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/raid1/www/Hosts/bankrupt/TCR_Public/030306.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, March 6, 2003, Vol. 7, No. 46 Headlines ADELPHIA COMMS: Schleyer and Cooper Employment Pacts Approved ALLEGHENY ENERGY: Supply Seeks Dismissal of California Lawsuit ALLEGIANCE TELECOM: S&P Cuts Junk Rating on Likely Restructuring AMERICAN SKIING: Commences Pink Sheets Trading Under AESK Symbol ANC RENTAL: Wants Exclusivity Further Extended Until July 5 ASIACONTENT.COM: Pulls Plug on Joint Ventures with DoubleClick AT&T CANADA: Completes Installation of 7-Eleven Network AVADO BRANDS: Dec. 29 Working Capital Deficit Balloons to $107MM BARNEYS NEW YORK: S&P Rates $100 Mil. Senior Secured Notes at B- BASN 2002-1: Fitch Downgrades Class B Notes to BB+ from BBB B/E AEROSPACE: 10-Month Transition Period Net Loss Tops $71 Mil. BELL CANADA: America Movil Promissory Note is Paid in Full BUDGET GROUP: Earns Nod to Reject Agreements with Khoury & Covan CENTERPOINT ENERGY: S&P Affirms Ratings over Facility Amendment CIENA CORP: Will Webcast Shareholders' Meeting on Wednesday COMMODORE APPLIED: AMEX to Strike Shares from Listing Today COMMUNICATION INTELLIGENCE: Obtains Nasdaq Temporary Exemption COMPANHIA SIDERURGICA: Fitch Puts Foreign Currency Rating at B CORNING INC: Reaffirms Forecast of Third Quarter Profitability CT TECHNOLOGIES: Voluntary Chapter 11 Case Summary DELTA AIR LINES: Vanguard PRIMECAP Discloses 7.67% Equity Stake DENVER'S OCEAN: Landry's Restaurants Pitches Best Bid for Assets DIVINE: Nasdaq to Knock-Off Shares Today over Bankruptcy Filing DORSET & NERVA: Fitch Keeps Watch on Low-B and Junk Ratings DYNEGY INC: Names Carol F. Graebner as EVP and General Counsel ENCOMPASS SERVICES: Signs-Up Hunt Patton for Consulting Services ENRON CORP: G. Russo Wants Nod to Hire Gardere Wynne as Counsel EOTT ENERGY: Asks Court to Okay Compromise with Kniffen, et. al. ESSENTIAL THERAPEUTICS: Nasdaq Sets Panel Hearing for March 20 GEMSTAR-TV GUIDE: Nasdaq Filings Deadline Extended to Month-End GENERAL MARITIME: S&P Assigns BB Corporate Credit Rating GENTEK INC: Sues INA USA to Recover $2MM of Unpaid Obligation GS MORTGAGE: S&P Assigns Low-B Ratings to Six Note Classes HANOVER COMPRESSOR: Q4 2002 Net Loss Widens to $75 Million HEXCEL CORP: S&P Rates Proposed $125M Senior Secured Notes at B HOLLYWOOD CASINO: S&P Ups Sr. Sec. Rating to B+ Following Merger HOLLYWOOD CASINO: S&P Ratchets Credit & Sr. Sec. Ratings to CCC- INSILCO HOLDING: Amphenol Pitches Best Bid for Assets at Auction INTEGRATED DATA: External Auditors Express Going Concern Doubt KAISER ALUMINUM: New Debtors Ask Court to Fix April 30 Bar Date KEMPER INSURANCE: Fitch Junks Financial Strength Rating at CC KEMPER INSURANCE: S&P Keeps Watch on Low-B & Junk Ratings KEMPER INSURANCE: Net Loss Widens to $312 Million in 2002 KMART CORP: Wants to Assign Store #3344 Lease to K-MER LLC LECTEC CORP: Dec. 31 Working Capital Deficit Stands at $1 Mill. LNR PROPERTY: Fitch Rates $200M Convertible Sr. Sub Notes at BB- LONGVIEW ALUMINUM: Files for Chapter 11 Protection in Delaware LONGVIEW ALUMINUM: Case Summary & 20 Largest Unsec. Creditors LTV CORP: Court Clears Stipulation Resolving Use of Tax Refunds MATTRESS DISCOUNTERS: Chapter 11 Reorganization Plan Confirmed MCSI INC: Wooing Creditors to Allow Covenant Amendments NATIONAL CENTURY: FirstMerit Gets Stay Relief to Sell Aircraft NEXTEL COMMS: Solid Operating Performance Spurs S&P's B+ Rating NORTEL NETWORKS: Wins $36-Million China Mobile Contract NRG ENERGY: ABN AMRO Bank Accelerates about $1-Billion of Debt NTELOS INC: Cooperative Finance Discloses $84-Mill. in Exposure NTELOS INC: S&P Drops Credit Rating to D over Bankruptcy Filing OMM INC: Will Discontinue Operations by Friday PAXSON COMMS: Will Publish Q4 & Year-End 2002 Results on Mar. 25 PENN NATIONAL: Will Issue Fin'l Guidance for Q1 2003 on March 14 POLAROID CORP: Has Until July 31 to Move Actions to Del. Court POTLATCH: Fitch Cuts Debt Ratings Due to Weak Market Conditions RICA FOODS: Working Capital Deficit Stands at $10MM at Dec. 31 RSL COM: Preparing Lawsuits to Void $1.5 Billion Guarantees SCIOTO DOWNS: PricewaterhouseCoopers Express Going Concern Doubt SECURITY INTELLIGENCE: Needs New Financing to Continue Ops. SERVICE MERCHANDISE: Proposes Headquarters Sale Bidding Protocol STARWOOD HOTELS: Selling the Hotel Principe di Savoia in Milan SUN HEALTHCARE: Expunging Six Personal Injury Claims SUPERIOR TELECOM: Receives Court Approval of First Day Motions TEL-ONE INC: Court Establishes March 24, 2003 Claims Bar Date TENFOLD CORP: Reports Improved Financial Results for Q4 2002 TODAY'S MAN: Files for Chapter 22 Reorganization in New Jersey TODAY'S MAN: Case Summary & 20 Largest Unsecured Creditors TODAY'S MAN: Blames Banks for Need to File "Chapter 22" Petition TRENWICK GROUP: S&P Believes Debt Restructuring is Remote UNITED AIRLINES: IRS Ruling Will Enable Sale of Stock by ESOP UNITED AIRLINES: Rothschild's Engagement as Inv. Banker Approved US AIRWAYS: Judge Mitchell to Consider Plan on March 18, 2003 US AIRWAYS: S&P Revises Outlook to Neg. after Loan Nonpayment US AIRWAYS: U.S. Trustee Amends Creditors' Committee Membership WABASH NATIONAL: Liquidity-Constrained Position Continues WHEELING-PITTSBURGH: Court Clears Agreements with BofA for OCC WINSTAR COMMS: Trustee Asks Court to Okay BW Fin'l Stipulation * Angelo Gordon Forms New Billion-Dollar Distressed Debt Fund * Edward L. Finn Joins Stonehill Group as Chief Exec. Officer * Kenneth J. Severinson Named President of Stonehill Financial * Stonehill Group LLC Forms $50-Million Distressed Debt Fund * Steel Industry Urges Gov't to Keep Steel Program in Place * USWA Supports Two More Years of Steel Tariffs * DebtTraders' Real-Time Bond Pricing ********* ADELPHIA COMMS: Schleyer and Cooper Employment Pacts Approved ------------------------------------------------------------- Adelphia Communications Corporation (OTC: ADELQ) announced that the Bankruptcy Court for the Southern District of New York has approved the Company's employment agreements with William T. Schleyer, Chairman of the Adelphia Board of Directors and Chief Executive Officer and Ron Cooper, President and Chief Operating Officer, with certain non-economic modifications. In the interest of addressing the concerns of all of Adelphia's important stakeholders, Bill Schleyer has agreed to make the minor modification to his contract requested by the Court. Mr. Cooper's contract was approved without any modification. The new employment agreements will go into effect immediately. Schleyer and Cooper, who have been serving as non-officer employees to Adelphia since the Company entered into employment agreements with them on January 17, issued the following statement: "We are pleased and excited to embark upon the complex challenge and extraordinary opportunity of rebuilding Adelphia. We begin the restructuring effort with a skilled and dedicated employee base, a core commitment to customer service, an advanced set of cable and broadband offerings and strong operations in eight regions nationwide. These significant assets will enable us to hit the ground running in our effort to better serve Adelphia's customers and regain the confidence of all stakeholders. "We will augment this considerable foundation with a talented management team -- comprised of old and new faces -- capable of leading an effective and efficient restructuring effort." Adelphia Communications Corporation is the fifth-largest cable television company in the country. It serves 3,500 communities in 32 states and Puerto Rico. It offers analog and digital cable services, high-speed Internet access (Adelphia Power Link), and other advanced services. Adelphia Communications' 10.875% bonds due 2010 (ADEL10USR1) are trading at about 39 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL10USR1 for real-time bond pricing. ALLEGHENY ENERGY: Supply Seeks Dismissal of California Lawsuit -------------------------------------------------------------- Allegheny Energy Supply, a subsidiary of Allegheny Energy (NYSE: AYE), asked the Sacramento Superior Court to dismiss a lawsuit brought by the California Department of Water Resources because the contract is currently under review by the Federal Energy Regulatory Commission, the federal agency with exclusive jurisdiction over the Allegheny contract. The motion filed also asserts that the CDWR failed to state a valid claim against Allegheny. "This lawsuit is just one of the CDWR's repeated attempts to invalidate a fair and binding contract," said Michael P. Morrell, President, Allegheny Energy Supply. "We believe that the proper forum for deciding this matter is with the FERC, and we are confident that the FERC will uphold the sanctity of our contract with California. We believe the Superior Court should dismiss the CDWR action or at a minimum wait to hear the FERC's decision in this matter before taking further action." In the filing, Allegheny Energy Supply, and its subsidiary Allegheny Trading Finance Co., responded to the Jan. 29 lawsuit brought by the CDWR, which seeks to dissolve the state agency's electricity supply contract with the Company. The CDWR, through its sister agencies the California Electricity Oversight Board and the California Public Utilities Commission, previously brought a related complaint at the FERC against Allegheny Energy Supply and other electricity suppliers, and a decision on that matter is currently pending before the federal agency following a lengthy hearing process. The Allegheny motion filed in Superior Court cited the FERC's jurisdictional exclusivity in deciding this matter. The filing also pointed to the CDWR's failure to allege the required elements of a breach of contract claim. With headquarters in Hagerstown, Md., Allegheny Energy is an integrated energy company with a balanced portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities and supplies energy and energy-related commodities in selected domestic retail and wholesale markets; Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia; and a business offering fiber-optic and data services. More information about the Company is available at http://www.alleghenyenergy.com The ratings of the Allegheny group are as follows: Allegheny Energy, Inc. -- Senior unsecured debt 'B+'. West Penn Power Company -- Medium-term notes 'BB+'. Potomac Edison Company -- First mortgage bonds 'BBB-'; -- Senior unsecured notes 'BB'. Monongahela Power Company -- First mortgage bonds 'BBB-'; -- Medium-term notes/pollution control revenue bonds (unsecured) 'BB'; -- Preferred stocks 'BB-'. Allegheny Energy Supply Company LLC -- Senior unsecured notes 'B'. Allegheny Generating Company -- Senior unsecured debentures 'B'. Allegheny Energy Supply Statutory Trust 2001 -- Senior secured notes 'B'. -- All ratings listed above remain on Rating Watch Negative. The ratings not on Rating Watch status are as follows: West Penn Funding LLC -- Transition bonds 'AAA'. Allegheny Energy Supply Company LLC -- Pollution control bonds (MBIA-insured) 'AAA'. ALLEGIANCE TELECOM: S&P Cuts Junk Rating on Likely Restructuring ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Allegiance Telecom Inc. to 'CC' from 'CCC'. The rating remains on CreditWatch with negative implications. Dallas, Texas-based Allegiance Telecom is a facilities-based integrated communications provider offering voice and data services to small and midsize businesses. As of Dec. 31, 2002, the company had about $1.2 billion of total debt outstanding, including: Face Amount at Sept. 30, 2002 -------------- * Series B 11-3/4% notes due February 15, 2008 $445,000,000 * 12-7/8% senior notes due May 15,2008 205,000,000 * Senior secured credit facilities 485,300,000 The Senior Secured Credit Facilities consist of a $350,000,000 seven-year revolving credit facility and a $150,000 two-year delayed draw term loan facility. "The rating actions reflect the likelihood that Allegiance Telecom will need to restructure its debt in the near term due to the terms of an interim amendment to its bank agreements," said Standard & Poor's credit analyst Rosemarie Kalinowski. The amendment requires the company to reduce total indebtedness by about 50% to $645 million by April 30, 2003. If this debt reduction is not consummated prior to the issuance of the 2002 audit report by its independent accountants, KPMG LLP, and in a manner that provides the company with sufficient available cash to fund operations for at least the next 12 months, Allegiance Telecom has been informed by KPMG LLP that the report will contain a "going concern" qualification. "Allegiance Telecom's financial profile has been adversely impacted by the slow turnaround in the economy and the increased number of carrier and retail customer bankruptcies," added Ms. Kalinowski. "Although the company has made progress in reducing its EBITDA loss over the past year, its ability to service its overall debt is unlikely given the fundamental challenges facing the competitive local exchange carrier industry." AMERICAN SKIING: Commences Pink Sheets Trading Under AESK Symbol ---------------------------------------------------------------- American Skiing Company (OTC Bulletin Board: AESK) announced that effective March 4, 2003, shares of its common stock are no longer being quoted on the "Over-the-Counter Bulletin Board under the symbol AESKE. The Company's common shares are currently being quoted in the Pink Sheets(R) under the symbol AESK. Quotations and trading information can still be accessed through http://www.pinksheets.com http://www.smallcapcenter.com or through a securities broker. On January 31, 2003, the Company announced that its OTCBB ticker symbol, AESK, would be appended with an "E" for a period of 30 days since the Company was not current with filings required by the Securities and Exchange Commission. The OTCBB is no longer providing quotes for the Company's common shares due to the continued delay in completion of the Company's financial statements for the 2002 fiscal year. On October 15, 2002, the Company announced that as a result of the Auditing Standards Board's Interpretation of AU 508, "Reports on Audited Financial Statements," it had been notified by its independent public accountants, KPMG, LLP, that a re- audit of the Company's financial statements for fiscal 2001 and 2000 was required. As a result of the Interpretation by the Auditing Standards Board and the significant time required to have this re-audit completed, the Company was not able to file its Annual Report on Form 10-K with the SEC by the October 27, 2002 deadline. This re-audit of prior years is the result of a recent interpretation of auditing requirements under these particular circumstances and is not the result of any known issues with previously reported results or the financial condition of the Company. The Company and its independent public accountants, KPMG, LLP, are working to complete the re-audit and the Company expects that the Form 10-K will be filed with the SEC promptly upon completion of the re- audit. * * * As reported in Troubled Company Reporter's November 29, 2002 edition, American Skiing Company's primary real estate development subsidiary, American Skiing Company Resort Properties, Inc., entered into an agreement with Fleet National Bank and the other lenders under a $63 million senior secured credit facility for forbearance from the exercise of the lenders' remedies. Last month, American Skiing refinanced its senior secured credit facility with a new facility led by GE Structured Finance, with additional financing provided by CapitalSource LLC. The new $91.5 million senior secured credit facility, which closed on February 14, 2003, includes a $40.0 million revolving credit facility and a $31.5 million term loan provided by GESF. In conjunction with the GESF facility, CapitalSource provided a $20.0 million term loan. The GESF facility matures on April 15, 2006 while the CapitalSource term loan matures on June 15, 2006. The New Credit Facility contains -- according to information obtained from http://www.LoanDataSource.com-- two key financial covenants: (a) American Skiing agrees that Consolidated EBITDA won't fall below: For the Four Fiscal Minimum Last-Twelve Quarters Ending Months EBITDA ------------------- ------------------- 2003 Quarter 3 $34,000,000 2003 Quarter 4 $34,000,000 2004 Quarter 1 $34,000,000 2004 Quarter 2 $34,000,000 2004 Quarter 3 $36,000,000 2004 Quarter 4 $36,000,000 2005 Quarter 1 $36,000,000 2005 Quarter 2 $36,000,000 2005 Quarter 3 and thereafter $38,000,000 (b) On April 1 of each year, American Skiing promises that no Revolving Credit Loans will be outstanding other than Revolving Loans borrowed on that date to repay all Reimbursement Obligations owed on account of outstanding Letters of Credit. Headquartered in Park City, Utah, American Skiing Company is one of the largest operators of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and The Canyons in Utah. More information is available on the Company's Web site at http://www.peaks.com ANC RENTAL: Wants Exclusivity Further Extended Until July 5 ----------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to extend their exclusive period to file a Chapter 11 plan to July 5, 2003. In addition, the Debtors also seek to extend their exclusive period to solicit acceptances of that plan until September 4, 2003. The extension requested will not prejudice the right of any party to move for termination of the Exclusive Periods. The first and most important factor used to determine whether cause exists for the extension of the Exclusive Periods is the size and complexity of the case. Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, contends that the Debtors' Chapter 11 cases are unusually large and complex. The Debtors own and operate one of the world's largest car rental businesses under the brand names Alamo and National. The Debtors' rental operations maintain a strong presence in the airport leisure and business travel market of the automotive rental industry. ANC Rental Corporation, one of the Debtors, is the direct or indirect parent of each of the other 45 Debtors, as well as the direct or indirect parent of a number of domestic and foreign entities that are not debtors under Chapter 11 of the Bankruptcy Code, including several special purpose limited partnerships or corporations which were created in connection with the prepetition fleet financing, and together with its subsidiaries, owns, manages and operates all aspects of the Debtors' businesses. Indeed, these Chapter 11 cases were one of the biggest U.S. bankruptcies filed in 2001. The next factor to look at in determining to extend exclusivity is whether the Debtors have been making good faith progress towards a restructuring. With respect to this factor, Ms. Fatell argues that the Debtors' efforts in these Chapter 11 cases weigh heavily in favor of an extension. From prior to the Petition Date, the Debtors' focus has been on restructuring their business and maximizing value for all of their creditors. In addition, since the Petition Date, the Debtors have also retained Jay Alix and Associates and Lazard Freres & Co. to assist in the restructuring of their business and the development of a plan. In connection with the retention of Lazard, the Debtors expect several indications of interest by parties wishing to purchase some or all of their operations, and will try to reduce that number to 2 or 3 final candidates over the next 30 to 45 days. Ms. Fatell reports that the Debtors have been focusing on their business affairs, developing cost saving strategies, developing a business reorganization strategy, implementing their business strategy of consolidating Alamo and National operations at airports throughout the country, restructuring their licensee operations and attempting to restructure their information technology systems and costs. The Debtors have made significant progress toward completing most of these goals, and are working diligently on restructuring their information technology systems and costs. Another factor supporting the Debtors' need for an extension is the existence of unresolved contingencies. While the Debtors have been attempting to formulate a plan of reorganization, Ms. Fatell states that outside factors have delayed the process. Objections by Hertz and Avis to the Debtors' attempts to consolidate operations at various airport locations resulted in a protracted dispute over an issue that is fundamental to the Debtors' reorganization efforts. Although those disputes have now been resolved, prior to their resolution, the disputes were extremely time consuming, and delayed the Debtors' efforts in developing a plan and obtaining long-term financing. These disputes, coupled with the day-to-day demands of running a large and complex business, had forced the Debtors to divert substantial attention from formulating a plan of reorganization. Ms. Fatell points out that over the past two months, the Debtors were involved in an extremely time intensive dispute with the Committee, which, although now resolved, temporarily diverted management's attention from formulating a plan. Management has also spent a significant amount of time making presentations to potential equity sponsors. Accordingly, now that these disputes have been resolved, an extension of exclusivity is necessary so that the Debtors can again focus their energies on developing a plan of reorganization. In determining whether to extend exclusivity, courts also look at whether the Debtors have been timely paying their postpetition obligations. Ms. Fatell insists that the Debtors have been paying their undisputed postpetition obligations as they come due in the ordinary course. Therefore, sufficient cause exists to warrant an extension of the Exclusive Periods so that the Debtors have a reasonable opportunity to develop and negotiate a confirmable plan of reorganization. Congress created the exclusive periods to give a debtor a clear opportunity to propose and confirm a plan without the disruption occasioned by competing plans. The objective of Chapter 11 is to develop, negotiate, and confirm a plan by agreement. Ms. Fatell asserts that the Debtors desire to do just that; but to do so, they must be given the additional time necessary to gauge the potential effects the various contingencies will have on the Debtors' business, explore additional financing options, and to meaningfully negotiate with their creditors and to formulate a plan that is feasible in light of the Debtors' current and potential operating performance. Ms. Fatell tells the Court that the Debtors have already made considerable progress, and allowing competing plans at this juncture would seriously disrupt these negotiations and set back the plan process. The Debtors deserve a realistic chance to propose, negotiate, and seek acceptance of a Chapter 11 plan or plans to maximize the value of the estates for the benefit of all creditors. Therefore, the Debtors' request for an extension of the Exclusive Periods is necessary and appropriate, is in the best interest of the Debtors' estates, and should be granted. (ANC Rental Bankruptcy News, Issue No. 28; Bankruptcy Creditors' Service, Inc., 609/392-0900) ASIACONTENT.COM: Pulls Plug on Joint Ventures with DoubleClick -------------------------------------------------------------- Asiacontent.com, Ltd., (OTC Bulletin Board: IASIZ.OB) has reached agreement with DoubleClick International Internet Advertising Limited, its joint venture partner, to terminate the parties' two joint ventures, DoubleClick Media Asia Limited and DoubleClick Korea (BVI) Ltd. The joint ventures have provided internet advertising solutions to online advertisers and web publishers since 1999. DoubleClick International Internet Advertising Limited is a subsidiary of DoubleClick Inc. Pursuant to the agreement between the Company and DoubleClick International Internet Advertising Limited, the joint venture operating companies will enter voluntary liquidation in their respective jurisdictions of incorporation. After the closing of the transaction between the Company and DoubleClick International Internet Advertising Limited, BDO International, the Company's liquidator, expects to deliver a progress report to shareholders concerning the status of the liquidation. As previously announced, Asiacontent.com commenced voluntary winding up and liquidation on July 10, 2002. AT&T CANADA: Completes Installation of 7-Eleven Network ------------------------------------------------------- AT&T Canada Inc., Canada's largest competitor to the incumbent telecom companies, announced that it has completed installation of a high-speed data communication network for 7-Eleven Inc., of Dallas, Texas, fulfilling a contract valued at CDN $7 million. The three-year data and equipment service includes a Frame Relay network connecting 7-Eleven's 500 Canadian stores and their Dallas headquarters. AT&T Canada's solution ensures network reliability for 7-Eleven by providing complete geographic network redundancy for all of its retail locations across Canada. In addition to providing 7-Eleven with highly reliable data flow, the major convenience store operator will be able to launch new applications in their retail outlets including an advanced retail information system. "AT&T Canada's network solution will allow us to effectively manage our business, including the rapid and reliable transfer of essential sales, inventory and operational data," said Robert Gray, Director of Technology Management, 7-Eleven, Inc. "We've been very impressed with both AT&T Canada's customer service and the functionality of their network, which has already proven itself to be highly dependable." 7-Eleven officials were pleased with the on-schedule installation of the network across the company's retail network by AT&T Canada - the largest frame relay network introduced in Western Canada. "We are delighted that 7-Eleven has chosen us to deliver a sophisticated communication network for their growing Canadian operations," said John MacDonald, President and COO, AT&T Canada. "Through our advanced business solutions and our highly- reliable and robust national network we were able to will help 7-Eleven achieve their business priorities." For more information about AT&T Canada's products and services, visit http://www.attcanada.com AT&T Canada is the country's largest competitor to the incumbent telecom companies. With over 18,700 route kilometers of local and long haul broadband fiber optic network, world class managed service offerings in data, Internet, voice and IT Services, AT&T Canada provides a full range of integrated communications products and services to help Canadian businesses communicate locally, nationally and globally. Please visit AT&T Canada's Web site, http://www.attcanada.comfor more information about the Company. 7-Eleven, Inc., is the premier name and largest chain in the convenience retailing industry. Headquartered in Dallas, Texas, 7-Eleven, Inc. operates or franchises more than 5,800 7-Eleven stores in the United States and Canada and licenses approximately 18,700 7-Eleven stores in 17 other countries and U. S. territories throughout the world. * * * As previously reported in the February 27, 2003, issue of the Troubled Company Reporter, AT&T Canada Inc., announced that the Ontario Superior Court of Justice and the U.S. Bankruptcy Court have both approved the Company's Restructuring Plan at hearings held Tuesday. Having secured the necessary creditor and court approvals, AT&T Canada expects to emerge from CCAA proceedings on April 1, 2003, as an independent company, with positive cash flow and net income, and no long-term debt. AT&T Canada Inc.'s 7.65% bonds due 2006 (ATTC06CAR1) are trading at about 21 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ATTC06CAR1 for real-time bond pricing. AVADO BRANDS: Dec. 29 Working Capital Deficit Balloons to $107MM ---------------------------------------------------------------- Avado Brands, Inc., (OTC Bulletin Board: AVDO) reported results for the fourth quarter and fiscal year ended December 29, 2002. In accordance with the provisions of Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets", the operations of Don Pablo's and Hops, as well as the operations of Canyon Cafe, which is held for sale, and the previously divested McCormick & Schmick's brand, are classified as continuing operations. Since the decision to divest Canyon Cafe and McCormick & Schmick's was made prior to the implementation of SFAS No. 144, their results are required to be reported within continuing operations. As of December 29, 2002, the Company's discontinued operations included the operations of 12 Don Pablo's and eight Hops restaurants that were either closed or classified as held for sale during 2002. For the fiscal year ended December 29, 2002, restaurant sales from continuing operations were $441.6 million compared to $589.4 million for the fiscal year ended December 30, 2001, representing a decrease of 25.1 percent. Included in restaurant sales from continuing operations are sales of $115.9 million in 2001 from McCormick & Schmick's, which was divested in August 2001. At the end of 2002, the Company's continuing operations included 189 restaurants compared to 199 restaurants at the end of 2001. Net loss from continuing operations was $38.3 million for the fiscal year ended December 29, 2002 compared to a net loss of $86.4 million for the fiscal year ended December 30, 2001. Earnings before interest, taxes and depreciation and amortization (EBITDA) from continuing operations was $24.4 million for the fiscal year ended 2002 compared to EBITDA of $48.0 million for the fiscal year ended 2001, which included $14.9 million of EBITDA from McCormick & Schmick's. The Company defines EBITDA as operating income (loss) plus depreciation and amortization, (gain) loss on the disposal of assets, asset revaluation and other special charges, non-cash rent expense and preopening costs. Restaurant sales from continuing operations were $102.5 million for the fourth quarter ended December 29, 2002 compared to $112.0 million for the fourth quarter ended December 30, 2001. Net loss from continuing operations was $60.6 million for the fourth quarter ended December 29, 2002 compared to a net loss of $19.0 million for the fourth quarter ended December 30, 2001. Net loss for the fourth quarter of 2002 includes a special charge of $41.7 million related primarily to the impairment and write off of goodwill at Hops. EBITDA from continuing operations was $2.2 million for the fourth quarter ended December 29, 2002 compared to EBITDA of $5.0 million for the corresponding period of the prior year. Loss from discontinued operations for the quarter and fiscal year ended December 29, 2002 was $9.7 million and $25.1 million, respectively. Loss from discontinued operations primarily reflects non-cash asset impairment charges related to the decision to close and divest 12 Don Pablo's and eight Hops locations. The divestiture of the Company's Canyon Cafe brand was substantially completed during the fourth quarter of 2002 and four remaining locations continue to be held for sale. Also, during 2002, the Company repurchased $52.4 million, in face value, of its outstanding 11.75% Senior Subordinated Notes, due June 2009, resulting in a pretax gain on debt extinguishment, net of costs, of $41.4 million. Credit Facility Amendments On December 27, 2002, the Company executed an amendment to its $75.0 million credit facility whereby its lenders have agreed to forbear from exercising their remedies with respect to existing events of default until May 31, 2003. The amendment also revised certain financial covenants and requires the Company to reduce its obligations under the facility to $0 by May 25, 2003. Working Capital Deficit Avado Brands, Inc.'s December 29, 2002 balance sheet shows that its total current liabilities exceeded its total current assets by about $107 million. Commenting on the quarter, Tom E. DuPree, Jr., Chairman and Chief Executive Officer, said, "Reducing debt, improving liquidity and increasing profitability continued to be our focus during the fourth quarter. We closed additional under-performing restaurants, and substantially completed the divestiture of our Canyon Cafe restaurants. It is our intention to use the proceeds from the sale of these closed restaurant properties to further reduce debt. While we continue to make progress, achieving these objectives will continue to be our primary focus." Avado Brands owns and operates two proprietary brands, comprised of 115 Don Pablo's Mexican Kitchens and 66 Hops Restaurant * Bar * Breweries. Additionally, the Company operates four Canyon Cafe restaurants, which are held for sale. Additional information, concerning results for the fiscal year ended December 29, 2002, is contained in the Company's Form 10- K, which was filed with the Securities and Exchange Commission on March 4, 2003. As reported in Troubled Company Reporter's January 14, 2003 edition, Standard & Poor's revised its corporate credit rating to 'SD' (selective default) from 'D' on casual dining restaurant operator Avado Brands Inc., and raised its senior unsecured debt rating on the company to 'CC' from 'D'. At the same time, Standard & Poor's affirmed its 'D' rating on Avado Brands' subordinated notes. The rating actions are the result of the company's payment of interest to holders of its 9.75% senior unsecured notes. The interest payment was originally due on Dec. 1, 2002. Avado has not remitted its December 15, 2002 interest payment on its subordinated notes. BARNEYS NEW YORK: S&P Rates $100 Mil. Senior Secured Notes at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Barneys New York Inc. Standard & Poor's also assigned its 'B-' rating to Barneys Inc.'s proposed $100 million senior secured notes due in 2008. The outlook is stable. "The ratings on Barneys reflect the company's weak credit protection measures, along with a small store base and high geographic concentration. Moreover, the company participates in the highly competitive high-end niche of the specialty retailing segment," Standard & Poor's credit analyst Ana Lai said. "Yet these risks are somewhat mitigated by the strength of the company's brand name and its strong relationships with major designers." The proposed notes are secured by a second priority lien on substantially all of the company's assets, however, they are still considered junior to a substantial amount of first priority debt. Accordingly, they are rated one notch below the corporate credit rating. Standard & Poor's expects that Barneys will use the proceeds of about $90 million from this offering to repay a substantial portion of its existing debt. At November 2, 2002, Barneys balance sheet shows $149 million in shareholder equity on a $310 million asset base. Barneys' long- term debt obligations at Nov. 2 consisted of: GE Facility $35,021,000 Revolving Credit Facility 0 $22,500,000 Subordinated Note 21,999,000 Equipment Lessors Notes 35,789,000 ----------- Total $92,809,000 =========== On January 10, 1996, Barney's, Inc. and subsidiaries filed voluntary petitions for reorganization under chapter 11 of the United States Bankruptcy Code. The Predecessor company's plan of reorganization was confirmed on December 21, 1998, by the U.S. Bankruptcy Court for the Southern District of New York, and became effective on January 28, 1999. BASN 2002-1: Fitch Downgrades Class B Notes to BB+ from BBB ----------------------------------------------------------- Fitch Ratings downgrades Banc of America Structured Notes, Inc.'s series 2002-1 $36.7 million class A to 'BBB' from 'BBB+' and $24.5 million class B to 'BB+' from 'BBB' and removes both classes from Rating Watch Negative. The ratings of the class A and B certificates are dependent on the ratings of the underlying certificates, classes H and J of the Banc of America Large Loan, Inc. series 2002-FLT1, which were downgraded due to the decline in performance of two loans, Windsor Court Hotel and Starrett Lehigh. B/E AEROSPACE: 10-Month Transition Period Net Loss Tops $71 Mil. ---------------------------------------------------------------- B/E Aerospace, Inc., (Nasdaq:BEAV) announced financial results for the 10-month transition period ended December 31, 