. If the Debtors are unable to move the plan process forward within this time frame, then the Committee should be given an opportunity to forge a direction for these estates that may lead to an expeditious and equitable conclusion for these cases. Mr. Bowden tells the Court that the time has come for these cases to be brought to a swift conclusion and the estates' assets distributed to creditors. Debtors Respond Matthew B. Lunn, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, contends that the Debtors' cases have progressed with remarkable dispatch. In less than seven months, the Debtors have: A. negotiated and closed three separate, but inter-related, financing facilities involving more than $1,700,000,000 in debtor-in-possession financing; B. negotiated, market tested and consummated a going concern sale of their multi-billion dollar North American, Latin America and Asian operations to Cherokee Acquisition Corporation; C. assumed and assigned over 7,000 executory contracts and unexpired leases involving more than 5,800 non-debtor counterparties to Cherokee in connection with the North American Sale; D. managed the transition of the Debtors' ongoing business operations to Cherokee; E. stabilized the Debtors' distressed European operations; F. marketed the Debtors' operations in Europe, the Middle East and Africa; and G. negotiated an Asset Purchase Agreement for the sale of the Debtors' EMEA Operations and, in connection therewith, negotiated and closed bridge DIP Financing for the EMEA Operations. If approved by the Court, the sale of the EMEA Operations should close by mid-March. If the EMEA Operations sale timely closes, the Debtors will be in a position to directly address the remaining issues that must be resolved to confirm a plan. Mr. Lunn relates that the Committee understandably desires that distributions be effected under a plan as soon as is reasonably practicable after the EMEA Operations sale closes. The Debtors agree with this goal, but disagree with the Committee's perception of the time that will be required, given the numerous issues that must be resolved, to propose and confirm a plan that will permit immediate distributions. Nevertheless, to mitigate the Committee's concerns, the Debtors agreed with the Committee, prior to the filing of the Objection, to reduce their requested extension of exclusivity to 6O days so long as the reduction of time was without prejudice to the Debtors' right to seek further extensions. Notwithstanding this accommodation, the Committee felt compelled to file its Objection. According to Mr. Lunn, the Committee's assertions that the Debtors' estates have been substantially administered, that the Debtors do not require additional time to confirm a plan and that administrative expenses "will only increase" with an exclusivity extension are each simply wrong. The Committee either fails to appreciate, or chooses to ignore, the significant issues that must be addressed before a plan can be confirmed. For example, the sale of the EMEA Operations must be consummated. In addition, significant post-closing issues must still be resolved with respect to Cherokee. Perhaps most importantly, complex inter-creditor and value allocation issues between the Debtors' estates must be addressed and resolved, not only in context of the Chapter 11 proceedings, but also with the UK Administrators and in a manner that is congruent with BRACII's UK administration. Stated differently, while the Debtors will have successfully converted their operating assets to cash, the Debtors and the Committee have yet to resolve these issues: A. which estate is entitled to what percentage of the consideration received in the two separate sale transactions? or B. which creditors within each estate are entitled to share pro rata in distributions of that consideration? Mr. Lunn reports that discussions concerning these issues -- which could not meaningfully have been addressed before the sale consideration for the different components of the Debtors' businesses was known -- have only recently begun. Similarly, the Debtors have only recently initiated discussions with the Committee and the UK Administrators concerning the most efficient means for coordinating the Chapter 11 plan confirmation process with a UK scheme of arrangement so that BRACII can emerge from the UK administration and fund distributions on a parallel course with the Chapter 11 Debtors. Quite frankly, under these circumstances, the Debtors are entirely at a loss to comprehend what other "direction" could be "forged" by the Committee to effect distributions if exclusivity was terminated. Mr. Lunn assures the Court that administrative expenses will not increase because exclusivity is extended. The Debtors will devote to these cases only those resources that are reasonably necessary to accomplish the tasks that must be resolved to confirm and consummate a plan and, to the extent necessary or appropriate, a scheme of arrangement regardless of whether exclusivity is extended. If anything, termination of exclusivity may actually increase administrative expenses because the Debtors may be required to expend time and effort resisting ill-conceived plans. Mr. Lunn relates that since the inception of these cases, the Debtors have vigorously pursued a program calculated to both enhance the value of their estates and realize that value before the absence of permanent financing impaired the Debtors' ability to protect that value. The Debtors' initiatives have been successful and they can now begin to sort through those issues that must be resolved to confirm a plan and effect distributions. The Debtors should not be penalized for their diligence and success, Mr. Lunn asserts. * * * Judge Walrath extends the Exclusive Filing Period for an additional 60 days, through and including April 2, 2003. In addition, the Exclusive Solicitation Period is also extended by 120 days until June 2, 2003. (Budget Group Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) Budget Group Inc.'s 9.125% bonds due 2006 (BDGP06USR1) are trading at about 23 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BDGP06USR1 for real-time bond pricing. BURLINGTON INDUSTRIES: Vanguard Discloses 8.4% Equity Stake ----------------------------------------------------------- In a February 13, 2003 filing with the Securities and Exchange Commission, Joseph Dietrick, Assistant Secretary of Vanguard Fiduciary Trust Company, discloses that Vanguard beneficially owns 4,519,516 shares of Burlington Industries, Inc' Common Stock. This represents 8.415% of the total number of shares of Burlington Common Stock. Vanguard Fiduciary Trust Company is a trust company organized under the laws of the Commonwealth of Pennsylvania. (Burlington Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALPINE: Reclassifies Sale-Leasebacks as Financing Transactions --------------------------------------------------------------- Calpine Corporation (NYSE: CPN) has determined in consultation with its independent auditor Deloitte & Touche LLP that two sale-leaseback transactions, previously accounted for as operating leases, will be recorded as financing transactions. The lease reclassifications will affect the company's financial results for the years ended December 31, 2000, 2001 and 2002. The company does not expect any adverse impact on the cash flow or liquidity position of the company or its outlook for 2003. The reclassifications will not cause Calpine to be in default of any covenants under the company's indentures or credit agreements. In connection with the ongoing re-audits of the 2000 and 2001 financial statements, it has been determined that the power contracts in place at two power plants (Pasadena and Broad River), for which the company has utilized sale-leaseback transactions, have characteristics that prevent the use of operating lease treatment. As a result, these two transactions will now be recorded as financings in Calpine's consolidated financial statements. The company noted that its former independent auditor, Arthur Andersen LLP, had previously concurred that the leases met the criteria for operating lease accounting under generally accepted accounting principles. "Sale-leaseback accounting represents a very complex, technical and highly judgmental area of accounting," stated Bob Kelly, executive vice president and chief financial officer. "Calpine is currently evaluating amendments that could be made to the power contracts for these two projects, which would allow us to account for these transactions as operating leases going forward." Sale-leaseback transactions are a common form of financing in many industries, including the power industry. Calpine provides details on its lease obligations in its notes to its financial statements. Impact on Financial Statements The reclassification of the two sale-leasebacks to financing transactions will require Calpine to restate its financial statements for the years ended December 31, 2000 and 2001 and adjust its previously announced unaudited financial results for the year ended December 31, 2002. All results remain subject to the completion by the company of its Annual Report on Form 10-K and the 2002 audit and the re-audits of 2000 and 2001 by D&T. Additional Issue In connection with the completion of the audit and re-audits, Calpine is seeking the review and concurrence by the Staff of the Securities and Exchange Commission for the appropriate accounting treatment for two other power sales contracts, which were entered into in 2001. Both D&T and the company's former independent auditor concurred that the company's accounting treatment for the revenue from these contracts is acceptable. If the SEC were to disagree with this determination, the timing of the recorded revenue for these contracts would shift such that net income would decrease by approximately $36 million in 2001; net income would increase by the same amount in the aggregate from 2002 through 2009. The company does not expect any adverse impact on the cash flow or liquidity position of the company or its outlook for 2003. This change will not cause Calpine to be in default of any covenants under the company's indentures or credit agreements. Earnings Guidance Taking into account the impact of the lease reclassifications, the company is confirming its guidance for 2003 diluted earnings per share for the year ending December 31, 2003 of approximately $0.40 to $0.50 per share. Based in San Jose, Calif., Calpine Corporation is a leading independent power company that is dedicated to providing wholesale and industrial customers with clean, efficient, natural gas-fired power generation. It generates and markets power from plants it develops, owns, leases and operates in 23 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit its Web site at http://www.calpine.com * * * As reported in Troubled Company Reporter's December 11, 2002 edition, Calpine Corp.'s senior unsecured debt rating was downgraded to 'B+' from 'BB' by Fitch Ratings. In addition, CPN's outstanding convertible trust preferred securities and High TIDES were lowered to 'B-' from 'B'. The Rating Outlook was Stable. Approximately $9.3 billion of securities were affected. DebtTraders says Calpine Corp.'s 10.500% bonds due 2006 (CPN06USR2) are trading at about 55 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for real-time bond pricing. CAMBRIAN: Gets Plan Filing Exclusivity Extension Until April 18 --------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Eastern District of Virginia, Cambrian Communications, LLC and Cambrian Holdings, LLC obtained an extension of their exclusive periods. The Court gives the Debtors, until April 18, 2003, the exclusive right to file their plan of reorganization and until June 17, 2003, to solicit acceptances of that Plan from their creditors. Cambrian Communications LLC, together with its affiliate Cambrian Holdings LLC, filed for chapter 11 protection on September 20, 2002 (Bankr. E.D. Va. Case No. 02-84699). Bradford F. Englander, Esq., at Linowes and Blocher LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed an estimated assets of over $10 million and estimated debts of over $50 million. CB TECHNOLOGIES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: CB Technologies, Inc. 350 Eagleview Boulevard Exton, Pennsylvania 19341-1155 Bankruptcy Case No.: 03-12393 Type of Business: CB Technologies is a custom software development and consulting firm. CB Technologies provides technology tools and services to the Life Science industries. CB's targeted solutions help pharmaceutical, biotechnology, medical device and contract research organizations adopt more efficient processes throughout the life science product lifecycle from post discovery to commercialization. See http://www.cbtech.com/ Chapter 11 Petition Date: February 18, 2002 Court: Eastern District of Pennsylvania (Philadelphia) Judge: Bruce I. Fox Debtor's Counsel: James M. Matour, Esq. Hangley Aronchick Segal & Pudlin One Logan Square 27th Floor Philadelphia, PA 19103 Tel: (215) 496-7016 Estimated Assets: $1 million to $10 million Estimated Debts: $1 million to $10 million CENTERPOINT ENERGY: Fitch Affirms Ratings with Negative Outlook --------------------------------------------------------------- Fitch Ratings has affirmed the outstanding credit ratings of CenterPoint Energy, Inc., and its subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp. The Rating Outlook for all three companies remains Negative. The rating action follows CNP's announcement on February 28, 2003 that it had reached an agreement with its lenders to restructure terms under an existing $3.85 billion credit facility. Specifics of the amendment include an extension in maturity from Oct. 10, 2003 to June 30, 2005 and the elimination of mandatory commitment reductions. In return, CNP has agreed to seek SEC authorization to pledge the company's 81% interest in the capital stock of Texas Genco Holdings, Inc., as collateral for the banks. Fitch notes that SEC approval for the TGN stock pledge is neither a condition precedent to close nor does its trigger an acceleration if such authorization is not received in the future. Separately, CNP announced a reduction in its quarterly common stock dividend to $0.10 per share, a move which will conserve approximately $60 million of cash flow annually. In analyzing the impact of the new bank agreement and the likely pledge of TGN capital stock to those lenders upon CNP's unsecured bondholders, Fitch believes that the issue of structural subordination is largely offset by the removal of near-term refinancing risk, as well as the fact that the value of the pledged stock represents less than 5% of total consolidated assets. Moreover, unsecured bondholders and bank lenders will continue to share equally in the residual value of both CNP Electric and CNP providing meaningful asset coverage for both secured and unsecured creditors. The extension of the bank facility removes much of the uncertainty around CNP's near-term liquidity position, particularly the requirement to make mandatory prepayments of $600 million each in February 2003 and June 2003. However, Fitch is maintaining the Negative Outlook reflecting CNP's need to de- leverage and reduce its dependency on commercial bank debt. CNP's plan to do so through a combination of capital markets transactions and the securitization of stranded costs entails some execution risk. In addition, there is a degree of uncertainty over the ultimate impact on CNP of various lawsuits and ongoing investigations related to the business activities of its former subsidiary Reliant Resources, Inc. (RRI; 'B' senior unsecured debt, Rating Watch Negative by Fitch), including RRI's involvement in the California wholesale power market. Although RRI has agreed to indemnify CNP for any potential damages emanating from these lawsuits, RRI's ability to perform under these indemnifications is limited by RRI's weak financial condition and strained liquidity. CNP's underlying credit ratings incorporate the temporary weakness in CNP's post-restructuring credit profile offset by the company's low business risk profile and the reasonable prospects for de-leveraging by early 2005. CNP's current high debt leverage stems from the business separation and spin-off of RRI in September 2002. With the exception of approximately $1.9 billion outstanding subsidiary debt and lease obligations transferred to RRI, the vast majority of debt issued by CNP's predecessors to fund non-regulated investments prior to the May 2001 initial public offering of RRI have been assumed by CNP. As a result, CNP's credit measures are expected to remain under pressure through 2004 with consolidated total debt to capital and cash interest coverage expected to approximate 80% and 2.0 times, respectively. A positive credit consideration mitigating the high near term debt leverage is CNP's low business risk profile and predictable cash flow stream. As a result of the spin-off of RRI and the planned divestiture of TGN, the vast majority of CNP's earnings and cash flow are derived from regulated electric and gas distribution activities and FERC- regulated interstate pipeline operations Expected funding sources for CNP's anticipated de-leveraging include the planned sale of CNP's Texas generating assets in 2004 and the subsequent recovery of stranded costs as permitted under approved Texas restructuring legislation. It is currently estimated that CNP will issue more than $4 billion of securitization bonds in early 2005 with proceeds used to retire a $1.3 billion secured term loan at CNP Electric and bank debt at CNP. As a result, adjusted consolidated debt to capitalization should drop to around 60% (excluding securitization debt), a level more appropriate for CNP's rating category. Fitch's ratings and Outlook for CNP incorporate a moderate degree of political and regulatory uncertainty, including the risk that new legislation or appeals could be introduced seeking to amend the amount and/or delay the ultimate timing of stranded cost recovery. CERC's Negative Outlook reflects the company's need to refinance a fully drawn $350 million revolving credit facility on March 31, 2003. A $350 million bridge facility is available in the event that CERC is not able to place capital market bonds in accordance with management's plan. Fitch will continue to monitor the terms and conditions of the capital market refinancing or bridge loan. The following ratings are affirmed by Fitch: CenterPoint Energy, Inc. -- Senior unsecured debt 'BBB-'; -- Unsecured pollution control bonds 'BBB-'; -- Trust originated preferred securities 'BB+'; -- Zero premium exchange notes 'BB+'. CenterPoint Energy Houston Electric, LLC -- First mortgage bonds 'BBB+'; -- $1.3 billion secured term loan 'BBB'. CenterPoint Energy Resources Corp. -- Senior unsecured notes and debentures 'BBB'; -- Convertible preferred securities 'BBB-'. COMDISCO INC: Completes Partial Redemption of $75MM of 11% Notes ---------------------------------------------------------------- Comdisco Holding Company, Inc., (OTC:CDCO), as previously announced on February 14, 2003, has completed a partial redemption of $75 million principal amount of its 11% Subordinated Secured Notes due 2005. The outstanding principal amount of the Subordinated Secured Notes after this redemption is $160 million. The $75 million principal amount of Subordinated Secured Notes were redeemed at a price equal to 100% of their principal amount plus accrued and unpaid interest to the redemption date. Comdisco previously redeemed $65 million, $200 million, $100 million and $50 million principal amounts of the 11% Subordinated Secured Notes on November 14, 2002, December 23, 2002, January 9, 2003, and February 10, 2003, respectively. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money the remaining assets of the corporation in an orderly manner. Rosemont, IL-based Comdisco -- http://www.comdisco.com-- provided equipment leasing and technology services to help its customers maximize technology functionality and predictability, while freeing them from the complexity of managing their technology. Through its former Ventures division, Comdisco provided equipment leasing and other financing and services to venture capital backed companies. CREST DARTMOUTH: S&P Assigns Low-B Class D & Preferred Ratings -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to CREST Dartmouth Street 2003-1 Ltd./CREST Dartmouth Street 2003-1 Corp.'s floating- and fixed-rate notes and preferred shares. The preliminary ratings are based on information as of Feb. 28, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes and by the preferred shares; -- The excess spread provided by the assets; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The experience of the collateral administrator and subadvisor; -- The coverage of interest rate risks through hedge agreements; and -- The legal structure of the transaction. PRELIMINARY RATINGS ASSIGNED Class Rating Amount (mil. $) A AAA 280.000 B A- 34.125 C BBB 14.875 D BB 12.250 Preferred shares BB- 8.750 DICE: Says Survey Highlights New Trends in Technology Salaries -------------------------------------------------------------- Dice Inc., the leading provider of online recruiting services for technology professionals, released results from the Dice 2002 Annual Salary Survey. The survey of more than 21,000 technology professionals details key industry trends, including salary growth outside of traditional tech areas, the rising benefit of experience and the continued increase in the gender gap. Although the economy showed signs of weakness, overall technology salaries remained steady in 2002, averaging $67,900 versus $68,400 last year. Government/defense salaries spiked 7% this year, with the highest of these salaries being recorded in the Washington, DC area ($72,000), likely reflecting an increase in demand for homeland security. Medical/pharmaceutical salaries gained more than 5%, increasing to $68,900 over the past year, as technology jobs expanded from the traditional IT sector and shifted towards other industries. Geographically, Dice found salaries recovering in areas outside traditional tech locales, while salaries declined in traditional tech areas such as Silicon Valley, New York and Boston. For the first time, non-traditional tech locations, including Atlanta and Denver, joined the top paying metro areas, with salaries growing from $71,900 to $73,700 and $75,300 to $76,800, respectively. The youth-driven dot.com culture of the late 1990s has been replaced by a new reality in the early 2000s, in which age and experience are back in fashion. While salaries for over-40 workers have remained steady, those under 30 have seen their salaries decline by 5%, to $53,400. "With the sluggish economy, we are seeing new trends in the technology labor market," said Scot Melland, president and CEO of Dice Inc. "The demand for government and medical sector positions is improving, and salaries in these industries are growing. Experience is winning out over youth, with those over 40 seeing higher and more stable salaries compared to their younger coworkers." Additional significant findings include: * The gender gap continues to increase, particularly for some prominent job titles including: IT Manager and Project Manager, where the gender gap has jumped from 5% to 14% and 4% to 11%, respectively, and Web Developer/Programmer where the gap increased from 9% to 13%. On average, women earned 14% less than their male counterparts (compared to 12% in 2001). The gender gap was the lowest in the Mountain region (5%) and highest in the Midwest (21%). * Consulting salaries remained high, but declined after skyrocketing in the late 1990s. However, even with a 7% decline, consultants still made an average of $94,800 in 2002. Top paying skills for consultants were Sybase, AIX and SAP. * Titles with the highest salaries for the year remained consistent with last year. IT Management topped the scales at $102,900 with Project Management following at $89,100. The highest paying non-management positions were Systems Developer ($80,300) and Software Engineer ($80,200). * Industries topping the pay scale were the financial industry ($80,200), computer software ($73,700) and telecommunications ($73,000). Users can log on to http://marketing.dice.com/rateresultsto search for specific salary information based on location, job function, skills and education. Dice.com currently lists approximately 24,000 permanent, contract and consulting jobs nationwide for a wide variety of positions -- from programmers, software engineers, system administrators and chief information and technology officers to technology positions in the aerospace, defense, biotechnology, pharmaceutical, healthcare and general engineering fields. Dice Inc. (OTCBB: DICEQ) -- http://about.dice.com-- is the leading provider of online recruiting services for technology professionals. Dice Inc. provides services to hire, train and retain technology professionals through its two operating companies dice.com, the leading online technology-focused job board as ranked by Media Metrix, and MeasureUp, a leading provider of assessment and preparation products for technology professional certifications. Dice Inc. has been operating under the supervision of the United States Bankruptcy Court for the Southern District of New York pursuant to Chapter 11 bankruptcy proceedings since February 14, 2003 (Bankr. S.D.N.Y. Case No. 03-10877). Dice Inc. has proposed a plan of reorganization under which all of its currently outstanding capital stock is to be cancelled and substantially all of its new capital stock is to be issued to the holders of its $69.4 million of 7% Convertible Subordinated Notes due January 2005. Most of the Company's existing stockholders are not expected to realize any significant recovery on their investment. DICE INC: Turns to Pacific Crest Securities for Financial Advice ---------------------------------------------------------------- Dice, Inc., asks for authority from the U.S. Bankruptcy Court for the Southern District of New York to employ Pacific Crest Securities Inc., as its Financial Advisor. The Debtor tells the Court that Pacific Crest is uniquely qualified to advise the Debtor in connection with maximizing the Debtor's business enterprise value in this chapter 11 case, and its professionals have extensive experience in matters involving complex financial restructurings. Pacific Crest will be engaged to render: 1. General Financial Advisory Services a. to the extent it deems necessary, appropriate and feasible, review and analyze the business, operations, properties, financial condition and prospects of the Debtor and its non-debtor subsidiaries; b. evaluate the Debtor's debt capacity in light of its projected cash flows; c. assist in the determination of an appropriate capital structure for the Debtor; d. determine a range of values for the Debtor on a going concern basis and on a liquidation basis; e. advise and attend meetings of the Debtor's Board of Directors and its committees; f. if applicable, participate in hearings before the Bankruptcy Court with respect to the matters upon which the Financial Advisor has provided advice, including, as relevant, coordinating with the Debtor's counsel with respect to testimony; g. if the Debtor determines to undertake a Restructuring, advise and assist the Debtor in structuring and effecting the financial aspects of such a transaction; 2. Restructuring Services h. provide financial advice and assistance to the Debtor in developing and seeking approval of a Restructuring plan, which may or may not be, a plan under chapter 11 of the Bankruptcy Code; i. provide financial advice and assistance to the Debtor in structuring any new securities, other consideration or other inducements to be offered or issued under the Plan; j. assist the Debtor or participate in negotiations with entities or groups affected by the Plan; and k. assist the Debtor in preparing documentation within our area of expertise required in connection with the Plan. The Debtor assures the Court that to the best of its knowledge, Pacific Crest is a "disinterested person" and holds no adverse interest on the estate. The Debtor will pay Pacific Crest: a) $100,000 Monthly Financial Advisory Fees; and b) a $750,000 Restructuring Transaction Fee. Dice Inc., provides career management solutions to tech professionals via online job board, dice.com, through non-debtor subsidiary Dice Career Solutions, Inc., and certification preparation and assessment products through non-debtor subsidiary MeasureUp, Inc. The Company filed for