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/raid1/www/Hosts/bankrupt/TCR_Public/030513.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, May 13, 2003, Vol. 7, No. 93 Headlines ACTERNA CORP: Enters New Partnership Pact with AM Communications ACTERNA: Wants to Honor $3.3MM of Critical Trade Vendor Claims ADVANCED ACCESSORY: S&P Ratchets Corp. Credit Rating Up a Notch AES CORP: Completes $1.8 Billion Private Placement Transaction AIR CANADA: Pilots' Group Offering 10% Wage Reduction AIR CANADA: Judge Farley Appoints Facilitator for Negotiations AIR CANADA: Judge Farley OKs $700 Mill. CCAA Financing Facility AIRGAS INC: Completes Acquisition of Delta Safety Supply Inc. AIRPLANES P-T: Fitch Downgrades Various Note Classes' Ratings AMERCO: Court Dismisses Five Shareholder Derivative Lawsuits APPLIED DIGITAL: Inks Purchase Pacts to Sell 25 Million Shares ARMSTRONG HOLDINGS: Reports Weaker Results for First Quarter ARMSTRONG HOLDINGS: Commences Soliciting Proxy Votes for Plan AVCORP INDUSTRIES: Negotiating Private Placement to Raise $4.5MM BAYOU STEEL: Hiring Gordon Arata as General Litigation Counsel BOOTS & COOTS: Sets Annual Shareholders' Meeting for August 19 BRIDGES.COM INC: Continues to Implement Restructuring as Planned CAM CBO I LTD: Fitch Slashes $21MM Class B Notes Rating to BB- CARECENTRIC INC: March 31 Balance Sheet Upside-Down by $15 Mill. CEDARA SOFTWARE: Regains Compliance with Nasdaq Listing Criteria CENTRAL PARKING: S&P Concerned about Weak Operating Performance CKE RESTAURANTS: Annual Shareholders' Meeting Slated for June 17 CLARION TECHNOLOGIES: Reports Improved Results for First Quarter COMDIAL CORP: March 31 Balance Sheet Upside-Down by about $1MM CONSECO FINANCE: Moody's Affirms & Further Junks Note Ratings CWMBS (INDYMAC): Fitch Affirms Two Class B-3 Notes at B/BB DAISYTEK INT'L: Appoints Eric T. Logan as Interim CFO DIRECTV: Judge Walks Approves Protiviti's Engagement as Auditors ENCOMPASS SERVICES: Wants to Pay $1.2MM Wellspring Break-Up Fee ENRON CORP: Board Votes to Create New International Company ENRON CORP: ENA Sues Macromedia & NJMGI to Recover $12 Million ENVIRONMENTAL SOLUTIONS: Red Ink Flows in First Fiscal Quarter EXIDE TECHNOLOGIES: Wins New Supply Pact from Dazon Motorcycles FAIRCHILD CORP: Seeking New Financing to Pursue New Acquisitions FLEMING COS.: Wants More Time to File Schedules and Statements FOOTMAXX HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $12.6MM FOSTER WHEELER: March 28 Net Capital Deficit Widens to $801 Mil. GREY WOLF: S&P Rates $150-Million Senior Unsecured Notes at B+ HALSEY PHARMACEUTICALS: Narrows Net Capital Deficit to $12 Mill. HAWAIIAN AIRLINES: No Immediate Decision on Chapter 11 Trustee HAYES LEMMERZ: Court Confirms Modified Plan of Reorganization HECLA MINING: Phillips S. Baker Jr. Replaces Arthur Brown as CEO HUNTSMAN INT'L: Jon M. Huntsman Buys Out Minority Interests HYWY CORP: Plans Corporate Workout and Will Pursue New Options I2 TECH: Teams-Up with Optimal for Integration Service Offerings INTERDENT INC: Files for Prepackaged Chapter 11 Reorganization INTERDENT INC: Case Summary & 3 Largest Unsecured Creditors INT'L FIBERCOM: Hires FTI to Replace PwC as Financial Advisors IRVINE SENSORS: Deficit & Losses Raise Going Concern Doubts IRVINE SENSORS: Files Registration Statement for 1.9MM Shares KASPER ASL: Has Until June 30 to Make Lease-Related Decisions KEY3MEDIA GROUP: Court Approves Proposed Disclosure Statement LAIDLAW INC: Offering $400 Million of Senior Notes to Investors LEVI STRAUSS: More Than 92% of Outstanding 6.80% Notes Tendered LODGENET: Wellington Management Discloses 13.24% Equity Stake MADISON RIVER TELEPHONE: Loss in Access Lines Spurs Neg. Outlook MAGELLAN HEALTH: Wants to Sell New Mexico Property for $1.8 Mil. MAGNATRAX CORP: Files for Chapter 11 Reorganization in Delaware MAGNATRAX CORP: Case Summary & 30 Largest Unsecured Creditors MALLARD CABLEVISION: Case Summary & Largest Unsecured Creditors MANITOWOC CO.: Will Padlock National Crane Facility by Year-End MISSION RESOURCES: Will Appeal Nasdaq Delisting Determination NATIONAL CENTURY: Proposes Medshares Sale Bidding Procedures NAVIGATOR GAS: Gets Court Nod to Hire Leaf Saltzman as Auditors NAVISTAR INT'L: Schedules Conference Cal Web Cast for Thursday NEENAH FOUNDRY: Moody's Hatchets Ratings over Limited Cash Flow NQL DRILLING: Dec. 31 Working Capital Deficit Tops $17 Million OMNOVA: Fitch Rates New Notes & Debt Facility at BB/BB+ OMNOVA SOLUTIONS: Fitch Puts BB+ Rating Outlook on Watch Neg. PAC-WEST: CPUC Votes on New Interconnection Agreement with SBC POLYPHALT: Discussing Likely Default Under Grandwin Credit Pact PRESTOLITE: S&P Keeps Watch on Low-B Ratings over Potential Sale PROTECTION ONE: Dr. Gene A. Budig Resigns from Company's Board RIVERWOOD INT'L: Invests $75M to Enhance Technology & Production SIEBEL SYSTEMS: Conducts Internal Review of Executive Statements SIX FLAGS INC: Completes Tender Offer for 10% Senior Disc. Notes SPECIAL METALS: Files Reorganization Plan in Lexington, Kentucky STRUCTURED ASSET: Fitch Takes Rating Actions on Various Classes TDZ HOLDINGS: Narrows Net Loss to $1 Million for Full-Year 2002 TEXAS PETROCHEMICALS: S&P Junks Corporate Credit Rating at CCC+ TRICO MARINE: Elects J. Landis Martin to Expanded Company Board TWINLAB CORP: Hosting First-Quarter Webcast Today U.S. INDUSTRIES: Files Amended Form 10Q for Period Ended Mar. 29 WARNACO: Strikes Stipulation Partially Allowing Schwartz Claim WERNER HOLDING: S&P Affirms B+ Credit Rating with Stable Outlook WESTAR ENERGY: Directors Frank J. Becker & Gene A. Budig Resign WHEREHOUSE ENTERTAINMENT: Committee Gets Nod to Hire Pachulski WORLDCOM INC: Intends to Assume ICG Remote Access Service Deal * Large Companies with Insolvent Balance Sheets ********* ACTERNA CORP: Enters New Partnership Pact with AM Communications ---------------------------------------------------------------- Acterna, the world's leading provider of cable network test and management solutions (OTCBB:ACTR.OB), entered into a new partnership with AM Communications, Inc. (OTC Bulletin Board:AMCM) to integrate Acterna's DSAM-2500 Digital Service Activation Meter, a TechSync-enabled solution, with AM Communications' family of network operations support systems. This integration of Acterna's advanced line of test and measurement products with AM's software-driven monitoring and management systems provides field technicians with access to information from back-office network management applications without any additional involvement from dispatch or network operations center personnel. The integrated systems will be on view at the SCTE Cable-Tec Expo in Philadelphia, May 12-14, at Acterna's booth (1161) and also at AM Communications' booth (2245). "Retrieving status information from the field has just been streamlined," said Bruce Hembree, Vice President of Workflow Solutions for Acterna. "By communicating with AM's Broadband Operations Software Solutions (BOSS) and Fulfillment Operations Support Systems (FOSS) via the DSAM's built-in web browser over the existing DOCSIS infrastructure, field technicians will have more insight into the status of their network. They'll be able to access critical information that will help them to perform their installation, maintenance and troubleshooting assignments more efficiently than ever before possible. This translates not only into time savings for a mobile field workforce, but gains in network availability and improved subscriber satisfaction by having access to the right information at the right time." Joe Rocci, Group Vice President of AM's Broadband Products Division, added, "It has long been our vision that the functions of test and measurement, network monitoring and workforce management all need to become parts of a seamless fabric of integrated network operations systems. By leveraging the computing power of advanced instruments like Acterna's DSAM, we are providing the technical workforce with a single portable device that is a universal measurement instrument, a dispatch management terminal and a general-purpose data terminal to access information from virtually any back-office software system. When field technicians are empowered with this kind of information, they will be able to perform their services better, faster and more efficiently than ever before." Acterna's new TechSync family of workforce management solutions reduces the costs associated with installing, troubleshooting and managing cable services. Implemented on the Acterna DSAM family of test instruments for the cable industry, TechSync solutions provide technicians with immediate, interactive access to back-office systems over existing, paid-for channels, as well as test applications and other Acterna systems. Acterna offers specific solutions that not only include the hardware but the software for providing specific applications that connect systems to field technicians. Open and customizable, TechSync solutions enable operators to control the information passed to the field in accordance with their own workforce management philosophies. TechSync solutions transform test equipment into multifunctional devices that automate advanced services testing, reduce capital expenditures and eliminate costly rework. As a result, technicians can perform more work faster with less cost and greater subscriber satisfaction. The DSAM-2500 is Acterna's newest meter used by installers and service technicians to test networks that carry DOCSIS, DTV, analog TV and VoIP services. The DSAM performs both traditional physical layer signal level tests and advanced IP and digital performance tests. With the integration of workforce management functions in the DSAM-2500, along with the entire suite of Acterna's TechSync Solutions, the meter will be transformed into a multifunctional device--a test instrument for advanced services as well as a mobile communications unit. AM Communications BOSS family of operations support solutions is a modular, scaleable and cost-effective set of software components that is intended to streamline the cable TV field workforce by correlating data from disparate back-office systems and providing useful decision information. BOSS analyzes data from billing, provisioning, mapping and monitoring systems in order to help network management personnel identify problems before they turn into outages and quickly pinpoint the root-cause and location of outages when they do occur. BOSS, in conjunction with AM Communications' OmniStat(TM) network status monitoring system, and with AM's FOSS product, provides Cable TV network operators with an integrated, end-to- end network and field workforce management solution that interfaces with a choice of wired and wireless personal productivity terminals. Acterna is the world's leading provider of integrated network test and management solutions for global cable networks. Acterna's cable networks portfolio enables cable operators to meet demand and enhance the reliability and performance of their networks and services. Deployed around the world, Acterna's cable systems, software and instruments comprise the industry's broadest set of products that support cable operators through the network life cycle, from building the network to deploying and managing advanced services. Acterna filed for Chapter 11 protection under the federal bankruptcy laws on May 6, 2003, (Bankr. S.D. New York Case No. 03-12837). Michael F. Walsh, Esq. Paul M. Basta, Esq., at WEIL, GOTSHAL & MANGES LLP represents the Company in these proceedings. AM Communications, Inc., located in Quakertown, Pennsylvania, is a leading supplier of software-driven network reliability solutions for HFC broadband network enterprises. AM's advanced systems and service offerings employ leading-edge technologies that embody the company's 25+ years of HFC experience and expertise. Through its exclusive and strategic relationship with Network Systems and Technologies (P) Ltd. (NeST), AM has access to a skilled manpower pool of over 400 software and hardware engineers as well as 2000 operations support personnel. AM's world-class Quality credentials include ISO9001 for engineering, business, and operations procedures, as well as CMM Level 5 for software development. ACTERNA: Wants to Honor $3.3MM of Critical Trade Vendor Claims -------------------------------------------------------------- Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that Acterna Corp., and its debtor-affiliates' revenues are derived from meeting customer demands for numerous small, semi-customized orders placed to fill precise needs. Hence, the Debtors have developed a strong vendor base positioned to meet the rapidly changing demands of their customers, while adhering to high quality standards. The Debtors are highly dependent on this vendor base and have become more so over the last two years after reducing their workforce by 2,700 employees, or over 45% of their then-existing workforce. The Debtors rely on their suppliers to provide complex sub-assemblies and other semi- customized electronics and connectors, which in turn are used to fulfill customer orders. In certain cases, the Debtors rely on the suppliers to manufacture entire product lines and to ship finished goods directly to their customers. As a result of this reliance, the materials comprise a significant majority of the Debtors' cost of goods sold. The uninterrupted provision of goods and services by the Critical Vendors, on customary terms, and the continuing support of their customers, are imperative to the Debtors' ongoing operations and viability. Especially, Mr. Basta points out that several of the Debtors' largest vendors manufacture entire product lines for them and ship the finished goods directly to the customers. Accordingly, the Debtors sought and obtained the Court's authority to pay, in their discretion, prepetition, fixed, liquidated, and undisputed Critical Vendor claims. The Debtors estimate these Claims to aggregate $3,300,000. The Debtors' Critical Vendors generally comprise three categories: (i) outsourcing manufacturing relationships; (ii) single source and specifically manufactured goods; and (iii) integrated suppliers. If a Critical Vendor later refuses to continue to supply goods on the customary trade terms applicable within the 180-day period before the Petition Date, the Debtors may, in their discretion, and without further Court order, declare that: -- the payment of such Critical Vendor Claim a voidable postpetition transfer pursuant to Section 549(a) of the Bankruptcy Code and that the Debtors may recover from the Critical Vendor in cash or in goods; and -- the Critical Vendor will immediately return the Claim payment without giving effect to alleged set-off rights, recoupment rights, adjustments, or any offsets and that Critical Vendor Claim will be reinstated so as to restore the Debtors and the Critical Vendor to their original positions as if the Vendor Agreement had never been entered into and the payment of the Critical Vendor Claim had not been made. To ensure that the Critical Vendors will transact business with them on Customary Trade Terms, the Debtors will enter into a letter agreement with each of the Critical Vendors that includes these commitments: (a) an agreement to provide goods or services on Customary Trade Terms; (b) a waiver of any general unsecured claim; and (c) the repayment of any amounts with respect to the Critical Vendor Claims to the extent that the Critical Vendor fails to maintain the Customary Trade Terms during the pendency of the Debtors' Chapter 11 cases. Some of the Critical Vendors may have obtained mechanics' liens, possessory liens, or similar state law trade liens on the Debtors' assets, based on the Critical Vendor Claims being held. In this regard, the Debtors will require a Critical Vendor, as a further condition of receiving the payment, to take whatever action is necessary to remove the Trade Lien at that Critical Vendor's sole cost and expense. (Acterna Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) ADVANCED ACCESSORY: S&P Ratchets Corp. Credit Rating Up a Notch --------------------------------------------------------------- Standard & Poor's Rating Services raised its corporate credit rating on Advanced Accessory Systems LLC to 'B+' from 'B' and removed the rating from CreditWatch where it had been placed on April 18, 2003. The outlook is stable. At the same time, Standard & Poor's assigned its 'B-' rating to AAS' proposed offering of $150 million senior unsecured notes due in 2011 (144A with registration rights), which are being offered to refinance bank debt incurred in the purchase of AAS by investment group Castle Harlan Partners Inc. on April 15, 2003. "The upgrade reflects the new capital structure of AAS and expectations for financial performance under the new owners," said Standard & Poor's credit analyst Nancy Messer. Sterling Heights, Michigan-based AAS is a global producer of towing and rack systems for the original equipment and aftermarket segments of the automotive industry. The company will have long-term debt of about $176 million after the notes issuance. The co-issuers of the notes will be AAS and AAS Capital Corp., a wholly owned subsidiary of AAS having no material assets and conducting no business. The proposed senior unsecured notes will be subordinated to all existing and future secured debt including AAS' existing credit facility. The notes will rank pari passu with existing and future unsecured senior debt and be senior to all existing and future subordinated debt. The parent company of AAS and each of its material domestic subsidiaries will jointly and severally guarantee the notes with unconditional guarantees. AES CORP: Completes $1.8 Billion Private Placement Transaction -------------------------------------------------------------- The AES Corporation (NYSE:AES) has completed its private offering of $1.8 billion of second priority senior secured notes. The notes were issued in two tranches: $1.2 billion of 8.75% Second Priority Senior Secured Notes due 2013 and $600 million of 9.00% Second Priority Senior Secured Notes due 2015. AES also announced that the tender offer for its senior subordinated notes had expired and that it had purchased approximately $104 million face amount of senior subordinated notes pursuant to the tender offer. The proceeds from the private offering were used to purchase the senior subordinated notes in the tender offer and to repay $475 million under AES's senior secured credit facilities, and will also be used to purchase approximately $1.1 billion face amount of senior notes in the tender offer and for general corporate purposes. The transactions substantially eliminate all scheduled parent maturities at AES until 2005, improve financial flexibility and parent liquidity, and lengthen the average life of AES's parent debt maturities. Barry Sharp, Chief Financial Officer, stated, "The completion of these transactions is another major step in AES's plan to strengthen the balance sheet, improve financial flexibility and increase liquidity. We sincerely appreciate the support and the confidence expressed by our lenders and investors." AES is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 158 facilities totaling over 55 gigawatts of capacity, in 28 countries. AES's electricity distribution network sells 108,000 gigawatt hours per year to over 16 million end-use customers. As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'B+' rating to the AES Corp.'s $1 billion second priority senior secured notes due 2013. Proceeds from the notes would be used to repay $475 million of AES' senior secured bank facility, to fund an open-market tender for outstanding bonds, and to fund up to $250 million for general corporate purposes. AES Corporation's 10.250% bonds due 2006 (AES06USR1) are trading at about 97 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AES06USR1for real-time bond pricing. AIR CANADA: Pilots' Group Offering 10% Wage Reduction ----------------------------------------------------- The Air Canada Pilots Association announced that they are offering Air Canada a 10 per cent wage reduction for the months of June and July, 2003. The wage reduction is subject to ratification by the membership, in a vote which is expected to be completed by May 23rd. Captain Don Johnson, President of ACPA, said that: "The Air Canada pilots recognize the gravity of our company's financial situation, and we are willing to make an immediate contribution to help alleviate current cash flow pressures." Captain Johnson noted that ACPA is pressing the federal government to help find ways of easing financial burdens on the airline industry, including funding security from consolidated revenues, suspending airport rental fees for two years and passing the savings on to the airlines, and a reduction or elimination of the federal aviation fuel excise taxes. "However, we cannot go cap in hand asking for government assistance without being willing to do our own part," said Johnson. The pilots note that for the past 16 months they have already been operating under a work sharing programme that reduced flying hours and has produced a substantial savings to the company. The Air Canada pilots will return to their established wage scales in August, unless they are superseded by any further agreement that may come out of restructuring negotiations under the Companies' Creditors Arrangement Act (CCAA). The pilots expect negotiations with the company under the CCAA will begin early next week. "The Air Canada Pilots Association is committed to work with all parties and stakeholders to see this company through to a successful resolution of the restructuring process," said Johnson. "We make this commitment because we know that the pilots have a direct interest in the future of Air Canada... as do all employees, other stakeholders and the communities we serve." The Air Canada Pilots Association is the largest professional pilot group in Canada, representing the approximately 3300 pilots who operate Air Canada's mainline fleet. AIR CANADA: Judge Farley Appoints Facilitator for Negotiations -------------------------------------------------------------- Ernst & Young Inc., Court-Appointed Monitor in the Air Canada Companies' Creditors Arrangement Act proceedings, advises that the presiding judge, the Honourable Mr. Justice Farley, has directed and ordered that Air Canada, Jazz, Zip and their respective unions commence meetings on May 12, 2003 with Honourable Mr. Justice Warren Winkler as Facilitator. The Notice from Mr. Justice Farley states: "I continue to be concerned that the maximum effort be made by all parties to see if a