2002 and confirmed its earnings guidance for calendar year 2003. Because the company changed its fiscal year, results announced are for a 10-month transition period from February 24, 2002 through December 31, 2002. The company will report on a calendar year basis going forward. Where noted, the results discussed herein have been adjusted to exclude the effect of certain facility and workforce consolidation costs, as well as certain unusual or nonrecurring items that are discussed below and in the accompanying footnotes. By presenting "as adjusted" results, management intends to provide a better understanding of the core results and underlying trends from which to consider past performance and prospects for the future. See the tables at the end of this news release for a reconciliation of "as adjusted" amounts to amounts reported under generally accepted accounting principles (GAAP). Users of this financial information should consider the types of events and transactions for which adjustments have been made. We also present operating earnings and EBITDA (earnings before interest, taxes, depreciation and amortization) as additional measures of our operating performance and our ability to service our debt, respectively. Neither operating earnings, EBITDA nor "as adjusted" information should be viewed as a substitute for or superior to net earnings or other data prepared in accordance with GAAP as measures of our profitability or liquidity. Neither EBITDA nor the "as adjusted" information are determined using GAAP. Therefore, such information is not necessarily comparable to other companies. HIGHLIGHTS -- Reported net loss of ($2.03) per share. Excluding consolidation costs and non-cash charge, net loss was ($0.05) per share. -- Amended bank credit facility. -- Completed majority of cost reduction initiatives. "2002 was a year of turmoil for our airline customers," said Mr. Robert J. Khoury, President and Chief Executive Officer of B/E Aerospace. "It was a year in which airlines' financial distress became acute, sharply reducing demand for our products. As the year wore on, the downturn spread to our business jet segment. Despite these challenges, we kept our focus and executed our plan to size the company for lower demand. "Both the scope and the cost of this downsizing have been substantial," he said. "However, we believe that most of the consolidation effort and costs are now behind us." FINANCIAL RESULTS For the period February 24, 2002 through December 31, 2002, B/E reported a net loss of $70.8 million. The $70.8 million net loss includes: -- Charges and transition costs totaling $39.5 million related to B/E's facility and workforce consolidation program. Transition costs are the expenses of operating facilities scheduled for closure and integrating transferred operations into the remaining facilities. Under GAAP, such costs must be treated as normal expenses until plant shutdown has been completed. -- A $29.5 million non-cash charge due to a recently announced arbitration decision regarding the 1999 sale of B/E's in-flight entertainment business, as more fully described in the company's February 10, 2003 news release. For the comparable 10-month period ended December 31, 2001, the company had a pro forma net loss of $90.0 million. The pro forma figures for the period a year ago include consolidation costs, acquisition-related expenses and debt extinguishment costs totaling $116.5 million, and treat companies acquired in 2001 as though acquired at the beginning of 2001, improving comparability with the period just ended. Excluding all the aforementioned costs in the respective periods in which they occurred, B/E would have reported a net loss of $1.8 million for the period ended December 2002, compared to net earnings of $26.5 million for the same period a year earlier. "Substantially lower sales and greater interest expense were the principal reasons for the year-over-year decrease in our results. Our 37.9 percent gross profit margin - achieved despite a 22 percent decline in sales -- and lower operating expenses reflect our cost reduction efforts," said Mr. Khoury, comparing the "as adjusted" loss of $0.05 per share for the transition period just ended to the "as adjusted" figure of $0.79 per share for the same period a year ago. Net sales were $503.6 million for the period ended December 2002, down 22 percent compared to pro forma figures for the same period a year ago. The results for the period a year ago were also negatively impacted by the airline industry downturn and the events of September 11, 2001. THE YEAR IN REVIEW "The tragic events of September 11, 2001, occurring in what was already a bad year for the airline sector, changed the landscape for our industry," Mr. Khoury said. "In the industry downturn which ensued, substantially lower sales have severely affected our financial performance. From the outset, we knew that we could do little to curb the company's revenue decline in the face of our customers' financial distress. Instead, we focused on reducing costs. We announced a major facility and workforce consolidation program just six weeks after the September 2001 terrorist attacks. "We are very pleased with the execution of our consolidation program. This has been a monumental effort, undertaken in the midst of the worst-ever crisis in the airline industry. We are proud of our accomplishments and grateful to our employees who have worked so hard to size the business appropriately. "Our employees have accomplished a great deal under very demanding circumstances. We closed four plants. We eliminated about 1,000 positions. By the middle of this year, we will have closed a fifth plant and brought our cumulative workforce reduction to about 1,400 positions. To put this into perspective: we will have closed nearly one-third of our principal manufacturing facilities and downsized our workforce by approximately 30% by the time these actions are complete. "We deeply regret the human toll which these actions have taken on employees, their families and their communities. Yet we have no choice but to cut costs to a level that should enable us to maintain our liquidity while our customers work through their difficulties," Mr. Khoury said. "We see evidence that we are making progress, based on the gross margin and lower operating expenses we report [Tues]day." The company furnishes the following "as adjusted" figures to enhance comparability. For the period ended December 2002, these figures exclude the consolidation costs and charge related to the arbitration decision. For the same period a year ago, these figures treat companies acquired in 2001 as though acquired at the beginning of 2001 and exclude consolidation, acquisition- related and debt extinguishment costs. -- Gross profit margin was essentially unchanged at 37.9 percent despite the significant decline in sales. -- Operating expenses decreased by $28.1 million, driven by both management's austerity measures and a decrease in amortization resulting from new accounting rules. -- As a result, despite the $139.9 million decrease in sales, gross margin was maintained at 37.9 percent, but nevertheless gross profit decreased by $51.8 million. Operating earnings decreased by only $23.7 million, reflecting both lower manufacturing costs and lower operating expenses. Management expects the consolidation effort to cost nearly $155 million, of which approximately $65 million are cash costs. Consolidation costs already incurred since inception of the program total $144.1 million ($104.6 million in the fiscal year ended February 2002 and $39.5 million in the 10-month transition period ended December 2002). Of the $144.1 million total, approximately $55 million were cash costs. RESULTS BY SEGMENT; BACKLOG Sales of commercial aircraft products, B/E's largest segment, dropped by 26 percent for the period ended December 2002 compared to the same period a year ago. Sales in B/E's business jet and fastener distribution segments also reflect constrained demand due to the aviation industry downturn. Total backlog decreased to about $450 million as of the end of December 2002, down from approximately $480 million at the end of February 2002. LIQUIDITY As previously announced, B/E recently amended its bank credit facility. The bank facility now provides for aggregate borrowings of $135 million, following a $15 million reduction in commitments. The Lenders behind the Bank Credit Facility -- http://www.LoanDataSource.comreports -- are: * JPMorgan Chase Bank; * Bank of America, N.A.; * Credit Suisse First Boston; * First Union National Bank; * Merrill Lynch Capital Corporation; * The Bank of New York; * Credit Lyonnais, New York Branch; and * GE Capital Corporation. Additionally, http://www.LoanDataSource.comreports, the Bank Credit Facility contains four key financial covenants: (a) a leverage ratio ranging from 7.50 to 8.25 times EBITDA (as defined) during 2003, decreasing to 6.00 to 1 at December 31, 2004 with scheduled decreases thereafter. Specifically: Maximum Testing Period Leverage Ratio -------------- -------------- From (but not including) the Fiscal 7.50 to 1 Date in November 2002 through the Fiscal Date in December 2002. From (but not including) the Fiscal 7.75 to 1 Date in December 2002 through the Fiscal Date in March 2003. From (but not including) the Fiscal 8.25 to 1 Date in March 2003 through the Fiscal Date in September 2003. From (but not including) the Fiscal 8.00 to 1 Date in September 2003 through the Fiscal Date in December 2003. From (but not including) the Fiscal 7.25 to 1 Date in December 2003 through the Fiscal Date in March 2004. From (but not including) the Fiscal 7.00 to 1 Date in March 2004 through the Fiscal Date in June 2004. From (but not including) the Fiscal 6.25 to 1 Date in June 2004 through the Fiscal Date in September 2004. From (but not including) the Fiscal 6.00 to 1 Date in September 2004 through the Fiscal Date in December 2004. From (but not including) the Fiscal 5.50 to 1 Date in December 2004 through the Fiscal Date in March 2005. Thereafter 4.00 to 1 (b) BE Aerospace agrees that its Senior Leverage Ratio will not exceed 2.00 to 1 at any time. (c) BE Aerospace covenants that the Interest Coverage Ratio will be no less than: Minimum Interest Testing Period Coverage Ratio -------------- ---------------- From (but not including) the Fiscal 1.25 to 1 Date in November 2002 through the Fiscal Date in December 2003. From (but not including) the Fiscal 1.50 to 1 Date in December 2003 through the Fiscal Date in September 2004. From (but not including) the Fiscal 1.75 to 1 Date in September 2004 through the Fiscal Date in December 2004. From (but not including) the Fiscal 2.00 to 1 Date in December 2004 through the Fiscal Date in March 2005. From (but not including) the Fiscal 2.50 to 1 Date in March 2005 through the Fiscal Date in December 2005. Thereafter 3.00 to 1 (d) BE Aerospace covenants that its Adjusted Net Worth at any time will be no less than the sum of: (x) $120,000,000 plus (y) 50% of the aggregate amount of Net Available Proceeds of Equity Issuances since May 26, 2001 plus (z) 50% of the sum of consolidated net earnings of the Borrower and its Subsidiaries (determined on a consolidated basis without duplication in accordance with GAAP) for each fiscal quarter of the Borrower ending after May 26, 2001; provided that consolidated net earnings for any fiscal quarter in which there is a consolidated net loss shall be deemed to be zero." Net debt (total debt less cash and cash equivalents) at December 31, 2002 stood at $696.0 million, virtually unchanged as compared to $695.3 million at February 23, 2002. OUTLOOK "We have made no changes to our financial guidance since our last earnings release," Mr. Khoury stated. "However, industry conditions remain sobering at best. U.S. carriers alone lost $11 billion for 2002, following large losses the year before. Fuel prices, airlines' largest operating cost after labor, are very high, while ticket prices remain low. Consequently, many carriers are in precarious financial condition. Their plight could become worse if there is a war in the Middle East. To cut costs, airlines have idled nearly 2,200 aircraft. All of this has sharply reduced demand for our products. "Under these circumstances, there is more than the usual amount of uncertainty associated with any forecast of financial performance. That includes the outlook we communicate today," Mr. Khoury said. For calendar 2003, management continues to expect: -- sales of approximately $575 - $600 million, -- approximately break-even bottom-line results before taxes and excluding approximately $10 million of transition costs associated with closure of the fifth facility and integration of transferred operations in the first half of 2003, -- a net loss of approximately $12 million after taxes and transition costs, -- EBITDA of about $100 million excluding transition costs, and -- a modest amount of free cash flow. B/E defines free cash flow as EBITDA less interest, taxes and capital expenditures. Management's expectations for interim results during calendar 2003 remain as follows: -- net losses in the first and second quarters, and -- a small profit in the second half of the year. "B/E Aerospace has a number of attributes that should enable us to maintain adequate liquidity during the downturn," Mr. Khoury said. "We have adequate liquidity to meet operating needs and service our debt obligations. Our $135 million bank credit facility, which will decrease by $15 million in December 2004, requires no further principal payments until maturity in August 2006. All other long-term debt requires no additional principal payments until 2008 through 2011. "Our customer base is truly global," he continued. "Over 40 percent of last year's sales came from outside the U.S. Our competitive position is very strong, with leading worldwide market shares in many product lines. "With our aftermarket focus, we should be an early beneficiary of the industry recovery," he said. "Aftermarket demand should lead the recovery, because refurbishing existing aircraft is much less expensive than buying new aircraft. "When demand improves, we will have enhanced earnings power through substantial operating leverage. We believe that our factories have the capacity to generate revenues of up to $1 billion without significant additional capital investment. In the meantime, we have a seasoned executive team which has navigated prior downturns," Mr. Khoury concluded. As reported in Troubled Company Reporter's February 13, 2003 edition, Standard & Poor's placed its ratings, including the 'BB-' corporate credit rating, on B/E Aerospace Inc., on CreditWatch with negative implications. "The action stems from the company's announcement that it will record a charge to earnings of about $30 million, coupled with continued weakness in the airline industry, BE Aerospace's primary market," said Standard & Poor's credit analyst Roman Szuper. The charge will be a write-off of a receivable created in connection with the sale of the firm's in-flight entertainment business to the Thales Group in 1999; that receivable represented the final payment expected from Thales. The charge, which will further weaken BE Aerospace's highly leveraged balance sheet, coincides with poor operating results, due to a very challenging environment of its airline customers, especially in the U.S. That environment is likely to deteriorate further if there is a war with Iraq. BELL CANADA: America Movil Promissory Note is Paid in Full ---------------------------------------------------------- Bell Canada International Inc., received payment of the remaining balance of US$170 million due under the America Movil S.A. de C.V. interest free promissory note. These proceeds represent the final payment on the sale of BCI's interest in Telecom Americas Ltd. on July 24, 2002. BCI is operating under a court supervised Plan of Arrangement, pursuant to which BCI intends to monetize its assets in an orderly fashion and resolve outstanding claims against it in an expeditious manner with the ultimate objective of distributing the net proceeds to its stakeholders and dissolving the company. BCI is listed on the Toronto Stock Exchange under the symbol BI and on the NASDAQ National Market under the symbol BCICF. Visit the Company's Web site at http://www.bci.ca BUDGET GROUP: Earns Nod to Reject Agreements with Khoury & Covan ---------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates sought and obtained the Court's authority to reject the Master Consulting Services Agreement and Sub-Locality Consulting Service Agreements with Khoury Consulting, Inc., the Ryder Move Management International Service Agreement dated January 20, 1999 and the Ryder Move Management Contract Carriage Agreement dated December 18, 1998 with Covan Worldwide Moving, Inc. Joseph A. Malfitano, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware informs the Court that by rejecting the Khoury agreement, the Debtors will save $318,720.97 per month. By rejecting the Covan Agreements, the Debtors will save a yet undetermined amount per month. These Agreements represent executory contracts that were not assigned as part of the Asset Sale to Cherokee and are no longer necessary to the Debtors' bankruptcy estates. Mr. Malfitano explains that the Khoury Consulting Agreement called for Khoury Consulting, Inc. to provide certain industry specific sales consulting and training services to the Debtors' personnel at various rental car sales locations nationwide. In exchange for these services, the Debtors were to pay Khoury Consulting a yearly base fee and a percentage fee that is tied to the incremental monthly revenue at the Debtors' rental car locations. Pursuant to the Covan Agreements, Covan Worldwide Moving, Inc. was to provide for international and interstate transportation and moving services for Ryder Move Management, Inc. on a subcontractor basis. Under the Covan Agreements, Ryder would arrange a shipment of goods and Covan would in turn submit a written estimate prior to shipment Ryder then would reimburse Covan. Mr. Malfitano relates that pursuant to the ASPA, on November 22, 2002, the Debtors transferred their assets relating to their rental car retail locations and moving operations to Cherokee. As a result, the Debtors no longer operate the assets that would be affected by or benefit from these Agreements. Moreover, Cherokee did not take assignment of the Agreements pursuant to the ASPA. (Budget Group Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) CENTERPOINT ENERGY: S&P Affirms Ratings over Facility Amendment --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on CenterPoint Energy Inc., (formerly Reliant Energy Inc.) and its subsidiaries CenterPoint Energy Houston Electric LLC and CenterPoint Energy Resources Corp and removed them from CreditWatch with negative implications. The outlook for all entities is stable. Houston, Texas-based CenterPoint has total debt and trust- preferred securities outstanding of about $12 billion. "The ratings affirmation reflects CenterPoint's successful negotiation of an amendment to its existing $3.85 billion credit facility," said Standard & Poor's credit analyst Cheryl Richer. Importantly, the amendment extends the loan maturity to June 2005 (from October 2003) and eliminates $1.2 billion in mandatory prepayments that would have been required this year; the first $600 million had been scheduled on Feb. 28, 2003. As a consequence, the overhang of substantial refinancing risk has been eliminated. Other features of the loan include a reduction in the quarterly dividend to 10 cents per share from 16 cents per share the previous quarter, the intent to pledge the 81% of the Texas Genco stock as security for the bank facililty (pending SEC approval), and the provision of up to 10% of CenterPoint common stock via the issuance of the warrants as an incentive for the company to access the capital markets to reduce the facility's size. The stable outlook indicates that CenterPoint will maintain its current rating over the medium term despite positive trends and interim challenges. The company must successfully execute the Texas Genco sale and the sale of stranded-asset securitization bonds to meet bank loan maturities at CenterPoint and the collateralized term loan maturity at CEHE. The proceeds from selling Texas Genco are expected to be used to pay down debt, resulting in a sharp improvement in financial ratios over 2005/2006. Some unquantifiable risk remains due to lawsuits that have been lodged against joint directors of CenterPoint and Reliant Resources Inc. (B-/Watch Neg/--). Although Reliant Resources has indemnified CenterPoint against such claims, its weakened creditworthiness could render Reliant Resources unable to step up to these obligations in the future. As a result, such claims remain contingent liabilities for CenterPoint. CIENA CORP: Will Webcast Shareholders' Meeting on Wednesday ----------------------------------------------------------- CIENA Corporation (NASDAQ:CIEN), a leading provider of intelligent optical networking systems and software, will host a live webcast of its annual shareholder meeting on Wednesday, March 12, 2003, beginning at 3:00 PM Eastern. The webcast will be listen-only and will be accessible and archived for replay through Wednesday, March 19, 2003 at http://www.ciena.com/investors CIENA Corporation's market-leading optical networking systems form the core for the new era of networks and services worldwide. CIENA's LightWorks(TM) architecture enables next- generation optical services and changes the fundamental economics of service-provider networks by simplifying the network and reducing the cost to operate it. Additional information about CIENA can be found at http://www.ciena.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's lowered the corporate credit rating on optical telecommunications systems and equipment provider, Ciena Corp., to single-'B' from single-'B'-plus, reflecting the company's dramatic decline in sales, and expectations that business conditions will remain weak over the intermediate term. The outlook remains negative. "The ratings continue to reflect the company's narrow business position, substantial leverage, and the risks of continuing technology evolution offset by the company's good financial flexibility," said Standard & Poor's credit analyst Bruce Hyman. COMMODORE APPLIED: AMEX to Strike Shares from Listing Today ----------------------------------------------------------- Commodore Applied Technologies, Inc. (AMEX: CXI), announced that on February 26, 2003, it received notice from the Listing Qualifications Panel of the American Stock Exchange, LLC that the Panel has determined to delist Commodore's common stock from the AMEX effective with the close of business today. In its notice to the Company, which was received after the close of business on February 26, 2003, the Panel noted that the Company's failure to meet certain continued listing standards: (i) the Company's losses from continuing operations over the five most recent fiscal years, (ii) the Company's failure to meet specified thresholds for stockholders' equity; and (iii) the Company's failure to hold an annual meeting of stockholders, led to the Panel's decision to file the delisting application. Commodore previously announced on January 17, 2003, that on January 9, 2003, it received notice from the AMEX that they intended to file an application with the Securities and Exchange Commission to delist Commodore's common stock because of Commodore's failure to meet certain continued listing standards. The Company appealed this determination and was granted an Oral Hearing before the Panel on February 24, 2003. The Panel informed the Company that it may submit a written request, within 15 days from February 26, to the full Committee on Securities to review the decision rendered by the Panel. Commodore is currently evaluating its options in this regard. Additionally, the Panel informed the Company that its securities may immediately be eligible to trade on the OTC Bulletin Board, and the Company is taking all necessary and appropriate steps to qualify its common stock for quotation on the OTC Bulletin Board. Commodore Applied Technologies, Inc., is a diverse technical solutions company focused on high-end environmental markets. The Commodore family of companies includes subsidiaries Commodore Solution Technologies, Commodore Advanced Sciences and Commodore Government Technologies, Inc. The Commodore companies provide technical engineering services and patented remediation technologies designed to treat hazardous waste from nuclear and chemical sources. More information is available on the Commodore Web site at http://www.commodore.com At September 30, 2002, Commodore Applied Technologies' balance sheet shows a working capital deficiency of about $4 million, and a total shareholders' equity deficit of about $3.7 million. COMMUNICATION INTELLIGENCE: Obtains Nasdaq Temporary Exemption -------------------------------------------------------------- Communication Intelligence Corporation (Nasdaq: CICI), the leader in electronic signature, biometric verification and natural input solutions announced that Communication Intelligence Corporation's common stock will continue to be listed on the Nasdaq SmallCap Market pursuant to an exception from the minimum bid price requirement. The Company previously announced that on December 9, 2002 Nasdaq informed the Company that its common stock was subject to delisting because it failed to comply with the minimum closing bid price requirement of $1.00 since June 7, 2002. On January 10, 2003, the Company was also informed by Nasdaq that the Company was not in compliance with Nasdaq's shareholder approval rule in connection with the Company's Equity Line of Credit Agreement with Cornell Capital Partners L.P. On January 16, 2003, the Company appeared before a Nasdaq Listing Qualifications Panel and on February 27, 2003 the Company was notified of the Panel's decision as discussed below. Regarding the shareholder approval rule, the Panel concluded that the Company had remedied the matter by stating in its currently effective S-1 that it may not issue shares, pursuant to its Equity Line of Credit Agreement, in excess of 19.9% of the Company's total shares outstanding at the time it entered the Equity Line of Credit Agreement without first obtaining shareholder approval. With respect to the minimum bid price requirement, the Company was granted a temporary exception under which it must meet one of the following requirements: A. On or before March 14, 2003, the Company must make a public filing with the SEC and Nasdaq evidencing a minimum of $5,000,000 in shareholders' equity. In the event the Company complies with the requirement of this exception it will be granted a grace period to June 2, 2003, within which to remedy the bid price deficiency. B. If the Company does not meet the requirement of item A above, then on or before March 28, 2003, the Company must file a proxy statement with the SEC evidencing its intent to seek shareholder approval for the implementation of a reverse stock split sufficient to remedy the bid price deficiency. Thereafter, on or before April 25, 2003, the Company must evidence a closing bid price of at least $1.00 per share and, immediately thereafter, a closing bid price of at least $1.00 per share for a minimum of ten consecutive trading days. However, in its discretion the Panel may require that the Company maintain a bid price at or above $1.00 per share for a period in excess of ten consecutive trading days. In accordance with Nasdaq rules, effective March 5, 2003, the Company's normal trading symbol will have a "C" appended to it so that its trading symbol will be "CICIC" until the status of its listing is no longer conditional. Management is currently evaluating its options regarding the continued listing of the Company's stock on the Nasdaq SmallCap Market. Communication Intelligence Corporation is the leading supplier of electronic signature, biometric security and natural input solutions focused on emerging, high potential applications including paperless workflow, smart wireless devices and e- Commerce enabling the world with "The Power to Sign Onliner." CIC's products are designed to increase the ease of use, functionality, and security of electronic devices and e-business processes. CIC sells directly to OEMs and Enterprises and has products available through major retail outlets such as, CompUSA, Staples, OfficeMax, key integration partners or direct via our website. Industry leaders such as Charles Schwab, Fujitsu, Handspring, Hitachi, IBM, Oracle, Palm Inc., Prudential, Siebel Systems and Sony Ericsson have licensed the company's technology. CIC is headquartered in Redwood Shores, California and has a joint venture, CICC, in Nanjing, China. For more information, please visit Web site http://www.cic.com * * * Liquidity and Capital Resources In its SEC Form 10-Q for the period ended September 30, 2002, the Company stated: "At September 30, 2002, cash and cash equivalents totaled $1,246 compared to cash and cash equivalents of $2,588 at December 31, 2001. The decrease was due primarily to cash used in operating activities of $1,569, cash used in investing activities of $54. Cash provided by financing activities was $281, net. The $281 provided by financing activities consists of $426 in proceeds from the exercise of stock options by the Company's employees and former chairman, the acquisition of capital equipment under capital lease of $40, reduced by the repayment of the note by the Joint Venture of $181, and by payments of capital lease obligations of $4. Total current assets were $2,372 at September 30, 2002, compared to $3,899 at December 31, 2001. "As of September 30, 2002, the Company's principal source of funds was its cash and cash equivalents aggregating $1,246. "The Company was incorporated in Delaware in 1986 and the accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered recurring losses from operations that raise a doubt about its ability to continue as a going concern. The Company is in the process of filing a registration statement with the Securities and Exchange Commission in order to obtain funding from equity financing. However, there can be no assurance that the Company will have adequate capital resources to fund planned operations or that any additional funds will be available to the Company when needed, or if available, will be available on favorable terms or in amounts required by the Company. If the Company is unable to obtain adequate capital resources to fund operations, it may be required to delay, scale back or eliminate some or all of its operations, which may have a material adverse effect on the Company's business, results of operations and ability to operate as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. "Current liabilities, which include deferred revenue, were $953 at September 30, 2002. Deferred revenue, totaling $123 at September 30, 2002, primarily reflects advance payments for products and maintenance fees from the Company's licensees which are generally recognized as revenue by the Company when all obligations are met or over the term of the maintenance agreement. "The Company currently owns 90% of a joint venture with the Information Industry Bureau of the Jiangsu Province, a provincial agency of the People's Republic of China. The Company's investment in the Joint Venture is subject to risks of doing business abroad, including fluctuations in the value of currencies, export duties, import controls and trade barriers (including quotas), restrictions on the transfer of funds, longer payment cycles, greater difficulty in accounts receivable collections, burdens of complying with foreign laws and political and economic instability." COMPANHIA SIDERURGICA: Fitch Puts Foreign Currency Rating at B -------------------------------------------------------------- Fitch Ratings has assigned a 'B' senior unsecured foreign currency rating to Companhia Siderurgica Nacional's US$85 million one-year notes that were issued though its subsidiary CSN Islands II Corp. on February 27, 2003. The Rating Outlook on the rating is Negative. CSN's foreign currency rating is constrained by Brazil's 'B', Rating Outlook Negative foreign currency rating. The proceeds from this issuance will be used primarily for working capital needs. CSN's leverage, net debt-to-EBITDA, was 3.4 times at June 30, 2002, while EBITDA-to-interest expense was 4.3x. Due to higher steel prices worldwide, as well as increased production volumes and a higher value-added product mix, Fitch expects CSN to generate about US$725 million of EBITDA for the full year 2002. With total debt expected to be less than US$2.0 billion, and with cash and marketable securities expected to be about US$500 million, EBITDA-to-interest should remain above 4.0x, while net debt-to-EBITDA should improve to less than 3.0x for year-end 2002. The rating reflects the company's position as one of the industry's lowest cost steel producers due to its ownership of the Casa de Pedra mine, one of the world's largest high-quality iron ore bodies. CSN also benefits from its modern production facilities, vertical integration and access to low-cost labor. The rating also factors in the concentrated nature of the Brazilian steel industry, which limits competition based solely upon price. In addition, transportation barriers minimize the amount of steel imported into the Brazilian market. These factors allow CSN to generate strong cash flows during troughs in the steel cycle and in economic downturns in Brazil. CSN ranks as one of the largest steel producer in Latin America with annual production capacity of 5.4 million tons of crude steel. CSN's fully integrated steel operations, located in the state of Rio de Janeiro in Brazil, produce steel slabs and hot- and cold-rolled coils and sheets for the automobile, construction and appliance industries, among others. CSN also holds leading market shares in the galvanized and tin-mill products. CORNING INC: Reaffirms Forecast of Third Quarter Profitability -------------------------------------------------------------- While outlining four key elements of a plan to provide a $400 million profit improvement in 2003, James B. Flaws, vice chairman and chief financial officer, reaffirmed that Corning Incorporated (NYSE:GLW) expects to return to profitability in the third quarter this year. Flaws made his comments to investors and financial analysts attending the Morgan Stanley Semiconductor and Systems Conference in Dana Point, Calif. Flaws said that the company continues to make significant progress on its priorities to protect the financial health of the company, restore profitability in 2003 and invest in its future. He said, "We have been able to maintain access to cash and liquidity, while reducing our debt levels substantially." Corning had $2.1 billion in cash and short-term investments at the end of 2002 and continues to have access to additional capital through untapped credit lines. "We believe this is very adequate to meet our ongoing operating needs," Flaws said. Restoring Profitability Flaws outlined four key elements of the company's plan to restore operating profitability by the third quarter of this year, including stable sales volume in optical fiber and cable, significant cost reductions across the company's telecommunications segment, continued growth in the Corning Technologies segment and further reduced corporate spending. Flaws said, "Although we believe in the long-term growth prospects for telecommunications, we have not built our plan around an industry recovery in 2003. There is some evidence that the fiber and cable markets are stabilizing." He pointed out that the company expects fiber and cable volumes to be stable and price declines to continue, but at more moderate rates than previously experienced. Flaws reiterated that Corning's telecommunications segment expects to see $300 million to $330 million of earnings improvement this year on $200 million to $250 million of lower revenue. He said that the real improvements in Corning's telecommunications segment are the result of "the painful restructuring actions we took last