chapter 11 protection on February 14, 2003 (Bankr. S.D.N.Y. Case No. 03- 10877). Robert Joel Feinstein, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $38,795,000 in total assets and $82,080,000 in total debts. DIVINE INC: Wants More Time to File Schedules and Statements ------------------------------------------------------------ divine, inc., and its debtor-affiliates ask for an extension of time from the U.S. Bankruptcy Court for the District of Massachusetts, to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under Section 521(1) of the Bankruptcy Code. The Debtors relate that they have over a thousand creditors and parties-in-interest and operate their businesses from various locations throughout the United States. Given the resultant size and complexity of their business and the fact that certain prepetition invoices have not yet been received or entered into the Debtors' financial systems, the Debtors have not had the opportunity to gather the necessary information to prepare and file its Schedules and Statements. The Debtors have, however, already commenced the extensive process of gathering the necessary information to prepare the Schedules and Statements from their various locations. Moreover, the Debtors need to prepare 6 sets of Schedules. The Debtors submit that they will be unable to comply with the 15-day deadline. At this time, the Debtors estimate that an extension of at least 45 additional days -- or until April 28, 2003 -- will be needed to prepare and file the Schedules and Statements. divine, inc., an affiliate of RoweCom Inc., is an extended enterprise company, which serves to make the most of customer, employee, partner, and market interactions, and through a holistic blend of Technology, services, and hosting solutions, assist its clients in extending their enterprise. The Company filed for chapter 11 protection on February 25, 2003 (Bankr. Mass. Case No. 03-11472). Richard E. Mikels, Esq., at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo represents the Debtors in their restructuring efforts. When the Debtors filed or protection from their creditors, they listed $271,372,593 in total assets and $191,957,065 in total debts. DUN & BRADSTREET: Completes Acquisition of Hoover's for $119MM -------------------------------------------------------------- D&B (NYSE: DNB), the leading provider of global business information and technology solutions, has completed its previously announced acquisition of Hoover's Inc., a provider of industry and market intelligence on public and private companies. The transaction was valued at $7.00 per share in cash, for a total of approximately $119 million, or approximately $81 million net of Hoover's cash. D&B funded the acquisition with cash on hand. "Hoover's is a good strategic fit for D&B for many reasons, as we said when we announced this transaction in December," said Allan Z. Loren, D&B chairman and chief executive officer. "Its core subscription business has a track record of growth and the potential for much more. In addition, Hoover's has a solid presence in the sales & marketing area, a focus on small business customers, and the majority of its revenues delivered over the Web - all of which are consistent with key elements of our Blueprint for Growth strategy." "We are excited to be joining the D&B team and look forward to working together to generate new growth and profit opportunities," said Jeffrey R. Tarr, Hoover's President. Tarr will continue to lead the Hoover's business, which will become part of D&B's E-Business Solutions group. D&B (NYSE: DNB) provides the information, tools and expertise to help customers Decide with Confidence. D&B enables customers quick access to objective, global information whenever and wherever they need it. Customers use D&B Risk Management Solutions to manage credit exposure, D&B Sales & Marketing Solutions to find profitable customers and D&B Supply Management Solutions to manage suppliers efficiently. D&B's E-Business Solutions are also used to provide Web-based access to trusted business information for current customers as well as new small business and other non-traditional customers. Over 90 percent of the Business Week Global 1000 rely on D&B as a trusted partner to make confident business decisions. For more information, please visit http://www.dnb.com As previously reported, The Dun & Bradstreet Corporation's September 30, 2002 balance sheet shows a working capital deficit of about $145 million, and a total shareholders' equity deficit of about $34 million. ENCOMPASS SERVICES: Court Okays Bracewell & Patterson as Counsel ---------------------------------------------------------------- Before the Petition Date, Encompass Services Corporation and its debtor-affiliates employed Bracewell & Patterson LLP to perform extensive legal work for them in connection with a variety of legal matters. In light of the firm's familiarity with the Debtors and their businesses, the Debtors sought and obtained the Court's authority to employ Bracewell to handle special corporate, litigation and employment matters during the pendency of these Chapter 11 cases. In particular, Bracewell will: (a) provide legal advice and counsel regarding general ERISA issues and employee benefit services in the ordinary course of business; (b) advise and counsel the Debtors regarding intellectual property issues in the ordinary course of business; (c) provide legal advice and counsel regarding labor and employment related issues and problems in the ordinary course of business; (d) provide legal services and advise the Debtors on general contract matters in the ordinary course of business; (e) represent the Debtors in general and specific litigation in the ordinary course of business including, but not limited to, the existing litigation matters Bracewell is handling; (f) provide legal services and advise the Debtors on corporate matters in the ordinary course of business; (g) advise and counsel the Debtors with respect to asset and business dispositions during these Chapter 11 cases including existing proposed sales presently before the Court; and (h) render other general corporate legal services in the ordinary course of the Debtors' business or relating to or arising out of these Chapter 11 cases, as may reasonably be required. The Debtors will pay Bracewell for its services in accordance with the firm's customary hourly rates. The Debtors will also reimburse the firm's actual and necessary expenses. Bracewell's rates are: Hourly Rates Professional ------------ ------------ $125 - 325 Associates 210 - 600 Partners 75 - 130 Paraprofessionals Bracewell Partner William A. (Trey) Wood, III, Esq., assures the Court that the firm's partners and associates do not have any connection with, or any interest adverse to, the Debtors, their creditors or any other party-in-interest, or their attorneys or accountants in these Chapter 11 cases. Bracewell is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. (Encompass Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Earns Nod to Consent to Exit Agreement Consummation --------------------------------------------------------------- Pursuant to Section 363 of the Bankruptcy Code, Enron Corp. seeks the Court's authority to consent to the execution and consummation of an exit agreement among Enron Palestine Inc., Enron Gaza International Ltd., Enron Gaza Power Private Limited Company, -- the Non-Debtor Subsidiaries -- Palestine Electric Company PLC and Morganti Development LLC. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Non-Debtor Subsidiaries, PEC, a consortium of primary Palestinian company led by Consolidated Contractors Company (Netherlands Antilles) N.V., and certain other investors, own the Palestinian Electric Company Public Shareholding Company Limited. PEC Public is a company incorporated under the laws as applicable in the Gaza Strip, Palestinian Autonomous Territories. Through their investment in PEC Public, the Non-Debtor Subsidiaries own a 33.5% interest in Gaza Power Generation Private Limited Company, which in turn owns a 140 MW CCGT combined cycle power plant in the Gaza Strip. The Plant runs on distilled fuel oil and, with minor modifications, can run on natural gas. Currently, the Plant is partially operational -- three of four gas turbines have been started up and can produce power. Two of the Operational Turbines are delivering power to the Palestinian Energy Authority while the other Operational Turbine was seriously damaged during operations in September 2002. Mr. Rosen informs Judge Gonzalez that the Non-Debtors Subsidiaries originally estimated that the cost to complete the Plant would be approximately $150,000,000. However, at present, they estimate that the actual cost to complete the Plant will be $185,000,000. The Plant has delivered 35,8000 MWh to the PEA and since July 2002, GPGC has invoiced the PEA $1,900,000. As of late October 2002, the PEA had paid GPGC only $346,000. Since September 1999, Alstom Power Sweden AB has been constructing the Plant pursuant to a $100,500,000 Engineering, Procurement and Construction Contract dated July 1, 1999 with GPGC. In conjunction with the EPC Contract, Enron Power Corp., a non-debtor subsidiary of Enron, has provided a $7,500,000 guarantee to Alston. In addition, other non-debtor Enron subsidiaries are involved in the Plant. Enron Power Construction Company was providing Owner's Engineer services to the Plant. However, all of EPCC's employees have been transferred to GPGC and the EPCC manager heading the OE operation has left EPCC and joined Consolidated Contractors International Company S.A.L. an affiliate of CCCNV. Operations and maintenance services for the Project are provided by Enron Gaza Operations Ltd. Although EGOL still has 24 local employees on site, GPGC has paid the EGOL Employees since November 1, 2001 and the EGOL Employees are effectively directed by, and report to, GPGC. GPGC sells power to the PEA pursuant to a 20-year Power Purchase Agreement. Mr. Rosen explains that the PPA works like a tolling agreement wherein PEA supplies gas oil, transported through Israel and the Gaza Strip, to the Plant. The PEA has the right to extend the term of the PPA for two additional five-year terms. The PPA also provides GPGC the exclusive right to produce and sell power in Gaza for consumption in Gaza and the West Bank. With the PEA's approval, GPGC may sell the Plant's capacity and energy not requested by the PEA outside of Palestine using the PEA's transmission system, which has yet to be built. Annual payments under the PPA to GPGC could amount to $36,000,000. According to Mr. Rosen, the PEA owns no generation assets and has no credit rating. Thus, the Palestinian National Authority has entered into an agreement with GPGC, pursuant to which PNA provides a guarantee of the PEA's obligations under the PPA and also provides a tax holiday to GPGC and its shareholders. However, the PNA does not have a credit rating and its ability to discharge its obligations at the present time is in jeopardy, especially that at the moment, public employees, including the police, are not being paid. Under the PPA, the PEA is required to provide a letter of credit to GPGC for $20,000,000. Mr. Rosen reports that the PEA has not provided the Letter of Credit. As a result, GPGC is entitled to terminate the PPA. A decision by GPGC to terminate the PEA would require a majority vote of the shareholders of PEC Public and these shareholders have verbally represented that they would not vote to terminate the PPA. GPGC has failed to provide a letter of credit for $3,500,000 -- the Enron LC -- to PEA as a construction security deposit. In the event that the PEA would require GPGC to post the Enron LC, the Non-Debtor Subsidiaries would be responsible for $1,750,000 in cash or other collateral for their obligation under the Enron LC. If GPGC did not provide the Enron LC, the PEA could terminate the PPA. Although the Plant was due to reach commercial operation in September 2001, since the beginning of the "Second Intifada" on September 28, 2000, there have been extended periods of reduced activity at the Plant site. Based on this reduced activity, Alston is claiming a force majeure event pursuant to the EPC Contract. At present, the Non-Debtor Subsidiaries estimate that, if there are no further disruptions at the site, commercial operations will begin in the third quarter of 2003. In addition to the work stoppages, GPGC has experienced other problems related to the Plant. GPGC lost its Builders All Risk coverage from April 15 2002 to July 25, 2002 for failure to comply with the conditions imposed on the extension of the policy by underwriters. Due to the extended period of force majeure and inactivity, the BAR Policy has had to be extended. The underwriters insisted that a site survey be done prior to the start up and commissioning of the gas turbines. The survey has not been completed prior to start up and commissioning. Hence, the underwriters terminated GPGC's BAR and Delay in Start UP policies. The reinstatement of the BAR policy came after an intensive 10-day intervention by certain of the Non-Debtor affiliates. The Non-Debtors did not become aware of the termination until several weeks after the fact. Since the Plant has yet to comply with information requests from underwriters, the Plant has yet to reinstate its DSU policy. Mr. Rosen reports that the Non-Debtor Subsidiaries and their affiliates have made several attempts to sell their interests in the Plant. They have approached BG Group plc, International Power plc, CMS Energy Corporation, The AES Corporation and ENEL S.p.A. Each declined invitations to evaluate the Plant and refused to engage in even the most basic due diligence exercise. Contemporaneously therewith, Enron was approached by SC Limited of Los Angeles, California. However, SC Limited was unable to demonstrate its ability to enter into a transaction or to provide information about its company or its financial creditworthiness. Because of the high probability that the Plant will never return their equity or generate any positive cash flow, the Non-Debtor Subsidiaries determined that they should exit the Plant Project. Accordingly, Enron has agreed to consent to the Non-Debtor Subsidiaries' execution and consummation of the Exit Agreement. Should Enron and the Non-Debtor Subsidiaries continue to seek a purchase for the Non-Debtor Subsidiaries' interest in GPGC, Mr. Rosen fears that the buyout process would likely take up to several months to complete during which the Non-Debtor Subsidiaries, and other non-debtor Enron subsidiaries, would continue to be exposed to liabilities related to the Plant, GPGC and PEC Public. The most significant of these liabilities arises out of the EPC Guarantee. Based on this premise, the Non-Debtor Subsidiaries decided to enter into an Exit Agreement with PEC and Morganti, a subsidiary of CCC. The salient terms of the Exit Agreement are: A. The contractual liabilities of the non-debtor Enron contractors and guarantors -- EGOL, EPCC and EPC -- relating to the Plant will be fully released; B. The contractual liabilities of the Non-Debtor Subsidiaries as shareholders relating to the Plant will be fully released; C. The Non-Debtor Subsidiaries and their affiliates will be indemnified for third party contractual claims relating to the Plant up to $2,000,000 for 18 months; D. The liability of the Non-Debtor Subsidiaries and their Affiliates for misrepresentation regarding ownership and encumbrance representations and warranties will expire three months after Completion; E. The transferees' sole remedy for non-fraudulent misrepresentation will be rescission of the Exit Agreement within three months after Completion; F. The Non-Debtor Subsidiaries will transfer the Shares in GPGC to Morganti and PEC, in consideration of the releases of the Non-Debtor Subsidiaries and their affiliates; and G. The Non-Debtor Subsidiaries will release their counterparties from obligations under any agreements in respect of the Plant. Mr. Rosen contends that pursuant to Sections 363(b) and (f) of the Bankruptcy Code, the Transfer should be authorized because: (a) Enron has concluded that a divesture of the Shares is appropriate and consistent with its desire to return to core operations; (b) the Shares are not integral to or contemplated to be part of Enron's reorganization process; (c) the Exit Agreement is the result of arm's length, good faith negotiations and is well within Enron and the Non-Debtor Subsidiaries' sound business judgment; (d) the Exit Agreement is the highest and best offer that Enron and the Non-Debtor Subsidiaries have received for the Shares; and (e) it minimizes the Non-Debtor Subsidiaries' future economic risk in the Plant, through releases and indemnities, in exchange for the transfer of the Shares to PEC and Morganti. Enron is not aware of any liens encumbering the Shares. Thus, Enron asks the Court to authorize the transfer of the Shares free and clear of any and all liens, claims and encumbrances. * * * Accordingly, Judge Gonzalez authorizes Enron to consent to its Non-Debtor Subsidiaries' entry into the Exit Financing. (Enron Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 609/392-0900) EOTT ENERGY: Emerges from Chapter 11 Proceeding Effective Mar. 1 ---------------------------------------------------------------- EOTT Energy Partners, L.P., (OTC Pink Sheets: EOTPQ) emerged from Chapter 11 Bankruptcy effective March 1, 2003, in accordance with the order approving its amended Plan of Reorganization entered in the U.S. Bankruptcy Court for the Southern District of Texas in Corpus Christi on February 18, 2003. Under the terms of the Plan, EOTT Energy emerges from bankruptcy as a new entity, EOTT Energy LLC, which will be the owner of the limited partnerships through which EOTT Energy's business is conducted. EOTT Energy's Plan of Reorganization provides for a significant reduction in debt, restructuring of finances and a complete separation from Enron Corp. The reduction in long-term debt and other liabilities was achieved through a restructuring of the senior notes and elimination of certain payables to Enron Corp. The senior noteholders also receive equity in the new entity in exchange for debt. Credit facilities and term debt previously available during the bankruptcy, in the amount of $575 million, have been renewed. The credit facilities provide up to $325 million for letters of credit and up to $250 million of loans. These facilities have a renewal term of 18 months (a portion consisting of inventory and receivables financing in the amount of $175 million is renewed for 6 months with an option by EOTT Energy to extend for 12 additional months). EOTT Energy President Dana R. Gibbs said, "Our quick and successful emergence from bankruptcy allows us to resume our focus on growing our business with a stronger financial position. We are confident that EOTT Energy has implemented a solid framework for competing in the future and building its customer base. We express our sincere appreciation to all who have stood with us and assisted us in achieving this significant accomplishment." The Plan, as previously announced, includes the cancellation of EOTT's previously publicly traded units and the issuance of new equity units in EOTT Energy LLC on a 50-to-1 old for new equity unit ratio. The holders of previously publicly traded units will receive 3% of the newly issued units and warrants to purchase an additional 7% of the company's new equity units at $12.50 per unit. EOTT Energy expects that the new LLC units will trade over the counter and be listed in the Pink Sheets. EOTT Energy filed for protection under Chapter 11 of the U.S. Bankruptcy Code on October 8, 2002 in the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division and the court entered the order approving the company's amended Plan of Reorganization on February 18, 2003, less than five months from the petition date. For current information on the plan of reorganization, please see updates at http://www.eott.com EOTT Energy LLC is a major independent marketer and transporter of crude oil in North America. EOTT also processes, stores, and transports MTBE, natural gas and other natural gas liquids products. EOTT Energy transports most of the lease crude oil it purchases via pipeline that includes 8,000 miles of intrastate and interstate pipeline and gathering systems and a fleet of more than 230 owned or leased trucks. The partnership's common units were traded under the ticker symbol "EOTPQ.PK" until February 28, 2003. FAO INC: Court to Consider Chapter 11 Plan on April 4, 2003 ----------------------------------------------------------- FAO, Inc. (Nasdaq: FAOOQ), a leader in children's specialty retailing, announced that the Bankruptcy Court overseeing its Chapter 11 proceedings approved the Company's Disclosure Statement on February 28, 2003. The approval by the United States Bankruptcy Court for the District of Delaware allows the Company to begin the process of soliciting votes on the Plan and ultimately seek an Order confirming the Plan. "We are extremely pleased by the Court's approval of our Disclosure Statement which is a key step toward the Company's successful emergence from Chapter 11," stated Jerry R. Welch, FAO's Chief Executive Officer. The Court set a confirmation hearing date of April 4, 2003 at which time it will consider final approval of FAO's Plan of Reorganization. The deadline to vote with respect to, or object to, the Plan of Reorganization is March 31, 2003. The Disclosure Statement should be reviewed with respect to the specific items of the proposed distributions to be made to creditors and current stockholders as well as other information relevant to the Plan of Reorganization. FAO, Inc. (formerly The Right Start, Inc.) owns a family of high quality, developmental, educational and care brands for infants, toddlers and children and is a leader in children's specialty retailing. FAO, Inc. owns and operates the renowned children's toy retailer FAO Schwarz; The Right Start, the leading specialty retailer of developmental, educational and care products for infants and toddlers; and Zany Brainy, the leading retailer of development toys and educational products for kids. FAO, Inc., assumed its current form in January 2002. The Right Start brand originated in 1985 through the creation of the Right Start Catalog. In September 2001, the Company purchased assets of Zany Brainy, Inc., which began business in 1991. In January 2002 the Company purchased the FAO Schwarz brand, which originated 141 years ago in 1862. For additional information on FAO, Inc., or its family of brands, visit http://www.irconnect.com/faoo/ GENTEK INC: Noma Company Brings-In Deloitte Canada as Auditor ------------------------------------------------------------- Stephen Gallant, Noma Company's authorized representative, tells the Court that Deloitte & Touche LLP--USA has used the services of certain of its affiliated foreign firms to provide professional services to Gentek Inc., and its debtor-affiliates. Among its affiliates, Deloitte & Touche LLP-Canada provides auditing services to Noma. Mr. Gallant relates that Noma has selected Deloitte Canada because of its extensive experience with and knowledge of Noma's business and finances necessary to provide auditing services in a most efficient and timely manner. Deloitte Canada may also be needed to provide accounting tax-related and bankruptcy reorganization services. While Noma believes that Deloitte Canada's services are covered under the original engagement with Deloitte USA, out of an abundance of caution, Noma seeks the Court's authority to employ Deloitte Canada. Noma proposes to compensate Deloitte Canada for its services in accordance with the firm's regular hourly Canadian dollar rates. Noma will also reimburse Deloitte Canada for any reasonable expenses. Deloitte Canada's hourly rates are: Staff Classification Hourly Rate -------------------- ------------- Partner/Director CND500 - 700 Senior Manager & Manager 300 - 575 Senior Staff 200 - 420 After searching Deloitte Canada's client database for potential conflicts, Robert J. Bougie, a Partner at Deloitte Canada, discloses that: (a) Deloitte Canada provides services in matters unrelated to these cases to certain of the Debtors' largest unsecured creditors, secured lenders, investment bankers, and landlords. Deloitte Canada will not serve the entities in these cases; (b) other Deloitte Canada partners may have personal partner capital loans with the Bank of Nova Scotia. The Bank of Nova Scotia is a party-in-interest in these cases; and (c) in the ordinary course of its business, Deloitte Canada has business relationships in unrelated matters with the other "Big Four" professional services firms, including Ernst & Young LLP, which assists the Debtors' legal counsel; PricewaterhouseCoopers LLP, which assists the bank group's legal counsel; and KPMG Inc., which assists a secured creditor in these cases. Nevertheless, Mr. Bougie assures the Court that Deloitte Canada is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, as modified by Section 1107(b) of the Bankruptcy Code. (GenTek Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) GEO SPECIALTY: Liquidity Concerns Spur Junk & Low-B Ratings ----------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured bank loan ratings on GEO Specialty Chemicals Inc., to 'B' from 'B+' and its subordinated debt rating to 'CCC+ from 'B-', citing the specialty chemicals company's continued profitability weakness that has elevated near-term liquidity concerns. At the same time, Standard & Poor's said that it has placed all of its ratings on GEO on CreditWatch with negative implications. The Cleveland, Ohio-based company had $216 million of debt outstanding as of September 30, 2002. "The downgrade and CreditWatch placement reflect continued profitability weakness in the company's main businesses, especially gallium, resulting in further deterioration to the financial profile and tightening liquidity," said Standard & Poor's credit analyst Franco DiMartino. Current profitability levels suggest that GEO Specialty may soon breach the financial covenants in its bank credit facility. The CreditWatch placement highlights the risk of a another downgrade if GEO Specialty is unable to obtain a waiver or an amendment that would preserve access to the facility in the absence of improvement to operating profits. Access to the credit facility is a key rating consideration in light of the company's low cash balance, persistent operating challenges, and considerable debt service requirements. The company's lower earnings stem primarily from substantially reduced volumes and profitability in the gallium market, which has not recovered since its falloff in early 2001, as well as a weak domestic economy, which has negatively pressured results for GEO's other business units. End markets for gallium products, primarily telecommunications and electronics, are not expected to rebound in the near-term, thus maintaining downward pressure on the firms operating profits. In addition, liquidity has deteriorated markedly as a result of lower operating cash flows and the reduction of the revolving credit facility to $20 million from $40 million as a result of an amendment to the bank credit agreement in May 2002. As part of the amendment, the leverage ratio covenant was suspended until 2004, and more lenient covenants were negotiated for senior leverage and interest coverage. However, the significant upswing in profitability and cash flows needed to maintain compliance with the amended covenants, which tighten considerably this year, is not expected to materialize in the near-term. GEO, with sales of about $200 million, manufactures and markets a diverse line of specialty chemicals to a variety of industries, including coatings, electronics, water treatment, construction, oil and gas production, industrial rubber, and wire and cable. The company focuses on chemical products that generally represent technically important, yet low-cost, materials for end products or services. GLOBAL CROSSING: Gary Winnick Discloses 8.88% Equity Stake ---------------------------------------------------------- In a regulatory filing dated February 14, 2003, Gary Winnick discloses to the Securities and Exchange Commission that he beneficially owns 79,745,659 shares of Common Stock composed of: -- 63,408,375 shares of Common Stock held by GKW Unified Holdings LLC and 2,515,788 shares of Common Stock issuable after exercise of warrants held by GKW; and -- 5,521,492 shares of Common Stock held by Pacific Capital