resolution to an Air Canada restructuring can be made. I note that all stakeholders at the April 22nd hearing agreed that they preferred a solution involving a result whereby Air Canada was a viable entity under foreseeable circumstances in the long run for the benefit of all concerned. In that regard, the Court, given these special circumstances prevailing here, finds it appropriate to take an extraordinary step. I am therefore directing and ordering management of Air Canada and its constituent unions to commence meeting with Mr. Justice Warren Winkler in an effort to settle the remaining issues among them so that they may mutually come to a resolution which will allow them to operate as a cohesive team, with trust and respect flowing both ways. It is important that management and the unions come to a coordinated approach as to how to make Air Canada competitive with maximum efficiency and productivity while at the same time minimizing disruption and other detrimental effects. A resolution in this regard will provide a stabilized foundation to build upon with respect to the other elements of the restructuring. Justice Winkler, in a facilitation function akin to Court annexed ADR (alternative dispute resolution), will be working to a practical deadline of May 21, 2003. Of course, an earlier resolution would be most welcome. Given the special circumstances of the importance of Air Canada to the societal and economic needs of Canada domestically and internationally, I have determined that it would be appropriate to involve Justice Winkler in this facilitation role." AIR CANADA: Judge Farley OKs $700 Mill. CCAA Financing Facility --------------------------------------------------------------- Mr. Justice Farley approved US$700,000,000 CCAA Financing Facility backed by General Electric Capital Canada Inc. to providing continued working capital financing to Air Canada during the court-supervised restructuring process. The CCAA financing transaction closed on April 30, 2003 upon the completion of a definitive loan and security documentation between the parties. * * * Backgrounder Air Canada intends to remain in possession and control of its assets and business during the course of the CCAA Proceeding. To finance the carrier's on-going working capital needs, General Electric Capital Canada Inc. offered to provide up to US$700,000,000 of senior secured financing to the Applicants, subject to the terms and conditions of a commitment letter dated on April 1, 2003. Prior to the CCAA Petition Date, the Applicants turned to GE Capital Canada for help bridging a potential liquidity shortfall for the period from April 1 through May 2, 2003. Air Canada projected that its cash disbursements would exceed cash receipts by more than C$350,000,000 during this period. In addition to C$375,000,000 of unrestricted cash on hand, the CCAA financing will provide adequate liquidity to meet all of the Applicants' anticipated needs to continue normal operations throughout the CCAA process. CCAA Financing Facility The CCAA Financing Term Sheet among Air Canada, as borrower, GE Capital as Administrative and Collateral Agent, for itself and a potential syndicate of other lenders, provides funds in two stages: * a Tranche A revolving term credit facility in a principal amount not to exceed US$300,000,000 (including a Letter of Credit Sub-Facility in an amount to be determined) and * a Tranche B non-revolving term loan facility in a principal amount of up to US$400,000,000. The CCAA Facility provides Air Canada with working capital financing until the earliest of October 1, 2004, and the effective date of a plan of arrangement in the CCAA Proceeding. Tranche A Revolver Availability The availability of the Tranche A Facility is subject to the maintenance of a maximum loan to to-be-negotiated collateral ratio that based on the sum of: * the orderly liquidation value of the Applicants' aircraft; * the fair market value of the Applicants' fee simple real estate; and * the orderly liquidation value of the Applicants' equipment. The value of the collateral will be determined by GE Capital Aviation Services, Inc. or another appraiser acceptable to GE Capital. The face amount of all letters of credit issued under the Letter of Credit Sub-facility will constitute a loan for purposes of the loan to collateral ratio. Tranche B Term Loan Availability The outstanding amount of the Tranche B Facility will be subject to the maintenance of maximum loan to to-be-determined collateral ratios. For the purposes of those ratios, the collateral will include Applicants' accounts receivable and Spare Parts inventory. GECAS or another appraiser acceptable GE Capital will determine the collateral's value. GE Capital or an outside auditor will determine the value of the receivables. Borrowing and Interest Options At Air Canada's option, the Tranche A Facility and the Tranche B Facility will be available: (A) in U.S. dollars: (i) at a floating rate equal to the US$ Index Rate plus the Applicable US$ Index Margin; or (ii) absent a default, a 1, 2 or 3-month LIBOR Rate plus the Applicable LIBOR Margin; or (B) in Canadian dollars at: (i) a floating rate equal to the Cdn.$ Index Rate plus the Applicable Cdn.$ Index Margin; or (ii) absent a default, a 30, 60 or 90 day BA Rate plus the Applicable BA Margin. -- "LIBOR Rate" will be the rate per annum equal to the offered rate for deposits in U.S. dollars for the applicable interest period that appears on Telerate Page 3750 as of 11:00 a.m. (London time) two Eurodollar business days before the beginning of the interest period. Interest on LIBOR loans will be payable and adjusted at the end of each applicable LIBOR period. LIBOR breakage fees and borrowing mechanics will be provided in the final CCAA Facility documents. -- "US$ Index Rate" will be the higher of (i) the prime rate per annum as most recently reported in the "Money Rates" column of The Wall Street Journal or (ii) the overnight Federal funds rate per annum plus 50 basis points. Interest on US$ Index Rate loans will be payable monthly in arrears and will be adjusted as of each change in the US$ Index Rate. -- "BA Rate" will be the rate per annum determined by GE Capital Canada by reference to the average rate quoted on the Reuters Monitor Screen Page CDOR (displaying Canadian interbank bid rates for Canadian dollar bankers' acceptances) applicable to bankers' acceptances for the applicable term as of 11:00 a.m. (Toronto time) two business days before the beginning of the term. Intserest on BA Rate loans will be payable at the end of each applicable BA period. BA Rate loan breakage fees and borrowing mechanics will be set forth in the final CCAA Facility documents. -- "Cdn.$ Index Rate" will be defined as the higher of (i) the annual rate of interest quoted from time to time in the "Report on Business" section of The Globe and Mail as being "Canadian prime", "chartered bank prime rate" or words of similar description and (ii) the BA Rate in respect of a BA period for 30 days, plus, 1.75%. Interest on Cdn.$ Index Rate loans will be payable monthly in arrears and will be adjusted as of each change in the Cdn.$ Index Rate. All interest and fees will be calculated on the basis of a 360- day year and actual days elapsed. These margins will apply so long as any loan remains outstanding: * Applicable US$ Index Margin 5.0% * Applicable LIBOR Margin 6.5% * Applicable Cdn.$ Index Margin 5.0% * Applicable BA Margin 6.5% * Applicable L/C Margin 4.0% * Applicable Unused Facility Fee Margin: Aggregate Unused Tranche A Applicable Unused Facility Level Facility Fee Margin ---------------- ------------------- at most US$100,000,000 0.50% greater than US$100,000,000 0.75% and at most US$200,000,000 at least US$200,000,000 1.00% CCAA Financing Fees The CCAA Financing Facility requires Air Canada to pay a variety of fees: 1. US$5,000,000 Commitment Fee The Commitment Fee will be due and payable to GE Capital Canada in U.S. dollars upon Air Canada's acceptance of the Commitment Letter. The Commitment Fee will be fully earned and non-refundable when due and payable. 2. US$35,000,000 Closing Fee The Closing Fee will be due and payable to GE Capital Canada in U.S. dollars at the time that the conditions precedent to the Tranche B Facility have been satisfied and the Tranche B Facility is available for usage. The Closing Fee will be fully earned and non-refundable when due and payable. 3. Letter of Credit Fee The L/C Fe is equal to the Applicable L/C Margin on the face amount of letters of credit. The L/C is payable to the Agent monthly in arrears, plus any charges assessed by the issuing bank. 4. Unused Facility Fee The Unused Facility Fee is equal to the Applicable Unused Facility Fee Margin on the average unused daily balance of the CCAA Facility, payable to Agent monthly in arrears. 5. US$500,000 Annual Collateral Monitoring Fee The Monitoring Fee will be payable to the Agent yearly in advance on the Closing and on the first anniversary date of the Closing. But if a plan of arrangement in the CCAA Proceeding becomes effective during the 12-month period in respect of which the Monitoring Fee has been paid, the Collateral Agent will refund -- by credit or payment -- the Monitoring Fee amount that has been paid based on the number of days in the year following the effective date of the plan. In the event of a default, all interest rates increase by 2%. Air Canada will also pay all out-of-pocket expenses incurred in connection with the Commitment Letter, prior communications, the CCAA Facility, and a field examination fee per person per diem plus actual out-of-pocket expenses in connection with the conduct of GE Capital Canada's field audit and the evaluation and documentation of the CCAA Facility. Air Canada has already paid GE Capital a non-refundable US$1,000,000 Underwriting Deposit. Events of default include, but are not be limited to: (i) the appointment of a receiver, interim receiver, receiver and manager or trustee in bankruptcy with powers to operate or manage any Applicant's affairs; (ii) the dismissal or conversion of CCAA Proceeding, or granting relief from the stay in favor of third parties except as contemplated by the definitive CCAA Facility documentation; (iii) a post-CCAA Proceeding judgment liability or event that will, in GE Capital Canada's judgment, significantly impair the Applicants' financial condition, operations, or ability to perform under the CCAA Facility or any CCAA Court or US Bankruptcy Court order; (iv) a threatened or actual seizure or detention of any aircraft by any airport or navigation authority or airline or airport-related servicer or other material property of the Applicants; (v) any violation or breach of any representation or warranty in any material respect, or covenant; or (vi) any amendment or modification of the CCAA Order that adversely affects GE Capital Canada's or the Lenders' rights without GE Capital Canada's prior consent. Security Subject only to a consensual C$10,000,000 first-priority Administrative Charge to cover legal and professional fees, Air Canada's obligations to repay all existing and future obligations under the CCAA Facility and under any agreements with GE Capital Aviation are secured by second-priority liens on all of the Applicants' unencumbered assets. In particular, GE Capital Canada, on behalf of itself and as Collateral Agent, the Lenders and GE Capital Aviation, on behalf of itself and the Lease Obligees, will receive a fully perfected first priority security interest in, and first ranking charge on, subject only to, in terms of priority, Permitted Liens, all of the existing and after acquired real and personal, tangible and intangible, property of the Applicants and their subsidiaries. The Permitted Liens include those liens created under the CCAA Order and the existing validly perfected liens granted by the Applicants before April 1, 2003. Air Canada's subsidiaries will guarantee its obligations. GE Capital Canada will receive a first ranking pledge of all of the issued and outstanding capital stock of each subsidiary and affiliate of the Applicants. GE Capital Canada will have the discretion to determine, as between the Tranche A Facility and the Tranche B Facility, the relative priorities of the Liens on the Collateral securing the facilities. If Air Canada receives from Canadian Imperial Bank of Commerce up to C$350,000,000 cash as a prepayment of CIBC's accounts payable for Aeroplan points with respect to the Aerogold feature of Aeroplan, and Air Canada grants CIBC a security interest in the revenues receivable for the 12 months under its agreements with CIBC regarding Aerogold and the licenses and trademarks CIBC used in connection with Aerogold, GE Capital Canada agrees that those revenues, licenses and trademarks will not be subject to the Lien. However, before receiving any cash from CIBC, Air Canada must provide GE Capital Canada with an updated advice from Solomon Smith Barney showing at least C$50,000,000 in increased annual revenue pursuant to Air Canada's amended agreements with CIBC regarding Aerogold. GE Capital also requires certain mandatory prepayments from the net proceeds of any sale or other disposition of any of the Applicants' assets and, subject to exceptions for repairs and replacements and satisfaction of prior-ranking liens and court- ordered charges, all net insurance proceeds or other awards payable in connection with the loss, destruction or condemnation of any of the Applicants' assets. (Air Canada Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) AIRGAS INC: Completes Acquisition of Delta Safety Supply Inc. ------------------------------------------------------------- Airgas, Inc. (NYSE:ARG) has completed the acquisition of Delta Safety Supply, Inc., with branches in Stockton and Santa Rosa, California. The acquired business is now part of Airgas Northern California & Nevada, headquartered in Sacramento, CA, one of 12 regional companies within Airgas. Airgas, Inc. (NYSE:ARG) is the largest U.S. distributor of industrial, medical and specialty gases, welding, safety and related products. Its integrated network of nearly 800 locations includes branches, retail stores, gas fill plants, specialty gas labs, production facilities and distribution centers. Airgas also distributes its products and services through eBusiness, catalog and telesales channels. Its national scale and strong local presence offer a competitive edge to its diversified customer base. For more information, please visit http://www.airgas.com As reported in Troubled Company Reporter's February 3, 2003 edition, Standard & Poor's Rating Services revised its outlook on packaged gas distributor Airgas Inc., to positive from stable based on expectations that the company's financial profile will continue to strengthen as economic conditions improve. Standard & Poor's said affirmed its 'BB' corporate credit rating on the Radnor, Pennsylvania-based company. AIRPLANES P-T: Fitch Downgrades Various Note Classes' Ratings ------------------------------------------------------------- Fitch Ratings has taken the following rating actions for Airplanes Pass Through Trust (Airplanes) as outlined below: -- Class A-6 notes are downgraded to 'BBB-' from 'A+'; -- Class A-8 notes are downgraded to 'BB' from 'A+'; -- Class A-9 notes are downgraded to 'BB' from 'A+'; -- Class B notes are downgraded to 'CCC' from 'BBB+'; -- Class C notes are downgraded to 'CCC' from 'B+'; -- Class D notes are downgraded to 'CC' from 'CCC'; -- All Classes are removed from Rating Watch Negative. The downgrades reflect Fitch's expectation that Airplanes' aircraft lease cash flows will likely suffer further impairment, with little probability of future recovery. In addition, such depressed levels of cash flow are not expected to be sufficient to pay interest on the class B, C and D notes less than one year from now. The difference in the A-6 rating and the A-8/A-9 ratings primarily reflects Fitch's expectation that the likelihood of A-6 principal repayment is higher than for the A-8 and A-9 classes. Airplanes originally issued $4,048 million of notes in March 1996 followed by two refinancing trusts, one in March 1998 and the other in March 2001. As of April 2003, Airplanes has $2,624 million of notes outstanding. Airplanes is a trust formed to conduct limited activities, including the buying, owning, leasing and selling of commercial jet aircraft. Airplanes current portfolio is comprised of 178 aircraft compared to 193 at the time of the 2001 refinancing trust. Primary servicing is being performed by General Electric Capital Aviation Services, GECAS (a wholly owned subsidiary of General Electric Capital Corp.), while the administrative agent role is being performed by debis AirFinance, 45% owned by a subsidiary of DaimlerChrysler and 55% by four German banks. The ability of Airplanes and many aircraft lessors to generate lease cash flows has been impaired by depressed lease rates. These rates are primarily the result of weak air travel markets, resulting from the events of September 11th and the downturn in the global economy. The continued depressed demand for many aircraft types will likely further impair lease rates, especially those of certain older Boeing and McDonnell Douglas aircraft. Airplanes lease cash flows have already been affected by its concentrated exposure to some of these aircraft, including B737 classics and the MD80 series. Airplanes lease cash flows have fallen about one third from September 2001 levels and as of April 2003 were at about $24 million. In the next 12-18 months Fitch expects lease cash flows to fall another 20% as lease renewals in 2003 and in 2004 will be subject to falling lease rates. Under Fitch's current cash flow stress scenarios, the class A-6 notes are repaid in less than 24 months while the A-8 and A-9 notes are repaid in a time period greater than 5 years. The repayment gaps between the class A notes can be attributed to the transaction's sequential principal payment structure within the A class. Although the class B, class C and class D notes are currently paying interest from cash flow, Fitch expects that by early 2004 the notes will likely have exhausted liquidity reserves and will be accruing interest. This is primarily due to the combination of decreasing lease cash flow and the resumption of the class A minimum principal payment, which is senior to class B, C and D interest payments. AMERCO: Court Dismisses Five Shareholder Derivative Lawsuits ------------------------------------------------------------ AMERCO (Nasdaq: UHAL), parent company of U-Haul International, Inc., announced that District Judge Brent Adams, ordered the dismissal of all five shareholder derivative lawsuits filed in Nevada State Court. These lawsuits falsely alleged that the AMERCO Board lacked independence. In reaching his decision to dismiss these claims, Judge Adams determined that the AMERCO Board of Directors had the prerequisite level of independence required in order to have these claims resolved by the Board. The five suits assert virtually identical claims. In fact, three of the five plaintiffs are parties who are working closely together and chose to file the same claims multiple times, a company spokesperson explained. Judge Adams consolidated all five complaints before he dismissed them on Thursday, May 8. The decision came after the court conducted a two-day hearing in the Second Judicial District Court of the State of Nevada. Judge Adams has served on the bench since 1989 and recently announced that he will run for the Nevada Supreme Court next year. Attorney Jack Londen, on behalf of AMERCO, argued that the five lawsuits sought to delay and interfere with normal corporate governance. Boards of Directors, when determined to be independent, he argued, should make normal business judgments on behalf of the corporation. A company spokesperson issued the following statement: "The dismissal of these five suits comes at a critical time in the financial restructuring of the Company. The decision helps clear up the unnecessary confusion and uncertainty that has surrounded the Company since the first suit was filed in September 2002. These lawsuits have been the subject of repeated articles in the media. This decision should clear up this cloud. This matter has now been resolved in the Company's favor. We are pleased with the judge's decision to formally recognize the independence of our Board of Directors." "AMERCO recently announced the formation of an Independent Governance Committee of the AMERCO Board. The existing Board complies with all existing standards of independence under Sarbanes-Oxley, Nasdaq and NYSE rules and regulations," said Gary Klinefelter, General Counsel. "The Board will continue to regularly review its compliance with established standards and seek to remain ahead of the curve as those requirements grow and change." AMERCO is the parent company of U-Haul International, Inc., Republic Western Insurance Company, Oxford Life Insurance Company and Amerco Real Estate Company. For more information about AMERCO, visit http://www.uhaul.com/ APPLIED DIGITAL: Inks Purchase Pacts to Sell 25 Million Shares -------------------------------------------------------------- Applied Digital Solutions, Inc. (Nasdaq: ADSX) an advanced technology development company, has signed Securities Purchase Agreements to sell 25 million previously registered shares. Placement agent, J. P. Carey Securities, made the arrangements for the sale subject to certain closing conditions. J. P. Carey is a registered broker-dealer and member of the NASD engaged by the Company to act as its placement agent under the terms of a placement agency agreement. The Company will use the proceeds of this sale towards the satisfaction of its debt obligation to its senior lender, IBM Credit LLC. Under the Forbearance Agreement with IBM Credit (announced on March 27, 2003), the Company has the right to purchase all of its debt of approximately $95 million (including accrued interest) with a payment of $30 million by June 30, 2003, subject to continued compliance with the terms of the Forbearance Agreement. If this payment is made on or before June 30, 2003, Applied Digital would satisfy its full obligation to IBM Credit. As of this date, the Company is in compliance with all terms of the Forbearance Agreement. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Technology Group, the Company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is the beneficial owner of a majority position in Digital Angel Corporation (AMEX: DOC). For more information, visit the Company's Web site at http://www.adsx.com * * * It was previously reported that under the terms of the Third Amended and Restated Term Credit Agreement with IBM Credit Corporation, Applied Digital Solutions, Inc. was required to repay IBM Credit Corporation $29.8 million of the $77.2 million outstanding principal balance currently owed to them, plus $16.4 million of accrued interest and expenses (totaling approximately $46.2 million), on or before February 28, 2003. The Company did not make the payment by February 28, 2003, and IBM Credit Corporation notified the Company that it must make the payment on or prior to March 6, 2003. Applied Digital didn't make the payment in that 7-day grace period. Instead, Applied Digital filed suit against IBM Credit LLC and IBM Corporation in Florida state court. That lawsuit charges IBM with improperly attempting to takeover the company, conspiracy to commit RICO violations, fraud, breach of good faith and fair dealing, and breach of the Florida Uniform Trade Secrets Protection Act. Unless Applied Digital wins its lawsuit or the IBM Agreement is restructured, Applied Digital says it is likely its business will end. ARMSTRONG HOLDINGS: Reports Weaker Results for First Quarter ------------------------------------------------------------ Armstrong Holdings, Inc. (OTC Bulletin Board: ACKHQ) reported first quarter 2003 net sales of $774.9 million that were about 3.6 percent higher than first quarter net sales of $748.0 million in 2002. Excluding the effects of favorable foreign exchange rates of $35.3 million, consolidated net sales decreased by 1.1%. Wood Flooring sales increased while all other segment sales were lower, after adjusting for the benefits of a weaker U.S. dollar, primarily due to lower sales volumes. First quarter 2003 operating income of $11.3 million compared to income of $40.5 million in the first quarter of 2002. The net effect of exchange rates on operating income was $0.4 million. The decline in operating income was primarily due to lower net sales, excluding the effect of foreign exchange rates, and from higher raw material costs, particularly lumber, natural gas and oil-based materials. In addition, there was a $6.4 million decrease in the U.S. pension credit in the first quarter of 2003 as compared to the prior year. The prior year results also benefited by $5.3 million from changes in long-term disability benefit policies for certain employees. A restructuring charge of $3.2 million was recorded in the first quarter of 2003 as part of the restructuring plan to consolidate certain functions in the European Textiles and Sports Flooring and Resilient Flooring segments, compared to a $0.5 million restructuring charge in 2002 in the Textiles and Sports Flooring segment. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $1.3 billion. More details on the Company's performance can be found in its Form 10-Q, filed with the SEC Friday. Segment Highlights Resilient Flooring net sales were $286.7 million in the first quarter of 2003 and $281.3 million in the first quarter of 2002. This 1.9% increase primarily resulted from favorable foreign exchange rates. Operating income of$17.6 million in the quarter compared to operating income in the first quarter of 2002 of $18.8 million. This decrease was primarily due to higher raw material costs, lower volume and a 2002 benefit of $3.1 million related to changes in long-term disability benefit policies for certain employees. Additionally, 2003 included $0.9 million of restructuring charges. Wood Flooring net sales of $167.2 million in the first quarter of 2003 increased 3.9% from $160.9 million in the prior year. This increase was primarily driven by increased volume and by an improved mix of products. Operating income of $2.2 million in the first quarter of 2003 compared to $8.7 million in the first quarter of 2002. The decline in operating income was primarily attributable to increases in lumber costs. Textiles and Sports Flooring net sales in the first quarter of 2003 increased to $62.0 million from $54.0 million. Excluding the effects of favorable foreign exchange rates of $12.3 million, sales were down 6.5% due to weak European markets. An operating loss of $6.0 million in 2003 compared to an operating loss in 2002 of $1.9 million. The 2003 results included restructuring charges of $2.3 million, as compared to restructuring charges in 2002 of $0.5 million. Building Products net sales of $207.1 million in the first quarter of 2003 increased from $195.5 million in the prior year. Excluding the effects of favorable foreign exchange rates of $12.6 million, sales would have decreased by 0.5%, primarily due to lower sales volume in the U.S. and European commercial markets, partially offset by gains in the emerging markets of Eastern Europe. Operating income decreased to $17.8 million from operating income of $22.7 million in the first quarter of 2002. This decrease resulted from increases in natural gas costs, higher administrative expenses, and a 2002 benefit of $1.2 million related to changes in long-term disability benefit policies for certain employees. Cabinets net sales in the first quarter of 2003 of $51.9 million decreased from $56.3 million in 2002. An operating loss of $3.6 million in 2003 compared to operating income of $3.2 million in the prior year. The operating loss was primarily due to the negative effects of lower volume, increases in raw material costs and inventory obsolescence. Armstrong Holdings, Inc. is the parent company of Armstrong World Industries, Inc., a global leader in the design and manufacture of floors, ceilings and cabinets. In 2002, Armstrong's net sales totaled more than $3 billion. Based in Lancaster, PA, Armstrong has 50 plants in 15 countries and approximately 16,500 employees worldwide. More information about Armstrong is available on the Internet at http://www.armstrong.com Armstrong Holdings Inc.'s 9.00% bonds due 2004 (ACKH04USR1) are trading at about 58 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ACKH04USR1 for real-time bond pricing. ARMSTRONG HOLDINGS: Commences Soliciting Proxy Votes for Plan ------------------------------------------------------------- Armstrong Holdings, Inc., begins distribution of the materials necessary to solicit proxy votes for its Plan of Dissolution. The proxy materials consisting of AWI's Amended Disclosure Statement and Plan are to be accompanied by a letter to be signed by Michael D. Lockhart as AWI Chairman; the Chairpersons of the Asbestos PI Claimants' Committee and the Unsecured Creditors' Committee; and Dean M. Trafelet, the Future Claimants' Representative. The letter is prospective pending Judge Newsome's approval of the Third Amended Disclosure Statement. A full-text copy of the Proxy Statement is available for free at: http://www.sec.gov/Archives/edgar/data/1109304/000090951803000240/jd4-30_14a .txt (Armstrong Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVCORP INDUSTRIES: Negotiating Private Placement to Raise $4.5MM ---------------------------------------------------------------- Avcorp Industries Inc. is negotiating a Private Placement of up to 15,000,000 units at a price of $0.30 per unit, to raise gross proceeds of up to $4,500,000. Each unit will consist of one common share and one non-transferable share purchase warrant. Two share purchase warrants will entitle the holder thereof to purchase one additional common share of the Company at $0.35 per share for a six-month period. The proceeds of the financing will be used for general working capital purposes. A cash finder's fee will be payable, only with respect to arms length placees, in accordance with the rules and policies of the Toronto Stock Exchange. Subject to disinterested shareholder approval, insiders comprising Working Opportunity Fund Ltd., Coastal Industries Inc., Michael Scholz, John Nicholson, Paul Kalil and Edward Merlo may collectively subscribe for up to 10,000,000 units of the financing. The financing is subject to shareholder and regulatory approval. Avcorp Industries Inc. is a Canadian aerospace industry manufacturer. The Company is a single-source supplier for engineering design, manufacture and assembly of subassemblies and complex major structures for aircraft manufacturers. As reported in Troubled Company Reporter's April 9, 2003 edition, Avcorp Industries Inc., whose September 30, 2002 balance sheet shows a working capital deficit of about C$11 million, arranged additional short-term financing with a Canadian chartered bank. The bank agreed to increase the previously announced short-term $12 million loan to $15 million subject to the Company being able to provide security to the bank's satisfaction. The Company continues to work towards a sale and leaseback of its land and building and has signed a conditional agreement for a sale and leaseback with a Canadian insurance company. The Company continues other debt re-negotiations with major lenders. BAYOU STEEL: Hiring Gordon Arata as General Litigation Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Texas gave its stamp of approval to Bayou Steel Corporation and its debtor-affiliates' application to employ Gordon, Arata, McCollam, Duplantis & Eagan, LLP as their General Litigation Counsel. The Debtors will look to Gordon Arata to: a. represent the Debtors in any potential litigation that may arise in the context of Debtors' chapter 11 cases; b. represent the Debtors in all hearings and proceedings, including any arbitration proceedings, before any court or tribunal as may be necessary; and c. prepare all necessary applications, motions, briefs, and any other pleadings, and performance of all other legal services for the Debtors as may be necessary Gordon Arata will charge for its legal services on an hourly basis in accordance with its ordinary and customary hourly rates, which are: Professional Position Billing Rate ------------ -------- ------------ Howard E. Sinor, Jr. Partner $220 per hour J. Nicholas Graydon Partner $170 per hour David J. Messina Partner $190 per hour Wendy H. Robinson Associate $140 per hour Kendra D. Comiskey Paralegal $ 75 per hour Bayou Steel Corp., a producer of light structural shapes and merchant bar steel products, filed for chapter 11 protection on January 22, 2003. Patrick J. Neligan, Jr., Esq., at Neligan, Tarpley, Andrews & Foley, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $176,113,143 in total assets and $163,402,260 in total debts. BOOTS & COOTS: Sets Annual Shareholders' Meeting for August 19 -------------------------------------------------------------- Boots & Coots International Well Control, Inc. (Amex: WEL), has scheduled its annual Shareholders Meeting for August 19, 2003. The meeting will be held in Houston, Texas, with details regarding the location and time forthcoming. Boots & Coots International Well Control, Inc., Houston, Texas, is a global emergency response company that specializes, through its Well Control unit, as an integrated, full-service, emergency-response company with the in-house ability to provide its expanded full-service prevention and response capabilities to the global needs of the oil and gas and petrochemical industries, including, but not limited to, oil and gas well blowouts and well fires as well as providing a complete menu of non-critical well control services. Additionally, Boots & Coots WELLSURE(R) program offers oil and gas exploration and production companies, through retail insurance brokers, a combination of traditional well control and blowout insurance with post-event response as well as preventative services. As reported in Troubled Company Reporter's April 1, 2003 edition, Boots & Coots International Well Control, Inc.'s Board of Directors decided against the restructuring proposal from Checkpoint Business, Inc. This proposal would have involved a voluntary Chapter 11 bankruptcy filing by Boots & Coots and the cancellation of Boots & Coots' common equity as part of the bankruptcy process. Additionally, Boots & Coots said that it had paid in full its principal balance and interest outstanding under its Loan Agreement with Checkpoint. BRIDGES.COM INC: Continues to Implement Restructuring as Planned ---------------------------------------------------------------- Bridges.com Inc. (TSX:BIT), North America's leading provider of career and educational management solutions, reported results for its first four months of fiscal 2003. The following message is from Bridges' Chief Executive Officer, John Simmons. "This report summarizes Bridges' progress during the four- month period ending March 31, 2003. This is the first interim reporting period since our announcement on November 6, 2002, that described plans to undergo a significant restructuring of our business and to change the company's year-end to June 30th. Through this period, much progress has been made but much still remains to be done. "Our restructuring continues to be implemented as planned. Over the past four months we have significantly reduced our operating costs and overhead expenses. At the time of the restructuring announcement, our annualized overhead and expense levels were approximately $17 million per year. Currently, annualized operating and overhead expenses are approximately $14.5 million per year. These lower expenses were achieved through staff reductions as well as efforts made to streamline our business processes. Further declines in operating and overhead expenses will be accomplished over the next few months as we complete the restructuring, close our Ottawa, Ontario, office and consolidate the majority of those job functions in our Kelowna, British Columbia, head office. "This restructuring accompanies a continuous deterioration in our key markets. The majority of our revenues are derived from school districts that are funded by state education budgets in the United States. As has been widely reported in the media, many of these educational institutions are under severe budget constraints, making it very difficult for our sales and marketing departments to meet our revenue expectations. To compound this difficulty, the rising value of the Canadian dollar has steadily reduced the value to us of U.S. dollar sales, which exceed 85% of our revenue. "In November, in addition to our restructuring, we announced that Bridges would adopt fully ratable revenue recognition for all of our subscription products beginning December 1, 2002. This being the case, it is necessary to compare the value of invoices issued in the current fiscal period with that of the previous year in order to judge our level of business activity. In the four-month period ending March 31, 2003, we invoiced $2.9 million. This compares poorly with the aggregate of invoices of $3.1 million issued in the same period of 2002. This 7% decline is reflective of market conditions and is similar to the sales experiences of other education companies doing business in the United States. "Unfortunately, we expect this trend to continue through the balance of this fiscal and calendar year. Our customers are telling us that they expect to have restrictive budgets well into 2004 and perhaps beyond. Given this, our major tasks include making the most of each and every sales opportunity while continuing to seek ways to streamline and simplify our business processes to create efficiency. As said earlier, we have accomplished much, but there is still much to do. "In spite of our sales decline, Bridges customers continue to value our products and view us as a trusted and reliable vendor. In the weeks and months ahead, it will be our task to continue to earn this trust by meeting our customer service requirements. At the same time, we recognize that our customers have changing needs and priorities. Finding ways to provide new products or services that satisfy these changing priorities is our next goal. Our specific plans in this respect will be brought forward in the very near term and well in time for implementation in the next school year cycle. "All of us at Bridges continue to work diligently through these difficult conditions. We do so because we know that what we do matters. Our products and services support the efforts of a large share of education professionals who aspire to help young people improve achievement through the building and implementing of solid plans for their futures. At the same time, we know that we can and must do our work in a manner that produces excellent financial results for our shareholders. In our quest to meet these objectives, we appreciate the continued support of our shareholders. At March 31, 2003, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $600,000, while its total shareholders' equity further diminished to about $6 million as accumulated deficit ballooned to $11 million. CAM CBO I LTD: Fitch Slashes $21MM Class B Notes Rating to BB- -------------------------------------------------------------- Fitch Ratings downgraded the following class of notes issued by CAM CBO I Ltd.: -- $21,000,000 class B notes to 'BB-' from 'BBB-'. CAM CBO I Ltd. is a collateralized bond obligation managed by Conning Asset Management. The CBO was established in November 1998 to issue debt and equity securities and to use the proceeds to purchase high yield bond collateral. The ratings of the class A notes from this transaction are affirmed at 'AA-' and the class C notes are affirmed at 'C'. According to its April 30, 2003 trustee report, CAM CBO I Ltd.'s collateral includes a par amount of $15.25 million (14.71%) defaulted assets as well as another $14.77 million of 'CCC' or below rated assets. The class A overcollateralization (OC) test is currently at 137.6% with a trigger of 134%, the class B OC test is currently at 107.9% with a trigger of 118%, and the class C OC test is currently at 86% with a trigger of 107%. Due to the failure of two of the OC tests, interest cash flows are being captured and used to pay down the class A notes; this has caused the class C notes to defer interest for the past several payment periods. The deal is also paying down due to the end of the revolving period which ended in December 2002. In reaching its rating actions, Fitch reviewed the results of its cash flow model runs after running several different stress scenarios. Fitch will continue to monitor this transaction. CARECENTRIC INC: March 31 Balance Sheet Upside-Down by $15 Mill. ---------------------------------------------------------------- CareCentric, Inc. (OTC Bulletin Board: CURA), a leading provider of management information systems to the home health care community, reports its financial results for the calendar quarter ended March 31, 2003. CareCentric reported a 4.3% increase in revenues for the three months ended March 31, 2003 to $5.5 million against revenues of $5.3 million for the three months ended March 31, 2002. The Net Cash provided from Operating Activities during the three months ended March 31, 2003 of $0.6 million represented a $1.8 million improvement when compared against the Use of Net Cash in Operating Activities of $1.2 million reported for the 1st quarter of 2002. Net Income for the three months ended March 31, 2003 was $0.4 million, which represented an increase of $1.0 million over the Net Loss of $0.6 million reported for the three months ended March 31, 2002. CareCentric Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $12 million, and a total shareholders' equity deficit of about $15 million. "Our first quarter results for 2003 when compared to the first quarter of 2002 confirm the level of operating stability the Company has achieved over the course of the last year," stated John R. Festa, President and CEO of CareCentric. "Our increase in revenues in the first quarter was generated largely by our maintenance service offerings while our new system sales ran more slowly than expected. New system sales trends have been slow to improve as our customers remain involved in managing implementation of HIPAA regulations, cost reduction efforts in response to the 15% reduction in reimbursement rates and general economic sluggishness." Mr. Festa added, "While our comparative quarter results are good, our objectives going forward remain clear. We must excel in all areas of customer satisfaction and aggressively work towards the extension of our product enhancement activities and development efforts for the new product platform. We continue to solicit our customers' input towards those objectives through the use of customer service satisfaction surveys and customer advisory boards. Additionally, we are focused on greater marketing efforts and the addition of more service offerings to our customers to improve their satisfaction and capabilities in the use of our products. " "The Board remains pleased with the financial performance and the actions taken by the Company," said John Reed, Chairman of the Board of Directors. "The Company continues to push its objectives to new levels and despite the sales softness is continuing to meet its financial goals." CareCentric provides information technology systems and services to over 1,500 customers. CareCentric provides freestanding, hospital-based and multi- office home health care providers (including skilled nursing, private duty, home medical equipment and supplies, IV pharmacy and hospice) complete information solutions that enable these home care operations to generate and utilize comprehensive and integrated financial, operational and clinical information. With offices nationwide, CareCentric is headquartered in Atlanta, Georgia. CEDARA SOFTWARE: Regains Compliance with Nasdaq Listing Criteria ---------------------------------------------------------------- Cedara Software Corp., (Nasdaq:CDSW/TSX:CDE) has received a notification from the staff of The Nasdaq Stock Market that it has regained compliance with The Nasdaq SmallCap Market minimum bid price requirement. In addition, the company has received a determination from the Nasdaq Listing Qualifications Panel granting the company a temporary exception from the shareholders' equity requirement subject to meeting certain conditions. The exception will expire on June 30, 2003. The company's securities will continue to trade on The Nasdaq SmallCap Market for the duration of the exception under the symbol "CDSWC". In the event the Company is deemed to have met the terms of the exception, it will continue to be listed on The Nasdaq SmallCap Market. There can be no assurance that the Company will meet these terms. Should the Company's securities cease to be listed on The Nasdaq SmallCap Market, they may continue to be listed in the OTC-Bulletin Board in the United States and in Canada they will continue to be listed on the Toronto Stock Exchange. Management and the Board