year. Eighty percent of the cost reduction is the result of actions that will be completed this quarter." He reminded investors that Corning has closed or mothballed three optical fiber factories, cut overall optical fiber manufacturing capacity by 50 percent from its peak in 2001, and made corresponding cuts in the company's global cable capacity as well. Corning is also moving much of its hardware and equipment capacity to countries with lower labor costs. In the photonics business, Flaws told investors that Corning has significantly narrowed its product line in 2002 and in early 2003, closed six facilities, drastically cut operating and R&D expenses and streamlined the organization. As he previously said, Flaws repeated, "Photonics is our only telecommunications business that continues to burn significant cash. We are exploring several strategic options including continuing to run the business after having now narrowed the product line and reducing cash burn; partnering the business in some form; or exiting completely, which could include a sale of some or all of the business's assets. We intend to make a decision no later than mid-year." Flaws told investors that Corning was pleased with the recent Federal Communication Commission's ruling on broadband. "We wanted the FCC in its triennal review to set a national policy for relieving fiber to the home from unbundling and wholesale pricing rules. This is exactly what the FCC did in its Feb. 20 ruling," he said. "We believe that this ruling will help the Telecommunications industry tremendously over the long-term." Display Technologies Growth He reminded investors that Corning's Technologies segment presents significant opportunity for growth and the company expects these businesses to deliver $100 million to $120 million in earnings improvement this year. This will be led by expected strong sales of flat-panel glass for liquid-crystal displays, a potential recovery in the semiconductor materials segment and continued increases in sales of ceramic substrates for gasoline and diesel engines. "We think that today is the beginning of the golden age of LCD and that glass demand could quadruple in the next eight years," Flaws said. Citing a dramatic increase in the market penetration of LCD desktop monitors, continuing growth of notebook computers and the emergence of LCD television as the drivers for the growth, Corning expects 70 percent of all desktop computer monitors to be LCDs by 2006, and notebook computers to represent 23 percent of all PCs sold this year. Flaws added, "LCD television represents only one percent of the color television market today, but new, larger screen sizes will drive market penetration to nearly 10 percent by 2006." Corning expects annual revenue growth for its Display Technologies business of 20 percent to 40 percent through 2006. Flaws also discussed the company's growth opportunity in its semiconductor materials business, where it is a leader in optical components for microlithography for the semiconductor market. Flaws said the company expects sales to recover in the second half of 2003 and that the business could triple in size over the next five years, with a 20 percent compound annual growth rate. First-Quarter Guidance Reiterated Flaws reiterated guidance for the first quarter, which was previously announced on Feb. 7. Corning anticipates first quarter revenues in the range of $700 to $730 million and a net loss in the range of $10 million to $50 million, or $0.01 to $0.04 per share, excluding gains on debt repurchases and restructuring charges. Flaws also told investors that Corning plans to recognize equity earnings of between $10 million and $20 million from Dow Corning in the first quarter. Flaws' presentation at the Morgan Stanley conference was webcast and replays are available on Corning Incorporated's Web site at http://www.corning.com Established in 1851, Corning Incorporated (www.corning.com) creates leading-edge technologies that offer growth opportunities in markets that fuel the world's economy. Corning manufactures optical fiber, cable and photonic products for the telecommunications industry; and high-performance display glass and components for television, information technology and other communications-related industries. The company also uses advanced materials to manufacture products for scientific, semiconductor and environmental markets. * * * As previously reported in the Troubled Company Reporter, Standard & Poor's lowered its ratings on two synthetic transactions related to Corning Inc., to double-'B'-plus from triple-'B'-minus. The lowered ratings follow the lowering of Corning Inc.'s long- term corporate credit and senior unsecured debt ratings on July 29, 2002. The two deals are both swap independent synthetic transactions that are weak-linked to the underlying collateral, Corning Inc.'s debt. The lowered ratings reflect the credit quality of the underlying securities issued by Corning Inc. RATINGS LOWERED Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-28 Trust $12.843 million corning debenture-backed series 2001-28 Rating Class To From A-1 BB+ BBB- Corporate Backed Trust Certificates Corning Debenture-Backed Series 2001-35 Trust $25.2 million corning debenture-backed series 2001-35 Rating Class To From A-1 BB+ BBB- CT TECHNOLOGIES: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: CT Electronics, LLC 771 Nepperhan Avenue Yonkers, New York 10703 dba Circuit Techniques Bankruptcy Case No.: 03-22349 Type of Business: The Debtor specializes in high-volume runs of single and double sided PCBs (not plated-thru holes). Chapter 11 Petition Date: March 5, 2003 Court: Southern District of New York (White Plains) Debtors' Counsel: Jonathan S. Pasternak, Esq. Rattet & Pasternak, LLP 550 Mamaroneck Avenue Suite 510 Harrison, NY 10528 Tel: (914) 381-7400 Fax : (914) 381-7406 Estimated Assets: $50,000 to $100,000 Estimated Debts: $100,000 to $500,000 DELTA AIR LINES: Vanguard PRIMECAP Discloses 7.67% Equity Stake --------------------------------------------------------------- Vanguard PRIMECAP Fund beneficially owns 9,464,700 shares of the common stock of Delta Air Lines, which represents 7.67% of the outstanding common stock of the Air Lines. Vanguard PRIMECAP Fund hold sole voting power over the stock. Delta Air Lines, the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,619 flights each day to 438 destinations in 78 countries on Delta, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please go to http://www.delta.com Delta Air Lines' 10.375% bonds due 2022 are currently trading at about 65 cents-on-the-dollar. DENVER'S OCEAN: Landry's Restaurants Pitches Best Bid for Assets ---------------------------------------------------------------- Through its winning bid of $13.6 million, Landry's Restaurants, Inc. (NYSE: LNY), has been granted ownership rights to Colorado's Ocean Journey, a 17-acre aquarium complex located in Denver. In a public auction Landry's outbid Fla.-based Ripley Entertainment in U. S. Bankruptcy Court proceedings. "With Landry's recent development -- and successful -- opening of Houston's first Aquarium, we are enthusiastic and confident the Landry's organization can increase sales and revenue and make Ocean Journey one of Colorado's premier destinations," said Robert F. Hill, chairman of Ocean Journey. The non-profit aquarium cost $93 million to build and opened in 1999. It attracted one million visitors during its first year of operations. The aquarium filed for Chapter 11 reorganization in April 2002 and had $62.5 million in debt at a high interest rate which caused its bankruptcy. Under the protection of U.S. Bankruptcy Court in Denver, the aquarium continued to operate and remain open. It recently began accepting bids to assume ownership of Ocean Journey. More than 500 species are housed in the one million-gallon, three story world-class attraction. "We are so delighted with this tremendous opportunity to step in and rescue this incredible aquarium, as well as ownership of its 17 acres of land," said Tilman J. Fertitta, president, chairman and chief executive officer of Landry's Restaurants, Inc. "Ocean Journey is considered to be one of America's top-tier aquariums. Although the aquarium originally was created with an educational focus, Landry's will bring a successful formula for entertainment and family orientation. Landry's has long been in the entertainment business and Ocean Journey will add to our mix of exciting family destinations," added Fertitta. The recently opened $38 million Downtown Aquarium is a magnificent six- acre aquarium, entertainment and dining complex that is serving to revitalize downtown Houston. With sweeping views of downtown, it offers a public aquarium boasting 500,000 gallons of underwater tanks with 200 species of fish; Aquarium Restaurant; Marina Matinee Cafe; the 6,000-square-foot Nautilus Ballroom; The Dive Lounge; the spectacular Shark Voyage; the aquatic-themed Carousel and Ferris wheel and C. P. Huntington train; open-air plazas with dancing fountains, and amusements for the entire family. Landry's Restaurants, Inc., is one of the nation's largest and fastest growing casual-dining, full-service restaurant and entertainment chains. Publicly traded on the New York Stock Exchange, Landry's owns and operates approximately 280 restaurants, including Landry's Seafood House, Joe's Crab Shack, The Crab House, Rainforest Cafe, Charley's Crab, Willie G's Seafood & Steak House, The Chart House and Saltgrass Steak House, as well as Kemah Boardwalk, a magnificent 30-acre, family-oriented themed entertainment destination. The company employs 30,000 workers in 36 states. Denver's Ocean Journey, Inc., filed for chapter 11 protection on April 1, 2002 (Bankr. Colo. Case No. 02-14424). Carl A. Eklund, Esq., Charles D. Maguire, Jr., and Lawrence Bass, Esq., at LeBoeuf, Lamb, Greene & MacRae, represents Ocean Journey. Steven T. Hoort, Esq., at Ropes & Gray, represents a group of secured bondholders. Ocean Journey, presented by Qwest, is the Rocky Mountain Region's only aquarium. The million-gallon adventure allows visitors to come within inches of thousands of fish, birds, invertebrates and mammals that rely upon water. More than 500 species are featured in re-creations of river-to- ocean journeys, special touch pools and family activities. Ocean Journey -- a not-for-profit organization with a mission to inspire guests to discover, explore, enjoy and protect our aquatic world -- is open 10 a.m. to 5 p.m. daily and maintains a Web site at http://www.oceanjourney.org DIVINE: Nasdaq to Knock-Off Shares Today over Bankruptcy Filing --------------------------------------------------------------- divine, inc., (Nasdaq: DVIN) announced that The Nasdaq Stock Market had notified divine that, as a result of its Chapter 11 Bankruptcy filing on February 25, 2003, the fifth character "Q" was added to divine's trading symbol, changing the symbol from DVIN to DVINQ at the opening of business on February 28, 2003. In addition, divine has received notice that, in accordance with Marketplace Rules 4300 and 4450(f), shares of divine's Class A common stock will be delisted from The Nasdaq Stock Market as of the opening of business on Thursday, March 6, 2003. This delisting is a result of concerns about divine's Chapter 11 bankruptcy filing, its inability to continue to meet the listing requirements of The Nasdaq Stock Market, and its failure to pay its 2003 annual listing fees and certain fees incurred for listing additional shares in 2002. divine does not intend to appeal the delisting. divine, inc., (Nasdaq: DVIN) is focused on extended enterprise solutions. Through professional services, software services and managed services, divine extends business systems beyond the edge of the enterprise throughout the entire value chain, including suppliers, partners and customers. divine offers single-point accountability for end-to-end solutions that enhance profitability through increased revenue, productivity and customer loyalty. The company provides expertise in collaboration, interaction and knowledge solutions that enlighten, empower and extend enterprise systems. For more information, visit the company's Web site at http://www.divine.com DORSET & NERVA: Fitch Keeps Watch on Low-B and Junk Ratings ----------------------------------------------------------- Fitch Ratings has placed the following classes of notes issued by the collateralized debt obligations (CDOs) listed below on Rating Watch Negative: Dorset CDO Ltd. -- Class A 'B'; -- Class B 'CC'. Nerva Ltd. -- Class A 'B'. The aforementioned classes have been placed on Rating Watch Negative due to the uncertainty of the timing and ultimate resolution of current impaired assets and the continuing risk of deterioration in their respective asset or reference pools. Both of these transactions experienced impairment of certain assets, which are expected to incur losses. The timing and ultimate recovery value of many of these assets, whether held in cash or synthetic form, is uncertain and may be below Fitch's assumed recovery values. Each of these transactions also contains certain assets that have experienced credit deterioration but are not currently impaired. It is unclear whether the credit quality of these assets has stabilized, thereby increasing the risk that the collateral pools' credit deterioration will continue. Barclays Bank Plc arranged the above referenced transactions and is portfolio manager in respect to Nerva Ltd. and portfolio administrator in respect to Dorset CDO Ltd.. Barclays is also the issuer of the Credit Linked Notes in Dorset CDO Ltd.'s portfolio. As such, Barclays can replace reference obligations in accordance to guidelines set forth in the CLNs' governing documents. Additionally, Nerva Ltd., contains significant holdings in other Barclays arranged CDOs that have experienced deterioration in the credit quality of their underlying assets. Through such deterioration, these related party holdings contributed to the ratings deterioration of Nerva Ltd.. The credit impairment and deterioration mentioned above reflect exposures to certain underperforming sectors including CDOs, aircraft securitizations, and manufactured housing. In order to provide additional information to investors in these transactions, Fitch has listed on its web site the collateral or reference pool for the substantial majority of Barclays arranged CDOs. DYNEGY INC: Names Carol F. Graebner as EVP and General Counsel -------------------------------------------------------------- Dynegy Inc., (NYSE:DYN) has named Carol F. Graebner executive vice president and general counsel. In this capacity, Graebner is responsible for all of Dynegy's legal, regulatory and government affairs activities. She will report directly to Dynegy President and Chief Executive Officer Bruce A. Williamson. Graebner, 49, joins Dynegy from Duke Energy International, where she served as senior vice president and general counsel, responsible for providing all legal, regulatory and government affairs services for the company's international merchant energy business. Prior to joining Duke Energy International in 1998, she served as general counsel for Conoco Global Power, Inc. "Carol brings years of experience and a deep knowledge of the legal aspects of the energy business, spanning oil and gas exploration and production, midstream processing and electric power," said Williamson. "We welcome her on board as Dynegy continues to restructure and position itself for the future." Graebner earned a bachelor's degree in international relations from Dickinson College. She holds a law degree from the American University. She replaces Kenneth E. Randolph, who is retiring after 18 years with Dynegy. "We thank Ken for his years of dedicated service and his many contributions to Dynegy, the company's restructuring efforts and the development of competitive energy markets," added Williamson. "We wish him the best during his retirement." Randolph said, "I am confident that Bruce and the rest of Dynegy's senior management team will have continued success in rebuilding Dynegy around its core energy businesses and that Carol and the Dynegy legal team will continue to play a key role in Dynegy's restructuring efforts." Dynegy Inc., owns operating divisions engaged in power generation, natural gas liquids and regulated energy delivery. Through these business units, the company serves customers by delivering value-added solutions to meet their energy needs. Dynegy Holdings Inc.'s 8.75% bonds due 2012 (DYN12USR1) are trading at about 61 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for real-time bond pricing. ENCOMPASS SERVICES: Signs-Up Hunt Patton for Consulting Services ---------------------------------------------------------------- Hunt Patton & Brazeal, Inc. is a nationally recognized consulting firm that provides services in the areas of strategic planning, valuation analysis, growth consulting, restructuring, and executive search, as well as merger and acquisition work. Pursuant to an employment arrangement dated October 1, 2002, Hunt Patton scouted for opportunities or contracts from potential buyers to sell the Debtors' assets. Hunt Patton provided a conduit of information exchange and assisted in arranging meetings between the Debtors and Hunt Patton's contact. Accordingly, Encompass Services Corporation and its debtor- affiliates sought and obtained the Court's authority to employ Hunt, Patton & Brazeal, Inc. as consultants in connection with the sale of Encompass Design Group and Encompass Power Services operations. The Debtors will compensate Hunt Patton for its services by way of: (1) a $25,000 monthly retainer fee for a period of three months from the date of the engagement or until the sale transaction was consummated; (2) a transaction fee if a transaction is consummated. The Transaction Fee is a cut from the total acquisition or purchase price of the asset sold but will not be less than $50,000. Hunt Patton will receive the: (a) 5% on the first million dollars or less, plus; (b) 4% on the second million dollars or fraction, plus; (c) 3% on the third million dollars or fraction, plus; (d) 3% on the fourth million or fraction, plus; (e) 1% of the amount in excess of $4,000,000. The Transaction Fee is a requisite part of the asset sale. Hunt Patton will receive the Transaction Fee from the Debtors at closing of the transaction. In the event deferred payments represent some portion of the purchase price, and the deferred payments are contingent on future events, the Transaction Fee will apply to the deferred payments, and will be paid to Hunt Patton. A promissory note indicating a fixed amount will be considered a deferred payment, and the Transaction Fee on that portion of the purchase price represented by the note will be payable as the note is paid. If the deferred payment terms include interest payments, the basis for the Transaction Fee balance due Hunt Patton will be at a rate equivalent to that which is paid by the Contact to the Debtors; (3) other fees as mutually agreed for additional acquisition support that the Debtors may request; and (4) reimbursement of travel, communication and other relevant expenses. Hunt Patton Secretary John Williams, Jr., discloses that the Debtors have retained the firm in January 2001 to perform executive search work. Before the Petition Date, the Debtors also paid Hunt Patton a total of $50,000 for its analysis on Encompass Design Group and Encompass Power Services. Other than that, Mr. Williams attests that Hunt Patton has no connection with, and holds no interest adverse to, the Debtors, their estates, their creditors, or any other interested parties in these cases. (Encompass Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: G. Russo Wants Nod to Hire Gardere Wynne as Counsel --------------------------------------------------------------- Gavin J. Russo, General Manager of Enron Corporation's Ad Valorem & Transaction Tax Group, seeks the Court's authority to retain Gardere Wynne Sewell LLP as his counsel pursuant to Sections 105(a), 327(e), 330, 331 and 363(b) of the Bankruptcy Code and this Court's Order dated March 29, 2002, nunc pro tunc to March 29, 2002. Moreover, Mr. Russo asks the Court to permit the payment of Gardere's reasonable legal fees and disbursement of expenses with respect to the engagement. Marla Thompson Poirot, Esq., at Gardere Wynne Sewell LLP, in Houston, Texas, relates that the Harris County District Attorney's Office initiated an investigation into the business activities and property tax rendition practices of the Enron Property Tax Department. Due to Mr. Russo's position, the Harris County District Attorney's Office requested to speak with him regarding Enron's property tax rendition practices. Prior to being interviewed by the District Attorney's Office, Mr. Russo discussed individual representation for himself with Enron's local attorneys at Andrews & Kurth, LLP. Knowing that Mr. Russo would need an attorney familiar with Texas criminal law to assist him in connection with the Investigation, Ross Rommel and Greg Waller of Andrews & Kurth suggested that Mr. Russo contact Tom Hagemann of Gardere Wynne Sewell in Houston for representation. According to Ms. Poirot, Mr. Hagemann is an experienced white collar criminal practitioner and has the requisite knowledge and expertise regarding Texas criminal law and procedure to represent an individual with respect to a local criminal investigation. Swidler Berlin Shereff Friedman, LLP does not have attorneys with the requisite expertise regarding Texas law and Texas criminal procedure. Thus, Swidler would not be qualified to represent an individual with respect to a criminal investigation by the Harris County District Attorney's Office. Ms. Poirot tells the Court that Gardere and Mr. Russo entered into a retainer agreement dated July 3, 2002. Pursuant to the Agreement, Gardere will represent Mr. Russo with respect to the Investigation. The Agreement also provides that Mr. Russo agreed to pay Gardere's hourly billing rates at $400 for Mr. Hagemann and $280 for Ms. Poirot. Gardere will also charge the Debtors with out-of-pocket expenses, including long distance telephone services, facsimile and copying services, travel costs, delivery and messenger messages, postage, filing fees and disbursements to other service providers. Ms. Poirot clarifies that although the Debtors will be responsible for Gardere's reasonable fees and expenses, Gardere represents Mr. Russo and his interests alone. Hence, the attorney-client relationship only exists and will continue to exist solely between Mr. Russo and Gardere. Gardere's ethical responsibilities in connection with this matter will only run to Mr. Russo and Gardere will only be obligated to act in accordance with Mr. Russo's instructions, not those of the Debtors. Ms. Poirot contends that Gardere's retention is warranted because: (a) it is an employee benefit that is integral to the retention of key employees and the Debtors' reorganization; (b) it facilitates the Debtors' interest and the public interest in full disclosure; (c) the March 29 Order sets forth the precise circumstances under which the Debtors should retain counsel other than Swidler for employees who are simply witnesses in the Investigation -- that is met in this instance: -- Mr. Russo has voluntarily turned over all relevant documentation in his possession; -- Mr. Russo has never been advised by the prosecutor that he is a target of the Investigation; -- at no time during his interview with Harris County Assistant District Attorney Lester Blizzard and other State agents did Mr. Russo refuse to answer any questions posed or invoked his Fifth Amendment privilege to refuse to testify; and -- Swidler does not have the requisite expertise in Texas law and criminal procedure to be able to appropriately represent Mr. Russo; and (d) Mr. Russo is a current employee of the Debtors. (Enron Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 15 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. EOTT ENERGY: Asks Court to Okay Compromise with Kniffen, et. al. ---------------------------------------------------------------- Robert D. Albergotti, Esq., at Haynes and Boone LLP, in Dallas, Texas, relates that John H. Roam and Deborah K. Roam are the named plaintiffs in a lawsuit captioned "John H. Roam and Wife, Deborah K. Roam, et al vs. Texas New Mexico Pipe Line Company, et al." in the 238th District Court, Midland County, Texas - the Kniffen Litigation. The Kniffen Litigation was brought on behalf of numerous plaintiffs who have filed numerous proofs of claims in these bankruptcy cases. On the other hand, Bernard Lankford and Bette Lankford are the named plaintiffs in a lawsuit captioned "Bernard Lankford and Wife, Better Lankford v. Texas-New Mexico Pipe Line Company, et al." in the County Court of Law in Midland County, Texas -- the Lankford Litigation. Mr. and Mrs. Lankford filed Proof of Claim Nos. 7183 and 7182 against EOTT Pipeline for $1,664,000 each. Jimmie T. Cooper and Betty P. Cooper are the named plaintiffs in a lawsuit captioned "Jimmie T. Cooper and Betty P. Cooper et al vs. Texas-New Mexico Pipe Line Company, et al." in the U.S. District Court for the District of New Mexico. Mr. and Mrs. Cooper have filed Proof of Claim No. 7175 against EOTT Pipeline for $3,120,000. In addition, Mrs. Cooper has filed Proof of Claim No. 7174 for $3,120,000. Mr. Albergotti tells Judge Schmidt that the Debtors, Lehman Brothers, Inc. or its designee and the Kniffen Claimants, the Lankford Claimants and the Cooper Claimants have reached a settlement that will amicably resolve all outstanding claims and disputes between the Debtors and the Kniffen/Lankford/Cooper Claimants. The primary terms of the proposed Settlement include: (a) The Kniffen/Lankford Claimants will have a combined, aggregate allowed claim in these bankruptcy proceeding for $3,252,800. The Cooper Claimants will have a combined allowed claim in these bankruptcy proceedings for $1,027,200; (b) On March 1, 2003, Lehman or its designee, will purchase the Kniffen/Lankford Claimants' claims at 45% of the $3,252,800 and will purchase the Cooper Claimants' claims at 45% of the $1,027,200; (c) Upon the total payment amounting to $1,926,000, the Kniffen/Lankford/Cooper Claimants will each release and fully discharge the Debtors from any and all claims, demands, causes of action, damages and liabilities with respect to their claims against the Debtors, as set forth in their lawsuits relating to remediation, restoration, clean-up or other environmental response measures on: -- all known claims against the Debtors, including those claims filed in the Debtors' bankruptcy proceeding and those relating to the pending litigation between the Kniffen/Lankford/Cooper Claimants and the Debtors; and -- all unknown claims for which the initial spill, discharge, release, leak of crude oil or other material first occurred on or before the date of the Court's approval of the final, executed Release Agreement. Furthermore, it is specifically understood that the Cooper Claimants are only releasing the Debtors with respect to those spills and leaks allegedly caused by the Debtors at their Monument Ranch after May 1, 1999; (d) The Kniffen/Lankford/Cooper Claimants and the Debtors will retain and reserve all rights, claims and causes of action they have against the other parties named in the lawsuits, including, but not limited to Texas-New Mexico Pipe Line, Shell Pipeline Company, LP, Texaco Pipe Line Co., and any other entities, which may have liability for the released claims. Provided, however, that the Debtors will not sell, assign, or in any manner transfer any of its rights or claims against Texas-New Mexico, Shell, Texaco or any other entity, which may have liability for the released claims, which affects the Kniffen/Lankford/Cooper Claimants' rights, claims and causes of action against Texas-New Mexico, Shell, Texaco and any other entitled which may have liability for the released claims; and (e) The Debtors will agree to the modification of the automatic stay to allow these cases to proceed without limitation: -- the Kniffen Litigation, -- the Lankford Litigation, and -- the Cooper Litigation. Thus, the Debtors ask the Court, pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure, to: (a) approve the principal and material terms of the Settlement Agreement; (b) authorize the Debtors and the Kniffen/Lankford/Cooper Claimants to enter into the Settlement; (c) authorize the Debtors to execute the documents necessary, including the Release Agreement, to memorialize the terms of the Settlement and supplement the terms as necessary to effect the material terms contained in the Settlement; (d) provide that that Kniffen Claimants and the Lankford Claimants will have combined, aggregate unsecured Allowed claims in these bankruptcy cases totaling $3,252,800; (e) provide that the Cooper Claimants will have a combined, allowed general unsecured claim for $1,027,200; (f) provide that, except as otherwise indicated in the Agreement, all Proofs of Claim filed by the Kniffen/Lankford/Cooper Claimants are disallowed; (g) order the Clerk of the Court to expunge the claims from the Court's registry; and (h) modify the automatic stay to allow the Kniffen Litigation, the Lankford Litigation and the Cooper Litigation to proceed as provided by the Settlement Terms. The Debtors believe that the expense, inconvenience and delay that would result from litigation would not be in the estates' best interest. (EOTT Energy Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) ESSENTIAL THERAPEUTICS: Nasdaq Sets Panel Hearing for March 20 -------------------------------------------------------------- Essential Therapeutics, Inc., (Nasdaq: ETRX) said that a Nasdaq Listing Qualification Panel hearing date has been set for March 20, 2003, and the Company described its plans to divest of a portion of its California operations. On January 31, 2003, the Company announced the receipt of a Nasdaq Staff determination letter indicating the Staff's decision to delist the Company's securities from The Nasdaq National Market due to the Company's failure to comply with the Nasdaq National Market System listing criteria which require the Company to maintain a minimum stockholders' equity of $10 million. The Company appealed the Staff's determination to the Nasdaq Listing Qualifications Panel, and the delisting of the Company's securities has been stayed pending the Panel hearing. The hearing has been set for March 20, 2003. The Company also announced that it has initiated discussions with an entity that has expressed interest in acquiring a portion of the Company's California operations, which may include, certain of the Company's California facilities, selected pre-clinical infectious disease programs and some of the Company's approximately 55 employees based in California. In the event that the Company is not able to secure a buyer for the California operations by March 31, 2003, the Company intends to phase out its California operations beginning on such date. The Company's plan calls for the elimination of approximately 42 positions as of March 31, 2003. Some of the remaining employees will assist with the shut-down of certain California facilities, while the remainder of the employees will be asked to continue with the Company until the completion of the Company's collaborative agreement with Fujisawa Pharmaceutical Co., Ltd. which is expected to conclude in the third quarter of 2003. The Company also announced that it will continue its pre- clinical proof-of-concept studies on a small molecule therapeutic for wound healing applications and that development of the Company's parenteral cephalosporin candidate, partnered with Johnson & Johnson Pharmaceutical Research & Development, LLC, which is in Phase 1 clinical trials will not be affected by the shut-down of the California operations. The Company will continue to evaluate its other programs. "We find ourselves in a situation where it is imperative that we focus the Company and its resources on those programs which offer the greatest opportunities to create commercial value," commented Mark Skaletsky, Essential Therapeutics Chairman and CEO. "While we are saddened by the circumstances that require us to divest of our California operations and eliminate certain positions and programs from the Company, we believe that the decision to do so is critical to ensure that this Company has the resources necessary to advance its wound healing program and to successfully in-license opportunities that we believe will offer the best opportunity to move Essential forward with the funds the Company has available." Essential Therapeutics, whose September 30, 2002 balance sheet shows a total shareholders' equity deficit of about $12 million, is committed to the development of breakthrough biopharmaceutical products for the treatment of life-threatening diseases. Essential Therapeutics is dedicated to commercializing novel small molecule products addressing important unmet therapeutic needs. Additional information on Essential Therapeutics can be obtained at http://www.essentialtherapeutics.com GEMSTAR-TV GUIDE: Nasdaq Filings Deadline Extended to Month-End --------------------------------------------------------------- Gemstar-TV Guide International, Inc. (NASDAQ: GMSTE), has previously received an extension to file with the SEC and Nasdaq all necessary amended filings for fiscal 2000, 2001 and 2002, including affirmative statements that the filings have been reviewed and/or audited in accordance with SEC requirements until March 31, 2003. The Company sought the extension in order to align the filing date for its 2000 and 2001 amended filings with its 2002 filing. The Company continues to anticipate filing all of its required documents and certifications on March 31 as required. Gemstar-TV Guide International, Inc., is a leading media and technology company focused on consumer television guidance and home entertainment. The Company's businesses include: television media and publishing properties; interactive program guide services and products; and technology and intellectual property licensing. Additional information about the Company can be found at http://www.gemstartvguide.