Group Inc. and 6,050,004 shares of Common Stock issuable after exercise of warrants held by PCG; and -- 2,250,000 shares of Common Stock issuable after the exercise of options held by Gary Winnick that have vested as of December 31, 2002. Gary Winnick owns 100% of the issued and outstanding voting stock of PCG and is Chairman and Chief Executive Officer. On the other hand, GKW was formed for the benefit of Gary Winnick and members of his family. Gary Winnick is the trustee of a trust that is a member-manager of GKW. The 79,745,659 shares of Common Stock -- including all warrants and options that had vested at December 31, 2002 -- beneficially owned by Gary Winnick represent 8.88% of the outstanding shares of the Common Stock. The 11,571,496 shares of Common Stock -- including all warrants that had vested at December 31, 2002 -- beneficially owned by PCG represent 1.29% of the outstanding shares of the Common Stock. The 65,924,163 shares of Common Stock -- including all warrants that had vested at December 31, 2002 -- beneficially owned by GKW represent 7.41% of the outstanding shares of the Common Stock. Percentage ownership of the Common Stock is based on 909,583,998 shares of Common Stock -- excluding treasury shares -- outstanding as of October 31, 2002, disclosed by the Company in its Form 8-K filed with the Securities and Exchange Commission on January 10, 2003. (Global Crossing Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) HIGH SPEED ACCESS: Intends to Make Initial Cash Distribution ------------------------------------------------------------ High Speed Access Corp., (OTC Bulletin Board: HSAC) intends to make an initial cash distribution of $1.40 per share to its stockholders in late May 2003. This revised distribution schedule relates to the following litigation developments in connection with HSA's dissolution as previously disclosed in HSA's most recent proxy, 10-Q and other public filings on record with the Securities and Exchange Commission. -- On January 27, 2003, a settlement of the Delaware Class Action lawsuits was executed, and the Delaware Chancery Court has set a hearing for April 16, 2003 to consider any objections to, and whether it should approve, the settlement. In the event the court approves the settlement and no other objections, motions or appeals are filed, the court's approval will be deemed final on May 16, 2003. As previously disclosed, HSA will not make any cash distributions until the Delaware Class Action lawsuits are finally settled. -- On February 28, 2003, Charter notified HSA of its assertion of a potential claim for indemnity in respect of Charter being named as a "successor in interest" to HSA in the IPO Litigation, and deferred release of half of the $2 million indemnity holdback. HSA collected $1,000,000 of its indemnity holdback plus $45,938 in interest from Charter, and will seek the release the $1,000,000 balance plus accrued interest if and at such time as Charter is dismissed as a defendant in the IPO Litigation or the IPO Litigation is otherwise settled, less Charter's actual defense costs to the extent they exceed $250,000. The amount of this intended initial distribution is based upon the current estimates of management and may be higher or lower, and the date of the intended initial distribution may be delayed, due to various risks and uncertainties, including but not limited to: -- the amount of the $1 million balance of the Charter indemnity holdback that HSA ultimately collects and its ability to dispose of or settle any other claims Charter may assert in connection with the sale of substantially all of HSA's assets to Charter; -- the amount of the general contingency reserve, which may change from time to time, that HSA determines is appropriate to assure the settlement of its liabilities during the dissolution process, and the amount of such reserve actually used to pay liabilities; -- the amount of time and money required to assess and resolve outstanding and potential litigation against HSA, including a dismissal of Charter from the IPO Litigation; -- the amount, if any, HSA receives upon liquidation of its remaining tangible assets net of any claims or liabilities; -- the total amount of HSA's liquidation transaction and administration costs; and -- any claims or potential claims that may arise before HSA is finally liquidated and dissolved or that management believes are likely to arise within 10 years of HSA's dissolution. HSA will announce the record date for the determination of stockholders entitled to the initial May 2003 liquidating distribution at a later date. HOLLYWOOD CASINO: Completes Asset Sale to Penn National Gaming -------------------------------------------------------------- Penn National Gaming, Inc., (NASDAQ:PENN) has completed the acquisition of Hollywood Casino Corporation (HWD: AMEX). As previously announced, Hollywood Casino stockholders are receiving $12.75 per share in cash for each share of common stock. Additionally, Hollywood Casino Corporation has called for redemption all of its outstanding long-term debt obligations comprised of $310 million of 11-1/4% Senior Secured Notes and $50 million of floating rate Senior Secured Notes, at 107% and 101%, respectively. The acquisition is expected to be accretive to Penn National's operating results. Hollywood Casino and its subsidiaries own and operate Hollywood- themed casino entertainment facilities in Aurora, Illinois, Tunica, Mississippi, and Shreveport, Louisiana. With the completion of the transaction, Penn National now owns six dockside gaming facilities, a pari-mutuel horse racing facility with slots, a land-based casino, two pari-mutuel horse racing operations and eleven off-track wagering sites and the Company holds a Canadian casino management contract. Reflecting its broadened asset base, Penn National now owns or operates gaming or pari-mutuel properties in eight jurisdictions in North America. On a combined basis, Penn National Gaming and Hollywood Casino Corporation generated 2002 revenues in excess of $1 billion. Commenting on the closing of the acquisition, Peter M. Carlino, Chief Executive Officer of Penn National, said, "This transaction brings the established, highly maintained Hollywood Casino properties and a significant growth and expansion opportunity to Penn National. We are delighted that on behalf of our shareholders we have completed another excellent financial and strategic acquisition that builds the critical mass of our gaming operations and further diversifies our geographic reach and sources of cash flow while broadening our gaming management resources. Hollywood Casino also brings to Penn National a solid brand with widespread recognition that we can apply, as appropriate, to other Penn National assets to drive marketing programs and efficiencies. "As reflected in our recently announced fourth quarter and 2002 earnings, Penn National continues to demonstrate its ability to integrate acquired properties and deliver improved financial results in the form of growing property EBITDA and in some cases increased local market share. We accomplish this through a combination of prudent facility upgrades, focused marketing initiatives, and strong local management. "Penn National is very well positioned to continue generating strong earnings growth over the next several years based on the integration of the Hollywood assets, our strong and growing regional presence and focus on slot revenues, and the potential for slots at our Pennsylvania racetracks. We look forward to presenting our 2003 first quarter and full year financial growth targets when we initiate our guidance later this month." Penn National Gaming President and Chief Operating Officer, Kevin DeSanctis, added, "We're excited about this transaction for several reasons. First, with no regional overlap, the Hollywood Casinos complement our existing property portfolio and, with the addition of over 4,000 slot machines, extend our position as a regional, slots driven gaming company. Second, the transaction will be additive to our financial operating results. Finally, we look forward to welcoming the Hollywood Casino operating management and employees to Penn National. As a large, diversified gaming company, we believe we can offer employees a great deal of opportunity for growth and professional advancement." Lehman Brothers Inc., acted as financial advisor to Penn National Gaming and Goldman, Sachs & Co., served as financial advisor to Hollywood Casino Corporation in the transaction. Hollywood Casino(R) Properties -- Hollywood Casino - Aurora, recognized as one of the premier gaming and entertainment properties in the Chicago marketplace. The 117,000 square foot dockside casino and entertainment facility is located in Aurora, Illinois, approximately 35 miles west of downtown Chicago. The property includes a recently opened dockside casino that replaced its two original, four level riverboat casinos. The dockside casino has 53,000 square feet of gaming space on a single level featuring 1,105 slot machines and 36 table games. The property also features the Hollywood Epic Buffet(R), offering presentation style cooking, the Fairbanks(R) gourmet steakhouse and a high- end player's lounge. -- Hollywood Casino - Tunica, a casino, hotel and entertainment complex located in Tunica County, Mississippi, approximately 30 miles south of Memphis, Tennessee. The Tunica Casino was designed to replicate a motion picture sound stage and features a 54,000 square-foot, single-level casino with approximately 1,600 slot machines and 40 table games. The casino includes the Adventure Slots(R) themed gaming area featuring multimedia displays of memorabilia from famous adventure motion pictures and over 200 slot machines. The Tunica Casino's 505- room hotel is currently undergoing an $8 million renovation expected to be completed in mid-2003. -- Hollywood Casino - Shreveport, a 229,000 square foot entertainment facility located in Shreveport, Louisiana, approximately 180 miles east of Dallas, Texas. The property is Shreveport's first true destination resort and is also the market's first highly themed facility, utilizing an art-deco Hollywood theme throughout the property. The Shreveport resort features the largest dockside casino in the Shreveport market, a 403-room, all-suite hotel, an elegant land-based pavilion that includes a sixty-foot high atrium and extensive restaurant and entertainment amenities. The property's dockside casino contains approximately 59,000 square feet of space with approximately 1,422 slot machines and approximately 66 table games. Located in the pavilion are the property's acclaimed Hollywood Epic Buffet, Hollywood Diner and Fairbanks gourmet steakhouse restaurants and its state-of-the-art spa and fitness center. Penn National Gaming owns and operates: three Hollywood Casino properties located in Aurora, Illinois, Tunica, Mississippi and Shreveport, Louisiana; Charles Town Races & Slots in Charles Town, West Virginia; two Mississippi casinos, the Casino Magic hotel, casino, golf resort and marina in Bay St. Louis and the Boomtown Biloxi casino in Biloxi; the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana and the Bullwhackers casino properties in Black Hawk, Colorado. Penn National also owns two racetracks and eleven off-track wagering facilities in Pennsylvania; the racetrack at Charles Town Races & Slots in West Virginia; a 50% interest in the Pennwood Racing Inc. joint venture which owns and operates Freehold Raceway in New Jersey; and operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. As reported in Troubled Company Reporter's Monday Edition, Standard & Poor's lowered its corporate credit and senior secured debt ratings for Shreveport, Louisiana-based Hollywood Casino Shreveport to 'CCC+' from 'B-'. At the same time, Standard & Poor's removed these ratings from CreditWatch where they were placed on August 8, 2002. The outlook is negative. Total debt outstanding at September 30, 2002, was approximately $190 million. The downgrade follows the announcement by Penn National Gaming Inc. (B+/Stable/--), which is acquiring HCS and its parent, Hollywood Casino Corp., that it does not intend to provide financing or credit support to assist HCS in making the obligated offer to repurchase its outstanding notes upon a change of control. In addition, Penn is seeking a waiver to the change of control provision under HCS's existing bond indentures. The ratings reflect HCS's continued weak operating performance, high debt leverage, competitive market conditions, and limited liquidity. HOLLYWOOD CASINO: Fails to Win Shreveport Debtholders' Consents --------------------------------------------------------------- Penn National Gaming, Inc., (NASDAQ:PENN) announced that the holders of record as of February 21, 2003 of the 13% Senior Secured Notes due 2006 and the 13% First Mortgage Notes due 2006 issued by Hollywood Casino Shreveport and Shreveport Capital Corporation failed to provide the required majority to consent to proposed waivers requested by one of its wholly owned subsidiaries with respect to the notes. As previously announced, the principal purpose of the proposed waivers was to eliminate the risk of a default under the indentures governing the notes that could occur as a result of the recently completed merger of the Company with and into Hollywood Casino Corporation. While the notes are non-recourse to Hollywood Casino Corporation, a default would occur in the event that the issuers of the notes or any other person fails to make or consummate an offer to purchase the notes at 101% of the principal amount thereof following the merger as required under the indentures and the notes due to the change of control resulting from the merger. Penn National Gaming previously announced it does not intend to provide, nor to permit any of its subsidiaries to provide, financing or credit support to Hollywood Casino Shreveport and Shreveport Capital Corporation to fund a change of control offer to repurchase the notes. In addition, Hollywood Casino Shreveport and Shreveport Capital Corporation have recently reported that they have limited liquidity. In the Independent Auditors' Report, included with the recently filed Hollywood Casino Shreveport and Shreveport Capital Corporation Annual Report on Form 10-K for fiscal year 2002, their independent auditors have expressed substantial doubt about their ability to continue as a going concern. In connection with the acquisition, Penn National Gaming expects to reduce the carrying value of the Shreveport asset based on its estimate of fair market value at the time of the merger. Among the factors that will be considered in this analysis will be the property's performance, single property asset sale multiples on property cash flow, anticipated future cash flows, overall conditions in the Shreveport market and independent appraisal. Penn National Gaming owns and operates: three Hollywood Casino properties located in Aurora, Illinois, Tunica, Mississippi and Shreveport, Louisiana; Charles Town Races & Slots in Charles Town, West Virginia; two Mississippi casinos, the Casino Magic hotel, casino, golf resort and marina in Bay St. Louis and the Boomtown Biloxi casino in Biloxi; the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana and the Bullwhackers casino properties in Black Hawk, Colorado. Penn National also owns two racetracks and eleven off-track wagering facilities in Pennsylvania; the racetrack at Charles Town Races & Slots in West Virginia; a 50% interest in the Pennwood Racing Inc. joint venture which owns and operates Freehold Raceway in New Jersey; and operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. INCO LTD: S&P Rates US$250 Mill. Subordinated Debentures at BB+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BBB-' rating to integrated nickel producer Inco Ltd.'s US$250 million senior convertible debentures due 2023, and its 'BB+' rating to Inco's US$250 million subordinated convertible debentures. Net proceeds from the debentures are expected to enable Inco to redeem all, or a portion of, each of the its US$472 million series E preferred shares, and its US$173 million 5.75% convertible debentures due in 2004. At the same time, ratings outstanding on the Toronto, Ontario- based company, including the 'BBB-' long-term corporate credit rating, were affirmed. The outlook is stable. "The ratings on Inco reflect the company's position as a leading nickel producer with a strong financial profile stemming from its large, low-cost mines and its moderately leveraged capital structure," said Standard & Poor's credit analyst Chris Timbrell. Inco is the world's second-largest, and one of the lowest-cost, integrated nickel producers, producing more than 20% of the world nickel supply in 2002 at a cash production cost of US$1.45 per pound after byproduct credits. Inco's operations include mines and refineries in Canada, Europe, and Asia, and large development projects in Voisey's Bay, Nfld., and Goro, New Caledonia. In 2002, after reaching agreements with aboriginal groups and the Province of Newfoundland and Labrador for the development of the Voisey's Bay nickel deposit, Inco wrote down the carrying value of its investment in Voisey's Bay by US$1.55 billion, primarily reflecting the reduced size of the project from original estimates. Inco also announced recently that it intends to delay development on its Goro Nickel Project in New Caledonia while it undertakes a comprehensive review of the project. Inco's review was prompted by an assessment from engineering firms that capital costs for the project could rise as high as US$2.1 billion, representing an increase of 45% from the original estimate of US$1.45 billion. While the potential for a significant increase in capital costs raises concerns about the ultimate profitability of the Goro project, the delay is not expected to have a significant impact on Inco's financial or business profiles in the medium term. The development of the Goro and Voisey's Bay deposits is expected to increase the company's annual nickel production by almost 40%. KEMPER INSURANCE: AM Best Cuts Financial Strength Ratings to B -------------------------------------------------------------- A.M. Best Co., has lowered the financial strength rating to B (Fair) from B+ (Very Good) of the participants in the Kemper Insurance Companies (Long Grove, IL) inter-company pool, 10 reinsured affiliates and one domestic affiliate. The rating remains under review with negative implications. Additionally, A.M. Best has lowered the debt rating of the surplus notes to "ccc+" from "bb-" issued by Lumbermens Mutual Casualty Company, the lead member of the inter-company pool and group. Separately, the financial strength rating of B+ (Very Good) of Eagle Insurance Group, including Eagle Pacific Insurance Company (Washington) and its affiliate, Pacific Eagle Insurance Company (California), remains under review with developing implications. This follows the termination of the 80% quota share reinsurance arrangement with Lumbermens Mutual Casualty Company effective January 1, 2003, and its pending successful and timely conclusion of capital enhancing efforts and reinstatement of the inter-company reinsurance pooling arrangement between Eagle Pacific and Pacific Eagle. The lowering of the Kemper rating is a result of its weakened capitalization, the ongoing operating uncertainties and execution risk associated with management's announced restructuring initiatives, including the sale of the renewal rights to various lines of business, including its financial lines, bundled and unbundled large risk national accounts, alternative risk programs, environmental and excess casualty and surety business. The rating also reflects the weakened liquidity and cash flow following the sale of many books of business. The rating will remain under review with negative implications pending the analysis of year-end 2002 financials. KEY3MEDIA: Signs-Up Ernst & Young as Independent Accountants ------------------------------------------------------------ Key3Media Group, Inc., and its debtor-affiliates asks for approval from the U.S. Bankruptcy Court for the District of Delaware to hire Ernst & Young LLP as their Independent Auditors and Tax Consultants, nunc pro tunc to February 6, 2003. The Debtors submit that an independent auditor and tax accountant is required to assist them in operating and reorganizing their businesses. Accordingly, the Debtors retain Ernst & Young to provide audit services including: a) Working with appropriate personnel or agents of the Debtors in developing an understanding of the business objectives related to the Debtors' recent chapter 11 filing including understanding reorganization or restructuring alternatives the Debtors are evaluating with its existing creditors, that may result in a change in the equity, capitalization or ownership of the shares of the Debtors or their assets; b) Assisting and advising the Debtors in their bankruptcy restructuring objectives and post-bankruptcy operations by determining the most optimal tax manner to achieve these objectives, including, as needed, research and analysis of Internal Revenue Code sections, treasury regulations, case law and other relevant tax authority which could be applied to business valuation and restructuring models; c) Tax consulting regarding availability, limitations, preservation and maximization of tax attributes, such as net operating losses and alternative minimum tax credits, minimization of tax costs in connection with stock or asset sales, if any, assistance with tax issues arising in the ordinary course of business while in bankruptcy, such as ongoing assistance with a federal IRS examination and related issues raised by the IRS agent and the mitigation of officer liability issues, and, as needed, research, discussions and analysis of federal and state income and franchise tax issues arising during the bankruptcy period; d) Assistance with settling tax claims against the Debtors and obtaining refunds of reduced claims previously paid by the Debtors for various taxes, including, but not limited to, federal and state income, franchise, payroll, sales and use, property, excise and business license; e) Assistance in assessing the validity of tax claims, including working with bankruptcy counsel to reclassify tax claims as non-priority; f) Analysis of legal and other professional fees incurred during the bankruptcy period for purposes of determining future deductibility of such costs; g) Documentation, as appropriate or necessary, of tax analysis, opinions, recommendations, conclusions and correspondence for any proposed restructuring alternative, bankruptcy tax issue or other tax matter described above; h) Provide international tax consulting regarding US impact of foreign operations and such other international tax consulting that may arise due to changes in such operations; i) Assisting the Debtors with annual income tax filings for federal and state purposes; j) Auditing and reporting on the consolidated financial statements of the Debtors for the year ended December 31, 2002; k) Reviewing unaudited financial statements and other financial information necessary for filings with the Securities and Exchange Commission; l) Providing such other accounting services as requested by the Debtors. The Debtors agree to pay Ernst & Young for services at the Firm's current hourly rates: Tax Advisory ------------ Partners and Principals $580-$860 per hour Senior Managers $560-$580 per hour Managers $450-$470 per hour Seniors $300-$400 per hour Staff $230-$360 per hour Client-Serving $120-$180 per hour Associate Tax Compliance -------------- Partners and Principals $416-$540 per hour Senior Managers $304-$386 per hour Managers $189-$340 per hour Seniors $154-$209 per hour Staff $122-$155 per hour Paraprofessional $110-$112 per hour Audit Services and Accounting Assistance ---------------------------------------- Partners and Principals $500-$880 per hour Senior Managers $410-$520 per hour Managers $295-$450 per hour Seniors $210-$300 per hour Staff $145-$235 per hour Key3Media Group, Inc.'s business consists of the production, management and promotion of a portfolio of trade shows, conferences and other events for the information technology industry. The Company filed for chapter 11 protection on February 3, 2003 (Bankr. Del. Case No. 03-10323). John Henry Knight, Esq., and Rebecca Lee Scalio, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed $241,202,000 in total assets and $441,033,000 in total debts. Key3Media Group Inc.'s 11.25% bonds due 2011 (KME11USR1) are trading at about 4 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KME11USR1for real-time bond pricing. KINETIC CONCEPTS: Charles N. Martin Steps Down from Board --------------------------------------------------------- Charles N. Martin resigned as a member of Kinetic Concepts' Board of Directors effective February 24, 2003. Mr. Martin, Chief Executive Officer of Vanguard Health Systems, had been a member of the Company's Board of Directors since 1998 and served on the Compensation Committee. Mr. Martin resigned due to demands on his time arising from his other personal interests and investments. Kinetic Concepts has indicated that Mr. Martin did not have a disagreement with the Company on any matter related to the Company's operations, policies or practices. As reported in Troubled Company Reporter's January 6, 2003 edition, Standard & Poor's Ratings Services removed its corporate credit and senior secured ratings of hospital supplier Kinetic Concepts Inc. from CreditWatch where they were placed on October 1, 2002. At the same time Standard & Poor's raised the ratings to 'B+' from 'B' and raised its subordinated debt rating for KCI to 'B-' from 'CCC+'. The outlook is stable. The action followed the announcement that KCI had reached a settlement of its antitrust lawsuit against Hillenbrand Industries Inc. and its Hillenbrand's Hill-Rom Co. Inc. unit. The suit was then dismissed in federal court in San Antonio, Texas. Under terms of the settlement, Hillenbrand paid KCI $175 million initially, to be followed by an additional payment of $75 million in a year. The settlement promises to improve KCI's liquidity and address near-term debt maturities. KCI is a leading manufacturer of specialty hospital surfaces and noninvasive medical devices, many of which are proprietary. The company's business is bolstered by established relationships with several group-purchasing organizations and by the growth of VAC, a device used to improve the healing of chronic wounds. KMART CORPORATION: Court Extends Exclusive Period to June 30 ------------------------------------------------------------ Although Kmart Corporation and its 37 debtor-affiliates have already filed a reorganization plan and obtained approval of their disclosure statement. As Kmart heads toward the finish line in its chapter 11 restructuring, it also wants a further extension of the periods within which the Company -- and only the Company -- has the exclusive right to file a chapter 11 plan and solicit and obtain acceptances of that plan from creditors. Thus, at the Debtors' behest, Judge Susan Sonderby further extends their Exclusive Plan Proposal Period for 122 more days, through and including June 30, 2003, and their Exclusive Solicitation Period for another 129 days, through and including August 29, 2003. (Kmart Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Kmart Corp.'s 9.00% bonds due 2003 (KM03USR6) are trading at about 13 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KM03USR6for real-time bond pricing. LA QUINTA: Board Declares Dividend on 9% Preferred Shares --------------------------------------------------------- La Quinta Properties, Inc.'s Board of Directors declared a dividend of $0.5625 per depositary share on its 9% Series A Cumulative Redeemable Preferred Stock for the period from January 1, 2003 to March 31, 2003. Shareholders of record on March 14, 2003 will be paid the dividend of $0.5625 per depositary share of Preferred Stock on March 31, 2003. Dividends on the Series A Preferred Stock are cumulative from the date of original issuance and are payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (or, if not a business date, on the next succeeding business day) at the rate of 9% of the liquidation preference per annum (equivalent to an annual rate of $2.25 per depositary share). Dallas-based La Quinta Corporation (NYSE: LQI), a leading limited service lodging company, owns, operates or franchises over 350 La Quinta Inns and La Quinta Inn & Suites in 33 states. Today's news release, as well as other information about La Quinta, is available on the Internet at http://www.LQ.com * * * As reported in Troubled Company Reporter's Sept. 9, 2002 edition, Standard & Poor's revised its outlook on La Quinta Corp., to stable from negative. The action followed the lodging company's improved credit measures resulting from its successful asset-sale program and use of proceeds towards debt reduction. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating and other ratings on the Dallas, Texas, company. Debt outstanding totaled $812 million at June 30, 2002, down from $1 billion at the end of 2001. As of June, the company had reduced the size of its health-care assets to $51 million (net of impairments) and had used all proceeds to reduce debt. LAKE TROP: UST Wants to Convert Case To Chapter 7 Liquidation ------------------------------------------------------------- The United States Trustee moves the U.S. Bankruptcy Court for the District of Nevada to convert Lake Trop, LLC's chapter 11 case to a chapter 7 Liquidation proceeding under the Bankruptcy Code or, alternatively, dismiss the Debtor's case. The UST points out that this proceeding is a single asset real estate case consisting of a group of buildings containing approximately 144 apartments. During the course of this bankruptcy proceeding, the principal secured creditor with an interest in the Real Estate filed a motion to lift the automatic stay. The automatic stay has been lifted with respect to the real estate. With the stay modified, debtor has lost the ability to effectively operate and it is expected that the collateral will be turned over to the secured creditors shortly. Thus, there is nothing left to reorganize or operate. As a result, this case should be dismissed or converted. Consequently, the Debtor has no reasonable likelihood of rehabilitation and can not effectuate a plan. The UST reports that the Debtor will owe at least $250 for UST fees. Lake Trop, LLC filed for chapter 11 protection on September 11, 2002 (Bankr. Nev. Case No. 02-20394). Shawn Christopher, Esq., at Rosenfeld & Money LLP represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it listed $14,748,983 in total assets and $8,688,742 in total debts. LEATHERLAND CORP: Looks to Helston Capital for Financial Advice --------------------------------------------------------------- Leatherland Corp., d/b/a Leather Limited, wants to employ Helston Capital Group, specifically, Mr. Ralph Griffith as the Debtor's strategic and financial advisor. Helston Capital will assist the Debtor develop and implement an action plan to arrange debt financing, assist with the financing of the company, assist with compliance with financial reporting requirements of secured lenders, the Court and the Office of the United States Trustee, and provide debt consulting services in order to obtain new debt facilities to support the company's asset and business growth. The Debtor has selected Helston Capital because of its experience and knowledge in providing general business counsel and debt consulting. The Debtor believes that Helston Capital has the appropriate skills needed to provide the necessary strategic and financial planning services required by the Debtor and that Helston Capital is well qualified to assist the Debtor in this case. The Debtor and Helston Capital have agreed that Helston will charge hourly rates ranging from $90 to $110 for professional services rendered. Mr. Griffith's hourly rate will be $110. Leatherland Corp., is in the business of retail store of leather goods. The Company filed for chapter 11 protection on February 25, 2003 (Bankr. N.D. Oh. Case No. 03-31195). Patricia B Fugee, Esq., at Roetzel & Andress represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $18,525,306 in total assets and $12,606,482 in total debts. LTV CORP: Court Extends Plan Filing Exclusivity Until June 30 ------------------------------------------------------------- Judge Bodoh signed an order granting The LTV Corporation's motion for an extension of time to propose and file a chapter 11 plan of reorganization or liquidations. The exclusive filing period for all LTV Corporation Debtors other than LTV Steel is extended through and including June 30, 2003. The exclusive solicitation period for all Debtors other than LTV Steel is extended through and including August 29, 2003. The Debtors' right to seek additional extensions is preserved, as is any party's right to object. (LTV Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-00900) MOBILE COMPUTING: Dec. 31 Net Capital Deficit Widens to C$7.7MM --------------------------------------------------------------- Mobile Computing Corporation (TSX:MBL), a leading supplier of information solutions for mobile workers, reported its financial results for the fourth quarter and year ended December 31, 2002. (All amounts are expressed in Canadian dollars unless specified otherwise). Financial Results For the fourth quarter ended December 31, 2002 revenues were $3,292,000 compared to $2,834,000 for the fourth quarter of 2001, a 16% year over year improvement. Gross margins for the fourth quarter of 2002 were $1,340,000 (41% of revenues) compared to $856,000 (30% of revenues) in the fourth quarter of 2001. Operating expenses in the fourth quarter of 2002 were $1,520,000 compared to $2,511,000 for the same period of 2001, a decrease of $991,000. The reduction in operating costs was, for the most part, due to the restructuring of operations in the second quarter of 2002. The Company reported an EBITDA (earnings before interest, taxes, depreciation and amortization) loss for the fourth quarter of $180,000 compared to an EBITDA loss of $1,655,000 in the same period in 2001. The loss for the fourth quarter of 2002 was $778,000, a significant improvement over the loss of $2,461,000 in the fourth quarter of 2001. For the second half of 2002 the Company had a small EBITDA loss of $28,000 compared to the EBITDA loss of $2,406,000 in the second half of 2001. "We made significant changes to the organization in the second quarter this year to get our costs into line with our revenues and to increase our focus on profitable operations," stated Vic Foster, President and CEO of the Company. "Our margins are up from 34% in the second half of 2001 to 39% in the same period in 2002 and our operating costs have been significantly reduced. We have achieved a strong improvement in the profitability of our business in the second half of 2002," Mr. Foster continued. For the year ended December 31, 2002, revenues were $12,785,000 compared to $17,364,000 for 2001, a decline of 26%. Gross margins for 2002 were $4,635,000 (36% of revenue) compared to $5,524,000 (32% of revenue) for 2001. Excluding reorganization costs and foreign exchange, operating costs for the 2002 fiscal year were $7,489,000 compared to $10,330,000 for the same period in 2001. The loss for the 2002 year was $7,491,000, or $0.17 per share, compared to $7,251,000, or $0.16 per share, in 2001. Consolidated financial statements of the Company for the year ended December 31, 2002 are attached. Review of Operations The fourth quarter of 2002 was an active one as we made progress on a number of fronts. Key sales during the quarter included: - The roll out of approximately half of the Ultramar contract announced in September 2002 with the balance scheduled for 2003 - A sale of our new fleet refueling product to Jacobus Inc, an existing customer - The revitalization of our waste industry activities with sales to Waste Industries - The progress from a pilot of Perfect Delivery to a rollout at the Miami Herald - The progress from a pilot of Route Max to a rollout at Philadelphia Newspapers, Inc. - The signing an m-LINX pilot in the fourth quarter, which will commence in the first quarter of 2003 During the fourth quarter of 2002, we completed our development work on our fleet refueling product and a GPS tracking solution for the fuel industry. We also signed a contract for the initial sale of the GPS product for delivery in the first quarter of 2003. In early February we announced an agreement with Glentel Inc., for that company to offer the m-LINX product as an Application Service Provider. We expect that this agreement will meet a growing need for wireless enterprise solutions for small and medium sized businesses. We are also pleased to welcome aboard three new directors in the first quarter - Howard Gwin, Peter Cooper and Jim Mingle. This group of directors brings a wealth of experience in fostering the growth of successful organizations and we look forward to their contribution to the Company's success. During the fourth quarter of 2002, VenGrowth II Investment Fund Inc. acquired $9.5 million aggregate principal amount of 10% convertible debentures of the Company from Telesystem Ltd. and Ontario Municipal Employees Retirement Board. As a result of these transactions, VenGrowth holds all of the Company's outstanding indebtedness of $10 million (which is represented by the 10% convertible debentures). These debentures mature as to $5 million aggregate principal amount on each of August 30, 2003 and November 30, 2003. The Company's ability to repay or refinance this debt remains an area of concern and priority for the Company. The Company is actively pursuing refinancing solutions. A more detailed discussion of this matter is set out below. "I am pleased with the progress that we have made so far in what has been a challenging year for technology companies," commented Vic Foster. "The market continues be a difficult one with an uncertain economy, cautious buyers, and extended pilots for new technology. However, we are beginning to see renewed interest in our solutions and products and we believe that we are well positioned for any recovery in the marketplace." Going Concern and Basis of Presentation The consolidated financial statements of the Company for the three and twelve months ended December 31, 2002 have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. The Company has sustained substantial losses in recent years and its ability to continue as a going concern is dependent on the Company's ability to generate future profitable operations and/or obtain additional financing. The Company has funded operations primarily through public and private offerings of common shares and the issue of convertible debentures and warrants. The attached financial statements do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate for these financial statements. In that case, adjustments would be necessary to the carrying value of assets and liabilities, the reported revenues and expenses, and balance sheet classification used. A discussion of the Company's liquidity and capital resources is set out below. Liquidity and Capital Resources During the fourth quarter ended December 31, 2002, the Company generated $131,000 in cash from operations and used $3,000,000 in cash for repayment of outstanding debentures at maturity. For the year ended December 31, 2002, the Company used $4,037,000 in operations and used $3,000,000 in cash for repayment of outstanding debentures at maturity. At December 31, 2002, the Company had cash and cash equivalents on hand totaling $1,838,000 and a net working capital deficiency of $8,527,000, which includes amounts payable on the outstanding convertible debentures of the Company in the amount of approximately $11,008,000, including interest thereon ($5,633,000 due on August 9, 2003 and $5,375,000 due on November 30, 2003) in the absence of conversion to common shares of the Company. At the same date, the Company's balance sheet shows a total shareholders' equity deficit of about $7.7 million. The Company believes that its current cash, cash equivalents and cash flow from operations will be sufficient to meet its other liquidity needs through to August 9, 2003, when the 10% convertible debentures in aggregate principal amount of $5 million plus accrued and unpaid interest thereon become due and payable. The Company believes that the amount of the Company's outstanding indebtedness and its capital structure limits its ability to borrow additional funds. The Company is in current discussions with the holder of its outstanding debentures and with other parties concerning the refinancing of the debentures. However, there can be no assurance that the debentures will be either refinanced or that the debentures and interest thereon will be converted to common shares. In the event that the debentures are not converted or refinanced or the Company is not able to raise additional funds on acceptable terms, or at all, the Company believes that it will not be able to generate sufficient cash flow from operations to repay the Company's outstanding debentures when due. Failure to repay any of the Company's outstanding convertible debentures when due would result in an event of default under the terms of all of the Company's outstanding debentures, which, if not cured or waived, would have a material adverse effect on the Company's business, financial condition, liquidity and results from operations. Mobile Computing Corporation -- http://www.mobilecom.com-- is a supplier of wireless information solutions for mobile workers. These systems enable companies to communicate with, monitor and manage the activities of their vehicles and field personnel. MCC solutions enable improved management of the movement and delivery of goods and services, improving productivity and profitability. MCC specializes in delivering fully integrated solutions that link mobile workers with corporate information systems utilizing wireless data communications services. Mobile Computing Corporation trades on the Toronto Stock Exchange under the symbol "MBL" and has approximately 45 million shares outstanding. MSU DEVICES: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Debtor: MSU Devices, Inc. 800 East Campbell Road, Suite 199 Richardson, Texas 75081 aka MSU Corporation Bankruptcy Case No.: 03-32040 Type of Business: Designer and marketer of internet access devices and a provider of software engineering services. Chapter 11 Petition Date: February 27, 2003 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Edwin Paul Keiffer, Esq. Hance, Scarborough, Wright Ginsberg & Brusilow, LLP 1401 Elm Street, Suite 4750 Dallas, TX 75270 Tel: 214-651-6517 Total Assets: $118,077 Total Debts: $4,199,221 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Farraday CVA Trade Debt $373,246 Mr. Lewis Huang 7F-3 9 Prosperity Road Science Based Industrial Park Hsin-Chi Taiwan Tel: 886-3578-7888 Torys Trade Debt $310,523 Geoffrey Gilbert 237 Park Avenue New York, NY 10017-3142 Tel: 212-880-6027 Phillips Electronics CVA Trade Debt $200,109 Singapore Pte. Ltd. Eurodis Bytech CVA Trade Debt $82,276 Bisquare Trade Debt $73,337 Brobeck, Phleger & Harrison Trade Debt $68,347 Richards Butler Trade Debt $64,203 Federal Express Trade Debt $59,533 Intelligent Sys. Design Trade Debt $55,346 Deloitte & Touche LLP CVA Trade Debt $38,808 Azia Core Ltd. CVA Trade Debt $22,284 Connexant Systems CVA Trade Debt $21,347 Haynes & Boone Trade Debt $14,848 Wedlake Bell Solicitor Trade Debt $13,900 Michael & Partners Trade Debt $12,631 BT Business Account CVA Trade Debt $12,256 Robert Kent CVA Trade Debt $9,539 Mark Laister CVA Trade Debt $9,539 Christian Pennycate CVA Trade Debt $9,062 NACIO SYSTEMS: Emerges from Reorganization Proceedings ------------------------------------------------------ eSynch Corp. (OTC BB: ESYN), which had acquired 91% of the voting rights to NACIO Systems in July, 2002, announced that its Reorganization Plan submitted on behalf of NACIO has become Effective, confirming that the Plan becomes a Final Order. With this stage completed, NACIO will become a wholly owned subsidiary of eSynch upon the issuance of the eSynch equity required by the Plan. NACIO Systems, through its state of the art NetSource Center(TM), provides "managed IT services" -- network-based computing and communication services on an "outsourced" basis to business customers who rely on the Internet for daily operation. These businesses seek to reduce or avoid the complexity, costs and risks of IT infrastructure requirements while they benefit from the expertise and latest technologies from NACIO along with the ability to focus their time and resources on their core competencies. "The completion of this stage in the acquisition of NACIO provides us with an outstanding opportunity to create great value for our customers and for NACIO shareholders, soon to be eSynch Shareholders, as we continue to move beyond the bankruptcy stage and further into the application of our Business Plan," said David Lyons, president of NACIO and eSynch. "Although the assets to be acquired through the share exchange include technology, hardware, software and customers, the most valuable asset acquired is NACIO's organization and its operating business, currently running at an annual rate of over $3,000,000," Mr. Lyons continued. eSynch -- http://www.esynch.com-- founded in 1994, is a development company that designs and distributes solutions for the delivery of digital content. Nacio Systems, Inc. -- http://www.nacio.com-- is one of the early leaders in the managed hosting and managed services market, providing full- service, high performance, commercial-grade Internet connectivity and wide area networks solutions for businesses that rely on the Internet for daily operations. This includes managed server hosting, collocation, and a full range of managed services. NAT'L CENTURY: Court OKs Williams & Prochaska as Special Counsel ---------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates obtained the Court's authority to employ Williams & Prochaska, PC, as special litigation counsel in these Chapter 11 cases, pursuant to Section 327(e) of the Bankruptcy Code and Rule 2014 of the Federal Rules of the Bankruptcy Procedure, nunc pro tunc to October 8, 2002. W&P will render litigation services in certain pending matters in the State of Tennessee and other additional matters that may arise in the State of Tennessee during the course of these Chapter 11 cases. As compensation for the services, W&P will: -- charge for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates in effect on the date services are rendered; -- seek reimbursement of actual and necessary out-of-pocket expenses. Currently, W&P's hourly rates of its professionals are: Professional Position Rate ------------ -------- ---- Connie M. Bembrey paralegal $95 Michael Bursi attorney 235 Victoria Ferraro attorney 150 Allison C. Hill paralegal 95 Tiffany Israel paralegal 70 Anna K. Maggard paralegal 95 Shelly Miles paralegal 55 Joseph R. Prochaska attorney 235 Harris P. Quinn attorney 250 Jacqualine Recht attorney 150 Margaret Samples paralegal 95 Diane C. Spears attorney 185 Randall J. Spivey attorney 150 Sabin T. Thompson attorney 250 Vicki Thompson paralegal 95 Ernest B. Williams, IV attorney 250 (National Century Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) NETDRIVEN SOLUTIONS: Dec. 31 Balance Sheet Upside-Down by C$1MM --------------------------------------------------------------- NetDriven Solutions Inc., (TSX:NDS) announced its interim financial results for the three-month period ending December 31, 2002. This first quarter of its fiscal 2003 year represents the first months of implementing a new strategy of providing management of information technology infrastructure to the small and medium enterprise market, as well as management of the content that resides on that infrastructure. (All amounts are expressed in Canadian dollars unless specified otherwise). Revenues generated by the Company in the first quarter increased approximately $769,000 or 360% compared to the same period in fiscal 2002. This was due to the consolidation of revenues acquired in the Partners Computer Systems transaction in late fiscal 2002. Despite a significant downturn in PC spending in Canada during the fall months, NDS generated a gross margin of 22% on equipment and service revenue, which was above industry averages and represented an ongoing increase in margin contribution from the Totaluptime portion of the business mix. Results for the second quarter are anticipated to be more in line with Company expectations for annual revenue run rates. Total Expenses for the first three months ending December 31, 2002 decreased approximately $234,000 or 28%, compared to the previous period. This decrease was primarily due to the discontinuation of the expenses associated with the Calgary- based seismic data business which was closed in the last quarter of fiscal 2002. Selling and marketing expenses include costs associated with the direct sales and sales management team. Operations expenses include costs associated with the technical customer service team and its tools. Product development expenses include costs associated with the ongoing development and support of the KSuite knowledge protection and sharing software solution. General and administrative expenses represent all costs not directly related to operations and include finance and accounting, executive compensation and costs associated with maintaining a publicly traded listing. NDS's Loss From Operations significantly improved as management has reduced it by approximately 50% from the previous year. The Company's cash on hand as at December 31, 2002 was slightly negative, requiring the use of a short-term banking facility. This situation was the result of lower-than- expected, first- quarter revenues. Accounts Receivables, however, increased by $450,000, and represent a source of cash in the short-term with an average 35 days outstanding. Accounts payable and accrued liabilities included $653,000 related to accounts receivable, a $563,000 accrued liability for shares held in escrow from the Partners Computer Systems acquisition, and $1,698,000 of account payable, primarily from discontinued operations, that the company is working with creditors to retire or reduce. During the first quarter of fiscal 2003, NDS issued 1,250,000 shares to a director of the Company upon conversion of a $187,500 promissory note. Also during the first quarter, Mr. Bruce MacInnis joined the NDS Board of Directors. Mr. MacInnis is Chief Financial Officer and Corporate Secretary of Bioscrypt Inc., a publicly listed technology company. From 1996 to 2000, Mr. MacInnis held the positions of CFO and Corporate Secretary of Certicom Corp., a publicly listed IT security company. Business Strategy It is NetDriven's mission to be the leading North American supplier of outsourced IT managed services to the small to medium enterprise market by providing best of breed solutions and support selected from our in-house technologies or strategic partners and suppliers. NDS has successfully evolved its strategic and tactical operations towards its mission by providing a subscription-based approach to the total management of IT infrastructures (referred to as Totaluptime) and the intellectual property or content that resides on that infrastructure. NDS delivers a much-needed solution for the SME market and has generated improved Company performance. NDS plans to grow revenues, cash flow and earnings through both internal growth and the acquisition of small and medium Value Added Resellers. Costs will be controlled through the deployment of a scalable infrastructure management solution internally, and through the outsourcing of the relatively low skill level elements of Totaluptime to third party providers. At December 31, 2002, the Company's balance sheet shows a working capital deficit of about $3 million, and a total shareholders' equity deficit of close to $1 million. NTELOS INC: Commences Chapter 11 Reorganization in E.D. Virginia ---------------------------------------------------------------- NTELOS (Nasdaq: NTLO) has taken another step toward a comprehensive financial restructuring plan that would significantly reduce the company's debt. To complete development and implementation of such a restructuring plan, NTELOS and certain of its subsidiaries filed voluntarily petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Eastern District of Virginia. The company has made arrangements for debtor-in-possession financing during the restructuring process. The company also said it is in active discussions with its bank group and bondholders owning a substantial majority of its outstanding senior notes with respect to its bank financing upon emergence from bankruptcy and the terms of a new investment by these bondholders in the company upon emergence. The company also is holding discussions with its bank group and other debtholders toward development of a definitive plan of reorganization. NTELOS emphasized that the Chapter 11 filing will not affect the company's operations, which remain strong and ongoing. The company plans to conduct business as usual throughout the Chapter 11 process. The company will continue to focus on providing all of its customers with the highest quality service, and employees will continue to be paid in the usual manner, with health and other benefits expected to continue unchanged. In addition to regular cash flows from operations, the company's ability to meet ongoing obligations during the Chapter 11 process has been enhanced through a commitment for $35 million in debtor-in-possession (DIP) financing from Wachovia Bank. Upon court approval, which is expected shortly, up to $10 million of these funds will be available immediately, to meet ongoing obligations in connection with regular business operations, including prompt payment to vendors for goods and services provided on or after today's filing. The full $35 million DIP commitment is subject to final court approval, certain state regulatory approvals and the banks' receiving satisfactory assurances regarding the bondholders' proposed new investment in the company upon emergence from bankruptcy. NTELOS is in active discussions with its bank group to continue providing access to the $261 million credit facility and to reduce its revolver commitment from $100 million to $36 million, both at current rates and existing maturities, upon emergence from bankruptcy. Based on these discussions, the company is optimistic that it will obtain approval of these terms, subject to, among other things, final documentation, the company's senior noteholders investing $75 million in the company upon emergence from bankruptcy and the bank group's reasonable satisfaction with the final terms of the plan of reorganization. The company also is engaged in active discussions with the company's senior noteholders about purchasing an aggregate of $75 million of new 9.0% senior convertible notes, subject to, among other things, agreement on final documentation with the bank group, as described above, and senior noteholders' reasonable satisfaction with the final terms of the plan of reorganization. The proceeds from this new investment would be used to repay the debtor-in-possession financing and to pay down the revolver, with the remaining funds to provide capital to support the company's ongoing operations. While the company cannot speculate as to what the final terms of a plan of reorganization might be, the company currently expects that such a plan would result in a substantial reduction in the company's indebtedness, with conversion of outstanding notes into all or substantially all of the reorganized NTELOS' equity, with little or no recovery to current equity holders. James Quarforth, Chief Executive Officer of NTELOS, said, "The Chapter 11 process remains the best means by which to effect a meaningful restructuring of our debt, allowing us to continue operating our business as usual while working toward completion of our proposed financial restructuring plan. We are proud of our tremendously talented and dedicated employees, who remain totally focused on serving customers. NTELOS has an outstanding franchise, built on over a hundred years of service excellence, and solid operations." "We believe we have made significant progress thus far in negotiations with our bank group and senior noteholders. We are continuing our discussions with these and other creditors with the objective of being able expeditiously to reach an agreement on the financing arrangements described above and the final terms of the restructuring plan." NTELOS has filed a number of first-day motions with the Bankruptcy Court, including, among others, requests to pay employee wages and benefits; honor pre-petition customer obligations, including warranty and service agreements; and obtain interim financing authority and maintain cash management programs. The company expects these