are currently evaluating their options regarding the continued listing of the company's shares on The Nasdaq SmallCap Market to determine which course of action is in the best interests of the company's shareholders. Cedara Software Corp. is a leading independent provider of medical imaging software for many of the world's leading medical devices and healthcare information technology systems companies. Cedara has over 20,000 medical imaging installations worldwide. Cedara's Imaging Application Platform (IAP) software is embedded in 30% of magnetic resonance imaging (MRI) devices shipped each year. Cedara's Picture Archiving and Communications Systems (PACS) technology has been installed globally in over 4,300 workstations. As of March 31, 2002, Cedara posted a working capital deficit of about $4.7 million and a shareholders' equity deficit of $10 million. CENTRAL PARKING: S&P Concerned about Weak Operating Performance --------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Nashville, Tennessee-based Central Parking Corp., including the company's 'BB' corporate credit rating, on CreditWatch with negative implications. This means that the ratings could be affirmed or lowered following the completion of Standard & Poor's review. Central Parking, a parking and transportation services provider, had about $354 million of total debt outstanding at March 31, 2003. "The CreditWatch listing reflects the company's weak operating performance for the most recent quarter ended March 31, 2003, and Standard & Poor's expectation for weaker than expected credit protection measures in 2003," said Standard & Poor's credit analyst David Kang. "What's more, Central Parking was not in compliance with financial covenants in its $350 million senior secured credit facility." Revenues for the 12 months ended March 31, 2003 have remained relatively flat compared with the previous year's figures; however, lease-adjusted EBITDA margins have declined, falling to 22.4% from 26.4% the previous year, primarily because of the continued weak economic environment and severe winter weather. Credit protection measures were already somewhat weak for the ratings, and the company's poor operating performance has resulted in further weakening. Lease-adjusted EBITDA coverage of interest expense for the 12 months ended March 31, 2003 was about 1.6x, down from about 1.9x in the previous year. Standard & Poor's had expected credit protection measures to improve modestly over the next few years. With regards to the covenant violation, the company has stated that it is currently working closely with its lenders to secure a waiver for the quarter prior to May 15, 2003. Before resolving the CreditWatch listing, Standard & Poor's will continue to monitor developments and meet with management to discuss the company's prospects for recovery of its operating performance and credit protection measures. CKE RESTAURANTS: Annual Shareholders' Meeting Slated for June 17 ---------------------------------------------------------------- CKE Restaurants, Inc. (NYSE: CKR) announced details relating to its 2003 Annual Meeting of Stockholders. A proxy statement has been filed with the Securities and Exchange Commission and can be viewed along with the 2003 Annual Report through the Company's Web site at: http://www.shareholder.com/cke/investors.cfm?pagetype=financials&reltype=fin (choose "Annual Report" or "SEC Filings" within the navigation bar). What: CKE Restaurants, Inc. Annual Meeting of Stockholders When: Tuesday, June 17, 2003 at 9:00 a.m. Central / 10:00 a.m. Eastern / 7:00 a.m. Pacific Time Record Date: Stockholders of record on April 22, 2003 may vote. Where: Chase Park Plaza Hotel, 212 North Kingshighway Blvd., St. Louis, Missouri or dial 913-981-5518 (no passcode required) or over the Internet @ http://www.shareholder.com/cke/medialist.cfm Contact: Caroline Leakan, VP, Investor & Corporate Communications, CKE Restaurants, Inc. at 805-898-8408 If you are unable to participate during the live event, a replay will be made available for one week beginning two hours after the end of the live call. To access the replay, dial 888-203- 1112 in the U.S. or 719-457-0820 outside of the U.S. (passcode: 207476) or go to http://www.shareholder.com/cke/medialist.cfm CKE Restaurants, Inc., through its subsidiaries, franchises and licenses, operates over 3,300 restaurants, including 987 Carl's Jr. restaurants, 2,229 Hardee's restaurants, and 99 La Salsa Fresh Mexican Grills in 44 states and in 14 countries. As of January 31, 2003, the company's working capital deficit is at $71,452,000 compared to $52,473,000 on January last year. CKE Restaurants Inc.'s 9.125% bonds due 2009 (CKR09USR1) are presently trading at 92 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CKR09USR1for real-time bond pricing. CLARION TECHNOLOGIES: Reports Improved Results for First Quarter ---------------------------------------------------------------- Clarion Technologies, Inc. (OTC Bulletin Board: CLAR) announced financial results for the fiscal period ended March 29, 2003. Clarion's 2003 sales for the period were $22.18 million versus $18.66 million in 2002. Gross profit for the period in 2003 increased to 14.4% of sales versus 12.5% for the same period in 2002. These improvements in revenue and margins were attributable to sales growth from a significant consumer goods customer and continued focus on operational performance. Clarion's net income from continuing operations for this period in 2003 was $600,000 versus a net loss of $1.87 million in 2002. Clarion Technologies' President, Bill Beckman, commented, "We are pleased to report these results, specifically a positive bottom line. The company has worked extremely hard over the last 18 months to improve our operational performance, realign our capital structure and obtain additional business. With continuing sales growth and operational execution, we believe Clarion is poised for continued improvement." Clarion Technologies, Inc., whose December 28, 2002 balance sheet shows a total shareholders' equity deficit of about $48 million, operates five manufacturing facilities in Michigan and South Carolina with approximately 145 injection molding machines ranging in size from 55 to 1500 tons of clamping force. The Company's headquarters are located in Grand Rapids, Michigan. Further information about Clarion Technologies can be obtained on the Web at http://www.clariontechnologies.com COMDIAL CORP: March 31 Balance Sheet Upside-Down by about $1MM -------------------------------------------------------------- Comdial Corporation (OTC Bulletin Board: CMDZ), a leading provider of IP telephony and unified communications solutions, reported financial results for the quarter ended March 31, 2003. Net sales for the three months ended March 31, 2003 were $12.3 million compared to $12.3 million for the same period in 2002. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the three months ended March 31, 2003 was $0.6 million. Pro forma EBITDA for the three months ended March 31, 2002, which excludes $14.7 million of non-operational gains from restructurings, was a loss of $0.6 million. Net loss for the three months ended March 31, 2003 was $1.3 million, compared to net income of $12.1 million for the same period in 2002. Net loss on a pro forma basis for the three months ended March 31, 2002, which excludes $14.7 million of non-operational gains from restructurings, was $2.6 million. Comdial Corporation's March 31, 2003 balance sheet shows a total shareholders' equity deficit of close to $1 million. "Comdial's operational performance during the first quarter of 2003 was successful as evidenced by the positive EBITDA contribution, despite the continuation of difficult economic conditions in the global economy and Comdial's market place," said Nick Branica, Chief Executive Officer. "The Company's full suite of innovative and value-added products and services combined with our aggressive approach to streamlining the cost of operations positions Comdial for our next steps of growth and profitability." Comdial Corporation, headquartered in Sarasota, Florida, develops and markets sophisticated communications solutions for small to mid-sized offices, government, and other organizations. Comdial offers a broad range of solutions to enhance the productivity of businesses, including voice switching systems, voice over IP, voice processing and computer telephony integration solutions. For more information about Comdial and its communications solutions, visit http://www.comdial.com CONSECO FINANCE: Moody's Affirms & Further Junks Note Ratings ------------------------------------------------------------- Moody's Investors Service took rating actions on two note classes issued by Conseco Finance Vehicle Trust 2000-B. The agency lowered the ratings for Class A-3 asset backed notes to Caa3 from Caa2 and affirmed its Caa2 rating to the company's Class A-2 notes. Moody's say that, "despite recent positive steps taken to strengthen the transaction, pool performance continues to deteriorate leading to increasing likelihood of losses on Class A-2 and Class A-3 notes. The pool, which consists of loans backed by commercial trucks and trailers, remains under- collateralized by approximately $41 million." CWMBS (INDYMAC): Fitch Affirms Two Class B-3 Notes at B/BB ---------------------------------------------------------- Fitch Ratings has upgraded one class and affirmed five classes for the following CWMBS (IndyMac), Inc. residential mortgage- backed certificates: CWMBS, Inc. (IndyMac) mortgage pass-through certificates, series 1994-L -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AA' ; -- Class B3 affirmed at 'B' and removed from Rating Watch Negative. CWMBS, Inc. (IndyMac) mortgage pass-through certificates, series 1994-X -- Class B1 affirmed at 'AAA'; -- Class B2 upgraded to 'AAA' from 'AA'; -- Class B3 affirmed at 'BB' and removed from Rating Watch Negative. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. DAISYTEK INT'L: Appoints Eric T. Logan as Interim CFO ----------------------------------------------------- Daisytek International Corp. (Nasdaq:DZTK) has appointed Eric T. Logan interim chief financial officer, effective immediately. Previously, Logan had served as senior vice president and CFO for the company's U.S. subsidiaries. "Eric has extensive knowledge of our industry and a proven track record with Daisytek, and I'm confident that he will do a terrific job in his expanded role," stated Dale Booth, interim president and CEO. Logan, 37, joined Daisytek in 2002. Previously, he was vice president of finance and planning for CompX International. Previous experience includes positions with Ameriserve, Frito- Lay, Inc., and The Quaker Oats Company. Logan received a BSEE degree, magna cum laude, from the University of Missouri and holds an MBA in finance from the J.L. Kellogg Graduate School of Management at Northwestern University. Daisytek is a global distributor of computer supplies, office products and accessories and professional tape media. Daisytek sells its products and services in North America, South America, Europe and Australia. Daisytek is a registered trademark of Daisytek, Incorporated. All rights reserved. Daisytek filed for Chapter 11 reorganization on May 7, 2003 (Bankr. N.D. Texas Case No. 03-34762). Daniel C. Stewart, Esq., Paul E. Heath, Esq., and Richard H. London, Esq., at Vinson & Elkins LLP, represent the Debtors in these proceedings. DIRECTV: Judge Walks Approves Protiviti's Engagement as Auditors ---------------------------------------------------------------- U.S. Bankruptcy Court Judge Walsh approves Protiviti's employment as DirecTV Latin America, LLC's auditors effective March 18, 2003 on these terms: A. Protiviti's $250,000 retainer is approved, but will be Applied to Protiviti's first invoice rather than the final invoice; and B. The indemnification provisions of the Consulting Agreement and Attachment 1 are approved, subject to: (1) the Debtor is authorized to indemnify Protiviti, in accordance with the Consulting Agreement and Attachment 1 for any claims arising from, related to, or in connection with Protiviti's prepetition performance of the services described in the Consulting Agreement; (2) the Debtor is authorized to indemnify Protiviti for any claim arising from, related to, or in connection with Protiviti's postpetition performance of any services other than the services described in the Consulting Agreement unless other postpetition services and indemnification are approved by the Court; (3) the Debtor has no obligation to indemnify Protiviti, or provide contribution or reimbursement to Protiviti, for any claim or expense that is either: -- judicially determined to have arisen from Protiviti's gross negligence or willful misconduct; or -- settled prior to the judicial determination as to Protiviti's gross negligence or willful misconduct, but determined by this Court to be a claim or expense for which Protiviti should not receive indemnity, contribution or reimbursement under the terms of the Consulting Agreement as modified by this Order; and (4) if, before the earlier of (i) an entry of an order confirming a Chapter 11 Plan in this case, and (ii) the entry of any order closing this Chapter 11 case, Protiviti believes that it is entitled to the payment of any amounts by the Debtor on account of the Debtor's indemnification, contribution or reimbursement obligations under the Consulting Agreement, including without limitation, the advancement of defense costs, Protiviti must file an application in this Court, and the Debtor may not pay the amounts to Protiviti before the entry of a Court order approving the payment. This is intended only to specify the period of time under which the Court will have jurisdiction over any request for fees and expenses by Protiviti for indemnification, contribution or reimbursement and not a provision limiting the duration of the Debtor's obligation to indemnify Protiviti. * * * As auditing consultants, Protiviti will: (a) provide assistance to DirecTV's management in various areas including, but not limited to, providing additional staff as needed to prepare accounting and other information related to the bankruptcy filing; (b) analyze accounting information DirecTV's systems produced and processes for completeness and accuracy and render a report regarding the same; and (c) perform internal auditing to identify potential weaknesses in internal accounting controls and develop recommendations for improvement. Phillip Fretwell will be the primary Protiviti professional for this engagement. In exchange for the auditing services, DirecTV will pay Protiviti on these hourly rates: Managing Directors $450 Directors 350 Managers 275 Seniors 150 - 200 Staff 115 - 135 Protiviti will also seek reimbursement of their actual, necessary expenses and charges. (DirecTV Latin America Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENCOMPASS SERVICES: Wants to Pay $1.2MM Wellspring Break-Up Fee --------------------------------------------------------------- Concurrent with the sale of the Residential Services Group's assets, Encompass Services Corporation, its debtor-affiliates and Wellspring Capital Management LLC entered into a due diligence agreement, which further describes the terms of a $1,200,000 break-up fee and expense reimbursement that the Debtors propose to pay Wellspring. At the Debtors' request, Judge Greendyke approves the Due Diligence Agreement, including the Break-Up Fee and Expense Reimbursement provisions. Wellspring will be entitled to reimbursement for its actual costs and expenses, including reasonable professional fees, incurred in connection with the Proposed Sale, not to exceed $300,000 if, from March 28, 2003 to April 9, 2003 -- the Due Diligence Period -- and before the execution of a definitive agreement for the purchase and sale of the Residential Debtors' assets: (a) the Debtors abandon the Proposed Sale for any reason within their control, other than as a result of a material breach by Wellspring or its affiliates of any of their obligations under the Letter of Intent; (b) Wellspring abandons the Proposed Sale based on the Debtors' active solicitation or initiation of discussions or negotiations with a third party other than Wellspring or its affiliates in contravention of the terms of the Due Diligence Agreement, with respect to an investment in or acquisition of the Residential Debtors; or (c) the Debtors directly or indirectly enter into any letter of intent or agreement in principle with one or more entities other than Wellspring or its affiliates with respect to an investment in, or acquisition of, the Residential Debtors, unless the letter of intent or agreement is entered into after a written notice by Wellspring that it is unwilling to proceed with the Proposed Sale. After Wellspring and the Debtors execute a Purchase and Sale Agreement, if the Debtors fail to satisfy any closing condition under the Purchase Agreement, other than any condition requiring certain members of the Debtors' management to execute employment agreements with Wellspring or its designee and the Proposed Sale does not close as a result, the Debtors will also reimburse Wellspring for its actual costs and expenses, including reasonable professional fees, up to a $600,000 maximum, incurred in connection with the Proposed Sale. The payment of any fees or expenses pursuant to this provision will be in lieu of, and not in addition to, any amount paid or payable. Wellspring will be entitled to receive a $1,200,000 Break-Up Fee payment from the Debtors in the event, after the parties execute the Purchase Agreement, the Debtors transfer the Residential Debtors' stock or assets to any entity other than Wellspring including, any creditor, in or as a result of any circumstance other than: (a) a material breach by Wellspring of any of its obligations under the Purchase Agreement; (b) Wellspring's failure to satisfy any closing conditions and the Proposed Sale does not close as a result; or (c) the delivery by Wellspring to the Debtors of a written notice stating its unwillingness to proceed with the Proposed Sale. Deductions will be made for any amounts previously received by Wellspring from the Break-Up Fee. The Expense Reimbursement and Break-Up fee will be accorded administrative expense priority pursuant to Sections 503(b)(1)(a) and 507(a)(1) of the Bankruptcy Code. However, the right of any party to seek surcharge against the Residential Debtors' assets or any proceeds equal to any Expense Reimbursement and Break-Up Fee paid to Wellspring or to otherwise request that the amounts be paid from any sale proceeds will not be prejudiced. (Encompass Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Board Votes to Create New International Company ----------------------------------------------------------- Enron Corp.'s Board of Directors has elected to create a new international energy company comprised of the majority of its international energy infrastructure businesses and to terminate the sales effort associated with its interests in those businesses. The new company, temporarily referred to as "InternationalCo," is expected to be governed by an independent board of directors and given protection from joint and several Enron group liabilities associated with the Enron bankruptcy. It is anticipated that shares of InternationalCo would be distributed to creditors in connection with implementation of the company's plan of reorganization. The formation of InternationalCo will require various board, bankruptcy court and other approvals, as well as the consent of the Official Unsecured Creditors' Committee. "After an extensive auction process and review, we determined that moving forward with InternationalCo was the best way to maximize value, which ultimately will be distributed to our creditors," said Stephen F. Cooper, Enron interim CEO. "We have continued to work with Enron's Creditors' Committee throughout the process and, under the current circumstances, they are supportive of this decision." InternationalCo is expected to hold all or a portion of Enron's interests in its international electric and natural gas utilities and pipelines including Elektro, SK-Enron, Cuiaba, Vengas, Trakya, the Bolivia to Brazil Pipeline and Transredes, Nowa Sarzyna and interests in several other energy infrastructure businesses located primarily in Central and South America and the Caribbean. A detailed listing of the entities, and Enron's ownership interests in them, can be viewed at http://www.enron.com/corp/pressroom/icoassets.html The transfer of these interests to InternationalCo is subject to various third-party, lender and regulatory consents and approvals. Enron reserves its rights to remove any of these interests from InternationalCo and to add interests in other international energy infrastructure businesses to InternationalCo. As previously announced, Enron's board voted last month to move forward with the creation of a new pipeline operating entity, which includes Enron's interests in Transwestern Pipeline Company, Citrus Corp. and Northern Plains Natural Gas Company. Enron also is continuing with the auction process for the sale of certain major assets, including Portland General Electric Company, EcoElectrica, Sithe/Independence Power Partners, and Compagnie Papiers Stadacona, as well as other assets in the Enron estate. Enron's Internet address is http://www.enron.com DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 18 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. ENRON CORP: ENA Sues Macromedia & NJMGI to Recover $12 Million -------------------------------------------------------------- Enron North America Corporation seeks a declaratory relief and payment of $11,883,784, excluding interest, that is property belonging exclusively to ENA's estate from Macromedia Inc. and North Jersey Media Group, Inc. Macromedia Agreement On October 14, 1998, ENA's predecessor-in-interest, Enron Capital & Trade Resources Corp. entered into the Macromedia ISDA Master Agreement with Macromedia. The Macromedia ISDA Master Agreement provided that the parties would enter into one or more transactions to be governed by the Macromedia ISDA Master Agreement. Accordingly, the parties entered into a financial derivative transaction that was terminated as of November 10, 2001. The transaction was replaced with a separate swap agreement effective January 3, 2001. The Replacement Transaction indicated that the Macromedia ISDA Master Agreement governed it. Moreover, the Replacement Transaction obligated Macromedia to pay a fixed price for a specified quantity of pulp