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's lowered its corporate credit and bank loan ratings on Gemstar-TV Guide International Inc., to double-'B' from double- 'B'-plus. Standard & Poor's said that all of the ratings remain on CreditWatch with negative implications, where they were placed on August 15, 2002. GENERAL MARITIME: S&P Assigns BB Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to General Maritime Corp. At the same time, Standard & Poor's assigned its 'B+' senior unsecured debt rating to the company's proposed 10-year $250 million note offering. The long-term rating outlook is stable. New York-based General Maritime is engaged primarily in the ocean transportation of crude oil and petroleum products. The company owns and operates a fleet of 28 oceangoing vessels (23 Aframax tankers and 5 Suezmax vessels). "Ratings on General Maritime reflect the company's favorable business position as a large operator of midsize Aframax and larger Suezmax petroleum tankers with a strong market share in the Atlantic Basin, diversified customer base of oil companies and governmental agencies, and fairly good access to liquidity," said Standard & Poor's credit analyst Kenneth L. Farer. "These factors are offset by significant, but managed, exposure to the competitive and volatile tanker spot markets and an aggressive growth strategy," the analyst continued. In January 2003, the company announced it would acquire the 19 vessels owned and operated by Metrostar Management Corp., for $525 million, increasing General Maritime's fleet to 47 vessels (28 Aframax tankers and 19 Suezmax vessels) with capacity equal to about 6% of the world Aframax and Suezmax fleets. The transaction is expected to conclude by April 30, 2003. This acquisition expands General Maritime's scope of operations to Europe, the Mediterranean, and the Black Sea, in addition to increasing the total fleet cargo carrying capacity, with a small decrease in the combined fleet's average age. Tanker rates increased dramatically in the fourth quarter of 2002, reversing declines during the second half of 2001 and most of 2002, and have remained high, reflecting a cold winter, war premiums associated with a potential conflict with Iraq, and an extension of transit time to supply North America due to the oil company strike in Venezuela. Although rates may moderate from the current high levels, industry fundamentals over the near to intermediate term are expected to remain favorable. Additional rate increases and long-term charter contracts for quality modern tankers are possible due to environmental concerns after the sinking of the tanker Prestige off the coast of Spain. The global Aframax and Suezmax fleets are expected to increase slightly over the next few years, since the delivery schedule represents a somewhat higher percentage of the existing fleet compared with the capacity of ships over 20 years old that will likely be scrapped. General Maritime's liquidity available under credit facilities and fairly strong market position should enable the company to maintain a credit profile consistent with the rating. Downside risks are limited by the favorable near to intermediate term industry fundamentals and General Maritime's solid market position. However, dramatic improvements are unlikely due to an aggressive growth strategy in a competitive and cyclical market. GENTEK INC: Sues INA USA to Recover $2MM of Unpaid Obligation ------------------------------------------------------------- Under the terms of certain purchase orders issued in accordance with the Toledo Manufacturing Agreement dated November 14, 2000, GenTek Inc., and its debtor-affiliates manufacture stamped roller rocker arms and sell them to INA USA Corporation. INA owes $2,056,389 to the Debtors under this agreement. On the other hand, the Debtors owe $883,074 to INA under the terms of the INA Manufacturing Agreement. INA manufactures roller bearings and axles and sell them to the Debtors. On February 25, 2003, the Debtors paid INA the $822,044 postpetition amount they previously withheld under the INA Manufacturing Agreement. The Debtors intend to timely perform their postpetition obligations under executory contracts with INA. Accordingly, the Debtors seek a declaratory judgment that INA: (a) must timely perform its obligations under the executory contracts with the Debtors; (b) must pay all amounts presently due and owing to the Debtors under the existing contracts; and (c) owed the Debtors $2,056,389 as of October 11, 2002 under the terms of the Toledo Manufacturing Agreement and that amount remains unpaid and is presently due and owing to the Debtors. The Debtors also ask the Court to issue a turnover order directing INA to pay all indebtedness it presently owed under the Toledo Manufacturing Agreement. Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, explains that based on INA's conduct to date, there is an actual controversy between the Debtors and INA regarding their rights under the Toledo and INA Manufacturing Agreements. Mr. Chehi also argues that INA, as the non-debtor party to both agreements, is compelled to fully perform its contractual obligations during the pendency of these Chapter 11 cases until and unless the executory contracts are rejected. (GenTek Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) GS MORTGAGE: S&P Assigns Low-B Ratings to Six Note Classes ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to GS Mortgage Securities Corp. II's $1.64 billion commercial mortgage pass-through certificates series 2003-C1. The preliminary ratings are based on information as of March 4, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying mortgage loans, and the geographic and property-type diversity of the loans. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage ratio of 2.04x, a beginning loan-to-value ratio (LTV) of 72.5%, and an ending LTV of 65.4%. Unless otherwise indicated, all calculations in this report, including weighted averages, do not consider the B note of each of the four A/B loans, which have not been contributed to the trust. PRELIMINARY RATINGS ASSIGNED GS Mortgage Securities Corp. II $1.64 billion commercial mortgage pass-thru certs series 2003-C1 Class Rating Amount ($) ----- ------ ---------- A-1 AAA 123,864,000 A-2 AAA 632,098,000 A-3 AAA 675,405,000 X-1 AAA (a)1,645,250,145 X-2 AAA (a)1,595,008,000 B AA 55,527,000 C AA- 16,452,000 D A+ 12,339,000 E A 18,509,000 F A- 12,339,000 G BBB+ 20,565,000 H BBB 12,339,000 J BBB- 12,339,000 K BB+ 12,339,000 L BB 8,226,000 M BB- 6,169,000 N B+ 6,169,000 O B 2,056,000 P B- 4,113,000 (a) Initial notional balance. HANOVER COMPRESSOR: Q4 2002 Net Loss Widens to $75 Million ---------------------------------------------------------- Hanover Compressor Company (NYSE:HC), the leading provider of outsourced natural gas compression services, reported financial results for the fourth quarter and year ended December 31, 2002. During the fourth quarter of 2002, the company reviewed its business lines and the board of directors approved management's recommendation to exit and sell the company's California power generation and certain used equipment business lines. The results from these businesses are reflected as discontinued operations and prior periods have been adjusted to reflect this presentation. Additionally, in the fourth quarter, Hanover consolidated the results of Belleli Energy S.r.l., for the first time and recorded certain writedowns, asset impairments and restructuring costs. A summary of these changes and charges to the company's financial results is discussed below. For the fourth quarter 2002, Hanover reported a net loss of $74.9 million, or $0.93 per share. Fourth Quarter 2002 and Year End Summary Fourth quarter 2002 revenue was $261.7 million compared with $308.3 million for the fourth quarter 2001. Net loss for the fourth quarter 2002 was $74.9 million compared with net income of $12.0 million in the fourth quarter 2001. Loss from continuing operations for the fourth quarter 2002 was $38.2 million, compared to income of $12.3 million a year earlier. Included in the fourth quarter net loss was pre-tax charges of $108.5 million ($52.2 million included in discontinued operations and $56.3 million in unusual charges included in continuing operations). EBITDAR (income from continuing operations before interest expense, compressor leasing expense, distributions on mandatorily redeemable convertible preferred securities, income taxes, goodwill impairment, and depreciation and amortization) for the fourth quarter was $46.4 million, compared to $79.9 million for the same period a year earlier. EBITDAR for the period includes $17.2 million of unusual charges. Supplement II provides a reconciliation of EBITDAR to net income. For the year ended December 31, 2002, revenue was $1,028.8 million, a slight decrease from revenue of $1,041.0 million for 2001. For the year, Hanover reported a net loss of $116.1 million, or $1.46 per share, compared to net income of $72.4 million, or $0.94 per fully diluted share in 2001. Loss from continuing operations was $74.8 million for the year, or $0.94 per share, compared to income of $69.6 million, or $0.91 per fully diluted share in 2001. Included in the 2002 net loss was $182.7 million in pre-tax unusual charges, ($74.2 million in the second quarter as discussed in the company's Form 10-Q for that quarter and $108.5 million in the fourth quarter). EBITDAR for 2002 was $249.0 million, compared to $295.2 million in 2001. Included in EBITDAR for 2002 was $37.9 million in unusual charges, $20.7 million in the second quarter and $17.2 million in the fourth quarter. "During the fourth quarter, we performed a full review of our operations and lines of business and identified several areas where we could improve our ongoing operating performance by exiting non-core businesses and streamlining our fabrication operations through the consolidation of facilities," said Chad Deaton, President and Chief Executive Officer of Hanover. "While the charges associated with this restructuring led to negative fourth quarter and year end results, we believe these changes, along with our increased focus on capital discipline, should lead to improved operating performance. Looking at 2003, we are cautiously optimistic that our customers' activity will continue to build throughout the year." Discontinued Operations and Writedowns In the fourth quarter 2002, Hanover recorded a pre-tax charge of $52.2 million ($36.7 million, net of tax) to write down its investment in discontinued operations to current estimated fair market values. Discontinued operations include three power generation projects in California and related inventory, and certain of the company's used equipment divisions. Hanover anticipates selling these assets in 2003. Additionally, in the fourth quarter, Hanover recorded $56.3 million in pre-tax unusual charges. Included in these charges were: (i) $34.5 million included in depreciation and amortization expense for reductions in the carrying value of certain idle units of the company's compression fleet that are being retired and the acceleration of depreciation related to certain plants and facilities expected to be sold or abandoned; (ii) $4.6 million in goodwill impairment related to the writedown of goodwill associated with the company's pump division, which it plans to sell in 2003; and (iii) $17.2 million included in parts & service expense, selling, general and administrative ("SG&A") expense, and other expense for severance costs and bad debt reserves related to non-core businesses. Revenue and Profit Fourth quarter 2002 revenue declined 15% compared to fourth quarter 2001 as growth in the international rental business was more than offset by declines in the other business lines as customers continued to reduce capital expenditures and defer maintenance. International rental revenue increased by 9% over fourth quarter 2001 to $46.1 million and gross margin improved marginally to 62% from 61% a year earlier. The company continued to experience strong international demand, with increased activity in Latin America, particularly Mexico and Argentina late in the year. In the fourth quarter 2002, international rental revenue was negatively impacted by a $2.7 million reduction in revenue related to disruptions to the company's Venezuela operations in December caused by the unofficial national strike in the country. Domestic rental revenue for the quarter declined 6% from the fourth quarter 2001 to $79.3 million, with gross margin declining to 59% from 62% a year earlier. The parts & service and fabrication business lines continued to be impacted by the slowdown in capital spending by oil and gas producers. Parts & service revenue for the fourth quarter declined 29% from the fourth quarter 2001 to $51.0 million with gross margin improving to 30% from 27% for the same period a year earlier. Included in parts & service revenue for the quarter was $9.1 million in used compression equipment sales, with a 29% gross margin compared to $7.2 million in sales and a 11% gross margin for the fourth quarter 2001. Compression fabrication revenue declined 48% from the fourth quarter 2001 to $28.7 million with gross margin declining to 11% from 14% a year earlier. Production & processing equipment fabrication revenue for the quarter was $50.0 million and resulted in a gross margin of 14%, compared to $48.3 million in revenue and a gross margin of 17% for the same period in 2001. Included in production & processing equipment fabrication revenue and expense for the fourth quarter 2002 was the results of Belleli. Excluding Belleli, production & processing equipment fabrication revenue declined 28%, compared to the same period a year earlier. On November 21, 2002, Hanover increased its ownership in Belleli to 51% and began consolidating its financial results. Belleli is an Italian-based engineering, procurement and construction company that primarily engineers and manufactures desalinatization plants for use in Europe and the Middle East. In the fourth quarter, Belleli contributed $15.5 million in revenue, $13.7 million in operating expense, and $1.2 million in SG&A expense. Fourth quarter 2002 results were also impacted by higher SG&A expense due to the charges discussed above, the inclusion of Belleli's SG&A, and approximately $2.0 million in continuing administrative and legal costs associated with the SEC investigation and the company's restatement of its financial statements. Depreciation and amortization expense for the quarter increased to $68.8 million, compared to $28.2 million for the same period a year ago. The increase in depreciation was primarily due to $34.5 million in writedowns, partially offset by the reduction in amortization expense of $3.7 million from the adoption of FAS 142, and $3.7 million from the change in estimated useful lives of certain types of compression equipment which began in the third quarter 2001. Fourth quarter results were positively impacted by a $6.7 million tax benefit resulting primarily from the recognition of tax benefits related to foreign exchange losses from the company's international operations. For the full year 2002, revenue declined by approximately 1%, as declining revenue in the fabrication business lines was offset by increased rental revenues. Domestic and international rental revenue increased 22% and 45%, respectively, year to year, as 2002 results included the impact of owning Production Operators Corporation for a full year. POI was acquired from Schlumberger in August 2001. Parts & service revenue increased 4% over 2001 results, but gross margin decreased from 29% in 2001 to 20% in 2002 due to an inventory writedown in the second quarter 2002 and because a greater portion of the revenue in 2002 was generated from used compressor sales which had a lower gross margin. In 2002, parts & service revenue included $62.4 million in used equipment sales at a 13% gross margin, compared to $28.0 million in 2001, with a 31% gross margin. Revenue in 2002 for compression fabrication and production & processing fabrication decreased by 49% and 19%, respectively, from 2001 revenue due to weakness in the domestic market caused by lower drilling and new well completion activity by oil and gas producers which resulted in decreased capital spending by the company's customers in 2002. Gross margins for both business units in 2002 decreased as well to 13% and 15% from 16% and 20%, respectively, in 2001 as reduced fabrication activity put pressure on margins by having less production to cover fixed overhead. 2002 results were negatively impacted, compared to 2001 results, by increased interest and leasing expense resulting from additional borrowings used for the POI acquisition and increased leasing costs due to the delay in filing registration statements related to the notes issued in connection with the company's 2001 compressor leases caused by the restatements of the company's financial statements. SG&A expense was also higher in 2002 due to increased legal and administrative costs associated with the restatement of the company's financial statements and the SEC investigation. Liquidity and Other Hanover had capital expenditures of approximately $60 million in the fourth quarter 2002 and approximately $242 million for the full year. During 2002, the Company generated approximately $74 million in assets sales proceeds and at December 31, 2002, it had approximately $157 million outstanding under its $350 million bank credit facility and approximately $19 million in cash on its balance sheet. Effective December 31, 2002, Hanover amended certain financial covenants under its bank credit facility and certain operating leases financed with a group of lenders to allow the company more flexibility in 2003 to meet its short term liquidity needs and currently has approximately $120 million in availability it can access under the bank credit facility, based on current covenant constraints. "In the second half of 2002, management increased the company focus on improving capital expenditure discipline, and we were able to reduce borrowings under our bank credit facility from a peak of approximately $250 million at mid year to approximately $157 million at year end, which was about equal with borrowings at year end 2001," said John Jackson, Chief Financial Officer of Hanover. "In 2003, our goal is to limit our capital expenditures to less than our cash flow and to continue reducing debt with excess cash flow and proceeds from asset sales." Total compression horsepower at December 31, 2002 was 3,514,000, including certain units from acquired companies that Hanover has traditionally excluded from the rental utilization calculations because these units require maintenance and upgrade to meet Hanover's standards ("unavailable units"). Historically, Hanover has reported horsepower utilization excluding unavailable units but going forward the company will report on a total horsepower basis. Hanover's compression horsepower utilization rate as of December 31, 2002, on a total horsepower basis, was 78%, compared to 80% at the end of the third quarter and 84% at December 31, 2001. In the fourth quarter 2002, the company analyzed its compression fleet and determined that 217 units representing approximately 35,000 horsepower should be retired and scrapped or sold. The company recorded a $18.9 million charge in the fourth quarter, included in the unusual charges for the quarter, to write-off these units. At December 31, 2002, Hanover's third-party fabrication backlog was approximately $88 million, a slight increase over year-end 2001 levels of $87 million. Compared to the third quarter 2002, the Company's backlog increased by 24%. Hanover Compressor Company -- http://www.hanover-co.com-- is the global market leader in full service natural gas compression and a leading provider of service, financing, fabrication and equipment for contract natural gas handling applications. Hanover sells and provides this equipment on a rental, contract compression, maintenance and acquisition leaseback basis to natural gas production, processing and transportation companies that are increasingly seeking outsourcing solutions. Founded in 1990 and a public company since 1997, Hanover's customers include premier independent and major producers and distributors throughout the Western Hemisphere. As reported in Troubled Company Reporter's November 18, 2002 edition, Standard & Poor's placed its ratings on Hanover Compressor Co., ('BB' corporate credit rating) on CreditWatch with negative implications, reflecting the company's announcement that the SEC was changing the status of its review of financial restatements to formal from informal. DebtTraders says that Hanover Compressor's 4.750% bonds due 2008 (HC08USR1) are trading at about 70 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=HC08USR1for real-time bond pricing. HEXCEL CORP: S&P Rates Proposed $125M Senior Secured Notes at B --------------------------------------------------------------- Standard & Poor's Rating Services said today it assigned its 'B' rating to Hexcel Corp.'s proposed $125 million senior secured notes due 2008 that are to be offered under SEC Rule 144a with registration rights. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the advanced structural materials manufacturer. The outlook is negative. The proceeds from the proposed debt offering, in combination with a portion of the proceeds from the sale of $125 million in preferred stock to certain investors, will be used to refinance and pay down the company's existing secured credit facility. The remaining proceeds from the preferred stock sale will be used to repay the subordinated notes maturing in August 2003. In addition, Hexcel is arranging a new credit facility to meet working capital needs. The notes are secured by substantially all domestic property, plant, and equipment. The transactions are expected to close simultaneously by the end of the first quarter of 2003. "The refinancing and preferred stock issuance will alleviate near-term liquidity concerns regarding the return to stricter bank covenants in the first quarter of 2003 and upcoming debt maturities. Therefore, the outlook will likely be revised to stable from negative after the transaction closes," said Standard & Poor's credit analyst Christopher DeNicolo. Ratings for Stamford, Conn.-based Hexcel reflect a very weak financial profile, stemming from high debt levels and unprofitable operations, which outweigh the company's substantial positions in competitive industries and generally favorable long-term business fundamentals. The firm is the world's largest manufacturer of advanced structural materials, such as lightweight, high-performance carbon fibers, structural fabrics, and composite materials for the commercial aerospace, defense and space, electronics, recreation, and industrial sectors. The markets served are cyclical, but most have growth potential where the company's materials offer significant performance and economic advantages over traditional materials. In the commercial aircraft market, accounting for about 45% of Hexcel's revenues in 2002, weaker air traffic, losses at airlines, grounded aircraft, passenger security concerns in the aftermath of September 11, 2001, and a slow global economy will constrain demand for new planes and, thus, for the company's products. This downturn and continued weakness in the electronic materials business will overshadow positive trends in some of the firm's smaller markets, such as military aircraft, wind energy, and soft body armor. A substantial decline in the commercial aircraft business, which could be prolonged, and a heavy debt burden will challenge management in the intermediate term. Significant deterioration in performance from current expectations or reduced financial flexibility due to a failure to complete the proposed refinancing and equity sale could lead to a downgrade. HOLLYWOOD CASINO: S&P Ups Sr. Sec. Rating to B+ Following Merger ---------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Hollywood Casino Corp.'s $310 million of 11.25% senior secured notes and $50 million of floating rate senior secured notes to 'B+' from 'B'. At the same time, Standard & Poor's withdrew its corporate credit rating on the Dallas, Texas-based company. In addition, all ratings were removed from CreditWatch where they were placed on August 2002. The rating actions follow the completion of the previously announced merger between HWCC and Penn National Gaming Inc. "Although HWCC's senior secured debt is not a direct obligation of Penn National, Standard & Poor's is taking a consolidated approach to the credits, given the economic and strategic importance of the acquisition," said Standard & Poor's credit analyst Michael Scerbo. He added, "However, Penn National has called for redemption of the notes and Standard & Poor's will withdraw its ratings if the notes are redeemed." HOLLYWOOD CASINO: S&P Ratchets Credit & Sr. Sec. Ratings to CCC- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior secured debt ratings for Shreveport, Louisiana-based Hollywood Casino Shreveport to 'CCC-' from 'CCC+'. 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/--), the indirect parent company of HCS, that holders of the outstanding HCS bonds failed to provide the required majority to consent to a waiver of the change of control provision required under HCS' existing bond indentures. As a result, given Penn National's comments 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, and Standard & Poor's belief that the funding of the change of control repurchase on a stand-alone basis by HCS is unlikely, the notes are vulnerable to nonpayment. The ratings could be lowered further if HCS is unable to fund the change of control repurchase obligation. INSILCO HOLDING: Amphenol Pitches Best Bid for Assets at Auction ---------------------------------------------------------------- Insilco Holding Co., announced that Amphenol Corporation has emerged as the successful bidder in a competitive auction for the majority of Insilco Technologies, Inc.'s custom assembly business assets for approximately $14 million, subject to closing adjustments. The results of the auction will be presented for approval by the United States Bankruptcy Court for the District of Delaware at a hearing in Philadelphia, PA, on March 7, 2003. Because there were no competitive bids submitted for the Company's other going concern assets, the Bankruptcy Court will be asked to approve the sale of those assets pursuant to previously announced contracts. Specifically, Bel Fuse Ltd. has agreed to purchase the passive components business for approximately $35 million; SRDF Acquisition Company LLC, a private investor group, will purchase the stamping assets for approximately $13 million; LL&R Partnership, a private investor group, will purchase the North Myrtle Beach custom assembly business for approximately $1.7 million. Insilco Technologies, Inc. has also agreed to sell the Ireland-based custom assembly business to that facility's general manager, Mr. Stephen Bullock, for approximately $850,000. The closing of the transactions remain subject to, among other things, customary closing conditions and Bankruptcy Court approval. Insilco Holding Co., and certain of its domestic subsidiaries, filed voluntary petitions under Chapter 11 of the U.S. Bankruptcy Code on December 16, 2002, with the stated intention to facilitate the planned sales of the going concern assets of the Company. Insilco Holding Co., through its wholly-owned subsidiary Insilco Technologies, Inc., is a leading global manufacturer and developer of a broad range of magnetic interface products, cable assemblies, wire harnesses, high-speed data transmission connectors, power transformers and planar magnetic products, and highly engineered, precision stamped metal components. Insilco maintains more than 1.5 million square feet of manufacturing space and has 21 locations throughout the United States, Canada, Mexico, China, Ireland and the Dominican Republic serving the telecommunications, networking, computer, electronics, automotive and medical markets. For more information visit the Company's sites at http://www.insilco.com or http://www.insilcotechnologies.com INTEGRATED DATA: External Auditors Express Going Concern Doubt -------------------------------------------------------------- Integrated Data Corp. is a non-operating U.S. parent company with subsidiaries in the U.S., United Kingdom and Italy. IDC holds proprietary technology for digital transmission of data utilizing radio frequencies transmitted by FM radio stations. On October 23, 2002, the Company's Plan of Reorganization was approved by the United States Bankruptcy Court and became effective on November 12, 2002. The Company continues to operate from its Conshohocken (suburban Philadelphia), PA headquarters. As part of the Plan of Reorganization, the Company changed its name from Clariti Telecommunications International, Ltd. to Integrated Data Corp. and the Delaware Secretary of State accepted this change of the Company's Certificate of Incorporation, effective November 20, 2002. Also under the Plan, the Company implemented a reverse stock split converting each 100 shares into 1 share of IDC common stock. Additionally, the Company formed C3 Technologies, Inc. a wholly owned subsidiary and Delaware Company, to manage its technologies and intellectual property. For Fiscal second quarter 2003, the Company incurred net income of $3,321,000, on $25,000 in revenue as compared to a net loss of $769,000, on no revenue in Fiscal first quarter 2002. Excluding extraordinary gain on discharge of indebtedness, the Company incurred a net loss of $314,000, on $25,000 in revenue as compared to a net loss of $769,000, on no revenue in Fiscal 1Q02. For Fiscal first quarter 2003, net loss from continuing operations was $314,000 as compared to $769,000 in Fiscal first quarter 2002. The $444,000 reduction in loss from continuing operations was primarily due to the decrease in general and administrative expenses offset by an increase in depreciation and amortization expenses. In addition, the Company operated with limited expenses due to the Chapter 11 proceedings, which extended into Fiscal second quarter 2003. For the Fiscal Six Months 2003, the Company incurred net income of $3,489,000, on $25,000 of revenue as compared to a net loss of $3,607,000, on no revenue for the Fiscal Six Months 2002. Excluding gain on discharge of indebtedness, the Company incurred a net loss of $486,000, on $25,000 in revenue in Fiscal Six Months 2003 as compared to a net loss of $3,607,000, on no revenue in Fiscal Six Months 2002. At December 31, 2002, the Company had a working capital deficit of $1,383,000 (including a cash balance of $1,000) as compared to a working capital deficit of $5,711,000 (including a cash balance of $5,000) at June 30, 2002. The working capital increase of $4,328,000 is primarily due to the $3,635,000 in extraordinary gain on discharge of indebtedness as a result of closing Chapter 11 proceedings and an extraordinary gain on discharge of indebtedness of $340,000 associated with the closing of the Chapter 7 proceedings for RadioNet International. The Company has no firm commitments for funding after December 31, 2002. The Company has historically relied principally on equity financing to meet its cash requirements and expects to find the process of raising equity capital extremely difficult. These matters raise substantial doubt about the ability to continue as a going concern. There can be no assurances that such funding will be generated or available, or if available, on terms acceptable to the Company. KAISER ALUMINUM: New Debtors Ask Court to Fix April 30 Bar Date --------------------------------------------------------------- To complete the reorganization process and make distributions under any reorganization plan confirmed in these cases, the Nine New Kaiser Aluminum Corporation Debtor-Affiliates require among other things, complete and accurate information regarding the nature, validity and amount of claims that will be asserted in their Chapter 11 cases. The New Debtors are: * Alpart Jamaica Inc., * KAE Trading, Inc., * Kaiser Aluminum & Chemical Canada Investment LTD., * Kaiser Aluminum & Chemical of Canada LTD., * Kaiser Bauxite Co., * Kaiser Center Properties, * Kaiser Export Co., * Kaiser Jamaica Corporation, and * Texada Mines Ltd. However, because they filed for Chapter 11 almost a year after the 17 existing Debtors and only a few weeks before the 17 Debtors' deadline for filing proofs of claim, the New Debtors were not be included in the current bar date. For this reason, the New Debtors ask the Court to establish new deadlines for filing proofs of claims against them: A. General Bar Date The New Debtors anticipate that they will serve on known entities holding potential prepetition claims notice of the new Bar Dates and a proof of claim form on or before March 24, 2003. Accordingly, the New Debtors propose to fix April 30, 2003 as the general bar date by which all entities holding prepetition general claims must file proofs of claims. The proposed Bar Date will provide potential holders of General Claims against the New Debtors with more than one month to prepare and file their claims. B. Rejection Bar Date The New Debtors expect that some entities may assert claims in connection with the New Debtors' rejection of executory contracts and unexpired leases. For any claims relating to a New Debtor's rejection of a contract or lease that is approved by the Court before the confirmation of the applicable New Debtor's reorganization plan, the New Debtors suggest that the affected party to the contract may file rejection damage claims on or before the later of the General Bar Date or 30 days after the date of the Rejection Order is entered by the Court. The New Debtors will indicate the Rejection Bar Date in any Rejection Order. C. Amended Schedule Bar Date The New Debtors have not yet filed their schedules of assets and liabilities and statements of financial affairs but expect to do so by March 17, 2003. Nevertheless, in the event a New Debtor amends its Schedules to reduce the undisputed, noncontingent and liquidated amount or change the nature or classification of a claim, the New Debtors propose that the affected claimant will have until the later of the General Claims Bar Date or 30 days after a notice of the Schedules amendment is served on the claimant. These entities are required to file proofs of claim on or before the General Claims Bar Date: (a) any entity whose prepetition General Claim against a New Debtor is not listed in the applicable New Debtor's Schedules or is listed as disputed, contingent or unliquidated and that desires to participate in any of these Chapter 11 cases or share in any distribution in any of these Chapter 11 cases; and (b) any entity that believes that its prepetition General Claim is improperly classified in the Schedules or is incorrectly listed and that desires to have its General Claim allowed in a classification or amount other than that identified in the Schedules. These entities need not file proofs of claim by the General Claims Bar Date: (1) any entity that already has properly filed a proof of claim against one or more of the New Debtors; (2) any entity whose claim against a New Debtor is not listed as disputed, contingent or unliquidated in the Schedules and that agrees with the nature, classification and amount of its claim as identified in the Schedules; (3) any entity whose claim against a New Debtor previously has been allowed by, or paid pursuant to, a Court order; (4) any entity holding an administrative expense claim against any New Debtor's Chapter 11 case; and (5) any of the Debtors or their non-debtor subsidiaries, including any of the New Debtors that hold claims against one or more of other New Debtors. The proposed Bar Dates will not apply to personal injury claims associated with exposure to asbestos. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, any entity that fails to file a proof of claim by the applicable Bar Date will be forever barred, estopped and enjoined from: -- asserting any General Claim that: (i) exceeds the amount, if any, that is identified in the Schedules as undisputed, noncontingent and liquidated; or (ii) is of a different nature or classification than any General Claim identified in the Schedules -- Unscheduled Claim; or -- voting on, or receiving distributions under, any reorganization plan in these Chapter 11 cases with respect to an Unscheduled Claim. The New Debtors also ask the Court to approve the form and manner of notice of the Bar Dates. The New Debtors will serve a Bar Date notice package on all known entities holding potential prepetition General Claims against them. The Notice Package will be mailed by first class United States mail, postage prepaid. The Bar Date Notice Package will consist of a Bar Date Notice and a proof of claim form substantially in the form of Official Form No. 10. The New Debtors inform the Court that the Proof of Claim Form has been modified, and may be further modified in certain limited respects, to accommodate the claims process in these cases. The Proof of Claim Form will state, along with the claimant's name: (i) whether the General Claimant's claim is listed in the Schedules and, if so, the New Debtor against which the General Claimant's claim is scheduled; (ii) whether the General Claimant's claim is listed as disputed, contingent or unliquidated; and (iii) whether the General Claimant's claim is listed as secured, unsecured or priority. If a claim is listed in the Schedules in a liquidated amount that is not disputed or contingent, the dollar amount of the claim will also be identified on the Proof of Claim Form. Any entity that relies on the information in the Schedules will bear responsibility for determining that its claim is accurately listed. For any claim to be validly and properly filed, the New Debtors advise that a signed original of a completed Proof of Claim Form, together with any accompanying documentation required by Bankruptcy Rules 3001 (c) and 3001(d), must be delivered to the New Debtors' claims and noticing agent, Logan & Company, at the address identified on the Bar Date Notice so as to be received no later than 5:00 p.m., Eastern Time, on the applicable Bar Date. All filed proofs of claim must: (a) be written in English; (b) be denominated in lawful U.S. currency, based on the exchange rate in effect as of 7:00 a.m. (Eastern time) on January 14, 2003; and (c) conform substantially with the Proof of Claim Form. The New Debtors propose to permit the General Claimants to submit proofs of claim in person or by courier service, hand delivery or mail. Proofs of claim submitted by facsimile or e- mail will not be accepted. Proofs of claim will be deemed filed when actually received by Logan. If a General Claimant wants to receive an acknowledgement of Logan's receipt of a proof of claim, the General Claimant must include in its original proof of claim: (1) a copy of the original proof of claim; and (2) a self-addressed, stamped return envelope. The New Debtors further note that those entities asserting General Claims against more than one New Debtor are required to file a separate proof of claim with respect to each New Debtor. The New Debtors explain that if the entities are permitted to assert claims against more than one New Debtor in a single proof of claim, Logan may have difficulty maintaining separate claims registers for each New Debtor. The New Debtors may be required to object to a proof of claim to clarify the proper New Debtor liable for the amounts identified in the claim. Additionally, the New Debtors also require the entities to identify on each proof of claim the particular debtor against which the claim is asserted. Identifying the liable debtor will greatly expedite the New Debtors' review of proofs of claim in these cases. The New Debtors also intend to provide a supplemental notice to the General Claimant by publishing notices of the Bar Dates on or before April 11, 2003 in: * the national edition of The Wall Street Journal; * the local London, Ontario edition of The London Free Press; and * the local Jamaican edition of The Daily Gleaner. The supplemental notice will also ensure that entities with unknown potential General Claims will receive notice of the Bar Dates. The New Debtors relate that the Publication Notice will contain: -- a website address where potential General Claimants may download the Proof of Claim Form and related instructions; and -- a toll-free number where potential General Claimants can seek additional information with respect to filing General Claims. (Kaiser Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 609/392-0900) KEMPER INSURANCE: Fitch Junks Financial Strength Rating at CC ------------------------------------------------------------- Fitch Ratings has downgraded the insurer financial strength ratings of three primary insurance underwriters of the Kemper Insurance Companies to 'CC' from 'B+'. Additionally, Fitch has downgraded the $700 million of surplus notes issued by group member Lumbermens Mutual Casualty Company to 'C' from 'CCC'. All ratings have been removed from Rating Watch Negative. The rating actions follow recent announcements by the company regarding operating results and future strategic initiatives. Fitch's concerns regarding the financial condition of KIC are evidenced by the decline in consolidated policyholders' surplus to approximately $1.0 billion at year-end 2002 from approximately $1.5 billion at year-end 2001. The decline was primarily caused by adverse prior year loss development, additional funding obligations for KIC's pension plan, and significant realized investment losses. Included in these concerns is the increasing likelihood that interest payments on Lumbermen's surplus notes may not be made as scheduled, as the next interest payment is due in June 2003. The reduction in capital reported at year-end 2002 strains an already thin capital base that is heavily levered. Policyholders' surplus at Lumbermens is currently estimated at $700 million at year-end 2002. This is comprised entirely of the surplus notes, which represents financial leverage of 100%, and is far greater than industry peer ratios which are typically in the 25%-30% range. Given the regulatory oversight of surplus notes payments, and the organization's strained capital position, Fitch is concerned that Lumbermens will have difficulty maintaining minimum capital requirements. Therefore, KIC could experience difficulties in maintaining approvals from regulators to pay interest on its surplus notes. Further, Fitch believes that ultimate principal repayments on the surplus notes may be unlikely. Fitch believes that policyholders' surplus could still be negatively impacted by adverse development of asbestos & environmental claims that would further weaken KIC's capital profile. Reported policyholders' surplus already benefits by an estimated $380 million after-tax due to cessions through finite reinsurance contracts and specially allowed reserve discounting as represented in year-end 2001 regulatory financial statements. Capital may be further strained by the repurchase of a $125 million minority equity investment in a KIC subsidiary company that was made by Berkshire Hathaway in 2002. Closing of the transaction is expected in the first quarter of 2003. Fitch believes that the repurchase of the Berkshire investment will adversely impact KIC's capital and liquidity position. Additionally, KIC announced its intention to sell certain lines of its existing business to a new company capitalized primarily by private equity funds. The transaction will include KIC's middle market offerings, the core underwriting operations of KIC. Management believes that once this transaction has closed, the company will cease underwriting activities except as necessary to meet existing obligations. Fitch views this announcement as evidence of KIC's financial uncertainty and is concerned that potential restructuring and execution risk may cause additional operating challenges. KIC reported an operating loss of $76 million in 2002 in an improving underwriting environment. This disappointing result suggests that troubles continue to surround the underwriting capabilities of the organization. Fitch will closely monitor KIC's operations in the near term including a review of year-end regulatory statements and will make swift actions when additional information has been made public. Insurer Financial Strength Ratings -- Lumbermens Mutual Casualty Co. downgrade 'CC'. -- American Motorists Insurance Co. downgrade 'CC'. -- American Manufacturers Mutual Ins. Co. downgrade 'CC'. Surplus Note Rating -- Lumbermens Mutual Casualty Co. downgrade 'C'. KEMPER INSURANCE: S&P Keeps Watch on Low-B & Junk Ratings --------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on the members of the Kemper Insurance Cos. Intercompany Pool to 'B+' from 'BB+'. The ratings remain on CreditWatch with negative implications, where they were placed on February 18, 2003. At the same time, Standard & Poor's said its 'CCC' rating on Lumbermens Mutual Casualty Co. surplus notes remains on CreditWatch with negative implications. "The rating action was attributable to the decision to cease underwriting activities except as necessary to meet existing obligations, fourth-quarter adverse loss reserve development, and significant deterioration in policyholders surplus," said Standard & Poor's credit analyst Frederic Sklow. On March 3, 2003, Kemper announced a $312 million net loss for 2002, versus net income of $121 million in 2001. The decline was driven by $450 million of adverse reserve development, most of which was recognized in the fourth quarter. This action reduced the Kemper pool's policyholder surplus to $1 billion at year-end 2002 from $1.5 billion as of September 30, 2002. In response to the deterioration in capital adequacy, Kemper's board has directed the pool to cease underwriting activities except as necessary to meet existing obligations. As a significant element of this transaction, Kemper intends to sell the renewal rights to the ongoing book, which consists primarily of small and middle market business, to a consortium of investors led by Securitas Capital LLC. These lines generated about $1 billion in gross premiums in 2002. The risk-based capital ratio of parent company Lumbermens is down to about 80%, which is approaching the mandatory control level of 70%. The company's policyholder surplus fell by $570 million, to $697 million at year-end 2002 from about $1.3 billion the prior year. The decline in surplus would have been greater had it not been for a $190 million benefit to surplus generated by retroactive reinsurance contracts. The cumulative benefit of these contracts was $349 million, which offset the $(352) million unassigned funds position. The capital base of the company now consists solely of surplus notes carried at $698 million. Prospectively, surplus remains vulnerable to potential further adverse loss development, charge-offs and/or slowdown in payments of reinsurance recoverables, and additional write downs of affiliated investments. Standard & Poor's expects to resolve the CreditWatch status of the ratings following receipt of additional information concerning management's plans for running off the existing liabilities, including projected cash flows available to fund the orderly runoff of the Kemper Pool liabilities. Another rating factor will be the response of the state insurance regulators to Kemper's 2002 results. KEMPER INSURANCE: Net Loss Widens to $312 Million in 2002 --------------------------------------------------------- The Kemper Insurance Companies posted a year-end 2002 net loss of $312 million, compared with net income of $121 million in 2001. Year-end consolidated surplus fell to $1.0 billion, a reduction of approximately $475 million from Kemper's 2001 year- end surplus of $1.5 billion. "Three main factors contributed to our surplus decline," said David B. Mathis, Kemper chairman and CEO. "One was substantial adverse prior year loss development on past business, principally from 1999 and earlier. Another was a reduction in our surplus that we were required to record during 2002 as additional funding obligations for the pension plan. And, finally, significant realized capital losses and a drop in investment income in 2002 in part reflect the decline in the general capital markets and also reflect losses and write-offs from company investments in various business ventures." In view of the company's current situation, and the likelihood of additional rating actions, Kemper's board of directors has approved several actions, including the following: -- As previously announced, Kemper has arrived at an agreement-in-principle to sell certain lines of its existing businesses to a new company capitalized by private equity funds managed by Securitas Capital, LLC, a private equity investment firm affiliated with Swiss Re; The Cypress Group L.L.C.; Gilbert Global Equity Partners; and some members of Kemper's existing management team. -- The transaction will include Kemper's middle market offerings, such as workers' compensation, package, auto and umbrella in support of these lines, marine and small business accounts, professional liability business for architects and engineers, the Ohio-based Greatland operations and Kemper's fidelity and ERISA bond operations. The new unaffiliated company will operate under the Kemper name, retaining the value of the Kemper franchise. -- At the same time, Kemper is developing its claim and insurance services platform to sell its capabilities independently to current and new customers. These services include claim management; medical and disability management; loss control services to control workers' compensation; liability and property insurance costs; and legal bill audit services. This services platform will operate under National Loss Control Service Corporation (NATLSCO, Inc.), a subsidiary of Kemper, which soon will begin discussions with investors interested in equity stakes in this service company. Kemper intends to retain a level of ownership in the new services company as well. -- Finally, once the commercial lines transaction has closed, the company will cease underwriting activities except as necessary to meet our existing obligations, including those related to our former personal lines business. Going forward, Kemper will focus on expanding opportunities for the services platform. "The transaction around our middle market, small business and related specialty lines will support our efforts to enhance our services platform as a third party administrator," said Mathis. "Looking ahead, we will become a much smaller organization. However, there will be opportunities for many employees with the new commercial lines company, with the services platform and in facilitating an orderly withdrawal from lines of business that we are exiting." Kemper Insurance Companies is a premier provider of property and casualty insurance services headquartered in Long Grove, Ill. KMART CORP: Wants to Assign Store #3344 Lease to K-MER LLC ---------------------------------------------------------- On December 30, 2002, Spencer Management LLC notified Kmart Corporation and its debtor-affiliates that it has struck an agreement to assign an unexpired nonresidential real property lease for Store No. 3344 in Kentwood, Michigan to K-MER LLC. Spencer is the designation rights purchaser solely with respect to the Store No. 3344 Lease. To comply with their obligations under the Designation Rights Order, the Debtors now seek the Court's authority to assume and assign the Kentwood Store Lease to K-MER. The Debtors lease the premises under a real property lease with Hanover Kent Inc. on December 1, 1975. The Debtors assert that the proposed transaction will reap benefits for the estates. By agreeing to Spencer's assignee, the Debtors will receive $1,000,000 pursuant to their Designation Rights Agreement. The Debtors will also avoid continuing costs on a lease at a location they no longer operate. They will also avoid rejection claims. The Debtors estimate that the amount necessary to cure defaults under the Lease is: Claim Type Amount ---------- ------ 2001 prepetition real estate taxes $46,373 2001 prepetition CAM charges 5,392 2002 prepetition CAM charges 1,532 ------- Total $56,050 The Debtors further report that $49,070 in real estate taxes for year 2002 became due on February 14, 2003. Of this amount, $2,823 represents prepetition obligations and $46,247 represents postpetition obligations. If there is no dispute over the Cure Claims, the Debtors will pay the Cure Claims in connection with the assumption and assignment of the Lease. If there is a dispute, the Debtors will pay the undisputed portion of the Cure Claim to the designated party and deposit the disputed portion in an escrow account or other commercially reasonable arrangement. The Debtors will resolve the dispute either consensually or with Court intervention. The Debtors believe that Hanover Kent's interest to its property is adequately protected with the transaction. The Debtors will compensate Hanover Kent for any pecuniary loss. There is also adequate assurance that K-MER will continue to perform under the terms of the Lease. K-MER will sublet the property to other retail store operators. The Debtors also note that K-MER is a joint venture participated by Hanover Kent. Accordingly, Hanover Kent has consented to the assignment. TLM Realty Objects To Cure Claim TLM Realty Corp. alleges that there are disputed cure amounts, which the Debtors must escrow. TLM Realty is the managing agent for Kentwood Michigan Realty LLC, the owner of the Kentwood Shopping Center where Kmart Store No. 3344 is situated. TLM Realty informs the Court that, as of February 1, 2003, an additional $7,434 in penalties, interest and administrative fees became due on the unpaid prepetition real estate taxes. TLM Realty also seeks assurance that the taxes for 2002 will be timely paid by the Debtors. TLM Realty fears that the Debtors will not pay the $2,823 prepetition taxes. TLM Realty also notes that there is a $748 discrepancy for the 2002 prepetition CAM charges, which the Debtors fail to indicate. Should the Court approve the proposed lease assignment to K-MER, TLM Realty insists that the Debtors be required to pay the 2002 real estate taxes and place $11,005 in escrow to represent the disputed cure amount to be resolved later. (Kmart Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) LECTEC CORP: Dec. 31 Working Capital Deficit Stands at $1 Mill. --------------------------------------------------------------- LecTec Corporation (OTCBB:LECT) reported that net sales for the year ended December 31, 2002, decreased 41.4% to $6,852,000 from $11,698,000 for the year ended December 31, 2001. Approximately 75% of the year-over-year net sales decline was attributable to the sale of the Company's conductive products division in 2001. Conductive products net sales represented approximately $671,000 (or 9.8%) of total net sales for 2002 and $4,316,000 (or 36.9%) of total net sales for 2001. The net loss for 2002 was $2,603,000, compared to net earnings for calendar 2001 of $70,000. Excluding the gain and restructuring charge related to the 2001 sale of the conductive products division, the Company had a net loss of $4,288,000 for the year ended December 31, 2001. Gross profit as a percentage of net sales for 2002 was 23.9% compared to 23.4% for the prior year. Net sales for the fourth quarter of fiscal 2002 were $1,741,000, an 18.5% decline from net sales of $2,135,000 in the fourth quarter of 2001. Contract manufacturing sales grew 12.6% to $1,577,000 in the fourth quarter of 2002 from the comparable period in 2001 due to a strong cough cold season. Consumer products revenues declined due to the reduction in the number of TheraPatch(R) products offered and the repositioning of the NeoSkin(R) brand for the direct-to-consumer distribution channel. The Company had a net loss for the fourth quarter of fiscal 2002 of $658,000, down compared to the net loss for the prior year fourth quarter of $1,373,000. Gross profit for the fourth quarter of 2002 declined as compared to fourth quarter 2001 due to the aforementioned TheraPatch and NeoSkin product repositioning. LecTec's total operating expenses (excluding the 2001 restructuring charge) fell 40.3% from prior year levels to $4,132,000 for the fiscal year ended December 31, 2002, due to effective cost cutting and management initiatives focused on reducing expense levels. Sales and marketing expenses decreased 56.0% for the year ended December 31, 2002 to $1,413,000 from $3,213,000 in the prior year due to reduced promotional expenses. General and administrative expenses declined 19.5% for the year ended December 31, 2002 to $2,227,000 from $2,765,000 in the prior year due to head count reductions and cost control measures. Research and development expenses decreased 47.9% for the year ended December 31, 2002 to $492,000 from $945,000 in the prior year due to head count reductions. The Company's December 31, 2002 balance sheet shows a working capital deficiency of about $1 million, while total shareholders' equity drops further to about $967,000. "This past year was the most difficult year the company has faced, as a result of the slumping economy and the concerns it caused our contract manufacturing and retail customers," commented Rodney A. Young Chairman, CEO and President. "It was a year where for the first five months we had significantly lower revenues from our contract business. However, during the year we took actions necessary to maintain our operations and compliance procedures and continue to supply products to our contract manufacturing customers and retail channels. It was necessary to ask our contract manufacturing partners to pre-pay orders to help meet our cash requirements. We reduced our work force by more than 60% and eliminated all discretionary sales and marketing expenses, as well as reduced our inventory in an effort to properly position us for the future. In the second half of the year, we changed our strategy of launching and maintaining new products under our own brand, which required significant marketing investments, to aggressively expanding our efforts to establish contract manufacturing and licensing relationships with large pharmaceutical and skin care companies," Young stated. "I am pleased to report that last year wasn't all about struggling to survive. There were also some very positive outcomes in 2002. We saw the expansion of our cough cold vapor patch technology into Mexico and Canada by our largest contract- manufacturing customer. We also established new distribution for our TheraPatch brand products into several international markets. And on top of already strong relationships and interactions with our contract-manufacturing partners, we received even stronger collaboration and support," commented Young. "We look forward with excitement based on the fact that we have entered into a number of confidentiality agreements to explore new product development and new market opportunities with potential contract-manufacturing and co-development partners in the U.S. and Europe. The majority of these companies sought us out based on our patents, our reputation as OTC and skincare patch experts and our presence in the U.S. retail channels. We feel we are well positioned to lead, in connection with our partners, the further growth and development of the OTC patch technology market, which has already demonstrated, on average, a 146% annual increase over the past 3 years (Information Resources Inc. data February 2003). As we drive toward executing our contract manufacturing and licensing strategy, we are aggressively continuing our efforts to attract an appropriate strategic investor, partner, or acquirer to take advantage of our patented advanced skin interface technologies," Young concluded. LecTec is a health care and consumer products company that develops, manufactures and markets products based on its advanced skin interface technologies. Primary products include a full line of over-the-counter therapeutic patches for muscle aches and pain, insect bites, minor skin rashes, cold sores, coughs due to colds and minor sore throats, psoriasis, and its new products NeoSkin Rejuvenation and TheraPatch Sinus & Allergy. LNR PROPERTY: Fitch Rates $200M Convertible Sr. Sub Notes at BB- ---------------------------------------------------------------- Fitch Ratings has assigned a 'BB-' rating to LNR Property Corp's 5.5% $200 million contingent convertible senior subordinated notes. The notes have a final maturity of 2023 and are pari passu with LNR's existing senior subordinated debt. Although notes do not become redeemable at noteholder option until 2010,LNR will have the option to redeem them beginning in 2008. Fitch views the issuance as constructive as it adds to LNR's unsecured capital base and adds another level to the company's funding diversity. The yield of the notes, at 5.5%, is significantly lower than LNR's existing senior subordinated debt. Additionally, the long tenor of the notes will push LNR's weighted average debt maturity out to 4.5 years (how calculated at put date or final maturity). Fitch views the use of proceeds as neutral from a rating perspective. LNR announced that approximately 50% of the proceeds will be used to repurchase stock, an action that will dilute unencumbered assets. While LNR's stock buy back is consistent with is repurchase program, Fitch is, in general, more comfortable with the redemption of equity through retained earnings than the use of incremental leverage. Fitch has noted weaknesses in the composition of LNR's unencumbered asset base as it includes significant repositioning property and partnership equity components. However, LNR's internal capital formation rate combined with the partial use of proceeds to repay a mix of senior unsecured and secured debt help to offset concerns. Based in Miami, Florida with roots dating to 1969, LNR underwrites, purchases, and manages real estate and real estate driven investments. LNR has also developed one of the premier CMBS special servicer franchises in the U.S., with a market share of 18% at the end of 2002. LNR primarily seeks investment opportunities where it can purchase assets at a discount and utilize its due diligence, repositioning, asset management, and workout expertise to improve cash flows and profitability. Specifically, activities include the development or purchase of office buildings, apartment buildings, affordable housing communities, retail space, investments in subordinated commercial mortgage backed securities, and mortgage and real estate backed loans. LONGVIEW ALUMINUM: Files for Chapter 11 Protection in Delaware -------------------------------------------------------------- Officials at Longview Aluminum confirmed that the company filed a petition for voluntary Chapter 11 bankruptcy protection in Federal Court in Delaware. Today's Chapter 11 filing follows the company's successful efforts last week to receive a temporary restraining order prohibiting the Bonneville Power Administration and its Executive Director Steven Wright from terminating the aluminum smelter's power and transmission contracts pending further order of the Court. Longview Aluminum officials, including Chairman Michael Lynch, have long acknowledged that ensuring access to a long-term supply of affordable power and transmission would be key to our ability to profitably operate the smelter. "Since receiving the injunction last week, we've been meeting with our team of advisors to investigate every remedy and alternative available to us," said Lynch. "Finally, we determined that the Chapter 11 filing and reorganization would be our best path to restarting this smelter, protecting this asset, preserving these jobs and contributing to the economic welfare of the region." Longview Aluminum Chairman Michael Lynch expressed frustration with the lack of consistency in the power buy-back agreements BPA negotiated with other aluminum companies in the region, including global industry behemoth Alcoa. Unlike Longview Aluminum's contract with BPA, many of these agreements included "easy out" clauses which allow companies unencumbered exemption from their contractual "take or pay" obligation should they be able or choose to secure alternate power sources. Such options were never presented to Longview Aluminum. "BPA's inconsistent and uneven enforcement of its power buy-back agreements was a major factor in our decision," acknowledged Lynch. "Their misguided energy policy has resulted in a deindustrialization of this region and, if allowed to continue, will only result in more manufacturing job loss and economic hardship." Longview Aluminum is a high-purity aluminum smelting facility in Longview, Washington. LONGVIEW ALUMINUM: Case Summary & 20 Largest Unsec. Creditors ------------------------------------------------------------- Debtor: Longview Aluminum, L.L.C. 20 So. Clark Street Suite 850 Chicago, Illinois 60603 Bankruptcy Case No.: 03-10642 Type of Business: The Debtor is a high-purity aluminum smelting Facility. Chapter 11 Petition Date: March 4, 2003 Court: District of Delaware Judge: Peter J. Walsh Debtor's Counsel: James E. O'Neill, ESq. Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC 919 North Market Street, 16th Floor P.O. Box 8705 Wilmington, DE 19899-8705 Tel: 302-652-4100 Fax : 302-652-4400 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Pension Benefit of Guaranty $30,000,000 Corp. Roger Relersen Office of the General Counsel 122 K Street, N.W. Washington, DC 20005 Bonneville Power Admin. Transmission $16,000,000 Alan Penschke PO Box 3621 Portland, OR 97208-3621 Alcoa Corporate Center $6,000,000 Irene Schmidt 201 Isabella St. at 7th St. Bridge Pittsburgh, PA 15212 McCook Bankruptcy Estate $3,000,000 Joseph Baldi 4900 S. First Avenue McCook Illinois 60525 Cowlitz County ReaL $1,000,000 Estate Tax Assessor Ronald Marshall 312 S.W. 1st Street Kelso, WA 98626 Bonneville Power Admin. $1,029,688 PO Box 2784 Portland, OR 97228-2784 Eugene Tkalutch & Associates $230,475 SGL Carbon $140,000 Dept. Ecology Air (State $45,253 of WA) Fidelity Investments $34,339 Power Resource Managers LLP $19,394 Pacific States Industrial $17,694 Delta Dental of VA $11,870 Pension Benefit Guaranty $11,267 Corp. IGI Resources Inc. $8,854 GE Global Asset $5,000 Dept. of Ecology $4,984 ADP Payroll Wires & Service $2,590 Fees Pioneer $2,374 LTV CORP: Court Clears Stipulation Resolving Use of Tax Refunds --------------------------------------------------------------- The LTV Corporation and its debtor-affiliates, the Official Committee of Unsecured Creditors, the Official Committee of Noteholders, and the Term Lenders, obtained the Court's approval of a Stipulation regarding use of Copperweld's Tax Refund. As previously reported, the Job Creation and Worker Assistance Act of the Internal Revenue Code provides that the two-year net operating loss carry-back period is extended to five years for any net operating loss arising in any taxable year ending during 2001 or 2002. As a result of this carry-back extension, Copperweld Corporation is entitled to carry back certain of its 2001 net operating losses to its 1997 taxable year, generating a refund claim of approximately $7.5 million. The pertinent terms of the Stipulation are: (1) Copperweld and The LTV Corporation will jointly file an Application for Tentative Refund. (2) The LTV Corporation shall have control rights over the Joint Refund Application, including authority to: (i) supervise the filing of the Joint Refund Application; and (ii) any attendant procedures. (3) Notwithstanding the grant of authority to The LTV Corporation, the Joint Refund Application will identify Copperweld as the party entitled to receive direct payment of the refund proceeds, and will direct the Internal Revenue Service to pay the refund proceeds directly to Copperweld. (4) The LTV Corporation must act only after consultation with Copperweld, and may not waive, alter, amend, adjust, defer, set off, or otherwise compromise the refund claim or proceeds with the prior written consent of Copperweld, or the entry of a court order. (5) Once received, Copperweld will hold the refund proceeds received under the Joint Refund Application in a segregated interest-bearing account, and may not use the funds for any purpose. (6) Unless any party commences any litigative matter within 30 days of the receipt of the refund proceeds contesting Copperweld's right to retain the refund proceeds, or all of the parties agree, the refund proceeds shall be deemed to be the property of Copperweld Corporation and will not be subject to any claim by any Debtor or other entity, and Copperweld will no longer be required to segregate and hold the funds, but may use the funds for general business purposes. (7) If a litigative matter is timely commenced, then Copperweld will continue to hold all refund proceeds in the segregated, interest-bearing account and will not use the funds for any purpose until a court determines the entitlement to the proceeds. (8) In the event a litigative matter is timely begun, the filing of the Joint Refund Application and the receipt of the proceeds by Copperweld will not prejudice the rights, if any, of any party to claim or assert that a Debtor other than Copperweld is entitled to receive or recoup proceeds, nor prejudice the rights of Copperweld to reject any contract that may give rise to such a claim. (LTV Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392- 00900) MATTRESS DISCOUNTERS: Chapter 11 Reorganization Plan Confirmed -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland (Greenbelt Division), confirmed Mattress Discounters Corporation's plan of reorganization. Both the company's secured and unsecured creditors voted overwhelmingly in favor of the Company's plan. The Company expects the plan to become effective on or about March 14, 2003. When the plan becomes effective, Mattress Discounters will emerge from Chapter 11 with a new ownership structure and a new Board of Directors. Steve Newton, President and Chief Executive Officer said "We have always described this as a 'fast-track' process and, after less than five months in Chapter 11, it is gratifying to see such a high acceptance level for our plan. It is a real tribute to our employees that over 90% of the creditors voting had sufficient faith in our team, and our Company, to vote in favor of the plan. Our emergence from bankruptcy, along with the recent new dealership agreements that we have signed with Sealy and Simmons, will put us in an extremely strong position for the future." Mattress Discounters was the pioneer of the specialty Sleep Shop industry when it opened its first stores in 1978. "This is a tremendous way to celebrate our 25th anniversary year, and we are delighted to take such a positive step forward," said Newton. "Our emergence, along with adding the new, exclusive Simmons Beautyrest 'Spa Collection' to our product range, puts us in a superb position to take advantage of our many strengths over the coming year." Mattress Discounters is headquartered in Upper Marlboro, Maryland, and operates their own manufacturing plant along with over 100 stores. Employing almost 600 people, they were the original pioneer of the specialty Sleep Shop concept. With 25 years in business, they are one of the most experienced and largest specialty mattress retailers in the USA. MCSI INC: Wooing Creditors to Allow Covenant Amendments ------------------------------------------------------- MCSi, Inc., (Nasdaq:MCSI) reported a net loss of $189.0 million for the fourth quarter ended December 31, 2002. For the year ended December 31, 2002, the loss from continuing operations was $175.5 million and the loss from discontinued operations was $47.0 million, resulting in a net loss of $222.5 million. The Company indicated that management is continuing to work with the Company's independent accountants to finalize the audit for the fiscal year ended December 31, 2002, and expects to complete the work related to the audit over the next few weeks. Included in the quarter end and year end net loss is a non-cash charge of $161.7 million related to impairment of goodwill associated with the Company's annual goodwill impairment assessment. Also included in Cost of Sales and Selling, General and Administrative Expense are certain charges related to supplier realignment, inventory value decline, legal expenses, and account and note receivable reserves. Operating results for the three months ended December 31, 2002 are as follows: -- Net sales for the fourth quarter of 2002 were $105.2 million versus $113.6 million in the prior year period. -- Operating loss including goodwill impairment and certain other charges for the fourth quarter was $210.9 million, compared to operating income of $2.0 million for the same period in the prior year. Operating results for the twelve months ended December 31, 2002 are as follows: -- Net sales for the year ended December 31, 2002 were $499.0 million, versus $560.5 million in the prior year period. -- Operating loss including goodwill impairment and certain other charges for the year ended December 31, 2002 was $183.1 million, compared to operating income of $36.8 million for the same period in the prior year. The Company reported that, as a result of its financial results for the fourth quarter, it is in violation of certain financial covenants under its existing secured credit facility. The Company is in discussions with its lenders regarding a waiver of the defaults and an amendment of certain financial covenants. No assurance can be given that the Company will reach an agreement with its lenders or that the terms of any waiver or amendment will be acceptable to the Company. In such event, the lenders will be entitled to exercise certain remedies, including an acceleration of all amounts due under the credit facility. As of December 31, 2002, the balance outstanding under the credit facility, net of offsetting cash reserves of $6.7 million, was approximately $113.3 million. As previously announced, the Company is under investigation by the United States Securities and Exchange Commission and has received a subpoena from the SEC seeking production of documents. The Company intends to cooperate fully with the