motions to be addressed shortly by the Court. The Company anticipates announcing fourth quarter 2002 and year- end 2002 financial results and 2003 guidance during the week of March 24, 2003 in the usual press release format. For more information regarding the company's recent results of operations and liquidity and capital resources, please refer to the company's Form 10-Q for the quarter ended September 30, 2002 and the company's Current Reports on Form 8-K dated February 19, 2003 and November 29, 2002, on file with the SEC. NTELOS Inc., (Nasdaq: NTLO) is an integrated communications provider with headquarters in Waynesboro, Virginia. NTELOS provides products and services to customers in Virginia, West Virginia, Kentucky, Tennessee and North Carolina, including wireless digital PCS, dial-up Internet access, high-speed DSL (high-speed Internet access), and local and long distance telephone services. Detailed information about NTELOS is available online at http://www.ntelos.com NTELOS INC: Case Summary & 30 Largest Unsecured Creditors --------------------------------------------------------- Lead Debtor: NTELOS Inc. 401 Spring Lane Suite 300 Waynesboro, VA 22980 fka CFW Communications Company Bankruptcy Case No.: 03-32094 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Richmond 20 MHz, LLC 03-32093 NTELOS Wireless, Inc. 03-32095 NTELOS of Maryland Inc. 03-32096 NTELOS of Kentucky Inc. 03-32097 NTELOS PCS North Inc. 03-32098 NTELOS Cable of Virginia Inc. 03-32099 NTELOS Communications Services Inc. 03-32100 NTELOS NetAccess Inc. 03-32101 NTELOS Telephone Inc. 03-32102 NTELOS Network Inc. 03-32103 NTELOS Licenses Inc. 03-32104 NTELOS Cable Inc. 03-32105 R&B Communications Inc. 03-32106 NTELOS Cornerstone Inc. 03-32107 NTELOS PCS Inc. 03-32108 Virginia RSA 6 Cellular Ltd. Partnership 03-32109 NA Communications, Inc. 03-32111 Roanoke and Botetourt Telephone Company 03-32112 R & B Network, Inc. 03-32114 Botetourt Leasing, Inc. 03-32115 R&B Cable, Inc. 03-32119 The Beeper Company 03-32121 Virginia PCS Alliance, L.C. 03-32123 West Virginia PCS Alliance, L.C. 03-32127 Virginia Telecommunications Partnership 03-32131 Type of Business: NTELOS Inc. is a regional integrated communications provider offering a broad range of wireless and wireline products and services. Chapter 11 Petition Date: March 4, 2003 Court: Eastern District of Virginia (Richmond) Judge: Douglas O. Tice Jr. Debtors' Counsel: Linda Lemmon Najjoum, Esq. Hunton & Williams 1751 Pinnacle Dr. #1700 McLean, VA 22102 Tel: 703-714-7442 Fax : (703)714-7410 Total Assets: $800,252,000 Total Debts: $784,976,000 Debtor's 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Morgan Stanley Bond Desk Bondholder $97,000,000 1585 Broadway New York, NY 10036 (212) 761-1558 (212) 761-0203 fax Michael Petrick Welsh, Carson, Anderson & Bondholder $95,000,000 Stowe 320 Park Ave., Suite 2500 New York, NY 10022 (212) 893-9500 (212) 893-9575 fax Anthony de Nicola Capital Research & Mgt. Bondholder $85,700,000 630 5th Ave., 36th Floor New York, NY 10111 (212) 641-1748 (212) 641-1788 David Daigle Satellite Asset Management Bondholder $30,000,000 623 Fifth Avenue, 20th Floor New York, NY 10022 (212) 588-7400 (212) 209-2010 fax Matt Heckler Merrill Lynch Asset Bondholder $18,000,000 Management c/o Bank of New York 101 Barclay St., Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration Oppenheimer (CIBC Corporate Bondholder $15,000,000 Funds) c/o Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration New York Life Trust Co. Revised Retirement $11,000,000 846 University Avenue Plan Norwood, MA 02062-2641 (781) 440-2000 (781) 440-2350 fax Andrew Parsons AIM Management Co. c/o Bondholder $8,575,000 Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration Invesco High Yield Fund Bondholder $8,000,000 4350 South Monaco St. Denver, CO 80237 (720) 624-0603 (720) 624-2440 fax Robert Hickey, VP Motorola, Inc. Access Utility $5,089,575 1701 Golf Road, 8th Floor Rolling Meadows, IL 60008 (847) 435-3740 (847) 435-6169 fax Mark Dabe Distressed Debt Corporate Bondholder $4,000,000 Center, BBT Fund c/o Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration Pacific Mutual Life Ins. Bondholder $4,000,000 700 Newport Center Drive Newport Beach, CA 92660-6397 (949) 219-3448 (949) 219-3199 fax Lori Johnstone, Assistant VP AAM High Yield c/o Bondholder $3,000,000 Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration FC CBO Ltd. c/o Bondholder $3,000,000 Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration Cell Star Ltd. Trade Vendor $2,617,262 71870 Crown Drive Suite 1510 Farmers Branch, TX 75234 (800) 530-4664 (800) 799-6555 fax Jim Harman Verizon Interconnections $1,902,236 600 Hidden Ridge, HQE03B75 Negotiations Acess Irving, TX 75038 Utility (972) 718-1300 (972) 718-1279 fax Renee Ragsdale Sprint Communications Trade Vendor $1,512,000 6200 Sprint Parkway Overland Park, KS 66251 (913) 794-1440 (913) 794-1436 fax J. Richard Devlin, EVP Lucent Technologies, Inc. Trade Vendor $1,489,684 67 Whippany Road Whippany, NJ 07981 (973) 386-8307 (973) 386-4464 fax Jerry Davis Crown Castle Int'l Corp. Tower Leases $1,064,913 2000 Corporate Drive Cannonsburg, PA 15317 (724) 416-2310 (724) 416-2319 fax Dave Tanczos, Area President, Great Lakes Wholesale Realtors Supply Bondholder $1,000,000 c/o Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration Anthem BC & BS Trade Vendor $866,243 2220 Edward Holland Drive Richmond, VA 23230 (804) 354-7150 (804) 354-7647 fax Sherri Powell CiberNet Corporation Access Utility $656,791 1250 Connecticut Avenue NW, Suite 80 Washington, D.C. 20036 (202) 736-3668 (202) 496-0664 fax Anna Young, Manager- Financial Settlement NECA Services Inc. Access Utility $650,815 80 S. Jefferson Rd. Whippany, NJ 07981 (973)-884-8000 (973) 884-8262 fax Kevin Pollison Jefferies & Co. c/o Bondholder $480,000 Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration AT&T Access Utility $404,086 1 AT&T Way Bedminster, NJ 07921 (908) 234-5681 (908) 908-8154 fax James Cicconi, General Counsel & EVP Enterprise Operations $370,966 11832 Rock Landing Drive Newport News, VA 23606 (757) 873-4993 (757) 873-6730 fax General Sales Manager Global Crossing Bandwidth Access Utility $294,824 Inc. 20 Oak Hollow Suite 300 Southfield, MI 48034 (585) 987-9048 (585) 325-2163 fax John Norton, Account Manager Infonxx Trade Vendor $260,012 3864 Courtney Street, Suite 411 Bethlehem, PA 18016 (610) 997-1000 (610) 997-1050 fax Scott De Nardo, VP of Law Glenayre Electronics Inc. Trade Vendor $255,533 P.O. Box 3726 One Glenayre Way Quincy, IL 62301 (217) 223-3211 (217) 223-3284 fax Glynn Gossett Charles Ryan & Associates Advertising $250,000 300 Summers Street, Suite 100 Charleston, WV 25301 (304) 556-9101 (304) 342-1941 fax Charles Ryan, President SunAmerica c/o Bondholder $250,000 Bank of New York 101 Barclay St. Floor 21-W New York, NY 10286 (212) 815-4770 (212) 815-5915 fax Attn: Corporate Trust Trustee Administration NUEVO ENERGY: Closes Brea Olinda Field Asset Sale to BlackSand -------------------------------------------------------------- Nuevo Energy Company (NYSE: NEV) announced the sale of the mineral rights of the Brea Olinda Field to BlackSand Partners, L.P. for $59 million effective January 1, 2003. Nuevo had a 100% working interest and was operator of the Brea Olinda Field located in Orange County, California. Average production from the Field was 2,269 barrels of oil equivalent per day in 2002, 4% of Nuevo's total production. With the sale of this property Nuevo no longer has any oil and gas properties in the LA Basin. A portion of the cash proceeds from this sale will be used to eliminate bank debt which had a balance outstanding of $28.7 million on December 31, 2002. After the repayment of bank debt, Nuevo will have cash on hand and a debt to capital ratio (based upon bank covenants) of 56% compared to 62% at year-end 2001. "One of our top priorities this year is to monetize non-core assets and we are off to a good start having completed this sale," stated Jim Payne, Chairman, President and Chief Executive Officer. "As we execute additional asset sales in 2003 we will further reduce net debt and/or prudently use cash proceeds to acquire higher margin oil and gas assets." The 810-acre Brea Olinda Field encompasses Tonner Hills, a 200- acre proposed residential real estate project which Nuevo continues to own. As part of the sale of the oil and gas properties, Nuevo signed an accommodation agreement in which Nuevo agreed to perform the oil field accommodation necessary to render Tonner Hills suitable for a residential housing development. Nuevo does not anticipate performing any accommodation until Tonner Hills is developed by a future real estate purchaser. The Company expects a real estate purchaser to absorb the costs associated with the oil field accommodation. Nuevo Energy Company is a Houston, Texas-based company primarily engaged in the acquisition, exploitation, development, production, and exploration of crude oil and natural gas. Nuevo's domestic properties are located onshore and offshore California and in West Texas. Nuevo is the largest independent producer of oil and gas in California. The Company's international properties are located offshore the Republic of Congo in West Africa and onshore the Republic of Tunisia in North Africa. To learn more about Nuevo, please refer to the Company's internet site at http://www.nuevoenergy.com As reported in Troubled Company Reporter's November 20, 2002 edition, Standard & Poor's Ratings Services lowered its corporate credit ratings for independent oil and gas company Nuevo Energy Co., to 'BB-' from 'BB', and removed the ratings from CreditWatch where they were placed on September 20, 2002. The outlook is stable. Houston, Texas-based Nuevo Energy has about $454 million of debt outstanding. "The ratings downgrade reflects the company's continuing inability to meaningfully delever during an extended period of unusually high oil and gas prices," said Standard & Poor's credit analyst Brian Janiak. "The ratings action also reflects the vulnerability of the company's challenging asset base and highly leveraged balance sheet to downward movements in oil prices," Janiak added. ON SEMICONDUCTOR: Tinkers with Senior Bank Facilities ----------------------------------------------------- ON Semiconductor Corp., (Nasdaq: ONNN) has amended its senior bank facilities in conjunction with the sale of $200 million aggregate principal amount of the company's 12 percent senior secured notes due 2010. In combination, these transactions are expected to significantly increase the company's operating flexibility through the elimination of certain financial maintenance covenants and the reduction of debt maturities through 2006. Specifically, the bank amendment: -- Eliminates minimum interest expense coverage ratio and maximum leverage ratio requirements through the final maturity of the senior bank facilities in 2007; -- Provides for a minimum EBITDA maintenance requirement of $140 million for any four consecutive fiscal quarters; -- Amends the limitation on capital expenditures to provide for: -- a maximum capital expenditure requirement for each fiscal year beginning in 2004 of $100 million, plus -- 50 percent of the amount, if any, by which EBITDA in the prior fiscal year exceeds $200 million, plus -- the unused amount of permitted capital expenditures in the prior year. "Although ON Semiconductor has been in full compliance with the previous financial covenants, we believe the notes offering and bank amendment presented an opportunity to significantly improve the company's capital structure," said Keith Jackson, ON Semiconductor president and CEO. "These two transactions eliminate certain restrictive financial maintenance covenants for the duration of the senior bank facilities, and reduce required debt principal payments through 2006 by approximately $180 million. As a result of the senior secured notes issuance and the notes issuance that occurred in May 2002, as previously announced, outstanding amounts have been reduced under the company's senior credit facilities by approximately $460 million. "These actions provide significant additional flexibility to better enable us to execute our business strategy, increase market share, expand margins, return to profitability, and position ourselves for further recovery in the economy and the semiconductor industry." ON Semiconductor offers an extensive portfolio of power and data management semiconductors and standard semiconductor components that address the design needs of today's sophisticated electronic products, appliances and automobiles. For more information visit ON Semiconductor's Web site at http://www.onsemi.com As reported in Troubled Company Reporter's February 19, 2003 edition, Standard & Poor's assigned its 'B' rating to the planned sale by ON Semiconductor Corp., (B/Negative/--) of $200 million of Rule 144a senior secured notes due 2010. Proceeds of the note issue will be used to prepay bank debt. Other ratings were affirmed. The Phoenix, Arizona-based maker of commodity semiconductors had debt of $1.6 billion, including capitalized operating leases, at December 31, 2002. "ON's financial profile, although improving, remains marginal for the rating level," said Standard & Poor's credit analyst Bruce Hyman. "If debt-protection measures do not continue to improve in coming quarters, the ratings could be lowered." ON SEMICONDUCTOR: Completes Senior Secured Debt Offering -------------------------------------------------------- ON Semiconductor Corp., (NASDAQ: ONNN) and its primary domestic operating subsidiary, Semiconductor Components Industries, LLC, co-issued $200 million aggregate principal amount of senior secured notes pursuant to a Rule 144A/Regulation S offering. The senior secured notes were priced at 95.467 percent of the principal amount, with a coupon of 12 percent. The notes will mature on March 15, 2010, and are non-callable for four years. The company has used the net proceeds from the offering to prepay a portion of the term loan under its senior bank facilities and to pay a portion of the loans under its revolving credit facility and cancel the commitment relating to such portion. The senior secured notes have not been registered under the Securities Act of 1933, and may not be offered or sold absent registration under the Securities Act of 1933 or an exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws. This news release does not and will not constitute an offer to sell or the solicitation of an offer to buy the senior secured notes, nor shall there be any sale of the senior secured notes in any state in which any such offer, solicitation or sale would be unlawful. ON Semiconductor offers an extensive portfolio of power and data management semiconductors and standard semiconductor components that address the design needs of today's sophisticated electronic products, appliances and automobiles. For more information, visit ON Semiconductor's Web site at http://www.onsemi.com On Semiconductor Corp.'s 12% bonds due 2008 (ONNN08USA1) are trading at about 97 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ONNN08USA1 for real-time bond pricing. ORBITAL SCIENCES: Launches Exchange Offer for 12% Secured Notes --------------------------------------------------------------- By prospectus dated February 24, 2003, Orbital Sciences Corporation is offering to exchange all outstanding 12% Second Priority Secured Notes Due 2006 that are validly tendered and not withdrawn for an equal amount of a new series of notes which are registered under the Securities Act of 1933. The exchange offer will expire at 5:00 P.M., New York City time, on March 25, 2003, unless extended. The exchange is subject to customary conditions, including that the exchange offer not violate applicable law or any applicable interpretation of the staff of the Securities and Exchange Commission. Noteholders may withdraw their tender of outstanding notes at any time before the expiration of the exchange offer. Orbital Sciences will not receive any proceeds from the exchange offer. The terms of the exchange notes to be issued are substantially identical to the outstanding notes, except they are registered under the Securities Act of 1933 and are therefore freely transferable. Outstanding notes may only be tendered in denominations of $1,000 and multiples of $1,000. The exchange of notes will not be a taxable exchange for U.S. federal income tax purposes. Orbital develops and manufactures small space systems for commercial, civil government and military customers. The company's primary products are spacecraft and launch vehicles, including low-orbit, geostationary and planetary spacecraft for communications, remote sensing and scientific missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense boosters that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds satellite-based transportation management systems for public transit agencies and private vehicle fleet operators. * * * As previously reported, Standard & Poor's raised its corporate credit rating on Orbital Sciences Corp. to single-'B' from triple-'C'-plus, citing the defense company's refinancing of subordinated notes. Standard & Poor's removed the rating from CreditWatch, where it was placed on July 30, 2002. The outlook is positive. "The upgrade reflects the successful refinancing of Orbital's $100 million subordinated notes that matured on October 1, 2002," said Standard & Poor's credit analyst Christopher DeNicolo. The subordinated notes were paid using the proceeds from the issuance of $135 million second-priority secured notes due 2006. PENN NAT'L: Gets Financing to Fund Hollywood Casino Acquisition --------------------------------------------------------------- Penn National Gaming, Inc., (Nasdaq:PENN) closed an $800 million senior secured credit facility to fund its acquisition of Hollywood Casino Corporation and to provide additional working capital. The credit facility allows Penn National Gaming to raise an additional $100 million in senior secured credit to expand its Pennsylvania racetrack operations if legislation is passed permitting slot machines or video lottery terminals at these facilities. Penn National Gaming also announced that it would not proceed with commitments for an additional $200 million in financings. These commitments were made available only to finance a change of control offer at 101% of the principal amount of the non- recourse debt issued by Hollywood Casino Shreveport and Shreveport Capital Corporation, which will remain outstanding. As previously announced, Penn National Gaming does not intend to provide, nor to permit any of its subsidiaries to provide, financing or credit support to Hollywood Casino Shreveport and Shreveport Capital Corporation to fund a change of control offer to repurchase the notes. The $800 million financing package consists of three credit facilities comprised of: -- A $100.0 million revolving credit facility due March 2008 which will initially accrue interest at 325 basis points over LIBOR; -- A $100.0 million Term Loan A Facility due March 2008 which will initially accrue interest at 325 basis points over LIBOR; -- A $600.0 million Term Loan B Facility due March 2009 which will initially accrue interest at 400 basis points over LIBOR. Bear, Stearns & Co., Inc. and Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated served as Joint Lead Arrangers and Joint Book Runners. Merrill Lynch & Co. and Merrill Lynch, Pierce, Fenner & Smith Incorporated acted as Syndication Agent. Bear Stearns Corporate Lending Inc. is the Administrative Agent. Societe Generale and Credit Lyonnais were the Documentation Agents. Concurrent with this financing the previous senior credit facility is cancelled. The $36 million swap expiring June 2004 with CIBC World Markets Corp. is terminated and the $100 million swap expiring December 2003 with Wells Fargo continues and is now linked to the new facility. Penn National Gaming's $200 million 11 1/8% senior subordinated notes due 2008 and its $175 million 8 7/8% senior subordinated notes due 2010 will remain outstanding. Commenting on the financing, Peter M. Carlino, Chief Executive Officer of Penn National said, "This financing package provides us with immediate access to capital at attractive rates allowing us to complete our acquisition of Hollywood Casino Corporation and to fund additional expansion, acquisitions and capital expenditures including, if legislation is passed, the addition of slot machines or video lottery terminals at our Pennsylvania racetracks. The confidence in Penn National expressed by the respected financial institutions who arranged and participated in this financing is extremely gratifying and these entities are very supportive of our strategic plans for continued growth." Penn National Gaming owns and operates: three Hollywood Casino properties located in Aurora, Illinois, Tunica, Mississippi and Shreveport, Louisiana; Charles Town Races & Slots in Charles Town, West Virginia; two Mississippi casinos, the Casino Magic hotel, casino, golf resort and marina in Bay St. Louis and the Boomtown Biloxi casino in Biloxi; the Casino Rouge, a riverboat gaming facility in Baton Rouge, Louisiana and the Bullwhackers casino properties in Black Hawk, Colorado. Penn National also owns two racetracks and eleven off-track wagering facilities in Pennsylvania; the racetrack at Charles Town Races & Slots in West Virginia; a 50% interest in the Pennwood Racing Inc. joint venture which owns and operates Freehold Raceway in New Jersey; and operates Casino Rama, a gaming facility located approximately 90 miles north of Toronto, Canada, pursuant to a management contract. As reported in Troubled Company Reporter's February 3, 2003 edition, Standard & Poor's assigned its 'B+' rating to gaming property owner and operator Penn National Gaming Inc.'s proposed $1 billion senior secured bank credit facility. In addition, Standard & Poor's affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on Penn National. At the same time, Standard & Poor's lowered its existing senior secured rating on the company to 'B+' from 'BB-' and removed the rating from CreditWatch where it was placed on Aug. 8, 2002. The downgrade reflects the significant amount of senior secured bank debt in the company's pro forma capital structure. The 'BB' rating on the company's existing $75 million bank credit facility remains on CreditWatch with negative implications. This rating will be withdrawn once the new facility is in place. S&P says the outlook for Penn National is stable. PEREGRINE SYSTEMS: Committee Taps Blackstone for Fin'l Advice ------------------------------------------------------------- The Official Committee of Unsecured Creditors of Peregrine Systems, Inc., and its debtor-affiliates ask for approval from the U.S. Bankruptcy Court for the District of Delaware to employ Blackstone Group, LP as their Restructuring Consultant. As Restructuring Consultant, Blackstone will: a) assist in review of the Company's long-term business plan and related financial projections, including the evaluation of the Company's businesses and prospects; b) review and analyze any proposed Restructuring, including valuing any securities or other consideration offered to Committee in connection with any proposed Restructuring; c) assist the Committee in developing alternative Restructuring proposals to any proposed Restructuring; d) advise the Committee in negotiations concerning the terms, conditions and impact of any proposed Restructuring; e) negotiate on behalf of the Committee with the Company, other creditors and other parties in interest to effectuate a Restructuring; f) provide expert witness testimony concerning any of the subjects encompassed by the other restructuring consulting services; g) assist in the development of financial data and presentations to the Committee; and h) provide such other advisory services as are customarily provided in connection with the analysis and negotiation of a Restructuring, as requested and mutually agreed. The Committee argues that the Restructuring Consulting Services that Blackstone will provide to the Committee are necessary to enable the Committee to maximize the value of the Debtors' estates for the benefit of creditors and to reorganize successfully. The Committee believes that the Blackstone's services will not duplicate the services of other financial advisors in the chapter 11 cases. Blackstone will charge the Debtors: i) a $200,000 monthly advisory fee; ii) a $1,500,000 restructuring fee; and iii) all necessary and reasonable out-of-pocket expenses incurred during this engagement Peregrine Systems, Inc., the leading global provider of Infrastructure Management software, filed for chapter 11 protection on September 22, 2002 (Bankr. Del. Case No. 02-12740). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young Jones & Weintraub represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million. PETROLEUM GEO-SERVICES: Commences Trading on OTC and Pink Sheets ---------------------------------------------------------------- Petroleum Geo-Services ASA (OSE:PGS) (Other OTC:PGOGY) announced on Wednesday, February 26, 2003, that it was informed by the New York Stock Exchange that the NYSE was suspending trading of PGS' American Depositary Receipts, ticker symbol "PGO", and Trust Preferred Securities, ticker symbol "PGO PrA". The NYSE also indicated that it would commence proceedings with the U.S. Securities and Exchange Commission to delist these securities. PGS' ADRs and Trust Preferred Securities currently trade over- the-counter and are quoted on the Pink Sheets under the ticker symbols "PGOGY" and "PGOAY", respectively. PGS expects that, subject to the interest of market makers, its ADRs and Trust Preferred Securities will be quoted on the Over-The-Counter Bulletin Board ('OTCBB') under the same ticker symbols. The OTCBB is a regulated quotation service that displays real-time quotes, last-sale prices, and volume information in over-the- counter equity securities. More information about OTCBB can be found at http://www.otcbb.com Pink Sheets is a centralized quotation service that collects and publishes market maker quotes for OTC securities in real time. More information about the Pink Sheets can be found at http://www.pinksheets.com Investors should be aware that trading in PGS' ADRs and Trust Preferred Securities through market makers and quotation on the OTCBB and Pink Sheets may involve risk, such as trades not being executed as quickly as when the issues were listed on the NYSE. Petroleum Geo-Services is a technologically focused oilfield service company principally involved in geophysical and floating production services. PGS provides a broad range of seismic- and reservoir services, including acquisition, processing, interpretation, and field evaluation. PGS owns and operates four floating production, storage and offloading units (FPSO's). PGS operates on a worldwide basis with headquarters in Oslo, Norway. For more information on Petroleum Geo-Services visit http://www.pgs.com * * * As reported in Troubled Company Reporter's February 5, 2003 edition, Fitch Ratings affirmed Petroleum Geo-Services ASA senior unsecured debt rating at 'C'. The ratings remain on Rating Watch Negative. This affirmation follows the payment by PGO of interest related to PGO's 6-5/8% senior notes due 2008 and its 7-1/8% senior notes due 2028. PGO finds itself in the same situation it was in last month as it has utilized a 30-day grace period to make an $8.2 million interest payment on its 8.15% senior notes due 2029. This grace period expires Feb. 15, 2003. POLAROID CORP: Has Until July 31 to Make Lease-Related Decisions ---------------------------------------------------------------- Polaroid Corporation and its debtor-affiliates obtained extension of their Lease Decision Period. The Court extends the time period for the Debtors to decide whether to assume, assume and assign, or reject an Unexpired Non-Residential Property Lease through and including the earlier of July 31, 2003 or the date of plan confirmation. (Polaroid Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) PREMIER LASER SYSTEMS: Withdraws Form S-3 Registration Statement ---------------------------------------------------------------- Premier Laser Systems, Inc., has written the Securities and Exchange Commission requesting that the Registration Statement (333-30930) on Form S-3 filed with the Securities and Exchange Commission on February 23, 2000 be withdrawn. The Registration Statement is being withdrawn because the Company filed a petition for relief under the Bankruptcy Code, and is in the process of liquidating all of its assets and dissolving. To the knowledge of Company, no securities were ever sold under the Registration Statement Premier Laser Systems, the maker of lasers for the dentistry, surgical, and ophthalmic markets, is in Chapter 11 bankruptcy and has sold many of its patents. The company faced stiff competition from larger firms; it also had problems marketing its new technology to dentists who would be willing to give it a try. Premier Laser is now attempting to reorganize its operations. The company makes laser systems used to whiten teeth, treat tooth decay, harden fillings, and drill cavities. Its products are sold under such brand names as Aurora, BluLaze, and Centauri. PRIME HOSPITALITY: S&P Cuts Corporate Credit Rating to BB- ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating for the hotel owner, manager, and franchiser Prime Hospitality Corp., to 'BB-' from 'BB' and its subordinated debt rating to 'B' from 'B+'. At the same time, the ratings on the Fairfield, New Jersey-based company were removed from CreditWatch where they were placed on February 13, 2002. The outlook is negative. Total debt outstanding at December 31, 2002, was $285 million. "The ratings action reflects Prime's weaker-than-expected hotel portfolio performance; credit measures that are weak for the ratings, with prospects for further deterioration in 2003; and the company's emphasis on potential acquisitions and share repurchases," said Standard & Poor's credit analyst Stella Kapur. All three of Prime's brands have yet to achieve strong national brand recognition, which is reflected in its revenue per available room performance. The company's owned and leased hotels experienced a 5.0% decline in RevPAR in the fourth quarter of 2002 and 9.2% for the full year. Some 60% of Prime's portfolio is comprised of AmeriSuites hotels, which primarily rely on business travelers. Because these hotels are generally located in office parks and suburban areas, it has been more challenging for these properties to attract a substantial number of leisure customers to offset the decline in business traveler demand. Additionally, the Wellesley Inns & Suites branded hotels experienced a 7.6% RevPAR decline in 2002, compared to an average decrease of 0.6% for the domestic mid-priced without food & beverage price segment as reported by Smith Travel Research. In the fourth quarter of 2002, Prime reported EBITDA of about $10 million, which was almost 50% lower compared with the same period a year ago. Roughly half of the decline was due to asset sales and the rest to lower operating performance. The company generated $74 million in EBITDA in 2002, which was 34% lower than 2001. Given management's expectations for a RevPAR decline of 5%-6% for the first quarter of 2003, Standard & Poor's expects that Prime's credit measures could likely deteriorate this year. Prime's operating lease adjusted total debt to EBITDA in 2002 was in the high-4x area and EBITDA to interest expense was in the 2x area. PRUDENTIAL SECURITIES: Fitch Junks Class G & H Note Ratings ----------------------------------------------------------- Prudential Securities Secured Financing Corp.'s commercial mortgage pass-through certificates, series 1995-MCF2, $12.2 million class G is downgraded to 'CCC' from 'B+' and removed from Rating Watch Negative, and $11.1 million class H is downgraded to 'C' from 'CCC' by Fitch Ratings. In addition, Fitch affirms the remaining Fitch-rated classes: $5.9 million class A-2, interest-only class A-EC, $8.9 million class B, $13.3 million class C and $8.9 million class D at 'AAA', $15.6 million class E at 'A+' and $5.6 million class F at 'BBB+'. Fitch does not rate the $5.3 million class J-1 or the $5.3 million class J-2 certificates and class A-1 has been repaid in full. The rating downgrades and affirmations follow Fitch's review of the transaction after the master servicer, Midland Loan Services Inc., elected to recover additional advances on three loans with non-recoverable advance determinations as of the Feb. 25, 2003 determination date. Midland made non-recoverable advance determinations on three loans in the pool at various times in 2001 and 2002. In December 2002, Midland began the process of recovering a total of approximately $1.5 million of advances on these loans. Since Midland is attempting to maintain full principal and interest payments to investment grade rated classes, the recovery is spread out over time which will cause interest shortfalls to the non-investment grade rated classes. Interest shortfalls due to recoveries started in December 2002 were expected to affect classes G, H and J-2 for approximately one year. In February 2003, Midland elected to recover an additional $2.3 million of outstanding advances on these loans. At the same time, approximately $1.3 million of a $2.3 million scheduled loan payoff was used to reimburse a portion of these new recoveries. The remaining $1 million will be recovered over approximately one year, and $1.3 million was taken as a loss to class J-2. These recoveries combined with the December 2002 recoveries will cause at least two years of interest shortfalls to the non- investment grade rated classes, assuming there are no other trust expenses to cause more shortfalls. Due to the lack of interest payments to classes G and H for a significant amount of time and the unlikely possibility of recovery, Fitch deemed it necessary to downgrade the classes. The three loans causing the shortfalls are secured by two healthcare properties and one multifamily property respectively. Together these loans, Mountain Creek Manor, Bristol House/Walden Oaks and Lost River Apartments comprise approximately 13.2% of the outstanding pool balance. Fitch also assumed an additional $6 million in losses attributed to these loans, which would cause a complete loss to class J-2 and partial loss to class H. SEALY CORP: Dec. 1 Net Capital Deficit Narrows to $116 Million -------------------------------------------------------------- Sealy Corporation, the world's largest manufacturer of bedding products, announced results for the fiscal fourth quarter and full year ending December 1, 2002. For the quarter, Sealy reported sales of $284.0 million, a decrease of 9.8% from $315.1 million for the same period a year ago. Net income was $8.5 million, compared with a net loss of $4.7 million a year earlier. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $28.5 million, compared with $25.4 million a year earlier. EBITDA and Net Income were negatively impacted by $4.8 million of plant closure and restructuring costs and fees associated with the sale of an affiliate. The Company uses a 52-53 week fiscal year. The fiscal year ended December 2, 2001 was a 53-week year. The impact to net sales for the year and the quarter of including the 53rd week was $24.5 million. Excluding the effects of the 53rd week, sales decreased by 2.2%. For the full year, net sales reached a record $1.19 billion in 2002, up 3.0% from $1.15 billion in 2001. Excluding the effect of the 53rd week, sales increased 5.3% over 2001. Reported net sales for the fourth quarter of 2002 and 2001 reflect Sealy's adoption of Financial Accounting Standards Board Emerging Issues Task Force 01-09, "Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Product." Under EITF 01-09, cash consideration is a reduction of revenue, unless specific criteria are met regarding goods or services that the vendor may receive in return for this consideration. Historically, Sealy classified costs such as volume rebates and promotional money as marketing and selling expenses. These costs are now classified as a reduction of revenue. This had the effect of reducing net sales and selling, general and administrative expenses each by $11.5 million for the fourth quarter of 2002 and by $12.2 million for the fourth quarter of 2001 and by $51.5 million for the year end 2002 and by $42.7 million for the year ended 2001. These changes did not affect the Company's financial position or results of operations. Net income for the year was $16.9 million compared with a net loss of $20.8 million for 2001. The net loss from last year included a significant non-cash charge to write off investments in affiliates. EBITDA was $119.2 million for the year, up 16.2% from 2001 levels. Sealy Corporation's December 1, 2002 balance sheet shows a total shareholders' equity deficit of about $116 million. "In spite of the challenging economic environment, we recorded another year of record sales and delivered strong operating profit, excluding the one time charges related to the restructuring of our affiliated retailers, and paid down over $42 million of debt" said David J. McIlquham, Sealy's president and chief executive officer. "During the fourth quarter, we successfully refinanced our revolver, eliminated our affiliation with The Mattress Firm, restructured our supply agreement with Mattress Discounters, and made terrific progress in preparing for the launch of our new one sided Posturepedic product line, which will begin shipping in June" said McIlquham. Sealy is the largest bedding manufacturer in the world with sales of $1.2 billion in 2002. The Company manufactures and markets a broad range of mattresses and foundations under the Sealy(R), Sealy Posturepedic(R), Sealy Posturepedic Crown Jewel(R), Stearns & Foster(R), and Bassett(R) brands. Sealy has the largest market share and highest consumer awareness of any bedding brand in North America. Sealy employs more than 6,000 individuals, has 31 plants, and sells its products to 3,200 customers with more than 7,400 retail outlets worldwide. Sealy is also a leading supplier to the hospitality industry. For more information, please visit http://www.sealy.com SEDONA CORP: Applauds SEC's Commitment to Probe Short Sales ----------------------------------------------------------- SEDONA(R) Corporation (OTCBB:SDNA) -- http://www.sedonacorp.com -- the leading provider of Internet-based Customer Relationship Management solutions for small and mid-sized financial services companies, commented on recent SEC filed civil lawsuit alleging short selling manipulation of its common stock. The Securities and Exchange Commission announced on February 27, 2003 -- see http://www.sec.gov/news/press/2003-26.htm-- that it filed a settled civil action in the Southern District of New York. According to the SEC complaint, SEDONA common stock has been the victim of directed manipulative short sales resulting in a recurring decline in share price. The defendants named within the complaint have settled the civil action with the SEC, and while not admitting or denying the allegations, have agreed to pay, on a joint and several basis, a $1 million civil penalty. In addition, those same parties have consented to a court order requiring them to hire an independent consultant, acceptable to the Commission, to review its compliance policies and procedures and to implement the Independent Consultant's recommendation. The settlement terms are subject to court approval. Relating to this matter, back on October 4, 2001, the Company announced via a news release that it had requested that the Securities and Exchange Commission investigate alleged improprieties in the trading of its stock. That action was taken because of certain information obtained at that time by the Company alleged that the market price of the common stock of a number of companies, including SEDONA, was being manipulated through improper short selling and other activities. SEDONA President and CEO, Marco Emrich commented, "We are obviously pleased with the SEC for their commitment and diligence investigating the short sales directed at SEDONA. While SEDONA is a small company, the SEC actions show that companies of all sizes are entitled to the same protection under law from predatory and manipulative trading practices. Most importantly, all shareholders of all public companies are entitled to expect a market price determined by supply and demand, rather than fraudulent, manipulative, or otherwise deceptive practices." Mr. Emrich concluded, "In October of 2001, when information brought to light the allegations, the Company took action it felt necessary to protect its stockholders. As in the past, SEDONA will continue to take any action, when prudent and necessary, that it deems to be in the best interest of all its stockholders." SEDONA(R) Corporation (OTC:SDNA) is a leading technology and services provider that delivers Customer Relationship Management solutions specifically tailored for small and mid-sized financial services businesses such as community banks, credit unions, insurance companies, and brokerage firms. By using SEDONA's CRM solutions, financial institutions can effectively identify, acquire, foster, and retain loyal, profitable customers. Leveraging SEDONA's CRM solution, leading financial services solution providers such as Fiserv, Inc., Open Solutions Inc., COCC, Sanchez Computer Associates, Inc., Financial Services, Inc. (FSI), and AIG Technologies, Inc. offer best-in-market CRM to their own clients and prospects. SEDONA Corporation is an Advanced Level Business Partner of IBM Corporation. For additional information, visit the SEDONA Web site at http://www.sedonacorp.com As previously reported in the November 22, 2002 edition of Troubled Company Reporter, SEDONA(R) said it was aggressively pursuing several alternatives and anticipates this concern will be resolved. If such funding did not become available on a timely basis, however, the Board would explore additional alternatives to preserving value for its creditors and stockholders which might include a sale of all or part of the Company or a reorganization or liquidation of the Company. SEMX CORP: Fails to Comply with Nasdaq Min. Listing Requirements ---------------------------------------------------------------- SEMX Corporation (Nasdaq: SEMX), announced that a NASDAQ Listing Qualifications Panel had issued a written decision that the Company's Common Stock would be delisted from the NASDAQ Stock Market effective as of the opening of trading on March 10, 2003. The Panel's decision was based on SEMX's failure to comply with the NASDAQ requirements as to minimum market value of publicly held securities, or minimum bid price per share. The Company expects that its stock will trade on the Over-the-Counter Bulletin Board (OTCBB) under the symbol "SEMX" following the delisting by NASDAQ. SEMX Corporation and its subsidiaries principally manufacture proprietary materials and interconnect products for microelectronic and semiconductor packaging and packages its products and third party products in tape and reel form for surface mount applications. For further information, visit the Corporation's Web site at http://www.SEMX.com SEMX Corporation's September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $1.8 million. SERVICE MERCHANDISE: Selling Brentwood Headquarters for $9 Mill. ---------------------------------------------------------------- To complete the wind-down of their operations, Service Merchandise Company, Inc., and its debtor-affiliates have exerted thorough marketing efforts to sell their interest in their corporate headquarters in Brentwood, Tennessee. The Corporate Headquarters is one of the Debtors' last remaining assets to be monetized. It consists of a 347,539-square foot office complex located at 1700 Service Merchandise Drive in Brentwood. Beth A. Dunning, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, relates that the Debtors have employed Grubb & Ellis and Centennial Incorporated to assist in arranging potential sale or leaseback transactions with respect to the Property. Grubb & Ellis and Centennial circulated flyers about the Corporate Headquarters premises to 850 investors, potential end- users and real estate professionals. Ms. Dunning reports that these efforts have resulted in various preliminary proposals to purchase the Property. Consequently, Ms. Dunning tells the Court that the Debtors engaged in preliminary discussions with several parties regarding the potential sale of the Property. The discussions eventually culminated in the submission of several verbal and written purchase proposals. In conjunction with their financial and real estate advisors, the Debtors evaluated the terms of each proposal and the benefits arising from the offers. The Debtors subsequently concluded that the offer from Kirkland Properties LLC represents the most advantageous terms and the greatest benefit to their estates thus far. By this motion, the Debtors ask the Court to approve the sale of their interest in the Corporate Headquarters to Kirkland or its nominee, free and clear of all liens, claims and encumbrances. The Debtors will sell the Property for $9,000,000 subject to higher or better offers. The Debtors also ask the Court to approve a leaseback transaction with Kirkland. The Debtors will lease back 14,790 square feet of corporate office space on a month-to-month basis for one year at $0.55 per square foot rent per month. This will permit the Debtors to complete the wind-down of their operations. Kirkland is a developer and investor in office and industrial properties. Kirkland owns 170,000 square feet of office buildings in the Nashville, Tennessee metropolitan area, with an aggregate market value estimated to exceed $17,500,000. The Debtors assure the Court that Kirkland will be able to close the transactions. On February 11, 2003, the Debtors and Kirkland entered into an asset purchase agreement that outlines the sale and leaseback transactions. The salient terms of the Agreement are: A. Property The Debtors will sell the land and building complex as well as certain personal property and fixtures used in connection with the Corporate Headquarters' operation. B. Excluded Personal Property There are certain personal property and fixtures that will not be included in the sale. The Debtors will engage a liquidator to sell these Excluded Personal Property. Under the Purchase Agreement, the Debtors will have until the later of the closing date of the transaction or April 26, 2003 to remove the Excluded Personal Property from the Corporate Headquarters. If the Excluded Personal Property is not removed by that target date, the Debtors will relocate the Excluded Personal Property to the Leased Space. C. Purchase Price -- $9,000,000 The Purchase Price included an initial $100,000 earnest money deposit that Kirkland paid three days after the Purchase Agreement was executed. Kirkland will pay another $300,000 earnest money deposit if it turns out as the successful bidder at the auction. D. Closing Kirkland is required to close the transaction five days after the Court issues a final order approving the sale. E. Title/Condition of Property The sale will be in an "as is, where is" basis, free and clear of any liens, claims, encumbrances and interests. All liens, claims, encumbrances and interests will attach to sale proceeds. The Property is being sold as is, where is, with no representations or warranties. F. Due Diligence Kirkland has an option to terminate the Purchase Agreement, in the event that the updated survey conducted on February 25, 2003 reveals a material impairment of the Property that was not identified on the existing survey of the Property previously delivered to Kirkland. G. Leaseback The parties will enter into the leaseback transaction at the Closing. During the term of the Lease, the Debtors have the right to terminate the Lease effective on the later of: -- the last day of the month in which the Debtors served a termination notice to Kirkland; or -- the date that the Debtors have removed all of their personal property from the Leased Space. Kirkland also has the right to terminate the Lease at any time during its term on 90 days' prior notice. H. Guaranty Robert E. Kirkland will guaranty his firm's payment and other obligations to the Debtors under the Purchase Agreement. (Service Merchandise Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) SHAW GROUP: Liquidity Issues Prompt S&P to Drop Rating to BB+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Shaw Group Inc. to 'BB+' from 'BBB-'. At the same time, Standard & Poor's assigned its 'BB' senior unsecured rating to the engineering and construction firm's proposed $250 million note offering due 2010. The notes are expected to be filed under SEC Rule 144A with registration rights. The ratings assume the timely syndication and completion of the financing activities. Proceeds from the note offering are expected to be used to purchase up to $384.6 million of the firm's LYONs securities in a "Modified Dutch Auction," which will run through March 26, 2003. At November 30, 2002, Baton Rouge, Louisiana-based Shaw Group had $531 million in debt outstanding on its balance sheet. The outlook is now stable. "The rating action reflects Standard & Poor's heightened concerns that Shaw's liquidity will decline over the next several quarters, mainly due to working capital usage as the firm works off its power EPC backlog," said Standard & Poor's credit analyst Joel Levington. "It also reflects weaker-than- expected profitability on certain projects, which has led the company to reduce its earnings guidance to $1.32 per share-$1.37 per share in 2003, versus prior expectations of $1.92-$2.08," the analyst continued. Furthermore, financial flexibility may decline because three projects that have been cancelled may require additional near- term funding on Shaw's part, while cash inflows from either future asset dispositions or legal remedies are uncertain. Nonetheless, the new senior note issue, and expected cash on hand should make the likely put on Shaw's remaining outstanding LYONs balance in May 2004 manageable. New awards for plant construction have rapidly declined and are expected to continue to be quite limited over the next several quarters, which will diminish backlog, earnings, and cash flow generation in the intermediate term, even if Shaw demonstrates solid field execution and there are no additional project delays or cancellations. Although Shaw has experienced project delays and cancellations with some independent power suppliers, its largest remaining power plant construction projects in backlog are with regulated utilities, reducing the potential of further project cancellations. Over time, Shaw's power EPC operations should benefit from Clean Air legislation projects, and its pipe fabrication business may experience growth from recent global alliances. The firm's environmental and infrastructure service operations dramatically increased with the acquisition of the IT Group Inc.'s assets in 2002. Shaw should experience fair growth opportunities driven by the trends of Department of Defense outsourcing, increasing Homeland Security spending, and its efforts to win back commercial customers that used other service firms during IT's financial hardships. That business, which represents about 45% of the firm's consolidated backlog, generally has less working capital swings than Shaw's power business, and is more of a consistent free cash flow generator. SLI INC: Inks Definitive Pacts to Sell Two Lighting Divisions ------------------------------------------------------------- SLI, Inc., has entered into definitive agreements providing for the sale of its Miniature Lighting Division to an affiliate of M Capital LLC, a New York based private equity fund, and the sale of its General Lighting Division to a company owned by Frank M. Ward, the Company's Chairman of the Board and Chief Executive Officer. The Company estimates the transaction with M Capital to have an enterprise value of approximately $100 million and the transaction with Mr. Ward to have an enterprise value of approximately $123 million. Completion of both transactions is subject to the receipt of higher or otherwise better offers, bankruptcy court approval, regulatory approvals and other conditions. The transaction with M Capital is also subject to M Capital's receipt of financing and the satisfactory completion of its due diligence investigation. It is currently anticipated that both transactions will be completed in the spring of this year. A Company spokesman stated, "We are very pleased to announce the proposed sale of both divisions, which constitute substantially all of our operations. As we have from the outset, we will continue to work throughout our Chapter 11 proceedings to maximize the interests of customers and suppliers, creditors and other parties in interest without compromising the quality of our products." In addition, the Company announced that M. Barrington Hare and John A. Booker, two independent members of SLI's board of directors who reside in Europe, have been appointed as interim management to oversee the Company's foreign operations. Management of the Company's foreign operations will report directly to Messrs. Hare and Booker who, in turn, will report to the board of directors of SLI throughout the Chapter 11 proceedings. A Company spokesman stated, "The appointment of Barry Hare and John Booker to oversee the Company's foreign operations on an interim basis will further assist the Company in managing its operations and overseeing the sale process. Both Barry and John have been directors of the Company for nearly five years and have extensive knowledge of the Company's business and operations which continues to be invaluable to the Company." The Company has been operating under chapter 11 protection since September 9, 2002. While no reorganization plan has been finalized, SLI continues to believe that it is unlikely that there will be any recovery for the Company's stockholders. SLI, Inc., based in Canton, MA, is a vertically integrated designer, manufacturer and seller of lighting systems, which are comprised of lamps and fixtures. The Company offers a complete range of lamps (incandescent, fluorescent, compact fluorescent, high intensity discharge, halogen, miniature incandescent, neon, LED and special lamps). The Company also offers a comprehensive range of fixtures. The Company serves a diverse international customer base and markets, has 35 plants in 11 countries and operates throughout the world. The Company believes that it is also the #1 global supplier of miniature lighting products for automotive instrumentation. For more information, visit our Website: http://www.sliinc.com SLI INC: Delaware Court Establishes March 31 as General Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware has imposed a deadline by which all creditors of SLI, Inc., and its debtor-affiliates, including governmental entities, who wish to assert a claim against the Debtors' estates, must file their proofs of claim or be forever barred from asserting that claim. All proofs of claim, to be deemed timely-filed, must be received by the Debtors on or before 5:00 p.m. Eastern time on March 31, 2003. Proofs of Claim are not required, at this time, if they are on account of: i. properly-scheduled Claims, those that are listed in the Schedules and that are not disputed by the holders; ii. claims that have already been properly filed with the Court against the correct Debtor, and claims previously allowed by order of the Court; iii. administrative claims; iv. interdebtor claims; v. claims that are subject to a prior bar date previously approved by the Court. SLI, Inc. and its affiliates operate in multi-business segments as a vertically integrated manufacturer and supplier of lighting systems, which includes lamps, fixtures and ballasts. The Company filed for chapter 11 protection on September 9, 2002 (Bankr. Del. Case No. 02-12608). Gregg M. Galardi, Esq. at Skadden, Arps, Slate, Meagher represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $830,684,000 in total assets and $721,199,000 in total debts. STRUCTURED ASSET: Fitch Rates Unoffered Class B2 Certs. at BB+ -------------------------------------------------------------- Structured Asset Securities Corporation's $13.1 million pass- through certificates, series 2003-BC2 class M2 are rated 'A' by Fitch Ratings. In addition, Fitch rates the $8.3 million class M3 certificates and $2.8 million class M4 'BBB+', $6.2 million class B1 certificates 'BBB-' and $4.1 million unoffered class B2 certificates 'BB+'. The 'A' rating on the M2 certificates reflects the 10.25% credit enhancement provided by the 3% class M3, 1% class M4, 2.25% class B1, 1.50% class B2 and 2.50% initial overcollateralization. All certificates have the benefit of monthly excess cash flow to absorb losses. The ratings also reflect the quality of the loans, the soundness of the legal and financial structures, and the capabilities of Fairbanks Capital Corp. (rated 'RPS1' by Fitch) as primary servicer and Aurora Loan Services ('RMS2+') as Master Servicer. The Murrayhill Company will monitor the deal and make recommendations to the primary servicers regarding certain delinquent and defaulted mortgage loans. The mortgage pool consists of 3401 fixed-and adjustable-rate, fully-amortizing and balloon, first and second lien conventional residential mortgage loans having an original term of no more than 30 years. The cut-off date balance of the pool is approximately $275,536,576. The fixed-rate mortgage loans make up 71.36% of the pool and the adjustable-rate mortgage loans account for the remaining 28.64% of the pool. The weighted average combined loan-to-value of the mortgage loans is 87.59% and approximately 71.49% of the mortgage loans have a combined Loan-to-Value at origination exceeding 80%. The mortgage loans were originated or acquired by Green Tree Finance Corp. - Five, a wholly owned subsidiary of Conseco Finance Corp. and in turn sold to Structured Asset Securities Corporation, a special purpose corporation. Structured Asset Securities Corporation deposited the loans in the trust, which then issued the certificates. JPMorgan Chase Bank will serve as trustee. For federal income tax purposes, a real estate mortgage investment conduit election will be made with respect to the trust fund. SUN HEALTHCARE: J.P. Morgan Chase Discloses 5.5% Equity Stake ------------------------------------------------------------- J.P. Morgan Chase & Co. is the beneficial owner of 507,174 shares of the common stock of Sun Healthcare Group, Inc., on behalf of other persons known to have one or more of the following: the right to receive dividends for such securities; the power to direct the receipt of dividends from such securities; the right to receive the proceeds from the sale of such securities; the right to direct the receipt of proceeds from the sale of such securities. The total amount held, 507,174 shares, represents 5.5% of the outstanding common stock shares of Sun Healthcare Group. J.P. Morgan Chase & Co. holds sole powers of voting and disposing of the stock. As previously reported, Sun and its subsidiaries continue to receive ongoing funding under its revolving loan agreement although the Company is in covenant default under that agreement. 