and paper products from ENA for specified price over the course of several years. Melanie Gray, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that on February 27, 2002, Macromedia notified ENA that is was terminating the agreement effective February 28, 2002, pursuant to the Macromedia ISDA Master Agreement. Macromedia cited ENA's bankruptcy filing as an event of default. Pursuant to the Macromedia ISDA Master Agreement, the terminating party is obligated to make a calculation of the Termination Payment. Macromedia has yet to calculate a Termination Payment. Thus, ENA calculated the Termination payment and provided Macromedia with this calculation and demanded payment of the money owed by Macromedia to ENA on January 9, 2003. ENA has calculated that Macromedia currently owes ENA $11,823,533, plus interest. On January 21, 2003, Macromedia responded to the January 9 letter and asserted that certain provisions of the Macromedia ISDA Master Agreement entitled Macromedia to suspend its obligations to make a Termination Payment to Macromedia. In fact, Macromedia threatened, both orally and in writing, that it will improperly invoke the Macromedia ISDA Master Agreement's setoff provision, which purports to allow Macromedia to setoff amounts owed to ENA against amounts ENA's affiliate, Enron Energy Services, Inc. allegedly owes to Macromedia's current affiliate, Bergen, under a separate contract. Ms. Gray points out that this non-mutual set-off of debts under the Macromedia ISDA Master Agreement is invalid and unenforceable since neither EESI, nor Bergen are signatories to the Macromedia ISDA Master Agreement and have never provided ENA with any consideration for the purported right to set off non- mutual debts. Similarly, Macromedia's affiliates never provided ENA with any consideration allowing for the transfer of claims for non-mutual set-off purposes. Ms. Gray notes that Macromedia's January 21 letter also attempts to justify its conduct by alleging that ENA fraudulently induced Macromedia to enter into the ISDA Master Agreement by misrepresenting its financial condition. As a result, Macromedia contends that it is entitled to rescind the Macromedia ISDA Master Agreement and all underlying Transactions entered into pursuant to the agreement. According to Ms. Gray, each of Macromedia's allegations and excuses is without merit and is nothing more than an attempt to avoid its payment obligations to ENA. However, Macromedia's purported justification for its conduct implicates core issues that should be decided by this Court and not by an arbitrator. North Jersey Agreement As part of its ordinary course of business as a wholesale commodities marketer and broker, ENA entered into contractual relationships with a variety of companies for the sale of pulp, paper and wood products. Among those ENA was in contract with is North Jersey, a purported Macromedia affiliate. Ms. Gray tells Judge Gonzalez that one common contractual arrangement ENA has to establish the parties' rights, duties and obligations for the purchase and sale of pulp and paper products, was the use of a variety of general terms and conditions annexed to a particular commodity transactions, like the Affiliate Agreements. However, the specific terms related to the purchase and sale of pulp and paper products were separately bargained for and agreed to by the parties and were memorialized in "confirmation letters" that afforded ENA the right to buy and sell pulp and paper products for either a specified or index price on a date certain in the future. ENA and North Jersey agreed to the terms of the Enron Industrial Markets General Terms and Conditions for All Commodities to govern numerous Transactions. This EIM GTCs contain a provision that purports to allow North Jersey to set-off non-mutual debts. Ms. Gray reports that North Jersey has never sent ENA a letter terminating the Affiliate Agreements, including all pending Transactions. However, North Jersey breached the Affiliate Agreements when it failed to pay ENA $60,251 owed as accounts receivable, plus allowable interest for paper products delivered and invoiced postpetition. Accordingly, ENA demanded that North Jersey pay the owed sums. In the alternative, by way of this Complaint, ENA demands that North Jersey pay ENA the accounts receivable due and owing under the Affiliate Agreements. On October 15, 2002, Bergen filed a proof of claim against EESI for $850,053. ENA objects to this proof of claim to the extent that Macromedia or North Jersey attempt to setoff any amounts owed to ENA under the terms of the Macromedia ISDA Master Agreement or the Affiliate Agreements. Accordingly, ENA asks the Court for a judgment: (a) compelling Macromedia's turnover of the ENA estate's property pursuant to Section 542 of the Bankruptcy Code amounting to $11,826,533, plus interest owed thereon; (b) declaring Macromedia's violation of the automatic stay provided for by Section 362 of the Bankruptcy Code when it exercised control over estate property when it wrongfully suspended performance and withhold property due under the Macromedia ISDA Master Agreement; (c) declaring that Macromedia is attempting to improperly obtained secured creditor status resulting from an unsecured claim in violation of Section 506 of the Bankruptcy Code by virtue of its attempt to set off non-mutual debts; (d) declaring that Macromedia's purported set-offs of amounts owed to its affiliates are invalid and unenforceable pursuant to Section 553(a) of the Bankruptcy Code or, in the alternative, declaring that Macromedia is not entitled to enforce the Macromedia ISDA Master Agreement as a Square Setoff Provision; (e) declaring that any claim by Macromedia based on allegations of fraud in the inducement and rescission of the Macromedia ISDA Master Agreement is a core issue involving estate property as provided for by Section 541 of the Bankruptcy Code; (f) declaring that Macromedia is not entitled to rescission of the Macromedia ISDA Master Agreement since it cannot establish the elements of fraud in the inducement, cannot establish to the equitable remedy of rescission and cannot establish that it has not ratified the Macromedia Master Agreement and therefore waived any right to rescission after receiving knowledge of the alleged fraudulent acts; (g) declaring that the arbitration provision in the Macromedia ISDA Master Agreement should not be enforced as the dispute over the setoff and default provisions in the Macromedia ISDA Master Agreement implicate numerous substantive core Bankruptcy Code issues; (h) declaring that Macromedia's failure to pay a termination payment is a breach of contract, which entitles ENA a $11,823,533 payment, plus interest; (i) declaring that Macromedia's unjust enrichment substantially damaged ENA in an amount to be determined at trial; (j) compelling North Jersey's turnover of property pursuant to Section 542 of the Bankruptcy Code amounting to $60,251, plus interest; (k) declaring that North Jersey violated Section 506 of the Bankruptcy Code when it attempted to improperly obtained secured creditor status resulting from an unsecured claim; (l) declaring that North Jersey's purported set-offs of amounts owed to its affiliates are invalid and unenforceable pursuant to Section 553(a) of the Bankruptcy Code; (m) declaring that the arbitration provisions in the EIM GTCs should not be enforced; (n) declaring that North Jersey's failure to pay accounts receivable amounting to $60,251 for paper products delivered and invoiced prepetition and owed to ENA under the terms of the Affiliate Agreements is a breach of contract; (o) declaring that North Jersey's unjust enrichment substantially damaged ENA in an amount to be determined at trial; (p) awarding ENA interest; and (q) awarding ENA its attorneys' fees and other expenses incurred in this action. (Enron Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ENVIRONMENTAL SOLUTIONS: Red Ink Flows in First Fiscal Quarter -------------------------------------------------------------- Environmental Solutions Worldwide, Inc. (ESW) (OTCBB:ESWW), a company that develops, manufactures, and sells environmental technologies, announced the results for its first fiscal quarter ended March 31, 2003. Revenue for the first quarter that ended March 31, 2003 was $547,446 compared to $393,318 for the same period ended March 31, 2002. Net loss from operations for the 3 months period ended March 31, 2003 was $114,916 compared to $485,225 for the 3 months period ended March 31, 2002, a decrease of $370,309 or greater than a 400% improvement. Revenue for the first quarter ended March 31, 2003 was $547,446 compared to $364,493 for the last quarter of 2002 ended December 31, 2002. The loss for the three months period ended March 31, 2003 was $114,916 compared to $268,955 in Q4 2002, a decrease of $154,076 and greater than 200% improvement. Mr. Donohoe, the Company's CEO, President and Chairman stated, "ESW continues to execute on its previous stated sales strategy in favor of high volume customers needing catalyzed substrates. We are pleased with our continued improvement in all of our comparative results, and feel that these results further demonstrate the company's commitment to its newest business disciplines and our march towards profitability. ESW continues to establish relationships with outside catalytic converter assemblers that manufacture and sell ready to install converters incorporating our proprietary diesel and gas/petrol catalyzed substrates. Our after-market and retrofit activities continue to increase as demand for our products increases, and individual customers tests continue to yield positive results. Our substrates and boutique products are gaining wider acceptance because our substrate component sizes are flexible and can be produced to the exact dimensions of existing products being used, and our products performance continues to produce better than required results." Mr. Donohoe further remarked, "The Company continues to provide certification services and assist our customers in acquiring EPA/CARB certifications using the ESW technology. These same certification customers are now purchasing ESW products and for the first time, we are starting to gain a same-store sales dynamic, and the synergies that we had anticipated between certification customers and product consumers, are now starting to take place." In accordance with the Chairman-CEO Letter of October 2002 and the Company's Shareholder-Awareness commitment, CEOcast will be interviewing John Donohoe tomorrow. This is the second such interview and this procedure will continue to take place quarterly, in lieu of an analyst/shareholder conference call that was discussed in that 2002 letter. The replay of this interview will be available on Thursday May 15th 2003 and can be accessed on the ESW Web site at http://www.cleanerfuture.comor by logging on to CEOcast at http://www.ceocast.comand clicking on Environmental Solutions Worldwide on the right side of the screen. With headquarters in Telford, Pennsylvania Environmental Solutions Worldwide is a publicly traded research and development company engaged through its subsidiaries in the design, development, manufacture and sale of environmental technologies currently focused on the international automotive and transportation industries. ESW manufactures and markets a line of catalytic emission control products and catalytic conversion technologies for a multitude of applications. For updated information, please visit the Company's Web site at: http://www.cleanerfuture.com As reported in Troubled Company Reporter's April 7, 2003 edition, the Company said that while it seeks to achieve viable operations, it may still need to obtain either additional equity or debt financing to enable it to sustain the level of operations that it believes will be necessary to achieve and maintain profitable operations. On February 28, 2003, the Company's independent auditors directed their Auditors Report to Environmental Solutions' Board of Directors. Because, "the Company has suffered recurring losses from operations and lacks a sufficient source of revenue, which raises substantial doubts about its ability to continue as a going concern," the Auditors say. EXIDE TECHNOLOGIES: Wins New Supply Pact from Dazon Motorcycles --------------------------------------------------------------- Exide Technologies (OTC Bulletin Board: EXDTQ), a global leader in stored electrical-energy solutions, has secured a new original equipment supply agreement with Dazon Motorcycles. Dazon, based in Tempe, Arizona, is a manufacturer and marketer of motor scooters, motorcycles, all terrain vehicles and generators. According to the terms of the agreement, Exide is the exclusive supplier to Dazon, providing Champion branded motorcycle batteries to this new customer. "Exide has a reputation for providing the highest quality batteries in the industry, and with the projected growth that we are going to enjoy in the U.S. market, it was crucial for us to select a manufacturer with the capability to provide us with the quality and quantity that we require," said Mike Siglar, National Sales Director for Dazon. Dazon vehicles are built in China, shipped to the U.S. and fitted with batteries before they go on the market in U.S. distributorships. The company plans to open 125 U.S. dealerships -- selling some 6,000 vehicles by the end of 2003 -- and expects to have 11,000 vehicles on U.S. roads by the end of 2004. While motorcycles and ATVs will be standard part of the company's product line, Dazon intends to make a splash in the market with its line of sporty motor scooters. Scooters have been a staple of transportation in Europe and Asia for decades, and now are enjoying renewed popularity in the U.S. According to the trade group, Motorcycle Industry Council, Americans bought 50,000 motor scooters in 2001, as compared to 25,000 vehicles in 1999. Early 2002 reports showed an increase in scooter sales by almost 40 percent despite the caution of consumers in an uncertain economy. Starting in July of this year, Dazon will expand its U.S. product line from scooters and ATVs to motorcycles, which, according to MIC, have been selling in record numbers for 10 consecutive years. In 2001, the industry sold more than 850,000 new motorcycles, and in 2002, more than 937,000 of the two-wheelers. "Our new alliance with Dazon is the result of our ability to deliver consistent, world-class products and customer service," said Craig H. Muhlhauser, Chairman and CEO of Exide Technologies. "As Dazon's presence expands, we will support the company in achieving its goal of increased U.S. market penetration." Exide Technologies, with operations in 89 countries and fiscal 2002 net sales of approximately $2.4 billion, is one of the world's largest producers and recyclers of lead-acid batteries. The company's two global business groups - transportation and industrial energy -- provide a comprehensive range of stored electrical energy products and services for industrial and transportation applications. Transportation markets include original-equipment and aftermarket automotive, heavy-duty truck, agricultural and marine applications, and new technologies for hybrid vehicles and 42-volt automotive applications. Industrial markets include network power applications such as telecommunications systems, fuel-cell load leveling, electric utilities, railroads, photovoltaic (solar-power related) and uninterruptible power supply, and motive-power applications including lift trucks, mining and other commercial vehicles. Further information about Exide, its financial results and other information is available at http://www.exide.com Exide Technologies' 10% bonds due 2005 (EXDT05FRR1) are trading at about 15 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=EXDT05FRR1 for real-time bond pricing. FAIRCHILD CORP: Seeking New Financing to Pursue New Acquisitions ---------------------------------------------------------------- The Fairchild Corporation (NYSE:FA) is continuing to investigate how best to redeploy its cash in opportunities which will enable it to build a strong industrial company for the long term. The Company reported a net loss of $7.6 million for its third quarter ended March 30, 2003. Fairchild's cash and investments were $133.7 million at March 30, 2003, as compared to $21.1 million at June 30, 2002. Fairchild has also successfully reduced its debt by $488.3 million, to $3.5 million on March 30, 2003, as compared to $491.8 million on June 30, 2002. These efforts reflect the sale of Fairchild's fastener business to Alcoa for $657 million in cash, which was completed on December 3, 2002. The Company announced it has entered into discussions with a lender to receive a 10-year, non-recourse, fixed rate, term loan financing on its shopping center at interest rates currently approximating 5.8%. The Company estimates that it will receive approximately $50.0 million of cash which, combined with the available funds from its cash and investments, equity, and additional financing the Company believes it can raise, will be available to fund acquisitions. Eric Steiner, President and Chief Operating Officer of The Fairchild Corporation, stated: "We are pursuing acquisition opportunities in a variety of industries and locations. Based upon our experience with industrial companies and our prior acquisitions, we expect that these efforts will increase shareholder value". The Fairchild Corporation is engaged in the aerospace distribution business which stocks and distributes a wide variety of parts to aircraft operators and aerospace companies providing aircraft parts and services to customers worldwide. The Fairchild Corporation also owns and operates a shopping center located in Farmingdale, New York. Additional information is available on The Fairchild Corporation Web site at http://www.fairchild.com As reported in Troubled Company Reporter's December 6, 2002 edition, Standard & Poor's Ratings Services' corporate credit rating on Fairchild Corp., (B/Watch Dev./--) remains on CreditWatch with developing implications, where it was placed on July 17, 2002. FLEMING COS.: Wants More Time to File Schedules and Statements -------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates are the largest multi-tier distributor of consumable goods in the United States, selling products to approximately 45,000 locations, including, but not limited to, supercenters, discount stores, convenience stores, drug stores and supermarkets. These consumable products include a variety of general merchandise, health and beauty care, groceries, produce, and numerous other items. The products are purchased from a diverse group of vendors. Certain of the Debtors also operate retail grocery and convenience stores. There are 29 debtors and over 250,000 potential creditors. Separate Schedules of Assets and Liabilities and Statements of Financial Affairs -- required of all debtors under 11 U.S.C. Sec. 521(1) -- will be filed for each of the Debtors on a deconsolidated basis. The conduct and operation of the Debtors' business require the Debtors to maintain voluminous books and records and a complex accounting system. Due to the number of Debtors, the number of creditors, the complexity of their businesses, and the diversity of their operations and assets, it's impossible to produce and deliver coherent and complete Schedules and Statements within the first 30 days of these bankruptcy proceeding. Thus, the Debtors ask the Court to extend their deadline to file Schedules and Statements to July 1, 2003. Extensions like this are routinely granted in large Chapter 11 cases. The benefit the extension will produce is increased accuracy in the Debtors' Schedules and Statements. At present, the Debtors are still in the process of assembling the information necessary to complete the Schedules and Statements. The extension will provide sufficient time to prepare and file the Schedules and Statements. The Office of the United States Trustee has advised the Debtors that it will not oppose this request on the condition that the Debtors will not seek any further extensions. The Debtors agree that they will not seek further extensions and will file their Schedules and Statements no later than July 1, 2003. The Court will convene a hearing on May 19, 2003 to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the filing deadline is automatically extended through the conclusion of that hearing. (Fleming Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) FOOTMAXX HOLDINGS: Dec. 31 Balance Sheet Upside-Down by $12.6MM --------------------------------------------------------------- Footmaxx Holdings Inc., a Canadian owned company and one of North America's leading suppliers of corrective foot orthotics, and diagnostic systems, announced that: Footmaxx had record sales and ("EBITDA") for the three and 12 months ended December 31, 2002. Sales in the fourth quarter of 2002 were $3,756,934, indicating growth of $210,479 or 5.9% compared to the same period of 2001. Sales continue strong for both Canadian and US markets for custom orthotics, which is the Company's key product. Total year 2002 sales increased by 11.1%, to $15,397,253, which is $1,546,551 ahead of the $13,850,702 achieved for total 2001. Sales in our two largest markets US and Canada increase respectively by 13% and 7%. The increase in sales is due to increased sales of new product lines introduced through 2001 and continued growing market acceptance of Footmaxx technology. Gross profit earned on sales during the fourth quarter of 2002 was $2,042,367 or 54.4% of sales, compared to $2,006,516 or 56.5% for the same period in 2001. Total 2002 gross profit increased by 13.2%, to $8,658,515, which is $1,015,717 ahead of the $7,642,798 achieved in 2001. Gross profit margin increased by 1% to 56.2% in 2002, as compared to 55.2% for 2001. Increase in gross profit is due to the economies of scale and leverage derived from increased volumes, through the manufacturing operations. This has resulted in a sales increase of $1,547 million, contributing an increase in gross profit of approximately $1.0 million. Fixed expenses for the fourth quarter 2002 increased by $439,080 to $2,207,389, from the $1,768,309 for the same period in 2001. Year to date fixed expenses were $7,583,882, versus $6,977,181 in 2001, an increase of $606,701. This increase includes one time costs of approximately $300,000 related to refinancing activities carried out by the Company in 2002 and an incremental $300,000 spent on software development and sales promotion activities. Footmaxx continues to dramatically improve its operating