investigation, and cannot now predict the course or outcome of the investigation or whether additional information will be sought. In addition, the Company and MCSi's Chief Executive Officer, President and Chairman of the Board Michael E. Peppel, and its Chief Financial Officer and Vice-President, Ira H. Stanley, were named as defendants in several class action suits alleging violations of federal securities laws. "MCSi and its officers strongly deny the allegations of wrongdoing made in the lawsuits, and we intend to vigorously defend ourselves against the claims made," stated Mr. Peppel. MCSi has emerged as the nation's leading systems integrator of state-of-the-art presentation and broadcast facilities. MCSi's foresight and ability to converge three key industries: audio-visual systems, broadcast media and computer technology, combined with design-build and engineering expertise, computer networking and configuration services, an extensive product line, and quality technical support services, has given MCSi a distinct advantage in the systems integration marketplace and has contributed to the dramatic growth of the Company. MCSi's scalable solutions address clients at every level of the business transaction continuum. Products and services are available directly through the Company and its sales specialists, many of whom provide enterprise-wide solutions and/or work exclusively with clients on strategic and strong relationships maintained with manufacturers and technology leaders. With the largest selection of audio- visual/presentation, computer, and office automation products and the legacy of technical support and field service at various locations across the U.S.A. and Canada, MCSi's customers are provided with a unique value that extends beyond the product. MCSi's products are also provided over a robust business-to- business e-commerce platform. Additional information regarding MCSi can be obtained at http://www.mcsinet.com NATIONAL CENTURY: FirstMerit Gets Stay Relief to Sell Aircraft -------------------------------------------------------------- FirstMerit Bank, NA, a creditor of National Century Financial Enterprises, Inc., seeks relief from the automatic stay and from any other stay or order imposed by this Court to sell or transfer a 2000 Hawker 800XP Aircraft and two Allied Signal TFE731-5BR-1H Engines. Robert A. Bell, Jr., Esq., at Vorys, Sater, Seymour & Pease, in Cleveland, Ohio, recounts that National Century Financial Enterprises, Inc. leased the Aircraft from FirstMerit pursuant to a Lease Agreement Intended for Security dated December 14, 2000. Prior to the Petition Date, Mr. Bell reports, the Debtors committed multiple defaults under the Lease: (a) by initiating the process of liquidating its assets, (b) by intending to divest itself of its assets, (c) by failing to maintain a tangible net worth which is no less than $58,058,250, (d) when it became insolvent, (e) when it commenced one or more acts which amounted to a business failure or winding up of its affairs, (f) when it ceased doing business as a going concern, and (g) by failing to furnish the appropriate financial reports. On November 15, 2002, FirstMerit exercised its right under the Lease and repossessed the Aircraft from NCFE. FirstMerit is currently in possession of the Aircraft. Mr. Bell adds that from the Petition Date, NCFE has failed to express any interest in regaining possession of the Aircraft. Mr. Bell argues that FirstMerit is entitled to immediate relief from the automatic stay pursuant to Section 362(d) of the Bankruptcy Code because: (a) the relief is necessary to reduce and further eliminate the irreparable damage to the Aircraft and to FirstMerit's ability to sell as the Aircraft's value is depreciating daily. FirstMerit can command a higher price for the Aircraft if it can sell it quickly. A higher price reduces FirstMerit's deficiency claim to be filed in these cases, thereby benefiting NCFE and other creditors of the estate; (b) NCFE does not have any equity in the Aircraft; and (c) the Aircraft, being a luxury jet, is certainly not necessary for an effective reorganization of NCFE. * * * With the Debtors' agreement, Judge Calhoun Jr. grants FirstMerit's request on these terms: (a) The automatic stay imposed by Section 362 of the Bankruptcy Code, and any other stay imposed by the Court, is lifted in accordance with the terms of this Order; (b) FirstMerit Bank is authorized to immediately sell or transfer the 2000 Hawker 800XP Aircraft and two Allied Signal TFE731-5BR-1H Engines, Serial Nos. P107499 and P107501; (c) NCFE will take whatever actions, as requested by FirstMerit, to assist FirstMerit in transferring the Aircraft to a third-party, including releasing interest, if any, which NCFE may have in the Aircraft as granted by law or at equity or otherwise; (d) FirstMerit will take all responsibility for insuring the Aircraft and take all reasonable steps, as requested by NCFE, to assist in obtaining its insurance refund with respect to the prior insurance coverage of the Aircraft; (e) NCFE will not take any position within this or any other legal proceeding with the position that FirstMerit is the sole owner of the Aircraft and that title of the Aircraft is vested in FirstMerit; (f) FirstMerit will use commercially reasonable means and attempt to obtain the highest possible price in selling or otherwise transferring the Aircraft; and (g) NCFE currently owes approximately $10,687,000 plus other fees and costs, including attorney's fees, associated with the repossession and reselling of the Aircraft, to FirstMerit. Should any proceeds of any sale of the Aircraft not fully satisfy NCFE's Debt, the remaining unsatisfied portion of NCFE's Debt will be an unsecured non-priority claim, and filed by FirstMerit in this case, against the Debtors' bankruptcy case. Should the proceeds of any sale of the Aircraft exceed the amount of NCFE's Debt, the amount will be disbursed to NCFE or FirstMerit as provided in the Lease. (National Century Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXTEL COMMS: Solid Operating Performance Spurs S&P's B+ Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on wireless service provider Nextel Communications Inc., and revised the outlook to stable from negative. This action was based on the company's solid operating performance in a highly competitive industry and lower financial leverage, despite substantial debt still on the balance sheet. Reston, Virginia-based Nextel had total debt of about $12.5 billion at the end of 2002. "Despite the weak economy in 2002, Nextel maintained strong net subscriber additions, industry-leading average revenue per user, and low churn," Standard & Poor's credit analyst Michael Tsao said. "The solid operating performance and cost control allowed Nextel to grow annual revenues by 24%, expand its EBITDA margin to 38% in the fourth quarter of 2002 from 29% in the fourth quarter of 2001, and generate about $122 million in free cash flow for 2002." Standard & Poor's said EBITDA growth, along with the use of about $843 million in cash and the issuance of about 173 million shares of common stock to retire about $3.2 billion in aggregate face value of debt and preferred obligations in various privately negotiated transactions, allowed Nextel to lower its debt-to-annual EBITDA leverage substantially to about 3.9x at the end of 2002 from about 7.8x at the end of 2001. By effectively targeting a market niche and offering a highly differentiated service, Nextel is likely to maintain good operating metrics and further improve its financial risk profile assuming no significant deterioration in the economy. However, the degree of improvement could be constrained by factors such as wireless number portability, intense competition, and technology risks. Nextel Communications' 12% bonds due 2008 (NXTL08USR2) are trading at about 50 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NXTL08USR2 for real-time bond pricing. NORTEL NETWORKS: Wins $36-Million China Mobile Contract ------------------------------------------------------- China Mobile, the largest wireless carrier in the People's Republic of China, has selected Nortel Networks (NYSE:NT)(TSX:NT) to expand its GSM (Global System for Mobile Communications) digital cellular network in Hebei province under a contract estimated to be worth approximately US$36 million. Network expansion is planned for completion by mid-2003. The upgrade -- to be based on Nortel Networks Univity GSM access and core network solutions -- will position China Mobile to increase network capacity in Hebei province by 1.8 million subscribers. In addition, the contract provides for introduction and implementation of both GPRS (General Packet Radio Service) and EDGE (Enhanced Data Rate for GSM Evolution) to support migration to a rich set of wireless data services. EDGE is designed to deliver wireless packet data -- on average three times faster than GPRS -- for Web browsing, streaming audio and video, multimedia messaging, location-based services, m-commerce, Virtual Private Networks and other wireless services. "Nortel Networks is proud to have been chosen once again by China Mobile to implement this major GSM network upgrade," said Robert Mao, president and chief executive officer, Greater China, Nortel Networks. "This expansion will enhance China Mobile's offering in Hebei province by enabling delivery of new, revenue-generating services to a much larger subscriber base while positioning China Mobile to drive reduced operating expenses." Univity Wireless Data Networks leverage Nortel Networks leadership in capacity, reliability, and spectral efficiency. Univity products will also position China Mobile to seamlessly evolve to a converged voice and data packet network, and to drive reduced costs. Nortel Networks has deployed wireless networks in 17 of China's 31 provinces -- and supplied GSM digital infrastructure equipment to China Mobile in eight provinces, including Hebei, Shaanxi, Tianjin, Xinjiang, Guizhou, Anhui, Liaoning, and Hunan. In Hebei province, the working relationship between Nortel Networks and China Mobile dates back to 1995. Since then, Nortel Networks has been actively involved in construction of Hebei's GSM network and subsequent expansions. Globally, Nortel Networks has deployed 80 GSM/GPRS networks in more than 50 countries and is supplying GSM/GPRS systems to enable Wireless Data Network services for more than 30 operators around the world. Nortel Networks is the industry's only supplier with Wireless Data Networks operating in all three advanced technologies -- GPRS, CDMA2000 and UMTS. China Mobile currently operates exclusively self-funded subsidiaries in 18 provinces of China. Mainly supplying mobile telephony, data, IP (Internet Protocol) telephony and multimedia services, China Mobile also provides Internet, fax, data, handset banking, Global Access WAP and a host of other value- added services in addition to basic voice. More information on China Mobile is available at http://www.chinamobile.com Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The Company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. More information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com NRG ENERGY: ABN AMRO Bank Accelerates about $1-Billion of Debt -------------------------------------------------------------- On February 27, lenders to NRG Energy, Inc., a wholly owned subsidiary of Xcel Energy (NYSE:XEL), accelerated approximately $1 billion of NRG's debt under a 364-day revolving credit agreement, rendering the debt immediately due and payable. Based on discussions with the revolving credit lenders, it is NRG's understanding that the administrative agent, ABN AMRO Bank N.V., issued the acceleration notice to preserve certain rights under the revolving credit agreement. NRG believes that the administrative agent intends to forbear in the immediate exercise of any rights and remedies against the company. NRG Energy operates power generating facilities worldwide. NRG's operations include competitive energy production and cogeneration facilities, thermal energy production and energy resource recovery facilities. Xcel Energy is a major U.S. electricity and natural gas company with regulated operations in 12 Western and Midwestern states. The company provides a comprehensive portfolio of energy-related products and services to 3.2 million electricity customers and 1.7 million natural gas customers through its regulated operating companies. In terms of customers, it is the fourth- largest combination natural gas and electricity company in the U.S. Company headquarters are located in Minneapolis. Nortel Networks Corp.'s 7.40% bonds due 2006 (NT06CAR2) are trading at about 89 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=NT06CAR2for real-time bond pricing. NTELOS INC: Cooperative Finance Discloses $84-Mill. in Exposure --------------------------------------------------------------- National Rural Utilities Cooperative Finance Corporation announced that one of its borrowers, NTELOS Inc., has filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of Virginia, Richmond Division. CFC has a total of $84 million in senior secured loans outstanding to NTELOS as part of a syndicated bank financing that closed in July 2000. NTELOS has approximately $660 million in total debt outstanding to its creditors including approximately $286 million of secured debt. NTELOS' filing is not material to the current operations or financial condition of CFC. NTELOS is a diversified telecommunications service provider to customers in Virginia, West Virginia, Kentucky, Tennessee and North Carolina. NTELOS (NASDAQ: NTLO) is headquartered in Waynesboro, Virginia. CFC is a private, not-for-profit finance cooperative that serves the nation's more than 1,000 electric cooperatives and over 500 rural telecommunications companies. Rural telecommunications lending is done through CFC's controlled affiliate, Rural Telephone Finance Cooperative. With more than $20 billion in assets, CFC provides its member-owners with an assured source of low-cost capital and state-of-the-art financial products and services. NTELOS INC: S&P Drops Credit Rating to D over Bankruptcy Filing --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on diversified telecom provider NTELOS Inc., to 'D' from 'SD' following the company's Chapter 11 bankruptcy filing. At the same time, Standard & Poor's rating on the Waynsboro, Virginia-based company's secured bank loan was lowered to 'D' from 'CCC' and removed from CreditWatch. OMM INC: Will Discontinue Operations by Friday ---------------------------------------------- OMM, Inc., the leading supplier of MEMS-based optical switch array modules, will cease operations as of Friday March 7, 2003. The Company plans to release all of its 85 employees as of that date and assign the assets to the benefit of the Company's creditors. "OMM has been highly successful in the design and manufacture of the world's first commercial MEMS-based optical matrix switches," said Phil Chapman, President and CEO of OMM. "The Company shipped products to more than 60 telecommunications equipment manufacturers and achieved numerous customer design wins. However, with the severe downturn in the worldwide telecom industry, the market timing for volume deployment of our products has been significantly impacted," he added. The company has been seeking additional private funding to continue its operations, but was unable to raise the total amount deemed necessary to wait out the current downturn in the global telecom market. OMM, originally known as Optical Micro-Machines, was started in San Diego, California in 1997 and was funded by a combination of venture capital and strategic customer investments. The Company's venture investors included Sevin Rosen Funds, Atlas Venture, Bessemer Venture Partners, Rho Capital Partners, and Weston Presidio. Strategic investors included Nortel Networks, Siemens, Alcatel, Sycamore Networks, Solectron, Fairchild Semiconductor, and Corvis Corporation. For more information on OMM, please visit the Company's Web site at http://www.omminc.com PAXSON COMMS: Will Publish Q4 & Year-End 2002 Results on Mar. 25 ---------------------------------------------------------------- Paxson Communications Corporation (AMEX:PAX) will release its fourth quarter and full year 2002 financial results after market hours on Tuesday, March 25, 2003. The Company will also host a teleconference to discuss its results on March 25th at 5:30 p.m. Eastern Time. To access the teleconference, please dial 888-324-7816 (U.S.), 415-228-3886 (Int'l), passcode "Paxson" ten minutes prior to the start time. The teleconference will also be available via live webcast on the investor relations portion of the Company's Web site, located at http://www.pax.tv/investors If you cannot listen to the teleconference at its scheduled time, there will be a replay available through April 1, 2003, which can be accessed by dialing 888-562-5417 (U.S.) or 402-530-7682 (Int'l). The webcast will also be archived on the Company's website until 11:59 p.m. EST on April 1, 2003. For further information, please contact Cheryl Scully, Director of Treasury and Investor Relations, at 561/682-4211 or cherylscully@paxson.com. Paxson Communications Corporation owns and operates the nation's largest broadcast television distribution system and PAX TV, family television. PAX TV reaches 88% of U.S. television households via nationwide broadcast television, cable and satellite distribution systems. PAX TV's original series include, "Sue Thomas: F.B.Eye," starring Deanne Bray, "Doc," starring recording artist Billy Ray Cyrus and "Just Cause" starring Richard Thomas and Lisa Lackey. Other original PAX series include "It's A Miracle" and "Candid Camera." For more information, visit PAX TV's Web site at http://www.pax.tv * * * As previously reported in Troubled Company Reporter, Standard & Poor's placed its single-'B'-plus corporate credit and other ratings, on TV station and network owner Paxson Communications Corp., on CreditWatch with negative implications. The action follows the West Palm Beach, Florida-based company's lowered guidance for its 2002 second quarter, which includes relatively flat revenue and reduced earnings. Paxson has about $858 million in debt outstanding. Paxson Communications' 12.25% bonds due 2009 (PAX09USR1) are trading at about 72 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=PAX09USR1for real-time bond pricing. PENN NATIONAL: Will Issue Fin'l Guidance for Q1 2003 on March 14 ---------------------------------------------------------------- Penn National Gaming, Inc., (Nasdaq:PENN) will issue 2003 first quarter and full year guidance at 7:00 a.m. EST on Friday, March 14 and will host a conference call and simultaneous webcast at 10:00 a.m. EST on Friday, March 14. Both the call and webcast are open to the general public. The conference call number is 212/231-6032 or 415/537-1900; please call five minutes in advance to ensure that you are connected prior to the presentation. Questions and answers will be reserved for call-in analysts and investors. Interested parties may also access the live call on the Internet at http://www.companyboardroom.com; allow 15 minutes to register and download and install any necessary software. Following its completion, a replay of the call can be accessed until March 28, by dialing 800/633-8284 or 402/977-9140 (international callers). The access code for the replay is 21129785. A replay of the call can also be accessed for thirty days on the Internet via http://www.companyboardroom.com 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. POLAROID CORP: Has Until July 31 to Move Actions to Del. Court -------------------------------------------------------------- With the Court's approval of their motion, Polaroid Corporation and its debtor-affiliates has until July 31, 2003 to remove all prepetition judicial and administrative proceedings pending in various courts or administrative agencies to the Delaware Court. (Polaroid Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) POTLATCH: Fitch Cuts Debt Ratings Due to Weak Market Conditions --------------------------------------------------------------- Fitch Ratings has lowered Potlatch Corporation's debt ratings of senior secured to 'BBB-' from 'BBB', senior unsecured to 'BB+' from 'BBB-', senior subordinated to 'BB' from 'BB+', and commercial paper to 'B' from 'F3'. The Rating Outlook for Potlatch has changed to Negative from Stable. This rating action is based on several quarters of weak market conditions for wood products-prices having hit a 10-year low-and declining margins in tissue hurt by certain competitors' strategy to buy market share. Despite strong housing starts and fair remodel and repair markets in 2002, U.S. lumber companies have struggled with a multiyear slump in wood prices brought on by an oversupply of lumber and panel production. Until some reduction of capacity occurs, Fitch expects overproduction will continue and is uncertain when and by how much lumber and panel prices will improve. Tissue markets are also facing substantial capacity additions which could harm Potlatch's operating margins. The Resource segment continues to be profitable, and Fitch estimates that the market value of Potlatch's timberlands exceeds the company's aggregate debt. The company has initiated cost reduction programs, which will bear some fruit in the current year, but Potlatch really needs some price relief in its markets for a visible effect in operations and cash flow generation. Current debt maturities are fortunately limited to a $15 million note issue coming due next April. RICA FOODS: Working Capital Deficit Stands at $10MM at Dec. 31 -------------------------------------------------------------- Rica Foods's operations are primarily conducted through its 100% owned subsidiaries: Pipasa and As de Oros and their respective subsidiaries. The Company, through its subsidiaries, is the largest poultry company in Costa Rica. As de Oros also owns and operates a chain of quick service restaurants in Costa Rica called "Restaurantes As." For the three months ended December 31, 2002, the Company generated net income applicable to common stockholders of $1,065,278 ($0.08 earnings per share), compared to $1,813,276 ($0.14 earnings per share) for the three months ended December 31, 2001. For the three months ended December 31, 2002, net sales increased by 1.08% when compared to the three months ended December 31, 2001, mainly due to increases in the sales of the animal feed, by-products, quick service and others, offset by decrease in sales of broiler and export segments. Cost of sales increased by 5.75%, mainly due to increased costs of imported raw material and increase in volumes of primarily the animal feed segment. As of December 31, 2002, the Company had $5.11 million in cash and cash equivalents. The working capital deficit was $9.99 million and $9.78 million as of December 31, 2002 and September 30, 2002, respectively. The current ratio was 0.81 as of December 31, 2002 and 0.79 as of September 30, 2001. The Company intends to acquire, for an aggregate of $2.58 million a stake participation of 51% in Logistica de Granos, S.A., from Port Ventures, S.A., a Company owned by Jose Pablo Chaves, son of the Company's Chairman and C.E.O. Notwithstanding, and according to the Company, Jose Pablo Chaves is not an insider nor officer of the Company. The Company has obtained a fairness opinion valuation of the transaction which has been analyzed by the Audit Committee and Board of Directors of the Company, the Board of Directors of Corporacion As de Oros, S.A. as the proposed acquirer, and Pacific Life Insurance Company. The transaction is subject to final approval of the stock purchase agreement by the Board of Directors of the Company. The Company expects to close this transaction on or about April 2003, when the definitive approval of the Government of Costa Rica is expected to be obtained. In addition, the Company believes for the rest of fiscal year 2003, it will invest in approximately an additional $4.4 million of property, plant and equipment. Management is responsible for the preparation of the financial statements and related information of Rica Foods, Inc. and its subsidiaries: Corporacion Pipasa, S.A. and Subsidiaries and Corporacion As de Oros, S.A. and Subsidiaries that were filed with the SEC. Rica Foods, Inc. owns 100% of the outstanding common stock of Pipasa and As de Oros. The Company is seeking to engage a new independent public accounting firm, has entered into discussions with a number of firms, but has not yet engaged a new public accounting firm to perform an audit of its 2002 Financial Statements and otherwise serve as its independent auditor. As of the date of the filing of its latest financial statements with the SEC, the Company had not engaged an independent public accountant to serve as its auditor. As reported in Troubled Company Reporter's February 14, 2003 edition, Fitch Ratings placed the 'BB' foreign and local currency ratings of Rica Foods Inc., on Rating Watch Negative. The ratings apply to Corporacion Pipasa's senior notes due 2005 and Corporacion As de Oros' senior notes due 2005, jointly and severally guaranteed by Rica Foods. Pipasa and As de Oros are wholly owned subsidiaries of Rica Foods that operate in Costa Rica. The action follows the disclosure by Rica Foods in its Form 8-K filed January 30, 2003 that the financial statements included in its Form 10-K filed Jan. 13, 2003 contained financial errors and that its client-auditor relationship with Deloitte & Touche S.A. had ceased. Although the financial errors listed by Rica Foods in its Form 8-K appear to be mainly related to the classification of balance sheet items and do not appear to trigger debt covenants or materially affect the cash flow generation of the company, Fitch will maintain the ratings on Rating Watch Negative until Rica Foods' financial statements are audited and will subsequently review the ratings. RSL COM: Preparing Lawsuits to Void $1.5 Billion Guarantees ----------------------------------------------------------- RSL COM PrimeCall, Inc., RSL COM U.S.A., Inc., LDM Systems, Inc., and their Official Committee of Unsecured Creditors are preparing to file and prosecute various causes of action against JPMorgan Chase, in its role as Indenture Trustee, and holders of bonds issued by the three debtors' parent company, RSL Communications Plc, and allegedly guaranteed by RLS USA. The Debtors and the Committee intend to argue that the guarantees should be voided based on the terms of the Indentures and on fraudulent conveyance and equitable subordination theories. The Committee has already sued Robald S. Lauder and Charles Goldstein based on RSL USA's alleged guarantee of PLC's debt to Mr. Lauder. The Debtors and the Committee want to initiate a third lawsuit against RSL USA's directors and officers and D&O insurance carriers for breach of fiduciary duty in connection with the execution of the Guarantees. To handle all three lawsuits, the Debtors and the Committee jointly apply to the Bankruptcy Court to retain and employ Torys LLP as special litigation counsel. The Torys legal team consists of: Discounted Attorney Position Hourly Rate -------- -------- ----------- William F. Gray, Esq. Senior Partner $440 William F. Kuntz, II, Esq. Senior Partner $440 Steven R. Schoenfeld, Esq. Junior Partner $350 Edie Walters, Esq. Senior Associate $264 Jason Adams, Esq. Senior Associate $248 Shaya Berger, Esq. Junior Associate $184 Paralegals $120 For the D&O insurance-related lawsuit, Torys will work on a mixed contingency and capped fee basis, so that the sum of all hourly rate billings don't exceed: Phase Cap Amount Contingency ----- ---------- ----------- Phase I -- Preparation and $150,000 16.5% filing of the Complaint, and commencement of initial motion practice and/or initial pre-trial conference Phase II -- Discovery and $300,000 16.5% Mediation Phase III -- Preparation $300,000 33.0% for and representation at Trial Proceedings Other fee caps and blended hourly rates apply to limit Torys total fees. RSL COM PrimeCall, Inc., RSL COM U.S.A., Inc., LDM Systems, Inc., filed for chapter 11 protection on March 16, 2001 (Bankr. S.D.N.Y. Case No. 01-11457) (Gropper, J.). Allison H. Weiss, Esq., at LeBoeuf, Lamb, Greene & MacRae, L.L.P., represents the telecommunications Debtors. Robin E. Keller, Esq., at Stroock & Stroock & Lavan represents the Official Committee of Unsecured Creditors appointed in RSL's cases. SCIOTO DOWNS: PricewaterhouseCoopers Express Going Concern Doubt ---------------------------------------------------------------- "[T]he Company's net losses, negative working capital, and negative operating cash flows raise substantial doubt about its ability to continue as a going concern." This statement is included in PricewaterhouseCoopers LLP's Auditors Report on the financial condition of Scioto Downs Inc. for the period ended October 31, 2002. The racing industry in general in Ohio is experiencing an overall decline in business. Attendance is down, and the amount wagered on racing in Ohio is down approximately 8% from the previous year. Purses paid to winning horses are also down. Several developments in the racing industry have contributed to this result. One factor is the rapid growth of what is known as account wagering. This system allows an individual to place a wager on a horserace while at home by telephone or over the Internet using an account established with the telephone or Internet entity. Commissions received by the racetrack from account wagering are significantly less than if the person places a wager at the racetrack, thus, causing a decline in the racetrack's revenue. Another factor adversely affecting horseracing in Ohio is increased gambling competition from surrounding states. West Virginia, for example, has authorized electronic gaming machines at its racetracks. Indiana has riverboat gambling. Casino gambling is now in operation in Michigan. These out-of-state gambling facilities patronized by Ohio residents take business away from the Ohio racetracks and also provide the racetracks in those states which have these other forms of gambling with additional funds to pay higher purses and, thus, attract the more popular horses. Generally, the customers at Ohio tracks do not wager as much on a less popular class of horses, so this situation also causes the handle to decline. At the present time, it is extremely difficult for the Ohio racetracks to compete with racetracks in other states that have alternate forms of gambling. As a result, the racing industry in Ohio is in decline which has adversely affected Scioto Down's operations. On December 23, 2002, Scioto Downs entered into an agreement and plan of merger with MTR Gaming Group, Inc., under which the Company will become a wholly owned subsidiary of MTR. The Agreement provides that each stockholder of the Company may elect to receive $32 in cash for each share of the Company's common stock owned by the stockholder. Alternatively, each stockholder may elect to receive an amount equal to $17 per share plus 10 annual earnout payments subject to the conditions set forth in the Agreement. Consummation of the transaction is subject to various conditions, including the successful completion of the due diligence review by MTR, the approval by the stockholders of the Company and the attainment of necessary regulatory approvals. On December 24, 2002, the Company received a $1 million payment from MTR in accordance with the terms of the Agreement. In the event the Agreement is terminated for cause as defined in the Agreement, the $1 million will become a loan to be repaid by the Company to MTR on December 23, 2005, and shall bear interest at a rate equal to MTR's cost of borrowing. The loan will be collateralized by the Company's real and personal property. If the transaction takes place this will provide liquidity to the operation subject to MTR's willingness and ability to continue to fund operations. However, failure to consummate the transaction will make the ability to repay the $1 million loan and to continue future operations uncertain. The Company's net loss increased from $1,152,311 in 2001 to $1,406,816 in 2002, due mainly to higher operating costs, partially offset by higher revenue due to year-round simulcasting and the acquisition of Mid-America. The Company has term debt outstanding of $2,677,690 at October 31, 2002, with monthly payments of principal and interest of $30,025 due through September 2013. Interest is fixed at 7.79%. The original proceeds were used to finance the clubhouse enclosure project in 1991 and to purchase simulcasting equipment in 1997. The Company has an outstanding note payable of $50,000 at October 31, 2002 that is due to the former shareholders of Mid-America, and is payable on August 1, 2003. The note was discounted to approximately $48,400 assuming a discount rate of 6.75%, and is included in the current portion of the Company's long-term debt at October 31, 2002. During 2002, the Company was notified by its lender that availability under the line of credit was terminated and the outstanding balance is due on January 31, 2003. At October 31, 2002, the line had an outstanding balance of $110,000. Management reviewed all operating costs and took steps to reduce expenses through cost containment, reductions in expenditures and renegotiation of agreements with vendors. Management also explored ways in which to utilize its facilities to earn additional revenue from sources other than harness horseracing. Even after management's initiatives, business has continued to decline, resulting in operating losses during the fiscal year 2002 live racing season. As a result, management has been considering alternative options for liquidity and is pursuing a potential disposition of the business. At this time, it is uncertain that the Company will be able to continue as a going concern. SECURITY INTELLIGENCE: Needs New Financing to Continue Ops. ----------------------------------------------------------- CCS International, Ltd., and its wholly-owned subsidiaries are engaged in the design, manufacture and sale of security and surveillance products and systems. CCS is a Delaware corporation, organized in 1992. The Company purchases finished items for resale from independent manufacturers, and also assembles off-the-shelf electronic devices and other components into proprietary products and systems at its own facilities. The Company generally sells to businesses, distributors, government agencies and consumers through five retail outlets located in Miami, Florida; Beverly Hills, California; Washington, DC; New York City, and London, England and from its showroom in New Rochelle, New York. On April 17, 2002, CCS merged with Security Intelligence Technologies, Inc., a Florida corporation and became a wholly owned subsidiary of SIT. The merger has been accounted for as a reverse acquisition, since the management and stockholder of CCS obtained control of the merged entity after the transaction was completed. Under reverse acquisition accounting, CCS is considered the accounting acquirer and SIT (then known as Hipstyle.com, Inc.) is considered the acquired company. Inasmuch as SIT had no substantive assets or operations at the date of the transaction, the merger has been recorded as an issuance of CCS stock to acquire SIT, accompanied by a recapitalization, rather than as a business combination. The Company's net loss increased by $812,429, or 128.0%, to $1,447,178, in the 2002 Period from $634,749 in the 2001 Period. The Company requires significant working capital to fund operations. At December 31, 2002 it had cash of $23,875 and a working capital deficit of $3,449,321. Accounts payable and accrued expenses at December 31, 2002 was $2,766,970. As a result of continuing losses, working capital deficiency has increased. The Company funded operations using vendor credit, including delays in paying accounts payable, and customer deposits. Because it has not been able to pay some of its trade creditors in a timely manner, it has been subject to litigation and threats of litigation from its trade creditors and it has used common stock to satisfy some of its obligations