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 http://www.sunh.com SUPERIOR TELECOM: S&P Drops Ratings to D after Bankruptcy Filing ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on cable and wire manufacturer Superior Telecom Inc. to 'D' following the company's announcement that it has filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code in order to restructure its debt. Superior is in negotiations with its bank group and other creditors to eliminate and convert to equity a large portion of its $1.42 billion in debts. Superior will continue to operate its business units with a new $100 million debtor-in-possession facility attained from lenders within its existing bank group. East Rutherford, New Jersey-based Superior has been plagued by very weak market conditions in its telecommunications end markets and significant debt levels. TIDEL TECHNOLOGIES: Prevails in Montrose Investments Lawsuit ------------------------------------------------------------ Tidel Technologies, Inc., (Nasdaq: ATMSE) announced that an order had been entered by the Supreme Court of the State of New York to dismiss the action previously commenced by Montrose Investments Ltd. on August 9, 2002, regarding the nonpayment of the Company's $15 million principal amount, 6% Convertible Debenture due September 8, 2004. Tidel had filed a motion with the Court to dismiss the Montrose complaint for legal insufficiency. James T. Rash, Chairman and CEO, stated, "We are extremely pleased with the decision by the Court vindicating the position asserted by Tidel. With this matter concluded, management can better focus its energies on the turnaround effort presently underway." Tidel Technologies, Inc. is a manufacturer of automated teller machines and cash security equipment designed for specialty retail marketers. To date, Tidel has sold more than 40,000 retail ATMs and 150,000 retail cash controllers in the U.S. and 36 other countries. More information about the company and its products may be found on the company's Web site at http://www.tidel.com At June 30, 2002, Tidel Technologies' balance sheet shows a working capital deficit of about $4 million, and that its total shareholders' equity further diminished to about $54,000 from about $5 million (as at Sept. 30, 2001). TRIMAS CORP: S&P Revises Low-B Ratings Outlook to Stable -------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on TriMas Corp. to stable from positive. At the same time Standard & Poor's affirmed its 'BB-' corporate credit and senior secured debt ratings, and its 'B' subordinated debt ratings on TriMas. The outlook revision is due to the company's recent acquisition of two companies for a total of about $210 million. "Although these acquisitions are strategic to the company's Transportation Accessories Group, now called Cequent, it raises its leverage and reduces the near-term prospects for significant deleveraging that Standard & Poor's had expected," said Standard & Poor's credit analyst John R. Sico. These acquisitions were funded partly by the proceeds from its recent offering of $85 million 9 7/8% senior subordinated notes due 2012, cash on hand, revolver drawdown, and some equity from its sponsor, Heartland Industrial Partners L.P. Bloomfield Hills, Michigan-based TriMas manufactures a large number of industrial-supply products serving niche markets in a diverse range of commercial, industrial, and consumer applications, with strong brand names. It has total debt outstanding of about $800 million. The speculative-grade ratings on TriMas reflect its strong positions in niche markets, offset by the highly competitive and cyclical nature of certain of its businesses, high debt leverage, and thin cash flow protection. The company's products have leading market shares. About 70% of its sales are from products that have number-one or number-two market positions for which TriMas is one of only two or three manufacturers. Businesses provide a good deal of diversity, and a broad product offering lessens the company's dependence on any single product or customer. TriMas has undergone a rationalization of its manufacturing facilities and headcount reductions since 2001 that have led to about $29 million in potential annual cost savings, and about three-quarters of those savings have been realized. TriMas is expected to continue to pursue cost savings and to capitalize on product development. As expected, it has pursued niche acquisitions on an opportunistic basis. The recent acquisitions of Hammerblow Towing Systems Corp. and Highland Group Industries will broaden TriMas' product offering and customer base and solidify its position in trailer and towing accessories. Meanwhile, the company is highly leveraged, with total debt to EBITDA at about 4.8x on a pro forma basis for these acquisitions. This will put some pressure on meeting its leverage covenants in the near term, although the company is expected to generate free cash flow and amend covenants if required. Standard & Poor's expects the company to operate with total debt to EBITDA of around 4x, and EBITDA to interest coverage in the 2.5x-3x area, which is appropriate for the rating; it is currently at 2.5x. The ratings are not expected to change over the intermediate term as TriMas grows its businesses. During this period, the company is expected to reduce its leverage and integrate its recent strategic acquisitions. UNITED AIRLINES: Wins Nod to Assume Glen Tilton Employment Pact --------------------------------------------------------------- UAL Corporation and its debtor-affiliates strongly disagree with the AFA. James H.M. Sprayregen, Esq., describes AFA's Objection as "a curious one". Mr. Sprayregen notes that the AFA does not object to any of the specific terms in the agreement, except one -- the assumption provision itself. Additionally, the AFA ignores that Mr. Tilton was elected by a unanimous vote of United's Board of Directors. According to the AFA: -- the Debtors should ignore the difficulties of operating under Chapter 11 and the challenges of a successful reorganization; and -- the Debtors should send a message to creditors, employees, unions, management, investors, the flying public and Mr. Tilton, that they are simply not sure if Mr. Tilton is the right person for this momentous task. Unfortunately, this would be devastating to the Debtors' chances of a successful Chapter 11 emergence. Mr. Sprayregen asserts that it would be a gross violation of the Debtors' business judgment if they would not assume the Tilton Agreement. The Debtors need to send a strong signal to the public that Mr. Tilton made a commitment to become their leader in this critical time of bankruptcy. Mr. Sprayregen insists that there is nothing premature in assuming the Agreement now. "To change CEOs at this stage, would potentially derail the entire process." The Debtors admit that they did not share the Tilton Employment Motion with their unions before filing it with the Court. But even with advanced viewing, nothing would have changed. The Agreement's terms were reviewed and approved by UAL Board's Compensation Committee, which includes representatives from organized labor. * * * At the February 21, 2003 hearing, Judge Wedoff ruled that United's management used "reasonable business judgment" in determining to assume the Glen Tilton Employment Agreement. Accordingly, the Court overruled the Association of Flight Attendants' objection. * * * As previously reported, the salient terms of the Tilton Employment Agreement are: 1) Mr. Tilton is entitled to a $3,000,000 signing bonus upon execution of the Agreement; 2) In addition to a Base Salary of $845,500 (assuming the 11% reduction), Mr. Tilton may be entitled to two additional bonuses. The Board will determine if Mr. Tilton has earned his Target Bonus, which is 100% of Base Salary. If the Board determines that Mr. Tilton has displayed "Superior Performance," it may award him an "Extraordinary Bonus," equal to an additional 100% of Base Salary. At the Board's discretion, Mr. Tilton may earn $2,536,500 in a given year; 3) United will pay for all Mr. Tilton's relocation expenses; 4) UAL will fund three Trusts for Mr. Tilton. Each will hold $1,500,000, for a total of $4,500,000. As long as Mr. Tilton does not leave for "other than Good Reason," he is entitled to the entire amount. This will be paid either on the first business day in January 2004, or upon his termination of employment; 5) Upon execution, Mr. Tilton will receive, through a Restricted Stock Agreement, 100,000 shares of UAL common stock; 6) Under the UAL 2000 Incentive Stock Plan, Mr. Tilton will receive Options on 500,000 shares of UAL common stock; 7) Under the UAL 2002 Incentive Stock Plan, Mr. Tilton will receive Options on 650,000 shares of UAL common stock; and 8) The Options expire on September 1, 2012. They are exercisable in equal annual installments on the first four anniversaries of the Employment Date. The exercise price is calculated by the average high and low stock price of UAL common between August 30, 2002 and September 3, 2002. (United Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED PAN-EUROPE: Majority of Creditors Vote in Favor of Plan -------------------------------------------------------------- UnitedGlobalCom, Inc., (Nasdaq: UCOMA) announced that an overwhelming majority has voted in favor of the Akkoord (plan of composition) for its subsidiary United Pan Europe Communications N.V., at the creditors' meeting at the Dutch court in Amsterdam. Held on February 28, the creditors' meeting is related to the ongoing recapitalization process of UPC. The Dutch court has scheduled the confirmation hearing (homologatie) of the Akkoord on March 12, 2003. UPC remains on track to complete the recapitalization process by the end of March 2003. UGC is the largest international broadband communications provider of video, voice, and Internet services with operations in 21 countries. Based on the Company's aggregate operating statistics at September 30, 2002, UGC's networks reached approximately 19.1 million homes and 13.1 million total subscribers. Based on the Company's consolidated operating statistics at September 30, 2002, UGC's networks reached approximately 12.4 million homes and over 8.7 million subscribers, including over 7.3 million video subscribers, 690,300 voice subscribers, and 700,000 high-speed Internet access subscribers. In addition, its programming business had approximately 45.8 million aggregate subscribers worldwide. UGC's major operating subsidiaries include UPC, a leading pan- European broadband communications company; VTR GlobalCom, the largest broadband communications provider in Chile, and Austar United Communications, a leading satellite and telecommunications provider in Australia and New Zealand. Visit http://www.unitedglobal.comfor further information about UGC. US AIRWAYS: Fails to Make Payments on 2000-3 P-T Certificates ------------------------------------------------------------- US Airways, Inc., did not make certain payments due today on its 2000-3 pass through trust certificates related to 23 Airbus aircraft totaling approximately $44.5 million. US Airways is currently in discussions with certain interested parties regarding these payments. The company anticipates reaching agreement on these payments during the five-business day cure period allowed for these payments. As of Feb. 28, 2003, US Airways Group, Inc.'s unrestricted cash position was approximately $480 million. Bankruptcy law does not permit solicitation of votes on a reorganization plan until the Bankruptcy Court approves the applicable disclosure statement relating to the reorganization plan as providing adequate information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holder of claims or interests of the relevant class to make an informed judgment about the plan. On Jan. 17, 2003, the Bankruptcy Court approved the company's Disclosure Statement with respect to its First Amended Plan of Reorganization (Amended Plan) and authorized a balloting and solicitation process that commenced on Jan. 31, 2003, and will conclude on March 10, 2003. A hearing on confirmation of the Amended Plan is scheduled to commence in the Bankruptcy Court on March 18, 2003. Persons who are entitled to vote on the Amended Plan should obtain and read the Bankruptcy Court approved Disclosure Statement prior to voting to accept or reject the Amended Plan. The company will emerge from Chapter 11 if and when the Amended Plan receives the requisite creditor approvals and is confirmed by the Bankruptcy Court. US Air Inc.'s 10.375% bonds due 2013 (UAWG13USR2) are trading at about 10 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAWG13USR2 for real-time bond pricing. US AIRWAYS: Michelle Bryan to Leave Company After Emergence ----------------------------------------------------------- Michelle V. Bryan, US Airways executive vice president-corporate affairs and general counsel, announced her intention to leave shortly after the company's planned emergence from bankruptcy on March 31, 2003. During her 20-year tenure with US Airways, Bryan has held a number of executive positions, including vice president and deputy general counsel, corporate secretary, and senior vice president of human resources. She was named to her current position in April 2002 as part of the new management team put in place by David Siegel, US Airways president and chief executive officer. Bryan has spent the past year overseeing the legal and government affairs responsibilities associated with the airline's successful application for a federal loan guarantee and its restructuring under the U.S. bankruptcy code. "While Michelle has made a significant contribution in all of the positions she has held over the years, her knowledge and dedication have helped us most especially during this past very critical year," said Siegel. "The restructuring process places enormous challenges on the legal and corporate affairs teams and her leadership has been an invaluable asset in keeping this process on track and successful. I have valued her counsel and regret, but respect, her decision to leave." Bryan will be succeeded by Elizabeth K. Lanier, who will assume the same role as executive vice president-corporate affairs and general counsel. Lanier comes to US Airways most recently from Trizec Properties, Inc., where she was senior vice president- general counsel. Prior to that, she was vice president-general counsel for General Electric Power Systems (1998-2002), and vice president and chief of staff for Cinergy Corp. (1996-1998). She previously was a partner at the law firm of Frost & Jacobs (now Frost Brown Todd LLC) in Cincinnati, Ohio, and associated with Davis Polk & Wardwell in New York City. She holds a bachelor of arts degree from Smith College and a J.D. degree from the Columbia University School of Law where she was a Harlan Fiske Stone Scholar. "Liz has proven herself to be an outstanding corporate lawyer and legal strategist, and she is joining US Airways at an exciting time as we prepare for our emergence from Chapter 11 protection. Our ability to attract Liz to our team is further proof that our restructuring efforts are positioning our airline for long-term success and growth," said Siegel. Lanier started with the company today in order to facilitate a smooth transition in anticipation of Bryan's departure in early April. US AIRWAYS: Court Extends Plan Proposal Period Until March 31 ------------------------------------------------------------- Judge Mitchell extends US Airways Group Inc., and its debtor- affiliates' Plan Proposal Period through and including March 31, 2003, and the Debtors' the Solicitation Period through and including May 30, 2003. (US Airways Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. RESTAURANT: Board Approves April Common Stock Dividend ----------------------------------------------------------- U.S. Restaurant Properties, Inc.'s (NYSE:USV) Board of Directors has approved the April monthly common stock dividend of $0.11 per share (which equates to an annual rate of $1.32 per share). The April monthly common stock dividend will be paid on April 15, 2003 to stockholders of record on April 1, 2003. U.S. Restaurant Properties, Inc., is a non-taxed financial services and real estate company dedicated to acquiring, managing, and financing branded chain restaurant properties (such as Burger King(R), Arby's(R), Chili's(R), Pizza Hut(R)) and other service retail properties. The company currently owns or finances 815 properties located in 48 states. * * * Liquidity and Capital Structure Outstanding debt at December 31, 2002, totaled $353 million, or 46.6% of total capitalization. The Company's interest expense coverage ratio for the quarter was 2.6 times FFO. The average interest rate declined to just over 5% for the quarter. Other than regularly scheduled debt amortization, the Company must reduce its line of credit by $5.0 million by May 31, 2003, and has $47.5 million in senior notes that are due August 1, 2003. In anticipation of these maturities, management is discussing various financing alternatives with its creditors. USG CORP: Appoints Karen L. Leets as VP and Treasurer ----------------------------------------------------- USG Corporation (NYSE:USG) announced the appointment of Karen L. Leets, 46, to the position of vice president and treasurer. She joins USG from McDonald's Corporation where she served as assistant treasurer. In her new position, Leets will serve as an officer of the company and oversee USG's corporate treasury activities, including management of the company's banking, debt and cash management programs, as well as tax planning and compliance, real estate and insurance. She will report directly to Richard H. Fleming, USG Corporation executive vice president and chief financial officer. Leets earned a bachelor's degree from Indiana State University in 1978, followed by a master's degree in business administration in 1979. She started her career as a staff accountant in the Indianapolis office of Coopers & Lybrand and transferred to the Chicago office in 1986 where she served as general practice audit manager. She then joined McDonald's Corporation in 1987. Leets is actively involved in Our Saviour's Lutheran Church in Naperville, IL, where she currently serves on the Council and the Finance Committee. A native of Vincennes, IN, Leets, her husband David and their two children reside in Naperville, IL. USG Corporation is a Fortune 500 company with subsidiaries that are market leaders in their key product groups: gypsum wallboard, joint compound and related gypsum products; cement board; gypsum fiber panels; ceiling panels and grid; and building products distribution. For more information about USG Corporation, visit the USG home page at http://www.usg.com USG CORP: Court Approves Maple Energy Purchase Agreement -------------------------------------------------------- USG Corporation and its debtor-affiliates are parties to a ground lease and energy purchase and sale agreement with Maple Cogen II LLC, as tenant, Maple II BU LLC, as back-up owner and Maple II PM LLC, as back-up seller. The Debtors entered into the Agreement to reduce the cost associated with their gypsum wallboard manufacturing plant. The Empire Plant sits on 640 acres of land located in Washoe County, Nevada. The Empire Plant has substantial heat requirement for its wallboard kiln that is currently generated by burning natural gas. The wallboard kiln utilizes 400,000 dth of natural gas on an annual basis. The Empire Plant requires 20,000,000 kWh of electricity annually. The Maple Companies agreed to provide energy to the Empire Plant at a discounted price. The Maple Companies would build, own and maintain a natural gas turbine with back-up capacity, solely at their risk, cost and expense, on one-quarter of an acre section adjacent to the Plant. The turbine would generate both heat and electricity suitable for use at the Plant. Unfortunately, the Debtors and the Maple Companies were not able to execute the Agreement. As a result, on January 3, 2003, the Debtors and Maple Cogen I LLC decided to modify certain terms and execute an amended agreement, which guarantees better savings for the Debtors. Under the Amended Agreement, the Debtors estimate savings over $770,000 every year. The Debtors would also reduce their energy without having to make any capital investment and to share in Maple I's profits generated by the facility. Accordingly, the Debtors sought and obtained the Court's approval of their Amended Agreement with Maple, which provides that: (a) Maple I's Costs: Maple I's estimated costs for building and installing the natural-gas fired turbine facility will be $11,000,000; (b) Price of Electricity: For the first two years of the Amended Agreement, Maple I will provide the Debtors with electricity at the same rate charged by local utility companies. Subsequently, Maple I will provide electricity generated by the Facility to the Debtors at a price per kWh that is a function of Maple I's cost of gas with a floor of 85% and a ceiling of 110% of the rate charged by the local utility companies; (c) Parties to Agreement: Sierra Pacific Power Company, instead of Maple I, will provide the Debtors with back-up electricity requirements. Maple II BU and Maple II PM are no longer parties to the Amended Agreement. In addition, Maple I, instead of Maple II, will be the tenant under the Amended Agreement; (d) Production Losses: Maple I will not be liable for any actual production losses sustained by the Debtors due to Maple I's failure to supply electricity to the Empire Plant; (e) Initial Term: The initial term of the Amended Agreement is for 13 years, instead of the 10 years provided under the Original Agreement; (f) Profit Sharing: Maple I will share with the Debtors a portion of the profits from the sale to third parties of excess energy produced by the Facility but not purchased by the Debtors if the wholesale price for any hourly sale of energy exceeds $95 per mWh on a generated basis; and (g) Termination Fee: The termination fee is reduced after the first year of the initial term of the Amended Agreement by $105,000 each year. However, the termination fee cannot be lower than $500,000. (USG Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) VALEO INVESTMENT: S&P Ratchets 3 Class Ratings to Lower-B Level --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-2, A-3, B-1, B-2, and Preferred Share notes issued by Valeo Investment Grade CDO III Ltd., an arbitrage CBO transaction collateralized primarily by investment-grade bonds, and managed by Deerfield Capital Management LLC. Concurrently, the ratings are removed from CreditWatch with negative implications, where they were placed October 17, 2002. At the same time, the 'AAA' rating assigned to the class A-1 notes is affirmed based on a financial guarantee insurance policy issued by Financial Security Assurance Inc. The lowered ratings reflect factors that have negatively affected the credit enhancement available to support the notes since the transaction was originated in December 2001. These factors include a negative migration in the credit quality of the assets within the collateral pool and exposure to debt issued by WorldCom Inc. and AT&T Canada Inc. The credit quality of the collateral pool has deteriorated since the transaction was originated. Currently, 16.26% of the performing assets in the collateral pool come from obligors with ratings on CreditWatch with negative implications, and 36.53% of the total assets come from obligors with ratings that are below investment-grade (below 'BBB-'). As of the most recent trustee report (February 3, 2003), $27.00 million par value of assets in the portfolio come from an obligor currently rated 'D' by Standard & Poor's. The senior A overcollateralization ratio was 105.01%, versus a minimum required ratio of 102.4%, and compared to an effective date overcollateralization ratio of approximately 106.37%; the subordinated A overcollateralization ratio was 103.91%, versus a minimum required ratio of 102.3%, and compared to an effective date overcollateralization ratio of approximately 105.25%; finally, the class B overcollateralization ratio was 101.76%, versus a minimum required ratio of 101.1%, and compared to an effective date overcollateralization ratio of approximately 103.08%. Standard & Poor's has reviewed the results of current cash flow runs generated for Valeo Investment Grade CDO III Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the rated interest and principal due on the notes. After the results of these cash flow runs were compared with the projected default performance of the collateral pool, it was determined that the ratings assigned to the notes were no longer consistent with the amount of credit enhancement available, resulting in the lowered ratings. Standard & Poor's will continue to monitor the performance of the transaction to ensure that the ratings assigned remain consistent with the amount of credit enhancement available. RATINGS LOWERED AND REMOVED FROM CREDITWATCH NEGATIVE Valeo Investment Grade CDO III Ltd. Rating Current Balance Class To From (mil. $) A-2 A AA/Watch Neg 30.00 A-3 BBB+ A-/Watch Neg 5.00 B-1 BB+ BBB/Watch Neg 5.00 B-2 BB+ BBB/Watch Neg 5.00 Pref. Shares B+ BB+/Watch Neg 18.00 RATING AFFIRMED Valeo Investment Grade CDO III Ltd. Current Balance Class Rating (mil. $) A-1 AAA 440.00 VIEWPOINT: Defaults on Smithfield & Portside Purchase Agreement --------------------------------------------------------------- Viewpoint Corporation (Nasdaq:VWPT) announced that on Friday, February 28, 2003, it received Event of Default notices from Smithfield Fiduciary LLC and Portside Growth & Opportunity Fund, which allege that the Company is in breach of its representations and warranties that were contained in the securities purchase agreement. Smithfield and Portside are two of the three investors who purchased a portion of the Company's 4.95 percent convertible notes due December 31, 2007. In a letter subsequently delivered to the Company, the note holders indicated that they are basing these allegations on the Company's fourth quarter financial results, which were announced by the Company at the close of the stock market trading session the previous day. Under the terms