performance. Lenny Simak President and CEO of Footmaxx stated that, "2002 has been a milestone year for Footmaxx. In 2002 Footmaxx achieved positive earnings from operations, for the first time in its short history. It is also the third consecutive year, of significant growth and improvement in profitability". Fourth quarter 2002 earnings before interest, taxes and depreciation and amortization ("EBITDA") increased by $319,451 to $581,283 as compared to $261,832 in 2001. Year 2002 EBITDA increased by $1,112,556 to $2,158,145, as compared to EBITDA of $1,045,589 for 2001. An increase in gross profit and a small increase in fixed expenses, accounted for $409,016 of the improvement. The discount on the debenture retirement resulted in an additional $1.0 million improvement to EBITDA for 2002. Net income for year improved by $1,546,162, to a small net loss of $56,322. Net income in 2001 was a loss of $1,602,484. The net impact of the discount on debentures, which was $750,000, plus the decrease in interest expense of $250,000 accounted for $1.0 million of the improvement. Most of the balance of the improvement was the result of the gross profit improvement of $1.0 million being offset by the $600,000 increase in fixed expenses. Earnings per share were $0.00 cents for the quarter, compared to a loss of $0.01 for the same period in 2001. Earnings per share in 2002, is $0.00 versus a $0.04 loss per share for the same period in 2001. At December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $12.6 million. The new restructured financing required certain debt ratio covenants and profit covenants. The company met all of its debt covenants as per the Penfund financing agreement. The Company did not meet its ("EBITDA") covenants for December 31, 2002, as it relates to the Royal Bank line of credit. The Bank has provided a tolerance letter to March 31, 2003. As at March 31, 2003, management has performed the covenant calculation and found the Company to be in compliance. Footmaxx produces and globally markets high quality, state-of- the-art foot orthotics. Footmaxx's proprietary software uses advanced computer techniques to produce individually prescribed and technologically superior foot orthotics which reduce foot, knee, hip and lower back pain and enhance both the comfort and performance level of the wearer. FOSTER WHEELER: March 28 Net Capital Deficit Widens to $801 Mil. ---------------------------------------------------------------- Foster Wheeler Ltd. (NYSE: FWC) reported a net loss for the first quarter of 2003 of $19.8 million, compared to a net loss of $176.1 million, for the same quarter last year. Revenues for the first quarter of 2003 totaled $810.9 million compared to $806.0 million in the first quarter of last year. Higher revenues in the European engineering and construction and energy businesses more than offset slowdowns in the North American operating units and the reduced revenues resulting from selling substantially all of the assets of Foster Wheeler Environmental Corporation in early March. "One of our key goals for 2003 is to generate operating EBITDA, which we expect to be approximately 30 percent higher than the average we achieved over the last three years, and the first- quarter operating results are on track. However, this quarter also included a significant level of planned restructuring spending," said Raymond J. Milchovich, chairman, president and chief executive officer. "Our cash balance increased during the quarter, although we anticipate some level of future outflows due to the timing of cash flows for certain projects in our portfolio." The net loss for the first quarter included several items related to the company's realignment of its operations. The company completed the sale of substantially all of the assets of FWENC and recognized a gain of $15.3 million and charges of $21.1 million for revisions to the estimates on environmental contracts that were retained. In addition, $18.4 million of planned pre-tax expenses were incurred this quarter for professional fees, severance and other expenses related to the company's ongoing restructuring. Cash balances worldwide at the end of the quarter were $473 million, compared to $429 million at year-end, and $423 million at the end of the first quarter of 2002. As of March 28, 2003, the company's indebtedness was $1.1 billion, essentially unchanged from year-end 2002 and the end of the first quarter of 2002. On March 7, 2003, the company received approximately $80 million in net cash proceeds from the FWENC transaction. During the quarter, the company's operations used $17 million of cash, primarily due to the anticipated outflows related to projects for which substantial advances had been received during 2002. At March 28, 2003, the Company's balance sheet shows a working capital deficit of about $140 million, and a total shareholders' equity deficit of about $801 million. Bookings and Segment Performance New orders booked during the first quarter of 2003 were $476.3 million compared to $792.8 million in the first quarter of last year. The company's backlog was $3.5 billion, compared to $6.0 billion at the end of the first quarter of 2002. During the first quarter of 2003, $1.7 billion was removed from the backlog, representing the orders sold with the assets of the environmental business. "The decrease in the company's backlog is primarily due to soft market conditions and the FWENC sale," added Mr. Milchovich. "However, current backlog is not directly comparable with backlog in prior periods, which included a number of problem projects and did not serve as an adequate measure of future profits. As a result of the contracting and project management initiatives that were put in place early last year, we are highly confident that the quality of our existing backlog will support our 2003 operating plan." First-quarter new bookings for the Engineering and Construction Group were $262.8 million, compared to $383.3 million during the year-ago quarter. The decline was due to the absence of bookings from the company's environmental assets sold during the quarter. The Group's backlog was $2.2 billion, compared to $4.3 billion at quarter-end 2002. Backlog was reduced by $1.7 billion to account for the environmental asset sale. Revenues for E&C grew from $421.1 million in last year's first quarter, to $482.8 million in the first quarter of 2003, mainly due to increases in Continental Europe. Excluding costs of $8.6 million for the environmental transactions and restructuring items described above, earnings before interest, taxes, depreciation and amortization (EBITDA) were $20.7 million this quarter, compared to $24.6 million for the same period last year. New bookings in the first quarter for the Energy Group declined to $210.1 million, compared to $414.0 million in the year-ago quarter, mainly due to weakness in the North American power market. Backlog at quarter-end was $1.3 billion, compared to $1.6 billion at quarter-end 2002. Energy Group revenues for the quarter were $326.4 million, compared to $387.4 million in the same quarter of 2002. EBITDA for the quarter was $30.5 million compared to EBITDA of $11.6 million last year, which included special charges of $24.7 million. Improved revenues and EBITDA in the company's Finnish subsidiary were offset by weakness in the U.S. power operations. Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, and plant operation services. The corporation is domiciled in Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit its Web site at http://www.fwc.com GREY WOLF: S&P Rates $150-Million Senior Unsecured Notes at B+ -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to onshore drilling company Grey Wolf Inc.'s $150 million 3.75% convertible senior unsecured notes due 2023. At the same time, Standard and Poor's affirmed all ratings on Grey Wolf. The outlook remains positive. Houston, Texas-based Grey Wolf has about $250 million worth of debt. "Standard & Poor's expects that the offering will improve Grey Wolf's credit quality by extending its debt maturities, while lowering its fixed charges," noted Standard & Poor's credit analyst Paul B. Harvey. Proceeds from the offering, in addition to $15 million of cash on hand, will be used to redeem $165 million of Grey Wolf's outstanding 8-7/8% notes due 2007. Holders of the convertible notes may require Grey Wolf to repurchase all or a portion of the notes on May 7, 2013 or May 7, 2018. The notes are convertible into shares of Grey Wolf common stock at a conversion price of $6.45 per share. The closing price on May 1, 2003 was $3.91 per share. Standard & Poor's expects that the notes offering will lower Grey Wolf's interest costs by about $9 million per year. However, a ratings upgrade is not warranted presently, because the company's financial performance in recent quarters has been poor due to a severe industry downturn and the company remains highly indebted. A ratings upgrade could occur as industry conditions recover and the company's financial profile improves. Grey Wolf's 2003 financial results will be helped by the lower interest rate of the new $150 million notes and could achieve EBITDA interest coverage of about 2.4x rather than 2x without the refinancing. Although yearly revenue is expected to increase, operating margins are expected to fall as more earnings come from the spot market. Capitalization will be aggressive, debt to EBITDA should remain in the mid-5x range, and debt leverage should be in the mid-50% range. These results reflect the generally weak, although improving, market for drilling companies. Results for Grey Wolf are not expected to significantly improve until rig utilizations reach a point where companies can begin to contract out rigs at more favorable rates. Grey Wolf's positive outlook reflects the strength of its liquidity and the potential for a ratings upgrade once the extent of the current industry downturn becomes clear. HALSEY PHARMACEUTICALS: Narrows Net Capital Deficit to $12 Mill. ---------------------------------------------------------------- Halsey Pharmaceuticals (OTC.BB-HDGC) announced that total revenues for the year ended December 31, 2002 decreased by 52% to $8,205,000 as compared to $16,929,000 for 2001. The Company also reported that it had a net loss for the year ended December 31, 2002 of $59,589,000, compared with a net loss of $12,563,000 for 2001. Revenues for the year ended December 31, 2001 consisted of $8,429,000 in product revenues and $8,500,000 in product development revenues related to the sale of the Company's Abbreviated New Drug Application for Doxycycline Capsules. The product development revenues had a $.57 per share favorable impact on 2001 reported results. Included in the net loss for 2002 were expenses of approximately $46,564,000, comprised of $29,278,000 related to the December, 2002 debt restructuring and financing, $12,558,000 of amortization of debt discount and private offering costs and $4,728,000 of interest costs. Revenues were $2,053,000 and $1,675,000 for the quarters ended December 31, 2002 and 2001, respectively, representing an increase of 22.6%. The net loss for the quarter ended December 31, 2002 was $38,901,000, compared to the net loss of $5,958,000 for the quarter ended December 31, 2001. At December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $12 million. Commenting, Michael Reicher, Chairman & CEO said, "In the fourth quarter on an operating level the Company showed progress in terms of increasing product revenues. We expect this trend to continue in 2003 as the regulatory hurdles to product introductions are cleared and the Company expands its generic product line. Further, we expect to begin to see the results of development efforts relating to certain new products to be introduced to treat pain. Much of the loss for 2002 relates to the cost of recent financings and the amortization of these charges. These are largely non-cash in nature and have no impact on the ongoing operations of the Company. The Company continues to receive the financial support of its primary investors and remains committed to our strategy of developing products to serve the $5 billion pain management market." Halsey Pharmaceuticals, together with its subsidiaries, is an emerging pharmaceutical company specializing in innovative drug development. HAWAIIAN AIRLINES: No Immediate Decision on Chapter 11 Trustee -------------------------------------------------------------- Hawaiian Airlines, Inc., a subsidiary of Hawaiian Holdings, Inc. (Amex: HA; PCX), said that the evidentiary hearing on the motion filed by the airlines' major creditor, BCC Equipment Corp. had concluded. In remarks at the end of the hearing, U.S. Bankruptcy Judge Robert J. Faris said that he would not rule immediately, but rather would give further consideration to the testimony and evidence in the case. He said he would decide 'promptly' on whether the appointment of a Chapter 11 trustee to oversee the airlines' operations or another remedy is appropriate. The company said that, while it did not believe that the standards for appointing a trustee had been met, it acknowledged the Judge's closing comments in which he indicated it was unlikely that he would preserve the status quo and encourage the parties to continue to discuss alternatives. HAYES LEMMERZ: Court Confirms Modified Plan of Reorganization ------------------------------------------------------------- Hayes Lemmerz International, Inc., (OTC: HLMMQ) announced that the U.S. Bankruptcy Court for the District of Delaware confirmed the modified Plan of Reorganization that was filed by the Company and certain of its subsidiaries. Confirmation of the modified Plan should permit the Company to meet its goal of emerging from Chapter 11 prior to the end of the second quarter of fiscal 2003. The modified Plan garnered overwhelming support from its Unsecured Creditors and the Secured Lenders. Emergence from Chapter 11 is subject to consummation of its proposed exit financing facility to be arranged by Citigroup Inc., and Lehman Brothers Inc. "We are pleased that our modified Plan has been confirmed by the Court and was supported by an overwhelming majority of our creditors," said Curtis Clawson, Chairman and Chief Executive Officer of Hayes Lemmerz. "This is wonderful news for our employees, customers, and suppliers, and I want to thank all of them for their support." Mr. Clawson further commented, "Our emergence marks the end of what may be the most difficult chapter in our company's history. We have worked diligently over the past year and a half to rebuild Hayes Lemmerz by strengthening the Company's operational and financial performance. The actions we have taken to enhance performance, streamline operations and compete effectively in today's market will continue after emergence. We will continue to aggressively pursue our goals of satisfying our customers, becoming a low-cost producer and having the best people." As previously announced and in accordance with the modified Plan, holders of prepetition secured claims will receive approximately $478.5 million in cash and 53.1% of the New Common Stock. Holders of senior note claims will receive $13 million in cash and 44.9% of the New Common Stock, and holders of general unsecured claims will receive 2% of the New Common Stock. Additionally, as part of the confirmed Plan, a new seven-member Board of Directors will be formed. Hayes Lemmerz, its U.S. subsidiaries and one subsidiary organized in Mexico filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware on December 5, 2001. Hayes Lemmerz International, Inc. is one of the world's leading global suppliers of automotive and commercial highway wheels, brakes, powertrain, suspension, structural and other lightweight components. The Company has 43 plants, 3 joint venture facilities and 11,000 employees worldwide. HECLA MINING: Phillips S. Baker Jr. Replaces Arthur Brown as CEO ---------------------------------------------------------------- At its Annual Meeting of Shareholders, Hecla Mining Company's (NYSE:HL) board of directors accepted Arthur Brown's resignation as chief executive officer and appointed Phillips S. Baker, Jr., to replace him. Brown, 62, who has been with Hecla for 36 years, retired as CEO but will retain his position as chairman of the board. He has been CEO of Hecla since 1987. Taking Brown's place as CEO will be Baker, 43, who has been president and chief operating officer of Hecla since 2001. He holds J.D. and M.B.A. degrees from the University of Houston and an accounting degree from Texas A&M University. Baker has 18 years of experience in the mining industry, having held executive positions with Battle Mountain Gold Company and Pegasus Gold Inc. Baker said, "Art will still be fully involved as chairman of the board, and we are very glad to have his continuing guidance. He is leaving at a time when the day-to-day operations and finances of Hecla are in great shape. We are now positioned to move forward into growth and continued profitability. Our strategy is to build on Hecla's underground mining expertise. We hope to develop a number of gold projects we have in hand, allowing gold production to double over the next five years. In addition, we will take advantage of acquisition opportunities while maintaining our position as a major primary silver producer." Brown said he's comfortable with his decision and the condition in which he's leaving the company. "I'm grateful to Hecla for giving me opportunities few people anywhere have ever had the chance to experience. I feel gratified that through the hard work and creative efforts of our people, we've been able to achieve a remarkable turnaround in our company and I am able to leave it in solid financial and operating condition. We have an excellent management staff and I have full confidence in their abilities to move Hecla forward under Phil's leadership. Although I'll still be very involved as chairman, I am planning to have a little more time to enjoy my family and recreational activities." At the annual meeting, shareholders elected Brown to serve another three-year term. Also re-elected to the board for three- year terms were John E. Clute and Joe Coors, Jr. Shareholders also approved the selection of BDO Seidman, LLP, as independent auditors of the corporation for the current fiscal year. At its regular quarterly meeting, in the interest of conserving cash for exploration, development and acquisition opportunities, the board of directors opted to defer the July 1, 2003, quarterly payment of dividends to the holders of Hecla Series B Cumulative Convertible Preferred Stock. Hecla Mining Company, headquartered in Coeur d'Alene, Idaho, mines and processes silver and gold in the United States, Venezuela and Mexico. A 112-year-old company, Hecla has long been well known in the mining world and financial markets as a quality silver and gold producer. Hecla's common and preferred shares are traded on the New York Stock Exchange under the symbols HL and HL-PrB. * * * As previously reported in Troubled Company Reporter, Standard & Poor's revised its outlook on Hecla Mining Co., to positive from negative based on the company's improved cost position. Standard & Poor's ratings on the company, including its triple- 'C'-plus corporate credit rating, were affirmed. Standard & Poor's preferred stock rating on Hecla remains at 'D', as the company has not been current on its dividends. Standard & Poor's ratings on Hecla continue to reflect its well below average business position due to its limited reserve base, operating diversity, and tight liquidity. HUNTSMAN INT'L: Jon M. Huntsman Buys Out Minority Interests ----------------------------------------------------------- Jon M. Huntsman, Founder and Chairman, and Peter R Huntsman, President and CEO, of the Huntsman companies, announced the purchase of ICI's debt and equity holdings in Huntsman International Holdings LLC, and the additional purchase of two financial institutions' minority interest in HIH. With the buyouts, HMP Equity Holdings Corporation, which is controlled by the Huntsman family, now owns 100% of all principal Huntsman business entities. The purchases were accomplished by HMP issuing Senior Discount Notes with warrants. The $315 million of cash proceeds were used to complete the purchase from ICI of its 30% interest in HIH, and HIH Senior Subordinated Discount Notes (accreted to $366 million). Approximately $90 million of the notes and warrants were exchanged for the 9% interest in HIH currently held by JP Morgan Partners and MidOcean Capital Investors. Mr. Jon Huntsman commented, "This is a momentous event in our companies' history. The buyout of ICI's and others' minority interests in HIH is the final step of a financial restructuring that we began in January of 2002. We have realized its successful completion in spite of severe economic uncertainties and extremely high energy prices. I pay tribute to our management and finance teams for their professionalism and tenacity in accomplishing this major undertaking. Together with our partner, MatlinPatterson, we are extremely positive about the future of our companies." Mr. Peter Huntsman said, "These buyouts enable us to move forward without the concerns and constraints of the past. We feel we now will be able to compete more effectively in the global marketplace and, importantly, to take full advantage of opportunities for growth that may present themselves." The combined Huntsman companies constitute the world's largest privately held chemical company. The operating companies manufacture basic products for a variety of global industries including chemicals, plastics, automotive, footwear, paints and coatings, construction, high-tech, agriculture, health care, textiles, detergent, personal care, furniture, appliances and packaging. Originally known for pioneering innovations in packaging, and later, rapid and integrated growth in petrochemicals, Huntsman-held companies today have more than 13,000 employees, facilities in 44 countries and had 2002 revenues of more than $7 billion. As reported in Troubled Company Reporter's April 7, 2003 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Huntsman International Holdings LLC and its subsidiary, Huntsman International LLC following the company's announcement of a proposed note offering. The outlook remains developing. At the same time, Standard & Poor's assigned its 'B' rating to Salt Lake City, Utah-based Huntsman International LLC's $150 million senior unsecured notes due 2009, subject to preliminary terms and conditions. The new notes are rated one notch below the corporate credit rating, reflecting