to trade creditors. In certain instances when the Company issued common stock, it provided that if the stock does not reach a specified price level one year from issuance, the Company will pay the difference between that price level and the actual price. As a result, the Company has contingent obligations to some of these creditors. With respect to 577,000 shares of common stock issued during the six months ended December 31, 2002 and the fiscal year ended June 30, 2002, the market value of the common stock on December 31, 2002 was approximately $274,313 less than the guaranteed price. Accounts payable and accrued expenses increased from $2,030,866 at June 30, 2002 to $2,766,970 at December 31, 2002 reflecting the Company's inability to pay creditors currently. It also had customer deposits and deferred revenue of $1,754,901 at December 31, 2002 that relate to payments on orders which had not been filled at that date. The Company has used its advance payments to enable it to continue operations. If its vendors do not extend necessary credit Security Intelligence Technologies may not be able to fill current or new orders, which may affect the willingness of its clients to continue to place orders with it. Since the completion of the merger in April 2002 the Company has sought, and been unsuccessful, in efforts to obtain funding for business. Because of its losses, it is not able to increase its borrowing. Its bank facility terminated on November 1, 2002. To date, the Company does not have an agreement with respect to renewal of a credit facility with this lender or any agreement with any replacement lender. The Company's failure to obtain a credit facility could materially impair its ability to continue in operation, and there is no assurance that it will be able to obtain the necessary financing. Its main source of funds other than the bank facility has been from vendor credit and loans from its chief executive officer. Because of both its low stock price and its losses, it has not been able to raise funds through the sale of its equity securities. Security Intelligence Technologies may not be able to obtain any additional funding, and, if it is not able to raise funding, it may be unable to continue in business. Furthermore, if unable to raise funding in the equity markets, the stockholders will suffer significant dilution and the issuance of securities may result in a change of control. Management's plans with respect to these matters include its attempts to settle claims with vendors where possible, a reduction in operating expenses, and financing from the chief executive officer in the absence of other sources of funds. Management cannot provide any assurance that its plans will be successful in alleviating its liquidity concerns and bringing the Company to the point of sustained profitability. SERVICE MERCHANDISE: Proposes Headquarters Sale Bidding Protocol ---------------------------------------------------------------- Although Kirkland Properties LLC's bid may represent the highest or otherwise best offer for the Corporate Headquarters so far, Service Merchandise Company, Inc., and its debtor-affiliates will continue to evaluate other bids that they may receive and will serve a copy of the Sale Motion to other potential buyers or agents who expressed an interest in purchasing the Property during the past 12 months. According to Beth A. Dunning, Esq., at Bass, Berry & Sims PLC, in Nashville, Tennessee, the Debtors want to make sure that they obtain the best offer possible. To do that, the Debtors ask the Court to establish these competitive bidding procedures for the Property: (a) Submission of Competing Bids Competing bids are due by 4:00 p.m., prevailing Central Time on March 31, 2003. The Bid must include an asset purchase agreement similar to Kirkland's except for the provisions seeking certain rights afforded to Kirkland. (b) Deposit Competing bids must be accompanied with a $100,000 required deposit. The Deposit must be delivered by the Bid Deadline to: Gemini Realty Advisors 1114 Avenue of the Americas Suite 2600 New York, New York 10036 Attn: Richard Hauer (c) Auction If the Debtors receive a qualified Bid, an auction may be conducted on April 3, 2003 at 1 p.m., prevailing Central Time, at the offices of Bass, Berry & Sims, or at another date and time as the Debtors may announce. The Auction will be conducted on the record and the Debtors will, in consultation with the Creditors' Committee, evaluate the bids submitted. To the extent one is acceptable, the Debtors will negotiate the final terms with the Successful Bidder. (d) Announcement of Successful Bidder The Debtors will announce the Successful Bidder, Including the purchase price and any other relevant terms, by filing a Notice with the Court the day after the Auction -- April 4, 2003 -- no later than 12 p.m., prevailing Central Time. The Debtors will also serve the Notice via facsimile to the Creditors' Committee; the U.S. Trustee and to any party objecting to the sale. (e) Bids To Be Irrevocable Any bids made at the Auction will be irrevocable until the earlier of 48 hours after the Closing or 45 days after the Sale Hearing. Bidding Protections Kirkland has expended, and will likely to continue to expend, considerable time, money and energy pursuing the Sale and Leaseback transactions. Therefore, in the event of an Auction, Ms. Dunning informs the Court that the Debtors have agreed to provide Kirkland with certain bidding protections because the Purchase Agreement with Kirkland will set a floor bid and would facilitate the most competitive bid process possible. In particular, the Debtors propose to pay Kirkland a $270,000 termination fee in the event: (a) Kirkland is not the Successful Bidder at the Auction; (b) Kirkland has not: -- committed an uncured default under the agreement as of the Auction Date, or -- terminated the Purchase Agreement; and (c) the Debtors consummate the sale to the Successful Bidder. The Termination Fee will be paid on the consummation of the sale. Any initial overbid at the Auction should provide for at least $270,000 of the consideration beyond that provided by Kirkland under the Agreement. Ms. Dunning explains that the Termination Fee and Overbid Protection were material inducements for, and as a condition of, Kirkland's entry into the Purchase Agreement. The Debtors believe that the Termination Fee and the Overbid Protections are fair and reasonable in view of the intensive analysis, due diligence investigation, and negotiation undertaken by Kirkland in connection with the proposed Sale. If Termination Fee and the Overbid Protection are triggered, Ms. Dunning says, Kirkland's efforts will have increased the chances that the Debtors will receive the highest or otherwise best offer for the Property, to the benefit of the Debtors' creditors. For this reason, the Debtors also propose that the Termination Fee will be treated as an allowed administrative clam until paid. Ms. Dunning assures the Court that the Debtors' payment of the Termination Fee and use of the Overbid Protection will not diminish the value of the estates. The Debtors do not intend to terminate the Agreement unless to accept a more lucrative bid. The Termination Fee is also not payable unless the Court approves another Successful Bidder and the Debtors actually consummate the Sale with this Successful Bidder. Sale Hearing The Debtors ask the Court to schedule the Sale Hearing on April 8, 2003 or on another date as the Court may determine. Objections Any objections to the proposed Sale must be: (a) in writing; (b) filed with the Court before March 31, 2003 at 4:00 p.m.; (c) served on: (i) the Debtors' bankruptcy counsel: Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 Wacker Drive, Chicago, Illinois, 60606-1285 Attn: George N. Panagakis, Esq. and Bass, Berry & Sims PLC 315 DeaderiCk Street, Suite 2700 Nashville, Tennessee 37238 Attn: Paul G. Jennings, Esq. (ii) the Creditors' Committee's counsel: Otterbourg, Steindler, Houston & Rosen, PC 230 Park Avenue New York, New York 10169 Attn: Glenn B. Rice, Esq. (iii) the U.S. Trustee: Customs House Room 318, 701 Broadway Nashville, Tennessee 37203 Attn: Beth Derrick; and (iv) Kirkland's counsel: Baker, Dohelson, Hearman and Caldwell 211 Commerce Street, Suite 1000 Nashville, Tennessee 37201 Attn: John Rowland (Service Merchandise Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) STARWOOD HOTELS: Selling the Hotel Principe di Savoia in Milan -------------------------------------------------------------- Starwood Hotels & Resorts Worldwide, Inc., (NYSE:HOT) has signed a binding agreement to sell the Hotel Principe di Savoia to the London-based Dorchester Group Ltd. for 275 million Euros or approximately $300 million. The sale, subject to standard closing conditions, is expected to close in the second quarter. Starwood received a significant non-refundable deposit as part of the agreement. The 404-room hotel is located in Milan, Italy and is part of the CIGA portfolio of hotels and resorts. This transaction represents a portion of the $500 million of hotel assets that Starwood has announced it plans to sell by the end of 2003. Starwood's presence in Milan also includes the Diana Majestic and the Westin Palace. The property will be sold unencumbered. Starwood believes sales of this nature highlight the extraordinary values of many of its European hotels concentrated in the CIGA collection. Proceeds are intended to be used to retire debt. Starwood Hotels & Resorts Worldwide, Inc. -- whose $1.3 billion bank facility is currently rated by Fitch at BB+ -- is one of the leading hotel and leisure companies in the world with more than 750 properties in more than 80 countries and 110,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis, The Luxury Collection, Sheraton, Westin, Four Points by Sheraton, W brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit http://www.starwood.com SUN HEALTHCARE: Expunging Six Personal Injury Claims ---------------------------------------------------- Sun Healthcare Group, Inc., and its debtor-affiliates ask the Court to approve six separate stipulations expunging timely filed personal injury claims asserted against them. After several discussions, the Claimants have decided to withdraw and agree to have their Proofs of Claim expunged. The six claimants are: Claimant Claim No. Claim -------- --------- ----- Freda Guice 10254 $150,000 Rutha M. Glover 900000 1,000,000 Estate of C. Lenderman, Jr. 08220 3,000,000 Estate of Mary Alice Washington 13175 750,000 Estate of Adell Dawson 09582 1,000,000 Estate of Keith Bruce 07981 200,000 07831 07704 Pursuant to the Stipulations, the Debtors and the six Claimants separately agree that: (1) the Claimants will collect insurance proceeds for the entire settlement amount; and (3) the Claimants will refrain from asserting further Proofs of Claim in connection with the Debtors' bankruptcy estates. (Sun Healthcare Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 609/392-0900) SUPERIOR TELECOM: Receives Court Approval of First Day Motions -------------------------------------------------------------- Superior TeleCom Inc., (OTC Bulletin Board: SRTO.OB) received approval from the U.S. Bankruptcy Court for the Company's "first day" motions that will help ensure Superior TeleCom's operations proceed smoothly and uninterrupted throughout the reorganization proceeding. "The court's approval of our first day motions will ensure that Superior TeleCom can conduct business as usual and remain focused on serving our customers as we go through this process," said David S. Aldridge, Chief Financial Officer of Superior TeleCom. The court approved interim access to the $100 million debtor-in- possession (DIP) financing facility for use by the Company. At this morning's hearing, the court also approved, among other things, motions related to: -- Paying claims of essential trade creditors -- Paying shipping charges, import/export obligations, sales and use taxes -- Maintaining the Company's consolidated cash management system -- Authorizing payment of pre-petition employee obligations -- Authorizing continuation of customer programs The Company's bankruptcy case has been assigned number 0310607 and to the Honorable Judge Jerry W. Venters. As announced on March 3, 2003, Superior TeleCom Inc.'s U.S. operations filed petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. The Company is working in consultation with its lenders towards a debt restructuring. Superior TeleCom's United Kingdom and Mexican operations were not included in the filing. Superior TeleCom Inc., is one of the largest North American wire and cable manufacturers and among the largest wire and cable manufacturers in the world. Superior manufactures a broad portfolio of wire and cable products with primary applications in the communications and original equipment manufacturer (OEM) markets. The Company is a leading manufacturer and supplier of communications wire and cable products to telephone companies, distributors and system integrators and magnet wire for motors, transformers, generators and electrical controls. Additional information can be found on the Company's Web site at http://www.superioressex.com TEL-ONE INC: Court Establishes March 24, 2003 Claims Bar Date ------------------------------------------------------------- On January 22, 2003, the Securities and Exchange Commission filed a complaint and obtained a temporary restraining order against Tel-One, Inc., a Tampa-based company, and certain of its principals and promoters (SEC vs. Tel-One, et al M.D. FL Civil Case No. 120-T-30TGW). The SEC's complaint alleges that Tel-One and defendant Media Broadcast Solutions, Inc., a Tampa stock promoter, and certain of their principals have been involved in a pump-and-dump scheme that included false statements in advertisements in local and national newspapers, including the January 16, 2002, edition of the Wall Street Journal. The SEC's complaint and its motion for a temporary restraining order allege that the defendants, some of whom have recent felony convictions, dumped hundreds of thousands of Tel-One shares during their pump-and-dump scheme. The TRO issued by the Court enjoins Tel-One, Media Broadcast, W. Kris Brown (Tel-One's president), George Carapella (a Tel-One director at the time of the misconduct), Alan S. Lipstein (a former Tel-One director) and George LaFauci (Carapella's cousin and a principal of Media Broadcast) from violating the antifraud provisions of the federal securities laws, and freezes their assets. The SEC suspended trading in Tel-One stock effective at 9:30 a.m. on January 23, 2002. The SEC's suit resulted in a series of judgments and the creation of a fund to compensate investors harmed by the scheme. Consequently, the District Court for Middle Florida directs all persons who bought the common shares of Tel-One, Inc., on the National Association of Securities Dealers Over-the-Counter Bulletin Board to submit their claims against the Debtor on or before March 24, 2003. Parties will be notified of the treatment of their claims. Claims must be addressed to the Defendant's Claims Administrator, at: Soneet Kapila Tel-One, Inc., Claims Administrator PO Box 14213 Fort Lauderdale, FL 33302 Tel-One is a start-up company in the videoconferencing industry. TENFOLD CORP: Reports Improved Financial Results for Q4 2002 ------------------------------------------------------------ TenFold Corporation (OTC Bulletin Board: TENF), provider of the Universal Application(TM) platform for building and implementing enterprise applications, anticipates reporting a profitable and cash flow positive fourth quarter of 2002. During Q4 of 2002, TenFold increased its cash position by approximately $1.4 million. Subject to the results of its year- end audit in process, TenFold anticipates reporting Q4 2002 revenues in the range of $7.8 million to $8.3 million, and operating profits in the range of $1.2 million to $2.0 million. Additionally, TenFold expects to report a non-recurring, non-operating gain of approximately $2.4 million resulting from the retirement of its bank debt at a significant discount. Net income for the quarter is estimated to be in the range of $3.3 million to $4.2 million. "We are pleased by this solid closing of 2002 and the growing evidence of the hard-earned success of our far-reaching turnaround program," said Dr. Nancy Harvey, TenFold's President and CEO. "Over the course of the year, quarter-to-quarter revenues have grown modestly. With significant financial and operational restructuring, we closed the gap and transformed an operating loss of $3.5 million in Q1 to a solid Q4 operating profit. We faced many challenges and skirted the shoals of insolvency in 2002, but we enter 2003 repositioned and focused to deliver the extraordinary business value of our breakthrough Universal Application technology. We have a solid business foundation from which to build and to endure the continuing slump in the economy and IT market." With these anticipated quarterly results and subject to the results of its year-end audit in process, TenFold expects reporting full year 2002 revenues in the range of $27.7 million to $28.2 million compared to $52.6 million in 2001; a 2002 operating loss in the range of $3.7 million to $4.5 million compared to an operating loss of $25.3 million in 2001; and, a 2002 net loss in the range of $1.3 million to $2.2 million compared to a net loss in 2001 of $15.7 million. "The modest generation of cash in Q4 2002 is an important milestone for TenFold," added Dr. Nancy Harvey. "Over the year, the quarterly net change in cash improved from a deficit of $5.3 million in Q1 to $1.4 million in Q4." "Nancy and her management team have worked relentlessly to restore TenFold's promise and reputation," added TenFold's Founder, CTO and Chairman Jeffrey L. Walker. "Under her leadership TenFold has provided full, frank, and fair disclosure of its performance; transitioned to an entirely different business model; and begun the process of taking TenFold forward as a growth technology company." Q4 of 2002 was notable for a number of additional reasons: -- TenFold reached agreement to buy out its entire bank debt and retire an outstanding lien against TenFold's intellectual property assets. -- TenFold negotiated the reduction or elimination of further significant real estate lease obligations bringing the total reductions negotiated in 2002 to approximately $51 million. None of the confidential settlements materially reduced TenFold's non-restricted cash position nor did they involve options, warrants, or material common stock grants. -- Rick Bennett, a thirty-year, software-marketing veteran joined the TenFold Board of Directors. -- Federal Judge Tina Campbell dismissed a consolidated shareholders' class action lawsuit against TenFold and certain of its former and current officers and directors. TenFold subsequently settled this matter at no cost to the Company. -- TenFold concluded a settlement with the Securities and Exchange Commission without fines or civil penalties and was not required to restate its financial statements. -- TenFold established its third Universal Application- powered applications reseller and first such UK agreement with the execution of a deal with Vertex Data Sciences Limited, a UK- based utility-sector customer management and billing company, granting Vertex exclusive, global rights to resell the utility industry focused customer management and billing application, TenFold's Global Billing System. -- TenFold's UK reseller, Vertex Data Sciences Limited, completed its first sale of the Universal Application-powered Global Billing System to its first major customer. -- TenFold sold its UK subsidiary to the management team of that subsidiary, which will now act as a Universal Application reseller and provide Universal Application-related consulting services to new and existing UK customers. -- TenFold established a VAR relationship with Redi2 Technologies, which will resell the Universal Application- powered Revenue Manager application to investment managers. TenFold expects to file its 10K and to announce its audited financial results for the 2002 year during late March 2003. TenFold (OTC Bulletin Board: TENF) licenses its breakthrough, patented technology for applications development, the Universal Application(TM) platform, to organizations that face the daunting task of replacing legacy applications or building new applications systems. Unlike traditional approaches, where business and technology requirements create difficult IT bottlenecks, Universal Application technology lets a small, primarily non- technical, business team design, build, deploy, maintain, and upgrade new or replacement applications with extraordinary speed and limited demand on scarce IT resources. For more information, visit http://www.10fold.com * * * On February 10, 2003, TenFold Corporation dismissed its independent accountant, KPMG LLP, and engaged the services of Tanner + Co., as the Company's new independent accountant for its last fiscal year ending December 31, 2002 and its current fiscal year ending December 31, 2003. The Audit Committee of the Company's Board of Directors approved the dismissal of KPMG and the appointment of Tanner as of February 10, 2003. KPMG's audit report on such financial statements as of and for the fiscal year ended December 31, 2001 contained a separate paragraph stating, in relevant part: "The accompanying consolidated financial statements and related financial statement schedule have been prepared assuming that the Company will continue as a going concern. The Company suffered a significant loss from operations during the year ended December 31, 2001, has a substantial deficit in working capital and stockholder's equity at December 31, 2001, had negative cash flow from operations for the year ended December 31, 2001 and is involved in significant legal proceedings that raise substantial doubt about its ability to continue as a going concern." TODAY'S MAN: Files for Chapter 22 Reorganization in New Jersey -------------------------------------------------------------- Today's Man, Inc., (OTC Bulletin Board: TMAN) has filed a voluntary petition to reorganize under Chapter 11 of the Bankruptcy Code. Under Chapter 11, Today's Man will operate under Court protection from creditors, while it continues to evaluate strategic alternatives. The petition was filed in the U.S. Bankruptcy Court for the District of New Jersey. Frank Johnson, Today's Man Acting Chief Executive Officer, said, "The decision to file for bankruptcy was difficult, but we feel it represents the most viable approach for our business." Mr. Johnson went on to say, "We are grateful for the constructive relationships with our suppliers and the loyalty and commitment of our associates. The continued support of our suppliers and associates will play an important role in our ongoing efforts." It was also announced that Bruce Weitz will no longer be President and CEO of the company as of March 3, 2003. Mr. Johnson commented, "While we appreciate the leadership that Bruce has provided during his tenure, it is clear that the company must now take a new strategic direction that will require a different outlook." Today's Man, Inc., currently operates 29 menswear stores in the Philadelphia, New York and Washington, D.C. markets. It offers a wide selection of tailored clothing, furnishings, accessories and sportswear at everyday low prices. TODAY'S MAN: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Today's Man, Inc. 835 Lancer Drive Moorestown, New Jersey 08057 Tel: 856-235-5656 Bankruptcy Case No.: 03-16677 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Feld & Feld, Inc. 03-16687 Benmol, Inc. 03-16690 D&L, Inc. 03-16694 Type of Business: Today's Man is an operator of men's wear retail stores specializing in tailored clothing, furnishings, sports wear and shoes. Chapter 11 Petition Date: March 4, 2003 Court: District of New Jersey (Camden) Judge: Gloria M. Burns Debtors' Counsel: Michael J. Shavel, Esq. Blank, Rome, Comisky & McCauley 210 Lake Drive East Suite 200 Woodland Falls Corporate Park Cherry Hill, NJ 08002 Tel: (215) 569-5794 Total Assets: $37,800,000 Total Debts: $36,500,000 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Cordovan & Grey, Ltd. $1,108,659 4826 Gregg Road Pico Rivera, CA 90660 James Edmond, Inc. $1,546,564 Attn: Mr. Steve Daniels 3641 Holdrege Avenue Los Angeles, CA 90016 Berg Enterprises LLC Trade $925,000 1251 Avenue of the Americas New York, NY 10020 Berg Enterprises LLC Trade $925,000 1251 Avenue of the Americas New York, NY 10020 Neema Clothing, Ltd. $883,714 9950 Mission Mill Road Whittier, CA 90601-4709 PBM $599,592 Independence Mall East Philadelphia, PA 19106 Imported Apparel Inc. Trade $643,722 Attn: Cynthia G. Fischer 600 Madison Avenue New York, NY 10022 Feld Chestnut, LP $450,909 Feld David Gen Ptr 133 Old Gulph Road Wynnewood, PA 19096 Bernette Textiles Co. $439,913 42 West 39th Street New York, NY 10018 625 Ownership LLC Landlord $375,348 Mikki Davanzo Attn: Mr. Taub 675 Avenue of the Americas New York, NY 10010 David Feld $301,204 c/o Today's Man, Inc. 835 Lancer Drive Moorestown, NJ 08057 Evolution 2000 $387,582 19 West 34th Street Suite 1020 New York, NY 10001 Jacob Siegel $292,125 The Lenas Bldg. - 3rd Floor 1843 W. Allegheny Avenue Philadelphia, PA 19132 P.T. Tianjin USA Inc. $437,978 525 7th Avenue 2nd Floor New York, NY 10018 P.T. Tianjin USA Inc. $437,978 Howard Li 525 7th Avenue 2nd Floor New York, NY 10018 Tel: 212-764-8989 Price Enterprises, Inc. $369,943 Attn: James Nakagawa, C.F.O. 17140 Bernardo Center Drive Suite 300 San Diego, CA 92128 Price Owner, LLC Landlord $369,943 Joni Lilly 17140 Bernardo Center Drive Suite 300 San Diego, CA 92128 Sky High/C.I.T. $432,671 1015 East 14th Street Los Angeles, CA 90021 Swank Inc. $313,922 6 Hazel Street PO Box 2962 Attleboro, MA 02703 Tropical Sportswear/CIT $305,955 PO Box 15350 Tampa, FL 33684 Vornado Realty Trust Landlord $327,762 Albert Zubcak 210 Route 4 East Paramus, NJ 07652 TODAY'S MAN: Blames Banks for Need to File "Chapter 22" Petition ---------------------------------------------------------------- The "unwillingness of their bank lending group to make further advances under their outstanding lines of credit, their inability to obtain fresh inventory for stores from trade vendors/creditors and rent arrearages with numerous landlords," Frank E. Johnson, Vice President and Chief Financial Officer and Acting Chief Executive Officer for Today's Man, Inc., says is what forced the company to file for chapter 11 protection a second time. Feb. 1 Financial Data At February 1, 2003, the Today's Man discloses in bankruptcy court filings, total assets were $37.8 million -- a sharp decline from $54.5 million at Nov. 2, 2002 -- and liabilities total $36.5 million at Feb. 1, 2003. The Unwilling Lender Information obtained from http://www.LoanDataSource.comshows that Today's Man, Inc., as Borrower, and Benmol, Inc., D & L, Inc., and Feld & Feld, Inc., as Guarantors, are party to a loan agreement, as amended fifteen (maybe more) times to date, with Standard Federal Bank National Association, formerly known as Michigan National Bank, as successor in interest to Mellon Bank, N.A., under which LaSalle Business Credit, Inc., serves as the agent. Today's Man defaulted under its revolving credit agreement when its failed to pay the loan down to $16,500,000. Additionally, as of December 18, 2002, the Company violated its covenants to maintain tangible net worth greater than $12,308,000 and report net income of no less than $433,000 for the fiscal month ending November 30, 2002. Today's Man tells the U.S. Bankruptcy Court for the District of New Jersey that it will seek interim and permanent use of its Lender's cash collateral to fund on-going operating expenses. Mr. Johnson says the company believes that arrangement will be consensual, but is prepared to litigate with the Lender if that's required to get access to cash. Bankruptcy Professionals on Board Today's Man filed its chapter 11 petition in Camden, N.J. The case number is 03-16677 and the Honorable Gloria M. Burns presides. Joel C. Shapiro, Esq., Michael J. Shavel, Esq., and Michael C. Graziano, Esq. at Blank Rome LLP, provide legal counsel to Today's Man in its chapter 11 restructuring. Blank Rome has served as long-time corporate counsel to the Company. Ernst & Young LLP serves as Today's Man's independent accountants. Trumbull Associates, L.L.C., f/k/a Trumbull Services, L.L.C., provides noticing and claims processing services. Continuing to Explore Options Today's Man said yesterday that it will operate under Court protection from creditors, while it "continues to evaluate strategic alternatives." In late January, Today's Man's Board of Directors formed a committee of independent directors to consider and evaluate proposals with respect to possible third-party investments in or other transactions with the Company. At that time, three members of management -- David Feld, Bruce Weitz, and Larry Feld -- were developing and pursuing a possible investment in the Company. Mr. Weitz will no longer be President and CEO of the company as of March 3, 2003. "While we appreciate the leadership that Bruce has provided during his tenure, it is clear that the company must now take a new strategic direction that will require a different outlook," Mr. Johnson said. Mr. Johnson told the press yesterday, "The decision to file for bankruptcy was difficult, but we feel it represents the most viable approach for our business." Mr. Johnson went on to say, "We are grateful for the constructive relationships with our suppliers and the loyalty and commitment of our associates. The continued support of our suppliers and associates will play an important role in our ongoing efforts." * * * Today's Man, Inc. operates menswear retail stores specializing in tailored clothing, furnishings sportswear and shoes. The Company operates a chain of 29 stores in the Greater Philadelphia, Washington, D.C., and New York markets. The Company's goal is to be the leading menswear retailer in each of its markets by providing a broad and deep assortment of moderate to better, current-season, private brand merchandise at everyday low prices. The Company was incorporated in Pennsylvania in 1971 as Feld & Sons, Inc. and changed its name to Today's Man, Inc. in March 1992. The Company's executive and administrative offices are located in Moorestown, New Jersey. Today's Man emerged from its first chapter 11 case on December 31, 1997. The Plan of Reorganization confirmed in that case distributed $53.3 million in cash, new common stock and detachable warrants to creditors. TRENWICK GROUP: S&P Believes Debt Restructuring is Remote --------------------------------------------------------- Standard & Poor's Ratings Services placed its 'CCC-' counterparty credit ratings on Trenwick Group Ltd. and the sub- holding companies--LaSalle Re Holdings Ltd. and Trenwick America Corp.