of the notes, upon an event of default, the Company would be required to redeem the notes for an amount equal to 120 percent of the outstanding principal plus accrued and unpaid interest on the notes (approximately $5.5 million at the time of the notice). The Company believes that the note holders' allegations are without merit and accordingly, no event of default has occurred under the terms of the notes. Viewpoint Corporation (Nasdaq:VWPT) is a leading provider of interactive media technologies and services. Its graphics operating system platform, the Viewpoint Media Player, has been licensed by Fortune 500 companies for use in online, offline and embedded applications serving a wide variety of needs, including: business process visualizations, marketing campaigns, rich advertising and product presentations. The Company also provides cross media digital solutions for film, broadcast television and games. Headquartered in New York City, the Company also has offices in London and Los Angeles. Visit the Viewpoint Web site at http://www.viewpoint.com WILLIAM LYON: S&P Assigns Preliminary B- Rating to Note Offering ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary 'B-' rating to William Lyon Homes' proposed $200 million senior unsecured note offering. Concurrently, the 'B' corporate credit and the 'CCC+' senior unsecured note ratings are affirmed. Proceeds from the note offering are expected to repay secured debt and redeem existing senior unsecured notes. The ratings outlook is stable. The rating actions acknowledge the company's steady improvement in its homebuilding operations, highlighted by improving profitability and cash flow. The company's leverage, while high, has remained stable, and historically constrained financial flexibility will improve with the proposed offering, as secured debt levels decline and overall maturities will be extended. These improvements are modestly countered by a somewhat complex financial profile, due to reliance on joint ventures to finance a meaningful portion of active communities under development. The company has long ranked among the larger builders on the West Coast, but has always been highly leveraged. A sizeable inventory write-down in 1997 (which at the time represented approximately 20% of inventory) eliminated the company's book equity base. Covenants related to the company's existing 12.5% senior notes required WLS to repurchase portions of its public senior notes and also restricted the company's ability to incur additional on-balance sheet secured indebtedness. With financial flexibility constrained, management turned to off- balance sheet joint ventures as a way to pursue the acquisition of better-positioned land using, non-recourse financing. These off-balance sheet ventures are, in the aggregate, conservatively leveraged at 38%, which is substantially less leveraged than the parent. The joint ventures have been very profitable, and income from the joint ventures accounted for 43% of operating income in 2002. As on-balance sheet homebuilding operations have improved, WLS has reduced it reliance on the joint ventures, managing to increase the proportion of activity, which is financed on- balance sheet. At year-end 2002, the aggregate size of the joint ventures ($266 million in assets) has become smaller relative to that of the parent ($552 million, net of investment in the joint ventures), which compares to $252 million and $280 million, respectively, at the end of 2000. Despite the reduced reliance on joint ventures, WLS will continue to be a meaningful contributor to overall homebuilding operations. In 2002, home closings for the wholly owned communities were down 6.5% but the average home price was up 40%, and on a fully consolidated basis (including joint ventures), home closings were essentially flat, while the average home price was up 27%. Gross and operating margins for the wholly owned operations were 19.8% and 9.7%, respectively. Operating margins would be roughly 200 basis points higher if the more profitable joint ventures are fully consolidated. The company has continued to improve its overall financial position. The strong housing market and profitable joint ventures, in conjunction with the partial amortization of the higher cost bonds, have resulted in improved debt coverage measures and a sharp drop in leverage. EBITDA has grown steadily during the past four years resulting in improved EBITDA to interest coverage of more than 3x, while leverage has dropped to 59%. Debt to EBITDA is expected to remain in the 3x area. Since the company's joint ventures are moderately leveraged, full consolidation does not negatively impact WLS' financial profile. In addition, management has some discretion as to how it will commit future internally generated cash flow (on- versus off-balance sheet) and the refinancing will enable the company to continue to pursue more on-balance sheet growth. Pro forma for the proposed $200 million unsecured note offering, secured debt will comprise roughly 40% of total debt (less than 60% on a fully consolidated basis), and encumber tangible assets in the 20% to 30% range. Management is committed to maintaining the level of secured debt to tangible assets below 30%. As a result, the new senior notes are being rated one notch below the company's corporate credit rating. LIQUIDITY WLS had $17 million of cash on its balance sheet at year-end (2002), which is in-line with prior years. Inventory turns have slowed to 1.2x as the company has increased its wholly owned land/lot position, which has also resulted in greater use of its credit facilities ($118 million outstanding). The proposed offering will free up capacity under its revolving credit facilities, which will bolster financial flexibility. WLS has three separate secured credit facilities with total capacity of up to $275 million (subject to a borrowing base calculations): $150 million (due 2006), $75 million (due 2004), and $50 million (due 2003). The debt maturity schedule remains very manageable. With the proposed refinancing, other than the credit facilities that mature during the years 2003 to 2006, the only other debt maturity will be the pending note issuance, which is expected to mature in 2013. The proposed senior notes contain certain restrictive covenants, including limitations on additional debt subject to either consolidated debt-to-tangible net worth of less than three-to-one or fixed-charge coverage of at least 2x. Furthermore, management must maintain minimum tangible net worth of $75 million ($174 million at December 31, 2002). If tangible net worth declines below $75 million for two consecutive fiscal quarters, management must offer to repurchase 10% of the aggregate principal amount plus accrued and unpaid interest. Additional liquidity is derived from its joint venture activities. WLS has many joint venture partners and has historically demonstrated the ability to pursue various financial structures, including joint ventures structured with all equity. OUTLOOK: STABLE With WLS' core markets experiencing favorable demand and modest supply, recent improvements to financial measures should be sustainable. Cost of capital and refinancing risk will be reduced with the new unsecured note issuance. Longer term rating improvement would be driven by the company's ability to pursue more of its growth on-balance sheet, while continuing to grow the business in a profitable manner. WINSTAR COMMS: Ch. 7 Trustee Taps Mark Peterson as Co-Counsel ------------------------------------------------------------- On July 18, 2001, during the pendency of the Debtors' Chapter 11 cases, Winstar Radio Productions, LLC procured an arbitration award against a defendant in connection with an action in the Worcester Superior Court in the Commonwealth of Massachusetts amounting to $287,566.83. The Debtors ultimately obtained a judgment confirming the Award, which the Defendant subsequently appealed to Massachusetts Appeals Court. By this application, Chapter 7 Trustee Christine C. Shubert seeks the Court's authority to employ the Law Office of R. Mark Petersen, Esq., as co-counsel nunc pro tunc to January 1, 2003. According to Sheldon K. Rennie, Esq., at Fox, Rothschild, O'Brien & Frankel LLP, in Wilmington, Delaware, the Trustee seeks to employ Petersen because of its familiarity and experience with respect to matters relating to local custom and practice as well as the general administration of the Appeal. Petersen has the necessary expertise regarding appellate practice before the Massachusetts Court of Appeals. Petersen will assist Kaye Scholer LLP in defending the Appeal and obtaining the Award. As co-counsel, Petersen will: A. file the appropriate papers to have Kaye Scholer admitted pro hac vice and substituted as lead counsel in connection with the Appeal; B. monitor the status of the Appeal; C. make appearances on the Trustee's behalf in connection with the Appeal in the event that Kaye Scholer attorneys cannot attend; and D. perform other services as the Trustee will require as co-counsel to Kaye Scholer in connection with the Appeal. Petersen intends to apply for compensation of professional services rendered in connection with the Appeal and for reimbursement of actual and necessary expenses incurred, in accordance with the applicable provisions of the Bankruptcy Code, the Bankruptcy Rules, and the Local Rules and orders of this Court. The attorneys presently designated to represent the Trustee and their current standard hourly rates are: R. Mark Peterson $180 Michelle M. Hansen $160 Petersen understands that its fees and expenses in these Chapter 7 cases will be subject to the requirements set forth in Sections 330 and 331 of the Bankruptcy Code, the applicable Bankruptcy Rules, and the Local Rules and orders of this Court. Petersen has informed the Trustee that it: (a) does not hold or represent an interest adverse to the Debtors' estates; (b) is a "disinterested person" as defined by Section 101(14) of the Bankruptcy Code; and (c) has no connection with the Debtors, their creditors or other parties-in-interest in these cases. (Winstar Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) YOUTHSTREAM MEDIA: Red Ink Continues to Flow in December Quarter ---------------------------------------------------------------- YouthStream Media Networks, Inc., (OTC Bulletin Board: YSTM) announced the results of its operations for the three months ended December 31, 2002, reporting net sales of $1,956,000 and a net loss of $2,973,000, as compared to net sales of $2,831,000 and a net loss of $3,806,000 for the three months ended December 31, 2001. Included in the net loss for the three months ended December 31, 2002 was a loss on the closing of retail stores of $(989,000) and a gain from discontinued operations of $136,000, as compared to a loss from discontinued operations of $(460,000) and a loss on disposal of discontinued operations of $(291,000) included in the net loss for the three months ended December 31, 2001. For the six months ended December 31, 2002, the Company reported net sales of $8,402,000 and a net loss of $5,152,000, as compared to net sales of $10,952,000 and a net loss of $3,530,000 for the six months ended December 31, 2001. Included in net loss for the six months ended December 31, 2002 was a loss on the closing of retail stores of $1,458,000, a loss from discontinued operations of $447,000 and a gain on disposal of discontinued operations of $482,000, as compared to a loss from discontinued operations of $1,044,000 and a loss on disposal of discontinued operations of $291,000 included in the net loss for the six months ended December 31, 2001. The results of operations for the three months and six months ended December 31, 2001 have been restated to reflect the discontinuance of the Company's online segment and the sale of its media assets during August 2002. The Company's remaining operations consist of the sale of decorative wall posters through on-campus sales events, retail stores and internet sales to teenagers and young adults. Sales decreased in 2002 as compared to 2001 as a result of the closing of 20 retail stores and negative same store sales. The Company currently operates 19 stores in 14 states in the East and mid-West. The Company generated a positive cash flow from operating activities of $300,000 during the six months ended December 31, 2002, as compared to a negative cash flow from operating activities of $8,508,000 during the six months ended December 31, 2001, reflecting recent efforts to restructure the Company, streamline operations and reduce ongoing overhead. Recent Developments: During January 2003, the Company completed a debt restructuring, resolving default claims by the holders of the Company's outstanding notes, in the aggregate principal amount of $18,000,000, to exchange those notes, including approximately $2,000,000 of accrued interest, for a cash payment of $4,500,000, preferred stock with a face value of $4,000,000, common stock equal to 10% of the number of shares to be outstanding after the issuance of those shares, and $4,000,000 principal amount of promissory notes issued by the Company's retail subsidiary and secured by the Company's pledge of all of its stock in the subsidiary. At the conclusion of the debt restructuring, the Company's existing board of directors resigned and was replaced by three new directors, Jonathan V. Diamond, Hal G. Byer and Robert Scott Fritz. Jonathan V. Diamond was named Chief Executive Officer and Robert N. Weingarten was named Chief Financial Officer. New management has begun the process of rebuilding shareholder value by continuing its recent efforts to settle remaining obligations, reduce operating costs and streamline operations, as well as to maximize the value of the Company's remaining operating subsidiary. The Company's new management is also exploring strategic opportunities to acquire operating companies that meet specific criteria, including a history of profitability, positive cash flow, strong management and favorable long-term prospects. Z-TEL TECHNOLOGIES: Dec. 31 Balance Sheet Upside-Down by $99MM -------------------------------------------------------------- Z-Tel Technologies, Inc. (Nasdaq/SC: ZTEL), a leading provider of local, long distance and enhanced telecommunications services, announced its fourth quarter and fiscal year 2002 financial results. For the three-month period ended December 31, 2002, the Company reported revenues of $57.0 million, compared to $59.1 million for the prior year period, and EBITDA (earnings before interest, taxes, depreciation and amortization) of $2.2 million, compared to negative $3.9 million for the same period in 2001. Net loss for the fourth quarter of 2002 was $4.2 million, compared to a loss of $8.9 million for the fourth quarter of 2001. Net loss attributable to common stockholders was $7.9 million versus $13.6 million for the fourth quarter of 2001. For the fiscal year 2002, the Company reported revenues of $235.3 million, compared to $275.9 million for 2001, and EBITDA of $5.0 million, compared to negative $125.9 million for 2001. Net loss for 2002 was $20.0 million versus $146.1 million for 2001. Net loss attributable to common stockholders for 2002 was $35.1 million compared to $170.5 million for 2001. For the fiscal year 2002, the Company reported positive adjusted EBITDA of $0.3 million, compared to negative $36.7 million in 2001. Adjusted net loss for 2002 was $24.2 million versus $56.9 million for 2001. Adjusted net loss attributable to common stockholders for 2002 was $39.8 million compared to $81.3 million for 2001. These adjusted amounts are net of special items broken down in a table at the end of this press release in a format that reconciles the actual results to these adjusted amounts for the periods presented. At December 31, 2002, the Company's balance sheet shows that its total liabilities exceeded its total assets by about $99 million. Gregg Smith, president and chief executive officer, commented, "We're pleased to report our third straight quarter of positive EBITDA and an improved cash position at the end of the fourth quarter. 2002 was a challenging year, with the pending FCC Triennial Review -- which virtually halted new business activity in our wholesale group -- WorldCom's bankruptcy, and the general economic slowdown. Z-Tel, however, continued its strong trends in operational improvements and in building a more diverse set of distribution channels. Entering 2003, our business model is beginning to prove that we can internally finance a substantial growth rate and deliver bottom line benefits for our shareholders. "In the most critical regulatory development affecting Z-Tel since its inception," Smith added, "an FCC majority voted last month to preserve local competition for voice services nationwide, pending further proceedings before state commissions. While we must reserve complete judgment until we review the final order, which is not likely to be issued for several weeks, the result of this decision is vital, as it appears to ensure continued access to UNE-P, the method we use to deliver our mix of services, for our retail services for at least three years. The FCC majority's decision returns final authority over UNE-P to state utility commissions, who we believe are in the best position to determine what's best for the telecom consumers in their states. We have confidence that state regulators, most of whom have witnessed the benefits competition brings to their constituents, including lower rates and improved services, will continue their commitment to competition and act to preserve the availability of UNE-P in their jurisdictions." Smith stated, "The Triennial Review decision removed a large cloud of uncertainty from UNE-P. While vigorous legal maneuvering regarding UNE-P will likely continue in upcoming months, we expect the ongoing growth in UNE-P businesses to further validate it as a business model. Business development activity levels within our wholesale business are strong again. We believe this renewed activity and our recent agreement with Sprint provide direct evidence of the communications industry's confidence in UNE-P." Growth has returned to the Company's retail business. At the end of February, the Company had approximately 230,000 active retail lines in service, compared to approximately 203,000 active retail lines at the end of 2002. This growth is primarily attributable to several new strategic sales and marketing initiatives. In the past 120 days, the Company has signed over 20 agreements with independent sales affiliates, direct sales organizations and other companies to represent its retail products. The Company also launched a media campaign in Atlanta in early February featuring its unlimited residential calling packages and newest consumer feature, Personal Voice Assistant, and plans to extend this campaign to other cities in the second quarter of 2003. "As our recent rapid growth in retail lines indicates, innovation still matters to customers," Smith stated. "Another cause for optimism is that customer quality continues to improve, as residential users recognize the benefits of our services such as Personal Voice Assistant and unlimited local and long distance calling plans." Trey Davis, chief financial officer, stated, "We are pleased with our progress in 2002, particularly during the latter part of the year. A variety of operating improvements drove our substantially improved financial performance over the second half of 2002. One of the most essential enhancements was in the area of bad debt. During the fourth quarter alone, our bad debt expense dropped to just under 8 percent of retail revenue. This represented a decrease of more than $2 million from the level reported during the third quarter. "We also experienced very healthy gross margins throughout 2002. During the latter half of the year, operating improvements and effective working capital management resulted in our generating $18.4 million of cash from operations, including the $9.0 million of expense reduction relating to the Verizon access rate reduction. We also managed our capital expenditures downward. During the fourth quarter, we recorded just under $1.5 million of capital expenditures, compared to $2.7 million for the third quarter of 2002, despite implementing wholesale operations for Sprint in 33 states. This decline is both a credit to the discipline of our management team and an indication of our ability to accommodate additional significant wholesale customers without having to undergo a major capital expenditure initiative. "Today, active retail line count is up approximately 15 percent over year-end 2002, and revenue is growing once again," added Davis. "This growth, coupled with the inherent strength of our fundamental economic model, should translate into improved financial results in the coming quarters. We currently generate between $20 and $25 of monthly incremental EBITDA for every new retail line. If current retail line growth continues and our retail economics continue to perform as they have for the past several years, we expect to achieve operating profitability by the mid to latter part of 2003." Davis concluded, "The substantial retail line growth rate we expect over the coming quarters should cause cash to remain relatively stable or possibly increase throughout 2003. Our obvious challenge is to balance revenue growth with liquidity management, given that we are increasing expenses somewhat to help achieve that growth. We anticipate that in the coming months, however, Sprint wholesale operations will begin to contribute to our operating profitability, and the retail line growth that we're seeing should begin to have a favorable impact on our liquidity position by mid-year, as the cash payback on a new retail line is less than five months. We've also identified additional areas to target for expense improvement during 2003 that should only enhance our operating results and resulting liquidity position." The Company ended the year with $16.0 million in cash, compared to $13.5 million at the end of the third quarter of 2002 and compared to the $9.1 million of cash the Company had on hand at June 30, 2002. "The first half of 2003 will see some changes in our revenue composition," added Smith, "with retail revenue expanding, increasing contributions from Sprint and other wholesale customers, and MCI voicemail box traffic likely declining in the second quarter. We're handling the transition effectively, and to an outside observer, the numbers on an overall basis may appear to be improving moderately, but they understate our true progress." "2003 could be a breakout year for Z-Tel," Smith continued. "We have a relatively fixed operating cost model, low levels of capital expenditure requirements to support both the retail and wholesale expansion of our UNE-P business, less than $9.0 million in funded debt remaining, and a product breakthrough, Personal Voice Assistant, that distinguishes our service from our competitors'. Our wholesale business is virtually immediately income and cash generating, as we typically earn minimum per subscriber, per month and other fees, in addition to reimbursement for direct expenses. The effect of these two business models growing together can result in substantial improvements in our profitability." Smith added, "In our first communication with our investors in 2003, we understand that we have three major questions to answer. The first is regarding the sustainability of UNE-P, the second is related to our financial viability and ability to grow our business given our liquidity position, and finally, concerning our ability to generate sufficient free cash flow to fund capital expenditures, meet our modest debt obligations, and to fully cover the amounts accruing to the preferred shareholders. During 2002, we proved our ability to internally fund operations, to pay our indebtedness obligations on time and to build cash balances. Continued improvements in these areas will provide direct evidence that we are creating value for our common shareholders, a critical objective for Z-Tel management in the coming quarters. Our progress is demonstrable, and we are moving forward." Smith concluded, "Telecommunications has been an extraordinarily challenging industry for the past three years, but its story is far from unique. Over the past 30 years, investors and Americans have witnessed first-hand the challenges of transitioning other similar industries from a highly regulated monopolistic marketplace to a competitive one. Telecommunications will be no exception. Z-Tel sells its services in a vast marketplace, competing with monopolists that prefer to change the rules than compete on services and value. But in telecommunications, as in other industries before it, the end game will be positive. We expect to see resumed expansion of the overall marketplace, much greater service choices and value for consumers and businesses, and substantial rewards for investors who have backed winning new entrants. Our vision for communications remains intact, and we are excited about our future." First Quarter and Fiscal Year 2003 Guidance The Company is offering the following guidance for the first quarter and fiscal year 2003. These forecasts are subject to risks and events that could cause actual results to differ materially from expectations, including but not limited to the success of our wholesale service offering. Z-Tel was founded in the wake of the Telecommunications Act of 1996. With the establishment of the Unbundled Network Element- Platform (UNE-P), competitive telecommunications companies gained the ability to provide telephone service to customers using the incumbent local telephone providers' network. Z-Tel was formed around UNE-P with the vision of developing technology that would imbue the telephone with "Intelligent Dial Tone," changing telephone service to be personalized to meet consumers' and businesses' diverse communications needs intelligently and intuitively. Z-Tel offers residential and business customers in 46 states value-added bundled local and long distance phone service with proprietary Internet-accessible calling and messaging features. Z-Tel also makes these services available on a wholesale basis. For more information about Z-Tel and its innovative services, please visit http://www.ztel.com * Meetings, Conferences and Seminars ------------------------------------ March 6-7, 2003 ALI-ABA Corporate Mergers and Acquisitions San Francisco Contact: 1-800-CLE-NEWS or http://www.ali-aba.org March 20-21, 2003 AMERICAN CONFERENCE INSTITUTE Outsourcing In Financial Services Marriott East Side, New York Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com March 26, 2003 NEW YORK INSTITUTE OF CREDIT Asset-Based Lending Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org March 27-28, 2003 FINANCIAL RESEARCH ASSOCIATES Commercial Loan Workout Techniques New York Helmsley Hotel, New York City, NY Contact: 1-800-280-8440 or http://www.frallc.com March 27-30, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Litigation Institute II Flamingo Hilton, Las Vegas, Nevada Contact: 1-770-535-7722 or http://www.nortoninstitutes.org March 31 - April 01, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Healthcare Transactions: Successful Strategies for Mergers, Acquisitions, Divestitures and Restructurings The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com April 10-11, 2003 AMERICAN CONFERENCE INSTITUTE Predaotry Lending The Westin Grand Bohemian, Florida Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 10-13, 2003 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting Grand Hyatt, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org April 28-29, 2003 AMERICAN CONFERENCE INSTITUTE Credit Derivatives Waldorf Astoria, New York Contact: 1-888-224-2480 or 1-877-927-1563 http://www.americanconference.com April 29, 2003 NEW YORK INSTITUTE OF CREDIT Corporate Governance Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org May 1-3, 2003 ALI-ABA Chapter 11 Business Organizations New Orleans Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 8-10, 2003 ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 14, 2003 NEW YORK INSTITUTE OF CREDIT Factoring Panel Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 4, 2003 NEW YORK INSTITUTE OF CREDIT 24th Credit Smorgasbord Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 19-20, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Corporate Reorganizations: Successful Strategies for Restructuring Troubled Companies The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***