their disadvantaged position in the event of a bankruptcy, relative to Huntsman International's senior secured bank debt. HYWY CORP: Plans Corporate Workout and Will Pursue New Options -------------------------------------------------------------- HYWY Corp. (YHW TSX-V) plans a corporate restructuring. HYWY had its application for R&D refunds delayed by Canada Customs and Revenue. The delay of the refund is material to the company's ability to market its recently completed PE:J software product. As a consequence the company may be required to sell assets and use the proceeds to pay debts. It is anticipated that this may include the sale of the company's primary asset, PE:J software and is expected to result in the change of management and control. The company is now pursuing new business opportunities. HYWY Corp will delist its shares from the TSX Venture exchange so as to facilitate the restructuring which is expected to include a share consolidation. The shares will continue to be tradeable on the Toronto over the counter market. I2 TECH: Teams-Up with Optimal for Integration Service Offerings ---------------------------------------------------------------- i2 Technologies, Inc. (OTC:ITWO.PK), a leading provider of end- to-end supply chain management solutions, and Optimal Solutions Integration, Inc., a Dallas-based enterprise technology consulting firm, announced a strategic partnership to help enable a new and enhanced set of i2 integration service offerings. As a result of this partnership, i2 has outsourced certain of the development, maintenance, and customer deployment of its Rapidly Optimized Interface product suite to Optimal. Optimal runs and manages this product group primarily through its secure offshore development center in Bangalore, India. Further, Optimal will serve as a preferred partner for all i2 integration work executed by i2 for its worldwide customer base. "The strategic partnership with Optimal serves several strategic goals at i2," said Pallab Chatterjee, i2 president, Solutions Operations. "This relationship helps us bring deep integration expertise to our customer base, while helping us to remain focused on our core applications. The strategic partnership with Optimal has already reduced our implementation costs substantially - and we anticipate further reductions in the coming months." Optimal CEO, Gurvendra S. Suri said, "We bring a unique service offering to i2 customers that will leverage our expertise in integration with ERP systems like SAP, PeopleSoft and Oracle, while at the same time providing the benefits of lower costs associated with offshore resources." Optimal Solutions Integration, Inc. (Optimal) is an enterprise technology consulting firm based in Dallas, TX. Optimal works with organizations in North America, Europe, Latin America and the Asia/Pacific region to extract maximum value from their investments in enterprise technology. Through a unique model that incorporates onsite and secure offshore consulting capabilities, Optimal features best-in-breed skills while containing the costs associated with the design, deployment, and support of enterprise technology platforms. A leading provider of end-to-end supply chain management solutions, i2 designs and delivers software that helps customers optimize and synchronize activities involved in successfully managing supply and demand. More than 1,000 of the world's leading companies, including seven of the Fortune global top 10, have selected i2 to help solve their most critical supply chain challenges. Founded in 1988 with a commitment to customer success, i2 remains focused on delivering value by implementing solutions designed to provide a rapid return on investment. Learn more at http://www.i2.com As reported in Troubled Company Reporter's April 10, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on i2 Technologies Inc. to 'CCC+' from 'B' and its subordinated debt rating on the company to 'CCC-' from 'CCC+'. The actions followed i2's announcement that it would delay the filing of its 2002 10-K and, as a result, expected to be in violation of a covenant in the indenture governing its $350 million convertible subordinated notes. The indenture contains a cure period for covenant noncompliance that allows the company 60 days to file its 10-K. i2 remains on CreditWatch with negative implications, where it was placed on Jan. 27, 2003, pending the completion of the company's re-audit of its annual financial statements from 1999 through 2001. INTERDENT INC: Files for Prepackaged Chapter 11 Reorganization -------------------------------------------------------------- InterDent, Inc. (OTC BB: DENT) has reached agreement with its senior lenders and the holders of its senior subordinated debt to convert $90 million of the Company's debt to equity and restructure the remaining $38 million of senior debt into a new term loan. The agreement is to be implemented by a Prearranged Plan of Reorganization under Chapter 11 of the U.S. Bankruptcy Code, which the Company filed on Friday, May 9, 2003. The restructuring is subject to court approval and other customary conditions. If the restructuring is completed as proposed, the existing equity in the Company will be extinguished. The restructuring will also eliminate the Company's $39 million convertible subordinated debt. InterDent also announced that it has secured a $7.5 million senior secured debtor-in-possession (DIP) financing facility from two of its current senior lenders, subject to bankruptcy court approval. The DIP facility will supplement the Company's existing cash flow from operations during the reorganization process and will be available, if needed, to fund continuing operations, including employee salary and benefits and vendor payments. During the restructuring process, the Company will continue to manage its operations as a debtor-in-possession and expects to continue to deliver uninterrupted service to its customers. In light of the agreement reached with 100 percent of its senior lenders, the Company is confident that it will reorganize on a fast-track basis and has targeted emergence from Chapter 11 in the 3rd quarter 2003. H. Wayne Posey, InterDent's chairman and chief executive officer, stated, "This restructuring will substantially reduce our debt, strengthen InterDent and will be a win-win for our affiliated dentists, their patients, our employees and vendors. Unlike many typical bankruptcy proceedings, this prearranged Chapter 11 will enhance our financial condition and position the Company to implement a focused, more conservative business strategy that will preserve our strengths and eliminate the distractions that have diverted our resources. We are optimistic that within the relatively short time frame of approximately 90- 120 days, we will successfully emerge as a well-financed national leader in the dental industry." Mr. Posey added, "When we emerge from this reorganization, the Company will be on solid footing with a stable capital structure. With the significantly reduced and fully manageable debt load, we will be able to totally focus on our business, improving the quality and appearance of those of our offices that are in need of maintenance and updating, and to pursue growth in promising new markets." In closing, Mr. Posey said, "We are grateful to the more than 500 affiliated dentists who have steadfastly believed in our future. Also, we appreciate the continuing dedication of our employees, whose efforts have given us the opportunity to put this company back on track. The management team at this company has one important mission - fulfill the promise of InterDent." InterDent provides dental management services in 137 locations in California, Oregon, Washington, Nevada, Arizona, Hawaii, Idaho, Oklahoma and Kansas with total annualized patient revenues under management of approximately $250 million. The Company's integrated support environment and proprietary information technologies enable dental professionals to provide patients with high quality, comprehensive, convenient and cost- effective care. INTERDENT INC: Case Summary & 3 Largest Unsecured Creditors ----------------------------------------------------------- Lead Debtor: Interdent Inc. 222 N. Sepulveda Blvd. Suite 740 El Segundo, California 90245-4340 Bankruptcy Case No.: 03-13593 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Interdent Service Corporation 03-13594 Type of Business: Dental practice management company. Chapter 11 Petition Date: May 9, 2003 Court: Central District of California, Santa Ana Division Judge: John E. Ryan Debtors' Counsel: Robert E. Opera, Esq. Winthrop Couchot Professional Corp. 660 Newport Center Drive 4th Floor Newport Beach, CA 92660 Tel: 949-720-4100 Fax: 949-720-4111 Total Assets: Approximately $54,000,000 Total Debts: Approximately $204,000,000 Debtor's 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Levine Leichtman Capital Promissory Note $43,754,264 Partners II, LP Steve Hartman 335 N. Maple Dr., #240 Beverly Hills, CA 90210 Tel: 310-275-5335 Fax: 310-275-9484 Southwest Dental Center, Promissory Notes $1,904,705 Inc. Attn: Corp. Officer Eldon Jenkins, Scott L. Dalton 21680 N. 56th Avenue Glenbdale, AZ 85308 Tel: 623-561-6616 Fax: 623-572-4667 Dental Care, Inc. Promissory Note $733,341 Attn: Gerald M. Bieze 215 North Blaine Street Newberg, OR 97132 Tel: 503-5547-1903 Fax: 503-554-0115 INT'L FIBERCOM: Hires FTI to Replace PwC as Financial Advisors -------------------------------------------------------------- International Fibercom, Inc., and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Arizona to retain FTI Consulting, Inc., as their financial advisors and accountants. As previously reported in the Troubled Company Reporter's June 3, 2002 issue, the Debtors retained PricewaterhouseCoopers LLP's Business Recovery Services. The BRS Practice specializes in providing services to distressed corporations. The Debtors were informed that FTI purchased the BRS Practice of PwC and its related assets and receivables. Following the sale, Edward M. McDonough, the primary PwC partner providing BRS Services to the Debtors, along with a substantial number of professionals assisting him in these Chapter 11 proceedings, became employees of FTI. In this engagement, FTI will continue to provide the BRS Services to the Debtors under the same terms and conditions of retention set forth in the Debtors' retention of PwC. FTI's current customary hourly rates charged to both bankruptcy and non-bankruptcy clients by the personnel assigned from the Phoenix office are: Senior Managing Directors $390 per hour Managing Directors $300 per hour Directors $285 per hour Consultants $225 per hour Associates $185 per hour In the event that personnel from the FTI national practice are required to be involved this time, will be charged at the national rates of: Senior Managing Directors $525 - $595 per hour Managing Directors/Directors $370 - $475 per hour Associates/Consultants $175 - $290 per hour International Fibercom, Inc. resells used, refurbished communications equipment, including fiber-optic cables. The Company filed for chapter 11 protection on February 13, 2002 (Bankr. Ariz. Case No. 02-02143). Robert J. Miller, Esq., at Bryan Cave, LLP represents the Debtors in their restructuring efforts. IRVINE SENSORS: Deficit & Losses Raise Going Concern Doubts ----------------------------------------------------------- Irvine Sensors Corporation prepared its consolidated financial statements on a going concern basis, which contemplates the realization of assets and settlement of obligations in the normal course of business. The Company generated net losses of $6,037,500 and $2,721,400 in fiscal 2002 and the first 26 weeks of the fiscal year ending September 28, 2003, respectively. In addition, the Company had total stockholders' equity of $3,340,800 and a working capital deficit of $1,687,600 at March 30, 2003. These factors, among others, pose risks to the Company's ability to continue as a going concern. Mitigating these risks, the Company has historically relied on equity financing to fund its operations and has recently demonstrated access to equity capital, even during periods of depressed market activity, including a $1,000,000 equity placement closed in April 2003. Management believes, but cannot assure, that the Company will be able to raise additional working capital, if required, to fund its operations for at least the next twelve months. Furthermore, the Company has recently received several new government contract awards that management believes, but cannot guarantee, will contribute to improvements in the Company's operating results during the second half of fiscal 2003. In addition, expenses in subsidiaries, which has historically been a significant source of consolidated net operating losses in prior periods, have been sharply curtailed, and the Company plans to seek further expense reduction through the reorganization of the Company's operations to allow subsidiaries to more effectively utilize technical and administrative support resources throughout the Company. Contract revenue for the 13-week period ended March 30, 2003 was $1,620,300, an increase of $498,700, or 44%, as compared to contract revenue of $1,121,600 for the 13-week period ended March 31, 2002. Contract revenue for the 26-week period ended March 30, 2003 was $6,200,900, an increase of $3,458,100, or 126%, as compared to contract revenue of $2,742,800 for the 26- week period ended March 31, 2002. The increase in contract revenue is primarily attributable to the receipt of new funded contracts allowing ATD to allocate more resources to the performance of contract backlog during the current period as opposed to internal research and development during the comparable period of fiscal 2002. In particular, the fiscal 2003 periods realized the effect of an approximate $9.6 million contract award to ATD initiated after the first 26-weeks of fiscal 2002. Approximately $4.5 million of contract revenue in the 26-week period ended March 30, 2003 was derived from this contract. The reduced level of activity in this contract as it neared completion in the 13-week period ended March 30, 2003, combined with delays in anticipated new government contract awards during that same period, is the principal cause for the decrease in contract revenue between the first and second fiscal quarters of fiscal 2003. Product sales represents revenues derived from sales of chip and stacked chip products by MPD, Novalog and MSI and software sales by RedHawk.Product sales for the 13-week period ended March 30, 2003 were $848,200, a decrease of $331,300, or 28%, compared to product sales of $1,179,500 for the 13-week period ended March 31, 2002. Product sales for the 26-week period ended March 30, 2003 were $1,447,500, which represented a decrease of $602,700 or 29%, from the $2,050,200 of product sales for the 26-week period ended March 31, 2002. These reductions primarily reflected a decrease in Novalog sales attributable to the further decline in the sales of products for Palm Computing, a major end-user of Novalog's products, and a decline in MPD sales, attributable to the reduced level of product requirements in the current 13-week and 26-week periods from an original equipment manufacturer, L-3 Communications. Purchases of MPD's products by this manufacturer accounted for approximately 11% of Company total revenues in fiscal 2002, and were the primary cause for the increase in MPD's sales in that fiscal year. However, unlike fiscal 2002, in the 13-week and 26-week periods ended March 30, 2003, L-3 Communications was not a material customer. L-3 Communications has projected an increase in its demand for MPD products for the balance of fiscal 2003, relative to the 13-week and 26-week periods ended March 30, 2003, but has made no guarantees regarding these projections. Whereas Irvine Sensors has retained its existing customer base, the decline in Novalog's sales in recent periods and the increase in sales of other business units, principally ATD, has resulted in none of Novalog's customers accounting for more than 10% of total revenues in either fiscal 2002 or in the 13-week and 26-week periods ended March 30, 2003. For the 13-week period ended March 30, 2003, approximately 39% of product sales were realized from Novalog, approximately 50% of product sales were realized from MPD, approximately 11% were realized from MSI and less than 1% were realized from RedHawk. For the 26-week period ended March 30, 2003, approximately 43% of products sales were realized from Novalog, approximately 40% of products sales were realized from MPD, approximately 16% were realized from MSI and less than 1% were realized from RedHawk. In the 13-week and 26-week periods ended March 30, 2003, the Company also received $10,900 and $28,100, respectively, in royalty revenues related to MPD's products as compared to $5,600 and $0 of such revenues of this nature in the corresponding periods of fiscal 2002. MPD's royalty revenues did not begin to increase beyond these initial levels until the third fiscal quarter of fiscal 2002 as the sales of licensee products incorporating MPD's technology also began to increase. Due to the increase in contract revenue, total revenues for the 13-week and 26-week periods ended March 30, 2003 were $2,487,500 and $7,684,500, respectively, which represented increases of $186,400, or 8%, and $2,885,900, or 60%, respectively, compared to total revenues for the comparable 13-week and 26-week periods of fiscal 2002. Based on notices of additional pending government contract awards, Irvine Sensors anticipates that its contract revenue will continue to represent a majority of total revenue for the remainder of fiscal 2003. However, it is expected that the percentage of total revenue resulting from product sales will increase in the second half of fiscal 2003 as a result of increased backlog of orders of stacked memory products to MPD from commercial customers that have only recently started to purchase such products. Cost of contract revenue for the 13-week period ended March 30, 2003 was $1,506,700, which represented an increase of $721,900, or 92%, as compared to $784,800 for the 13-week period ended March 31, 2002. Cost of contract revenue for the 26-week period ended March 30, 2003 was $5,128,000, which represented an increase of $3,082,000, or 151%, as compared to $2,046,000 for the 26-week period ended March 31, 2002. Cost of contract revenues for the current year 26-week period included a net reduction in accrued loss on contracts of approximately $160,000, primarily due to changed scope and associated reduction in estimated cost to complete for a large development contract. Taking this accrual reduction into account, the increase in the Company's cost of contract revenue was higher proportionately than the increase in contract revenue itself, for both the 13-week and 26-week periods ended March 30, 2003, because of the terms of the $9.6 million contract entered into in May 2002, which provided Irvine Sensors with limited margins on two large subcontracts that it issued under that program. These subcontracts were substantially completed in the 13-week period ended March 30, 2003. Cost of contract revenues as a percent of contract revenues increased from 70% and 75% in the 13-week and 26-week periods ended March 31, 2002, respectively, to 93% and 83% in the 13-week and 26-week periods ended March 30, 2003, respectively, largely because of these subcontract terms. Cost of product sales for the 13-weeks ended March 30, 2003 was $753,800, a decrease of $221,900, or 23%, from $975,700 for the 13-week period ended March 31, 2002. The cost of product sales for the 26-week period ended March 30, 2003 was $1,360,400, a decrease of $337,900, or 20%, from $1,698,300 for the 26-week period ended March 31, 2002. The 13-week and 26-week reductions were primarily attributable to the corresponding decline in the volume of products sold during those periods in fiscal 2003 versus the comparable periods of fiscal 2002. This reduction in cost was not as large as the decrease in volume of products sold during the 13 weeks and 26 weeks ended March 30, 2003 as compared to the 13 weeks and 26 weeks ended March 31, 2002, largely because of the minimum costs of MPD's contract with its manufacturing supplier that were not fully absorbed by the lower level of MPD sales in the first 26 weeks of fiscal 2003. Cost of product sales as a percentage of product sales increased from 83% in each of the 13 weeks and 26 weeks ended March 31, 2002, respectively, to 89% and 94% in the 13 weeks and 26 weeks ended March 30, 2003, respectively, due to the decrease in gross margins resulting from MPD's minimum contract manufacturing expenses. At March 30, 2003, the Company had consolidated cash and cash equivalents of $601,800, which represents a decrease of $94,500 from $696,300 as of September 29, 2002, with the decrease largely the result of the Company's losses experienced in the 13-week period ended March 30, 2003, primarily resulting from delays in receipt of expected new government contracts during that period. On a period to period basis, the comparison between the first 26 weeks of fiscal 2003 and the comparable first 26 weeks of fiscal 2002 exhibited similarity in many of the elements of the net cash used in operating activities. There was a significant difference in the net loss, $2,721,400 in the 26-week period ended March 30, 2003 as compared to $3,675,700 in the 26-week period ended March 31, 2002, an improvement of $954,300 in the current year period, despite the delays in receipt of new contract awards. This improvement was offset by a $813,700 increase in the use of cash to retire accounts payable and accrued expenses. In the 26-week period ended March 30, 2003, an aggregate of $550,100 was used to retire accounts payable and accrued expenses, while in the first 26 weeks of fiscal 2002, accounts payable and accrued expenses increased by $263,600. This difference reflected the increased level of contract activity during the fiscal 2003 period and the amount of that activity that required increased subcontractor support, particularly the $9.6 million contract received in May 2002. Another variance was the $189,700 of operating expenses paid through the issuance of common stock in the current year period, which was $144,200 lower than the $333,900 paid through such issuance in the comparable period last year. This decrease resulted from the specific desires of creditors in the respective periods rather than any fundamental trend, and is not necessarily indicative of Irvine Sensors ability to