--on CreditWatch with negative implications because it believes the company's ability to restructure its senior debt to keep it out of default is remote. Standard & Poor's also said that it placed its 'CCC' counterparty credit and financial strength ratings on Trenwick America Reinsurance Corp., Dakota Specialty Insurance Co., LaSalle Re Ltd., Trenwick International Ltd., and Insurance Corp. of NY on CreditWatch negative. In addition, Standard & Poor's withdrew is 'CCC' counterparty credit and financial strength ratings on Chartwell Insurance Co. due to the merger of this company into Trenwick America Reinsurance Co. Trenwick had a covenant in its recently renewed bank letter of credit facility that required a refinancing of its April 1 maturity of $75 million of senior debt by March 1. Although management has a waiver of the covenant, Standard & Poor's believes its ability to restructure such that the senior debt is not in default remains remote. Following the fourth-quarter 2002 reserve additions, tangible net worth at year-end 2002 is negative $49.7 million after deducting $127.2 million of deferred acquisition costs. The emergence of earnings and dividend capacity to service existing creditors in the near-term remains unlikely. The CreditWatch status of the holding company ratings will be resolved following the resolution of the April 1 senior debt restructuring. Standard & Poor's expects Trenwick to either default in payment on the debt or restructure in a way that may be equivalent to a default. UNITED AIRLINES: IRS Ruling Will Enable Sale of Stock by ESOP ------------------------------------------------------------- UAL Corp. (NYSE: UAL), the parent company of United Airlines, has received a private letter ruling from the U.S. Internal Revenue Service that permits State Street Bank & Trust, the independent fiduciary of the UAL Employee Stock Ownership Plan, to sell an additional 3.9 million shares of UAL stock held by the ESOP without jeopardizing tax benefits related to UAL's net operating losses. The IRS ruled that certain sales of stock by the 401(k) plans managed by Fidelity Management Trust Company and by a mutual fund that had previously held a large amount of UAL stock did not need to be included in the calculation of an ownership change for the purposes of preserving the NOL. Preserving the NOL should generate substantial tax benefits following UAL's emergence from Chapter 11 protection. After State Street has sold the additional 3.9 million shares, the UAL ESOP will still hold stock convertible into approximately 16 million UAL common shares. Remaining in effect is the order issued by the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division in Chicago, preventing certain parties from buying or selling UAL common stock or purchasing debt claims against UAL. Those restrictions are necessary in order to avoid triggering certain change in control consequences that would severely limit the company's NOL. The parties affected by the order include holders of more than 4.8 million shares of common stock on an as- converted basis and holders of claims of $200 million or more against UAL companies. The company noted that further sales of UAL stock by State Street may lower employee ownership in company benefit plans below 20 percent, triggering "Sunset" provisions (as described in the company's most recent Form 10-Q) that affect UAL's corporate governance structure. Depending on the amount and timing of share sales by State Street, the "Sunset" changes could occur in the next few weeks. The changes provided by the "Sunset" provisions include: -- Elimination of special Board, Board committee and shareholder votes, such as for acquisitions, divestitures and CEO appointments, among others; -- Elimination of the 55% shareholder voting power of the ESOP; -- Board discretion to change its committee structure and membership; and -- Possible changes in Board members, other than those representing the Air Line Pilots' Association (ALPA), International Association of Machinists and Aerospace Workers (IAM) and salaried and management employees. Decisions regarding potential Board nominees would be made by the Board's outside public directors nominating committee. United Airlines was rated number one in on-time performance for 2002. News releases and other information about United Airlines can be found at the company's website, www.united.com . DebtTraders reports that United Airlines' 10.670% bonds due 2004 (UAL04USR1) are trading at about 4 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=UAL04USR1for real-time bond pricing. UNITED AIRLINES: Rothschild's Engagement as Inv. Banker Approved ---------------------------------------------------------------- UAL Corporation and its debtor-affiliates obtained final Court approval to hire Rothschild, Inc., as their Investment Banker. The Debtors will compensate Rothschild at a cost of $225,000 per month for the first 12 months following the Petition Date and $200,000 per month thereafter, plus payment of a $15,000,000 Completion Fee if a Transaction (confirmation of a chapter 11 plan, a merger, or a sale of substantially all of the company's assets) is completed within 24 months. Rothschild will credit all Monthly Fees paid after seven months of bankruptcy against the Completion Fee. After eighteen months, either the Debtors or Rothschild may initiate talks about additional credit for monthly fees paid. Specifically, Rothschild will: a) identify and/or initiate potential Transactions; b) review and analyze the Debtors' assets and the operating and financial strategies of the Debtors; c) review and analyze the Debtors business plans and financial projections by testing assumptions and comparing them to historical data and industry trends; d) evaluate the Debtors' debt capacity in light of projected cash flows and assist in determining an appropriate capital structure; e) review the terms of any proposed Transaction and evaluate alternative proposals; f) determine a range of values for the Debtors and any securities offered by the Debtors in a Transaction or otherwise; g) advise Debtors on the risks and benefits of a Transaction and other strategic alternatives to maximize the business enterprise value; h) review and analyze proposals the Debtors receive from third parties, including proposals for debtor- in-possession financing; i) assist in negotiations with parties in interest including creditors and/or shareholders; j) advise and attend meetings of the Debtors Board of Directors, creditor groups, official constituencies and other interested parties; k) participate in hearings before the Bankruptcy Court and provide testimony with miscellaneous matters or in connection with a proposed Plan; and l) render other investment banking services as agreed upon by Debtors and Rothschild. (United Airlines Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) US AIRWAYS: Judge Mitchell to Consider Plan on March 18, 2003 ------------------------------------------------------------- On January 17, 2003, the U.S. Bankruptcy Court for the Eastern District of Virginia approved the Disclosure Statement prepared by US Airways Group, Inc., and its debtor-affiliates. Judge Mitchell found that the disclosure statement contains the right kind of information for creditors to make informed decisions about whether to accept or reject the Debtors' Joint Plan of Reorganization. A hearing to consider confirmation of the Debtors' Plan is set for March 18, 2003, prevailing Eastern Time, before Judge Mitchell. March 10, 2003, is the deadline for filing objections to confirmation of the Debtors' Plan. Objections must be received by the Bankruptcy Court before 4:00 p.m. on March 10. Copies must also be served on: a. Counsel for the Debtors Skadden, Arps, Slate, Meagher & Flom (Illinois) 333 West Wacker Drive, Suite 2100 Chicago, Illinois 60606-1285 Attn: John Wm. Butler, Esq. John K. Lyons, Esq. Skadden, Arps, Slate, Meagher & Flom Four Times Square New York, NY 10036 Attn: Alesia Ranney-Marinelli, Esq. -and- McGuire Woods LLP 1750 Tysons Boulevard, Suite 1800 McLean, Virginia 22102-4215 Attn: Lawrence E. Rifken, Esq. Douglas M. Foley, Esq. b. Counsel for the Official Committee of Unsecured Creditors Otterburgh, Steindler, Houston & Rosen PC 230 Park Avenue New York, NY 10169-0075 Attn: Scott Hazan, Esq. Brett H. Miller, Esq. -and- Vorys, Sater, Seymour & Pease LLP 277 South Washington Street Suite 310 Alexandria, VA 22314-3674 Attn: Malcolm Mitchell, Jr., Esq. Byron L. Pickard, Esq. c. Counsel for the Retirement Systems of Alabama Holdings LLC Orrick, Herrington, & Sutcliffe LLP 666 Fifth Avenue New York, NY 10123 Attn: Lorraine S. MacGowen, Esq. -and- Bean, Kinney & Korman PC 2000 North 14th Street, Suite 100 Arlington, VA 22201 Attn: James R. Schroll, Esq. d. Counsel for the Air Stabilization Board Curtis Mallet-Prevost Colt & Mosle LLP 101 Park Avenue New York, NY 10178-0061 Attn: Steven J. Reisman, Esq. Daniel R. Lenihan, Esq. e. Office of the United States Trustee 115 S. Union Street Plaza Level, Suite 210 Alexandria, VA 22314 Attn: Dennis J. Early , Esq. US Airways Group, Inc.'s primary business activity is the ownership of the common stock of US Airways, Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing and Sales, Inc., Material Services Company, Inc. and Airways Assurance Limited, LLC. The primary business activity of the Wholly-Owned Subsidiaries is the transportation of passengers, property and mail. The Debtors filed for Chapter 11 protection on August 11, 2002, (Bankr. E.D. Va. Case No. 02-83984). Skadden, Arps, Slate, Meagher & Flom and McGuireWoods LLP represent the Debtors in their restructuring efforts. When USAir filed for protection from its creditors, it listed total assets and liabilities topping $7 billion. US AIRWAYS: S&P Revises Outlook to Neg. after Loan Nonpayment ------------------------------------------------------------- Standard & Poor's Ratings Services revised its CreditWatch status to negative from developing on US Airways Inc.'s series 2000-3 pass-through certificates, class C (rated 'B'). The action follows the airline's failure to make a $44.5 million payment that was due on March 1, 2003, on the series 2000-3 pass-through certificates Class G and C. The company is negotiating with "certain interested parties" regarding these payments, including Airbus, the manufacturer of the aircraft (14 A319s, 3 A320s, and 6 A321s) securing the deal, and expects to reach an agreement within the five-business day cure period. There is no assurance that an agreement will be reached. The 'AAA' ratings on the class G are not affected, as it is insured by MBIA Insurance Corp. "This move is significant as it is the third instance of US Airways attempting to revise or terminate its financing on Airbus planes, which form US Airways' core fleet, rather than those on Boeing or other manufacturers' planes, which it is gradually replacing," said Standard & Poor's credit analyst Philip Baggaley. The A319 and A320 models are popular aircraft that incorporate current technologies, and their values have until now held up better than those of most other aircraft. The transaction affected by the airline's move is an enhanced equipment trust certificate, and the affected class of debt has access to a liquidity facility that can pay up to three semiannual interest payments. Accordingly, they are not at risk of immediate default, but prospects for full payment of principal and interest will be placed under further pressure. The 'D' corporate credit ratings on US Airways Group Inc. and its US Airways Inc. subsidiary reflect the companies' Aug. 11, 2002, Chapter 11 bankruptcy filings. 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: U.S. Trustee Amends Creditors' Committee Membership --------------------------------------------------------------- The U.S. Trustee amends the membership of the Official Committee of Unsecured Creditors of US Airways Group Inc., to reflect the substitution of the Association of Flight Attendants in place of HSBC Bank U.S.A., who has resigned from the Committee. 1. Airbus North American Holdings, Inc. CHAIRPERSON R. Douglas Greco, Senior Director, Sales Finance 198 Van Buren Street, Suite 300 Herndon, VA 20170-5335 Phone: 703-834-3402 Fax: 703-834-3547 http://www.airbus.com 2. Air Line Pilots Association International Captain Kelly Ison 660 Lakeside Dock Drive Kingsport, TN 37663 Phone: 423-279-0226 Fax: 423-279-0368 3. Charles E. Smith Commercial Realty Michael T. Crehan, V.P. & Division General Counsel 2345 Crystal Drive Arlington, VA 22202 Phone: 703-769-1215 Fax: 703-769-1312 E-Mail: michael.crehan@cescr.com 4. Electronic Data Systems Corporation Mitchell B. George, Account Executive 2345 Crystal Drive, Suite H300 Arlington, VA 2227 Phone: 703-872-6400 Fax: 703-872-6335 E-mail: Mitch.George@eds.com 5. Wachovia Bank National Association f/k/a First Union National Bank Robert L. Bice, II, Vice President, Advisory Services Co. Trust Group NC1179 401 S. Tryon St., 12th Floor Charlotte, NC Phone: 704-715-3021 Fax: 704-374-6682 E-mail: bob.bice@firstunion.com 6. Honeywell International Gerald W. Harris, Manager-Aerospace Credit 1140 W. Warner Road Mail Stop 1233-M Tempe, AZ 85284 Phone: 480-592-4506 Fax: 480-592-4530 E-mail: Gerald.Harris2@honeywell.com 7. International Association of Machinists and Aerospace Workers James T. Varsel, Airline Coordinator 9000 Machinist Place, Suite 118B Upper Marlboro, MD 20772-2687 Phone: 301-967-4560 Fax: 301-967-4591 E-mail: jvarsel@iamah.org 8. Association of Flight Attendants Patricia A. Friend, International President 1275 K Street, NW, Suite 500 Washington, DC 20005 Phone: 202-712-9799 Fax: 202-712-9796 E-mail: pfriend@afanet.org 9. LSG Sky Chefs, Inc. Janice L. Kiraly, Global Director-Credit & Collections 524 E. Lamar Blvd., Suite 175 Arlington, TX 76011 Phone: 817-792-5553 Fax: 817-792-1905 E-mail: jkiraly@skychefs.com 10. Pension Benefit Guaranty Corporation Craig Yamaoka, Senior Financial Analyst 1200 K Street, NW, Suite 270 Washington, DC 20005-4026 Phone: 202-326-4070 Fax: 202-842-2643 11. Rolls-Royce North America Inc. and affiliates Kevin T. Lowdermilk, Director of Financial Services 14850 Conference Center Drive Chantilly, VA 20151 Phone: 703-621-2816 Fax: 703-318-9097 E-mail: Kevin.T.Lowdermilk@Rolls-Royce.com 12. U. S. Bank National Association E. Decker Adams, Vice President 2 Avenue de Lafayette Boston, MA 02111 Phone: 617-662-1754 Fax: 617-662-1456 E-mail: dadams@statestreet.com 13. Wilmington Trust Company Steven Cimalore, Vice President Rodney Square North 1100 N. Market Street Wilmington, DE 19890 Phone: 302-636-6058 Fax: 302-636-4143 E-mail: scimalore@wilmingtontrust.com (US Airways Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) WABASH NATIONAL: Liquidity-Constrained Position Continues --------------------------------------------------------- Wabash National Corporation (NYSE: WNC) announced that in January 2003 it achieved positive operating results. This marks the first time since October 2000 that the Company achieved positive operating results. Commenting on these results, William P. Greubel, President and Chief Executive Officer, stated, "It's especially gratifying to see the results of our associate's hard work to turn this business around. We still have work to do; however, we see continued improvement from the momentum achieved during 2002 carrying through 2003. I believe these positive results, albeit modest, are particularly rewarding given the continued weakness in industry demand. Although we do not normally announce our monthly results, given the significance of these results, we believe it is important to inform our associates, customers, suppliers, lenders and stockholders of our progress." Given the softness in demand and other factors, the Company is not prepared to predict that first quarter results, or any other future periods, will achieve net income, and does not expect to announce further results before the first quarter is completed. Further, the Company remains in a highly liquidity-constrained environment, and even though its bank lenders have waived current covenant defaults through April 15, there is no certainty that the Company will be able to successfully negotiate modified financial covenants to enable it to achieve compliance going forward, or that, even if it does, its liquidity position will be materially more secure. Wabash National Corporation designs, manufactures, and markets standard and customized truck trailers under the Wabash(TM) and Fruehauf(R) brands. The Company believes it is one of the world's largest manufacturers of truck trailers, the leading manufacturer of composite trailers and through its RoadRailer(R) products, the leading manufacturer of bimodal vehicles. The Company's wholly owned subsidiary, Wabash National Trailer Centers, is one of the leading retail distributors of new and used trailers and aftermarket parts, including its Fruehauf(R) and Pro-Par(R) brand products with locations throughout the U.S. and Canada. WHEELING-PITTSBURGH: Court Clears Agreements with BofA for OCC -------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation and Wheeling-Pittsburgh Corporation, Debtors, ask Judge Bodoh to authorize: (1) WPSC to sign a No-Offset Letter in favor of Bank of America NA; and (2) WPC to sign a Subordination Agreement among WPC, Ohio Coatings Company, and the Bank of America. WPC is a Delaware holding company that conducts no business of its own. WPC's principal operating subsidiary is WPSC. WPSC produces and sells a broad array of flat rolled steel products which are sold to steel service centers, converters, processors, the construction industry and the container and appliance industries. OCC was created in July 1993 as a joint venture of WPC, NSA and Dong Yang under a Shareholders' Agreement. WPC and Dong Yang each own 50% of the common stock of OCC, and NSA holds $3 million of preferred stock in OCC. OCC was organized to build, own and operate a tin coating facility located in Yorkville, Ohio. The OCC tin-coating facility is the only domestic electro-tin plating facility constructed in the past 30 years and supplies tin pate to the container and automotive industries. WPC and its subsidiaries produce all their tin coated products through OCC. OCC is in the process of refinancing its credit facility. Bank of America NA, OCC's new source of financing (replacing National City Bank) is currently finalizing a Credit Agreement with OCC under which the Bank will make available to OCC a revolving line of credit for loans and letters of credit in an amount not to exceed $18,000,000 and will make a term loan to OCC in the aggregate principal amount of $4,300,000. WPC and WPSC will both benefit from the financial accommodations to be provided to OCC by the Bank. The Bank is requiring as a condition precedent to closing under the OCC Credit Agreement that WPC sign a Subordination Agreement and WPSC a No-Offset Letter. WPC and WPSC each say that in their sound business judgment it is in their best interests, their creditors' best interests and the best interests of their estates to do so. The No-Offset Letter The Bank intends to secure its advances and loans to OCC under the OCC Credit Agreement by taking a security interest in and assignment of OCC's accounts receivable. As a condition to making these loans and advances to OCC on its accounts receivable arising from sales of its tin mill products to WPSC, the Bank is requiring that WPSC: (1) sign and deliver the No-Offset Letter to the Bank, (2) agree that it will not offset against these accounts receivable any indebtedness owed by OCC to WPSC, WPC, or any of its affiliates; and (3) agree that it will pay indebtedness owed to OCC promptly when due. The Subordination Agreement As a further condition to providing OCC with financing, the Bank requires that WPC sign and deliver a Subordination Agreement in which WPC agrees and acknowledges that: (a) the $11,775,000 owed by OCC to WPC is subordinate to any indebtedness owed by OCC to the Bank under the OCC Credit Agreement; (b) OCC's payment of the $11,775,000 to WPC will be deferred to the indebtedness of OCC to the Bank under the OCC Credit Agreement; (c) WPC shall not attempt to collect any portion of the $11,775,000 or borrow any sums of money from OCC without the Bank's prior written consent; (d) upon an event of default by OCC under the OCC Credit Agreement, if OCC pays any amounts to WPC relating to the $11,775,000, WPC shall pay these amounts to the Bank; (e) notwithstanding any other provision of the Subordination Agreement, OCC may pay WPC Principal payments on the $11,775,000 if: (i) the principal amount of the term loan is less than $2,500,000; and (ii) OCC's availability under the revolving credit facility is at least $3,000,000; (iii) however, from June 30, 2003, until such time as the principal amount of the term loan is less than $2,500,000, OCC may make principal payments to WPC on a quarterly basis provided that: (1) there has been no default under the OCC Credit Agreement, and (2) the amount of the quarterly repayments to WPC does not exceed 33-1/3% of OCC's excess cash flow for the immediately preceding quarter; and (f) notwithstanding any other provision of the Subordination Agreement, OCC may pay WPC interest payments on the $11,775,000 so long as there has been no event of default under the OCC Credit Agreement. Moving this case along, Judge Bodoh promptly approves these agreements by granting the Motion. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) WINSTAR COMMS: Trustee Asks Court to Okay BW Fin'l Stipulation -------------------------------------------------------------- Michael G. Menkowitz, Esq., at Fox Rothschild O'Brien & Frankel, in Wilmington, Delaware, recounts that prior to the conversion of Winstar Communications, Inc., and its debtor-affiliates' cases to Chapter 7, the Debtors commenced a declaratory action in the New York State Supreme Court, Commercial Division to seek these declarations: A. a certain facility agreement with the predecessor-in- interest to BW Financial Corp., by which this predecessor company made a loan facility available to the Debtors and conveyed certain equipment pursuant to 38 separate equipment schedules, in the nature of a sale or leaseback transaction; B. that the Debtors satisfied all of its obligations Pursuant to the Agreement; and C. that certain certificates of title to the Equipment should be conveyed by BW Financial to the Debtors. Subsequently, Mr. Menkowitz relates that the Court granted BW Financial relief from the automatic stay to pursue counterclaims against the Debtors in the Declaratory Action. Specifically, BW Financial asserted counterclaims against the Debtors amounting to $2,616,780.55. BWF moved for summary judgment dismissing the Declaratory Action and entering judgment on its counterclaims, including attorney's fees, and directing replevin of the Equipment. On October 29, 2002, the court denied BW Financial's motion for summary judgment and granted the Debtors' reverse summary judgment in their favor. The court ordered BW Financial to convey title to the Equipment, and assessed damages against the Debtors for "fair rent" for the Equipment for the time periods between the termination of the Equipment Schedules, namely on September 30, 2000, and the tendering of the payment price, namely on December 8, 2000, and referred the matter of assessing the "fair rent" to a Special Referee for determination. To avoid the additional costs and expenses associated with a Special Referee hearing, on January 16, 2003, the Debtors and BW Financial stipulated these agreements: A. the "fair rent" to be assessed for the time periods Between the termination of the Equipment Schedules, namely on September 30, 2000, and the tendering of the payment price, namely, December 8, 2000, will be fixed at $250,000; and B. the Debtors and BW Financial propose to stipulate to a further order: 1. confirming the Court's Memorandum Order of October 29, 2002; 2. entering a judgment against the Debtors amounting to $250,000; and 3. dismissing the Declaratory Action. Mr. Menkowitz reports that the Trustee and BW Financial explored and took contrary positions with respect to whether the Debtors had satisfied all their obligations under the Agreements. Specifically, BW Financial sought summary judgment, claiming that the Agreement was not a true sale, but rather a lease and the Debtors owed the unpaid month-to-month lease obligations, totaling more than $2,000,000. However, after extensive negotiations, the Trustee and BW Financial have agreed to resolve all claims that they may have against one another in connection with the Agreements and any and all other matters, known or unknown, in consideration for the entry of a stipulated judgment in BW Financial's favor amounting to $250,000, which will be treated as a prepetition, general unsecured claim pursuant to the Stipulation. The salient terms of the settlement embodied by the Stipulation are: A. The Trustee agrees to stipulate to the entry of a judgment in the New York Supreme Court amounting to $250,000, representing the "fair rent" for the time periods between the termination of the Equipment Schedules, namely on September 30, 2000, and the tendering of the payment price, namely on December 8, 2000, which Judgment will be treated as a prepetition, general unsecured claim in these cases, in exchange for BW Financial's release of any and all claims of whatsoever nature against the Debtors' estates or the Trustee, her successors and assigns, except for the BW Financial Prepetition Claim; and B. The parties agree to take the steps necessary to have the Judgment entered in the New York Supreme Court fixing the BW Financial Prepetition Claim after the Delaware Bankruptcy Court approves this Stipulation. By this motion, the Chapter 7 Trustee asks the Court to approve the Stipulation and authorize the Trustee to consummate all transactions related to the Stipulation. Absent the Stipulation, Mr. Menkowitz argues, the Trustee would be forced to proceed with the Special Referee hearing that would unnecessarily burden the Debtors' estates. Based on the high cost of this potential hearing and the resultant negotiations that would ensue in relation to the value in connection with fixing the BW Financial Prepetition Claim, the Trustee asserts that the Stipulation represents a fair and reasonable consensual resolution of the issues addressed. The parties to the Stipulation recognize that the outcome of any special mediation over claims cannot be predicated with certainty. (Winstar Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Angelo Gordon Forms New Billion-Dollar Distressed Debt Fund ------------------------------------------------------------- Angelo, Gordon & Co., L.P. is advertising that AG Capital Recovery Partners IV, L.P., put together a $1 billion limited partnership last month to invest in distressed securities. Angelo Gordon & Co., L.P. 245 Park Avenue New York, NY 10167 Telephone 212.692.2042 Fax 212.867.9328 http://www.angelogordon.com * Edward L. Finn Joins Stonehill Group as Chief Exec. Officer ------------------------------------------------------------- Edward L. Finn has joined Stonehill Group, LLP as a Principal and has been named Chief Executive Officer of Stonehill Financial, LLC, a subsidiary, which purchases under-performing debt of privately held troubled companies. Stonehill Financial, LLC purchases distress debt in amounts from $5 to $50 million and is financed by Varde Partners, Inc., a Minnesota based firm that has invested over $2 billion in non- performing and sub-performing loans. The Minneapolis-based Stonehill Group provides consulting services to companies facing unique and important issues with business and financial components, such as litigation, the sale or refinancing of the business, a major acquisition and insolvency issues. Ed was with Ernst & Young for over 25 years, serving as Managing Partner of the Minneapolis, Minnesota area and Providence, Rhode Island offices and following retirement served as the Executive Vice President and CFO of Green Tree Financial Corporation and the CFO of Caribou Coffee Company. Ed is a graduate of Notre Dame with a BBA in Finance and has a Juris Doctorate from Boston College and an LLM in taxation from Boston University School of Law. Stonehill Group, LLP is comprised of experienced business consultants skilled in finance, economics, accounting, management and the law. * Kenneth J. Severinson Named President of Stonehill Financial -------------------------------------------------------------- Kenneth J. Severinson has been named President of Stonehill Financial, LLC, a newly formed company which purchases under- performing debt of privately held troubled companies. Stonehill Financial purchases distressed debt in amounts from $5 to $50 million and is financed by Varde Partners, Inc., a Minnesota based firm that has invested over $2 Billion in non- performing and sub-performing loans. The Minneapolis- based Stonehill Group provides consulting services to companies facing unique and important issues with business and financial components, such as litigation, the sale or refinancing of the business, a major acquisition or insolvency issues. Over his thirty-five plus year career, Ken has gained a significant background in acquisitions, start-ups, turnarounds, IPO's and public and private financings of large and small companies. Ken led numerous companies as Director, CEO, President, COO and/or CFO following his nine-year tenure as a CPA with Arthur Andersen & Co. During his almost twenty years of affiliation with Irwin L. Jacobs, he gained truly unique and remarkable experience managing companies, turning companies around, leading companies through Chapter 11, performing due diligence on countless potential target acquisitions, and actively selling countless companies and divisions. In addition, he was the COO of a $40 plus million private equity fund investing in financial services companies. Ken is a graduate of the University of North Dakota with a degree in Business Administration. Stonehill Group, LLP is comprised of experienced business consultants skilled in finance, economics, accounting, management and the law. * Stonehill Group LLC Forms $50-Million Distressed Debt Fund ------------------------------------------------------------ Stonehill Group, LLP has formed Stonehill Financial, LLC to purchase under-performing loan obligations of privately held troubled companies. Stonehill Financial is financed by Varde Partners, Inc., a Minnesota based firm which has invested over $2 billion in non-performing and sub-performing debt. Donald C. Swenson, a founding partner of Stonehill Group and Chairman of Stonehill Financial stated, "We are pleased that Edward L. Finn, a former managing partner of Ernst & Young and CFO of Greentree Financial and Caribou Coffee, has joined Stonehill Financial as our CEO. We will be acquiring under- performing loans from financial institutions. We will work with the borrower to restructure its financing and may provide additional financing, without the owners having to sell or dilute equity ownership, if we believe the company has a viable turnaround plan and a strong management team." Stonehill Group, LLP is comprised of experienced business consultants skilled in finance, economics, accounting, management and the law and provides services to companies facing unique and important issues with business and financial components, such as litigation, the sale or refinancing of the business, a major acquisition and insolvency issues. Varde Partners, Inc., was founded in 1993 and specializes in acquiring non- performing and sub-performing debt. * Steel Industry Urges Gov't to Keep Steel Program in Place ----------------------------------------------------------- Marking one year since President Bush initiated a steel 201 tariff program to respond to serious import injury, the U.S. steel industry issued a Progress Report showing the program is succeeding and that the industry is starting to turn the corner. At the same time, the Report stressed that the task of meeting the President's goals is not yet complete and that it remains absolutely essential to keep the program in place for the intended, full three years. The Report further advises that it would be "an unconscionable national security risk to allow America to become significantly dependent on foreign steel sources ... especially in a time of war." "President Bush's steel tariffs are working, and the industry is just starting to turn the corner, but it is now more important than ever, given the recent deterioration in U.S. steel market conditions and steel's essential role in national security, that the President stay the course." "The tariffs must be allowed to run for the full three-year term; there must be no unwarranted 201 product exclusions; surges from developing countries must be curtailed; and the Administration needs to focus even greater attention on the multilateral aspects of the President's Steel Program -- ending steel subsidies and other trade distorting practices, and eliminating inefficient and excess steel capacity worldwide," the Report states. The Report credits the President's steel program for enabling the most significant restructuring and consolidation in the domestic steel industry in decades to occur. Some examples that the Report highlights, include: * Bethlehem Steel is purchased by International Steel Group, a deal that could bring Bethlehem out of bankruptcy and create the nation's largest steel maker. Earlier this year, ISG acquired LTV Corporation, and later Acme Steel, which had ceased operations. Wilbur Ross, Chairman of W.L. Ross, which purchased LTV steel, identified "strong relief under Section 201" as one of the reasons he believes ISG will be successful. * U.S. Steel and AK Steel are both vying to acquire National Steel. Either way, it represents a dramatic consolidation underway within the industry. * Nucor Corporation acquires of Birmingham Steel's assets (involving Birmingham's mills in Alabama, Illinois, Mississippi and Washington). The transaction was completed on December 9, 2002. * In July 2002, Nucor purchased the assets of Trico Steel Company in Decatur, Alabama, increasing its sheet production capacity by 30 percent. The facility, now known as Nucor Steel Decatur, successfully produced its first heat and cast its first slabs the week of September 16 -- less than 60 days from closing of the acquisition. * In September 2002, Steel Dynamics Inc. (SDI) bought the Qualitech mill in Pittsboro, where it expects to begin producing steel bar by midyear. More recently, it agreed to buy the GalvPro II LLC galvanizing facility in Jeffersonville, Ind. SDI is seeing improved profitability as a result of the President's program. * In August, Gerdau SA North American announced an agreement to acquire Co-Steel's assets in an all-stock transaction that will be accounted for as a "reverse take-over." The combined entity, Gerdau AmeriSteel Corporation, is now the second largest North American mini-mill steel producer, with 11 mill locations. * On August 16, 2002, Republic Engineered Products LLC formally announced its launch with the completion of the purchase of select operating assets from Republic Technologies International LLC. RTI had filed for Chapter 11 bankruptcy in April 2001. The new REP operates six North American facilities and employs 2,500 workers, and remains the leading U.S. supplier of special bar quality steel. Sustained 201-import relief has been essential to REP's reorganization and consolidation. The Report also notes that the impact of relief on steel users has been modest. Prices today, despite some recovery, are still below their 20-year average and for most manufacturers of steel- containing products, steel represents only a tiny portion of their costs. There has been no evidence of added costs to the end consumers as auto and appliance prices declined over the last year (2002). "The ready availability of quality domestic steel products is not an issue," the Report states. "Adequate steel supply exists and is being maintained." The Report also points out that tariffs do not prevent steel products from entering the U.S. market, noting that imports of many finished products were, in fact, up substantially in 2002, compared to the year before, ever after the tariffs were put in place. It also cites data showing that steel prices in the U.S. are now lower than they are in many markets around the world. In the case of China, for example, U.S. steel prices are lower by up to $70 per ton, the Report notes. "The U.S. steel industry's domestic customer base will benefit long-term from having a strong and viable domestic steel supplier base," the Report maintains. "While import relief is not unduly harming steel users, it is absolutely essential to steel producers. Import relief is an essential component of President Bush's steel plan because it is stimulating global talks to reduce steel capacity and giving the domestic industry the time to make the critical decisions about investment, restructuring and consolidation that can lead to long-term health and competitiveness." A more complete list of examples of consolidation and restructuring in the U.S. steel industry can be found in "U.S. Steel Industry Progress Report, The President's Steel Program," at http://www.steel.orgthe Web site of the American Iron and Steel Institute (AISI). AISI is a non-profit association of North American companies engaged in the iron and steel industry. The Institute serves as the voice of the North American steel industry, speaking out on behalf of its members in the public policy arena and advancing the case for steel in the marketplace as the preferred material of choice. AISI also plays a lead role in the development and application of new steels and steelmaking technology. AISI is comprised of 32 member companies, including integrated and electric furnace steelmakers, and 144 associate and affiliate members who are suppliers to or customers of the steel industry. For more news about steel and its applications, view AISI's Web site at http://www.steel.org * USWA Supports Two More Years of Steel Tariffs ----------------------------------------------- Leo W. Gerard, President of the United Steelworkers of America (USWA) said that the steel tariffs imposed by the Bush Administration are helping the union's efforts to bring about the consolidation among several distressed American steel companies, despite numerous exemptions that have limited the tariffs to only five percent of steel being consumed in the U.S. "Without continuation of a full range of tariffs for another two years," Gerard said on the first anniversary of the tariff decision, "industry restructuring will fail, steelworker jobs, families, and communities will be hung out to dry, plus national security will be put at greater risk. "USWA-represented steelworkers and retirees are shouldering a huge burden of the restructuring that's already taken place," he added, citing the nearly 200,000 Steelworker retirees and their dependents who have lost their health care benefits as a result of 17 steel company liquidations. Last month's ratification by steelworkers of an innovative labor agreement with the newly-created International Steel Group (ISG) established industry- leading wages and a defined benefit pension, as well as achieving a first-ever benefit trust to provide a measure of health care relief for retirees of ISG's predecessor companies -- LTV Steel and Acme Steel. "Without the tariffs," Gerard said, "it's unlikely that we could have made so much progress toward consolidation. "Yet we're only in the early stages of rebuilding a globally competitive industry," he added. "The additional two years of tariffs will be essential for securing ISG's future as the buyer of Bethlehem, just as it will for whichever company buys National Steel." Both AK Steel and US Steel are vying for ownership of National. Gerard noted that import volume is increasing, prices are falling, and the second and third years of the tariffs are being applied at reduced duty levels that will substantially challenge the continued progress toward consolidation and the fragile security of American steelworkers. "Besides that," he added, "the Administration continues to oppose policies that would provide health care benefits to the 200,000 retired steelworkers, dependents and surviving spouses whose health benefits have been wiped out by unfair trade. And tens of thousands of additional retirees' healthcare benefits are in jeopardy among the more than 30 steel companies still in bankruptcy. "We need emergency funding of replacement healthcare benefits for these retirees. Otherwise we're going to look back on the tariffs as half-way measures that failed those who needed help most and were left with nothing to show but heartache for the decades of hard work they gave to building this country." * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 13.25 - 14.25 -0.75 Finova Group 7.5% due 2009 33.0 - 35.0 -0.5 Freeport-McMoran 7.5% due 2006 96.0 - 97.0 +1.5 Global Crossing Hldgs 9.5% due 2009 2.5 - 3.0 -1.0 Globalstar 11.375% due 2004 5.0 - 6.0 -1.0 Lucent Technologies 6.45% due 2029 56.5 - 57.5 +1.5 Polaroid Corporation 6.75% due 2002 6.5 - 7.5 -0.25 Terra Industries 10.5% due 2005 85.0 - 88.0 -3.0 Westpoint Stevens 7.875% due 2005 30.0 - 32.0 -4.0 Xerox Corporation 8.0% due 2027 67.0 - 69.0 +2.0 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 ********* 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 ***