utilize such a mechanism to pay operating expenses in the future. Other variances on a period-to-period basis were a $159,500 reduction in the amount of cash used to increase inventory during the current year period, $115,900 more cash realized in the current year period from accounts receivable retired and a $110,200 positive variance in the current year from customer advances. These variances are largely the result of timing fluctuations and not necessarily predictive of trends, with the possible exception of the increase in customer advances. If the Company is successful in its goal of increasing product sales, an outcome that it cannot guarantee, positive cash flow from customer advances could increase materially in future periods. These current year improvements, plus other less significant variances, resulted in net cash used in operating activities of $1,106,400, an improvement of $459,300 over the comparable use of $1,565,700 in the first 26 weeks of fiscal 2002. At March 30, 2003, the Company's funded backlog was approximately $1.4 million compared to approximately $1.8 million at September 29, 2002 and $2.2 million at March 31, 2002. The new contract awards received after March 30, 2003 increased the funded backlog to approximately $5.5 million at April 25, 2003. Contracts with government agencies may be suspended or terminated by the government at any time, subject to certain conditions. Similar termination provisions are typically included in agreements with prime contractors. Irvine Sensors has experienced such termination of its contracts on three occasions in over twenty years of operating history, but the current conflict in Iraq could impact government contracts and spending in an unpredictable manner. The Company cannot guarantee that it will not experience suspensions or terminations in the future. Any such termination, if material, could cause a disruption of Irvine Sensors' revenue stream, adversely affect its results of operations and could result in employee layoffs. IRVINE SENSORS: Files Registration Statement for 1.9MM Shares ------------------------------------------------------------- Irvine Sensors Corporation delivered a registration statement to the Securities and Exchange Commission last week. A public offering, which is not being underwritten, of a total of 1,919,231 shares of the common stock of Irvine Sensors Corporation is being made by selling stockholders of the Company. The price at which the selling stockholders may sell the shares will be determined by the prevailing market price for the shares or in negotiated transactions. The Company will not receive any of the proceeds from the sale of these shares. The Company's common stock is quoted on the Nasdaq SmallCap Market under the symbol "IRSN" and is traded on the Boston Stock Exchange under the symbol "ISC". On April 30, 2003, the last reported sale price for the common stock on the Nasdaq SmallCap Market was $1.24 per share. Costa Mesa, California-based Irvine Sensors Corporation -- http://www.irvine-sensors.com-- whose September 29, 2002 balance sheet shows a working capital deficit of about $1.4 million, is primarily engaged in the development and production of high-density electronics, image processing and sensing devices, and low power integrated circuits which are intended to have broad applications in military and commercial systems. KASPER ASL: Has Until June 30 to Make Lease-Related Decisions ------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the Southern District of New York, Kasper ASL Ltd., and its debtor-affiliates obtained an extension of their lease decision period. The Court gives the Debtors until the earlier of: a) June 30, 2003; or b) confirmation of a chapter 11 plan of reorganization to decide whether to assume, assume and assign, or reject their unexpired nonresidential real property leases. Kasper A.S.L., Ltd., one of the leading women's branded apparel companies in the United States filed for chapter 11 protection on February 05, 2002 (Bankr. S.D.N.Y. Case No. 02-10497). Alan B. Miller, Esq. at Weil, Gotshal & Manges, LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $308,761,000 in assets and $255,157,000 in debts. KEY3MEDIA GROUP: Court Approves Proposed Disclosure Statement ------------------------------------------------------------- Key3Media Group, Inc. (OTCBB: KMEDQ.OB), the world's leading producer of information technology tradeshows and conferences, received Court approval of its disclosure statement in connection with its plan of reorganization. Key3Media will now begin soliciting acceptances for its proposed plan of reorganization. The confirmation hearing for the Court's approval of the plan of reorganization is scheduled for June 4, 2003. "This is another milestone in our progress toward a successful reorganization of the Company," said Fredric D. Rosen, Chairman and CEO of Key3Media. "The Company remains on schedule to complete its reorganization and emerge within the next 45 days with a strong financial foundation. As demonstrated by the success of our recent NetWorld+Interop show, we continue to secure enthusiastic participation from customers for all our conferences and tradeshows, and to deliver the highest value to all exhibitors and attendees." All Key3Media tradeshows and conferences are continuing as scheduled, including JavaOne San Francisco (June 9-13), Seybold Seminars San Francisco (September 22-25), and COMDEX Fall in Las Vegas (November 15-20). On February 3, 2003, Key3Media announced a plan of reorganization, backed by investment funds managed by Thomas Weisel Capital Partners, which own approximately 68% of Key3Media's bank debt and approximately 38% of its bonds (11.25% senior subordinated notes due 2011). On April 9, 2003, Key3Media announced it reached an agreement in principle with the Official Committee of Unsecured Creditors, as well as the holders of the Company's senior secured bank debt, on the terms of the plan of reorganization. Through the reorganization, Key3Media will reduce its total debt by 87% from approximately $372 million to $50 million and eliminate all of its existing preferred stock and common equity. Annual interest expense will be cut from approximately $38 million to $3.4 million. Key3Media Group, Inc., produces information technology tradeshows and conferences. Key3Media's products range from the IT industry's largest exhibitions such as COMDEX and NetWorld+Interop to highly focused events featuring renowned educational programs, custom seminars and specialized vendor marketing programs. For more information about Key3Media, visit http://www.key3media.com Thomas Weisel Capital Partners is the merchant banking affiliate of the investment firm Thomas Weisel Partners LLC. TWCP's flagship fund, Thomas Weisel Capital Partners, L.P., is a $1.3 billion private equity fund with backing from leading institutional investors and a current portfolio of over 30 companies primarily focused in the growth sectors of the economy, including media and communications, information technology and healthcare. Key3Media Group Inc.'s 11.25% bonds due 2011 (KME11USR1) are trading at about 4 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=KME11USR1for real-time bond pricing. LAIDLAW INC: Offering $400 Million of Senior Notes to Investors --------------------------------------------------------------- Laidlaw Inc., is planning an offering of $400 million of senior notes to certain institutional investors in an offering exempt from the registration requirements of the Securities Act of 1933 and the prospectus requirements under Canadian securities laws. The issuer of the notes will be Laidlaw International, Inc., the Delaware corporation that will emerge from bankruptcy as the ultimate parent company of the Laidlaw businesses. Laidlaw intends to use the net proceeds from the offering, together with anticipated borrowings under Laidlaw's new senior secured credit facility, to fund a portion of the distributions to creditors under Laidlaw's plan of reorganization. The senior notes to be offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. In Canada, the senior notes have not been qualified by a prospectus and may not be offered or sold except pursuant to an exemption from the prospectus requirements under Canadian securities laws. LEVI STRAUSS: More Than 92% of Outstanding 6.80% Notes Tendered --------------------------------------------------------------- Levi Strauss & Co. has successfully completed its tender offer for its outstanding 6.80% Notes due 2003. As of 9:00 A.M. Eastern Daylight Time on May 7, 2003, the scheduled expiration date, $192,291,000 in aggregate principal amount of Notes, including $8,404,000 tendered under guaranteed delivery procedures, had been validly tendered, pursuant to the Offer to Purchase dated April 8, 2003. The Company accepted for payment all Notes validly tendered in the Offer and sent payment to the Trustee on May 9, 2003. Credit Suisse First Boston acted as the Dealer Manager and Georgeson Shareholder Communications served as the Information Agent in connection with the Offer. As reported in Troubled Company Reporter's January 29, 2003 edition, Levi Strauss & Co.'s new $750MM secured bank facility, maturing in 2006, is rated 'BB' by Fitch Ratings. Fitch rates Levi's $2.1 billion senior unsecured debt 'B+'. The two-notch differential between the secured bank facility and the senior unsecured debt reflects the significant asset protection provided by the security. The Rating Outlook remains Negative, reflecting the ongoing challenges Levi faces in sustaining the growth in revenues it reported in its most recent quarter. Levi Strauss & Company's 11.625% bonds due 2008 (LEVI08USR1) are trading at about 85 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=LEVI08USR1 for real-time bond pricing. LODGENET: Wellington Management Discloses 13.24% Equity Stake ------------------------------------------------------------- Wellington Management Company, LLP, beneficially owns 1,643,700 shares of the common stock of LodgeNet Entertainment Corporation with shared voting power over 549,200 such shares, and shared dispositive powers over the entire aggregate amount held. The 1,643,700 shares represent 13.24% of the outstanding common stock of LodgeNet Entertainment. LodgeNet Entertainment Corporation -- http://www.lodgenet.com-- is the leading provider in the delivery of broadband, interactive services to the lodging industry, serving more hotels and guest rooms than any other provider in the world. These services include on-demand digital movies, digital music and music videos, Nintendor video games, high-speed Internet access and other interactive television services designed to serve the needs of the lodging industry and the traveling public. As the largest company in the industry, LodgeNet provides service to 960,000 rooms (including more than 900,000 interactive guest pay rooms) in more than 5,700 hotel properties worldwide. More than 260 million travelers have access to LodgeNet systems on an annual basis. LodgeNet is listed on NASDAQ and trades under the symbol LNET. As of March 31,2003, LodgeNet Entertainment Corporation records a total shareholders' equity deficit of about $108,641,000 compared to $101,304,000 in December 31,2002. MADISON RIVER TELEPHONE: Loss in Access Lines Spurs Neg. Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised the outlook on Madison River Telephone Co. LLC (corporate credit rating 'B') and related entities to negative from stable because of the continued loss in access lines related to the economy, and the uncertainty related to the full impact of Fort Stewart, Georgia's troop deployment on that local community's access lines. As of March 31, 2003, total debt outstanding was about $654.9 million. Net debt, excluding the Rural Telephone Finance Cooperative subordinated capital certificates, was about $611 million. Mebane, North Carolina-based Madison River is a private rural local exchange company providing communications services to business and residential customers in North Carolina, Alabama, Mississippi, and Illinois. "Continued loss in access lines could have a significant impact on the company's cash flow growth in the near term. The ability to offset this loss, reduce debt leverage, and meet debt maturities will be essential to maintaining the current rating," said credit analyst Rosemarie Kalinowski. In the first quarter of 2003, the company's incumbent local exchange carrier business lost 1,950 voice access lines, or about 1% of total lines since year-end 2002. In 2002, the ILEC lost 4,560 voice access lines or 2.3% of total voice lines. The company's ILEC operations are about 92% of total revenues, and the majority of cash flow. The remainder is contributed from its competitive local exchange carrier business, which has been scaled back. To offset somewhat the decline in access lines, Madison River has been successfully increasing digital subscriber line (DSL) penetration and promoting bundled service offerings. In the first quarter of 2003, total debt to EBITDA annualized improved to the 7.0x area. Net debt to EBITDA was about 6.3x. Assuming no acquisitions and a reduced capital expenditures budget, the company should be able to meet debt maturities through 2004. Increased debt maturities in 2005 will require refinancing or additional funding from the RTFC. MAGELLAN HEALTH: Wants to Sell New Mexico Property for $1.8 Mil. ---------------------------------------------------------------- Stephen Karotkin, Esq., at Weil, Gotshal & Manges LLP, in New York, informs the Court that debtor Charter Hospital of Santa Teresa, Inc., is the owner of certain non-residential real property and personal property located in the County of Dona Ana, New Mexico, which was previously used as a psychiatric hospital. However, five years ago, the Magellan Health Debtors determined to cease operations at all of their psychiatric hospitals and began marketing the Property. In the four years since the Debtors began marketing the Property, the Debtors have received only two purchase offers. The Debtors received the first offer to purchase the property two years ago. However, the parties were unable to consummate a sale of the Property at that time because the potential purchaser was not able to obtain financing. Recently, Mr. Karotkin reports that the Debtors received an offer to purchase the Property from the Board of Education of the Gadsen Independent School District for $1,800,000. Prior to the Petition Date, the Debtors determined to enter into an agreement dated January 31, 2003 with Gadsen regarding the sale of the Property, which provides for payment in four installments. The $750,000 initial payment would be made on the date of the closing, plus subsequent payments of $364,000, $378,560 and $393,702, will be made annually over the next three years, which include interest at the rate of 4% per year. The Agreement also provides for the Property to be sold free and clear of all liens and encumbrances. In addition, the Debtors are responsible for the payment of a 6% commission of the Purchase Price to RECON, the Debtors' real estate broker, after the closing of the sale. Accordingly, pursuant to Section 363 of the Bankruptcy Code, the Debtors seek the Court's authority to sell the Property, free and clear of liens, claims and encumbrances to Gadsen pursuant to the terms and conditions set forth in the Agreement and pay the commission to RECON after the closing of the sale. The Debtors submit that the decision to sell the Property pursuant to the Agreement is based on their sound business judgment and should be approved. Mr. Karotkin points out that the Debtors are no longer in the psychiatric hospital business and, therefore, have no practical use for the Property. Moreover, the Debtors have marketed the Property for four years, during which time they only received two offers. The Debtors have also determined that Gadsen's offer is in the best interests of their estates and creditors. Mr. Karotkin believes that the sale pursuant to the Agreement is the only viable alternative and, moreover, will enable to the Debtors to be relieved of any further costs and expenses attendant to the ownership of the Property. The Debtors also submit that, in view of the exhaustive marketing effort that has taken place to date, there is no need for any further marketing effort. In accordance with Section 363(f) of the Bankruptcy Code, a debtor in possession may sell property under Section 363(b) "free and clear of any interest in the property of an entity other than the estate" if one of these conditions are satisfied: 1. applicable non-bankruptcy law permits sale of such property free and clear of interest; 2. the entity consents; 3. the interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on the property; 4. the interest is in bona fide dispute; or 5. the entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest. To facilitate the sale of the Property, the Debtors require authorization to sell it free and clear of any and all liens or interests that exist, with the liens, if any, to attach to the sale proceeds. Mr. Karotkin reports that the Debtors' prepetition lenders currently have a lien on the property. The Debtors are unaware of any other liens on the property. The Debtors propose that the liens on the Property attach to the sale proceeds with the same force, effect and priority as the liens have on the Property, subject to the rights and defenses, if any, of the Debtors and any party-in-interest. (Magellan Bankruptcy News, Issue No. 7: Bankruptcy Creditors' Service, Inc., 609/392-0900) MAGNATRAX CORP: Files for Chapter 11 Reorganization in Delaware --------------------------------------------------------------- Onex Corporation's subsidiary MAGNATRAX Corporation has filed a voluntary petition for reorganization under Chapter 11 in the United States. (All amounts in Canadian dollars unless otherwise stated). The decline in the engineered metal building products industry over the last three years combined with rapidly rising steel prices due to imposition of US import tariffs resulted in MAGNATRAX being unable to meet the financial requirements under its lending agreements. Onex and management of MAGNATRAX have been working with the senior debt holders and other creditor groups to arrange a restructuring of MAGNATRAX' debts. It is contemplated that Onex will have a minimal ownership interest in MAGNATRAX following the restructuring. All the debt of MAGNATRAX is without recourse to Onex or other Onex operating companies. Onex is not planning to make any further investment in the company. Onex Corporation has invested a total of approximately $172 million in MAGNATRAX. The value of that has been more than written off in Onex' consolidated financial results in years prior to 2003 with the inclusion of the losses of MAGNATRAX. Accordingly, Onex will record a gain to the consolidated financial statements upon the effective disposition of its interest in MAGNATRAX. Onex Corporation is a diversified company with annual consolidated revenues of approximately $23 billion and consolidated assets of approximately $18 billion. Onex is one of Canada's largest companies with global operations in service, manufacturing and technology industries. Its subsidiaries include Celestica Inc., Loews Cineplex Entertainment Corporation, ClientLogic Corporation, Lantic Sugar Limited, Rogers Sugar Ltd., Dura Automotive Systems, Inc., J.L. French Automotive Castings, Inc., Bostrom Holdings, Inc., InsLogic Corporation, Performance Logistics Group, Inc., Radian Communication Services Corporation and Galaxy Entertainment Inc. Onex shares trade on the Toronto Stock Exchange under the stock symbol OCX. For more information on Onex, visit its Web site at http://www.onex.com The company's security filings can also be accessed at http://www.sedar.com MAGNATRAX CORP: Case Summary & 30 Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: Magnatrax Corporation 1220 Old Alpharetta Road Windward Chase Suite 310 Alpharetta, Georgia 30005 dba Vicwest US fka ABCO Holdings Corp. Bankruptcy Case No.: 03-11402 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- American Buildings Company 03-11403 American Buildings Company Int'l, Inc. 03-11404 AMT/Beaman Corporation 03-11405 Associated Buildings Systems, Inc. 03-11406 Jannock, Inc. 03-11407 Jannock U.S.B.G., Inc. 03-11409 Janock Vinyl Group, Inc. 03-11410 Jenisys Engineered Products, Inc. 03-11412 Magnatran Corporation 03-11413 Magnatran Logistics, Inc. 03-11416 Magnatrax Finance Company 03-11417 Republic Builders Products Company 03-11418 Rescom Overhead Doors, Inc. 03-11419 Smith Door Distributing, Inc. 03-11420 U.S. Westeel, Inc. 03-11422 Windsor Door, Inc. 03-11424 Type of Business: Magnatrax is a diversified North American manufacturer and marketer of engineered building products and services for non- residential and residential construction markets Chapter 11 Petition Date: May 12, 2003 Court: District of Delaware Judge: Peter J. Walsh Debtors' Counsel: Joel A. Waite, Esq. Young Conaway Stargatt & Taylor The Brandywine Bldg. 1000 West Street, 17th Floor PO Box 391 Wilmington, DE 19899-0391 Tel: 302 571-6600 Fax : 302-571-0453 Total Assets: $207,000,000 Total Debts: $326,000,000 Debtors' 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Steel Trade Payable $4,863,000 Department at 40370 Atlanta, GA 31192 Chuck Beach, Sales Tel: 800-633-8226 Fax: 205-783-4190 National Steel Corp. Trade Payable $3,324,000 PO Box 12001 Dallas, TX 75312-0957 Vick Singh, Gen. Manager of Construction Tel: 800-522-7833 Fax: 574-273-7775 Chamberlain Group Trade Payable $2,073,000 PO Box 99152 Chicago, IL 60693 Jim Bowers, National Acct. Manager Tel: 800-323-2276 Fax: 630-993-6024 Steelscape Inc. Trade Payable $1,613,000 222 West Kamala River Road Kalama, WA 98625 Jim Schrumpf, Sales Manager Tel: 909-987-4711 Fax: 909-989-2125 BASF Trade Payable $1,449,000 26701 Telegraph Road Southfield, Michigan 48034-2442 Charles L. Parks, Sales Director Tel: 248-948-2084 Fax: 248-948-2101 Hanna Steel Corporation Trade Payable $1,010,000 3812 Commerce Avenue Fairfield, AL 35064 Dan Engstrom, Manager of Painted Sales Tel: 205-780-1111 Fax: 205-763-8291 J&F Steel, Inc. Trade Payable $438,000 PO Box 8500-8565 Philadelphia, PA 19178-8565 Mike Payne, Sales Manager Tel: 800-388-0590 Fax: 901-362-6249 SMI Steel, Inc. Trade Payable $379,000 PO Box 321188 Birmingham, AL 35232-1188 Ray Bauer, VP Sales Tel: 800-621-0262 Fax: 205-591-0262 Atlas Bolt & Screw Trade Payable $368,000 1628 Troy Road Asland, OH 44805 Randy Ridenour, Admin. VP Tel: 800-321-6977 Fax: 419-289-2564 Tricom Services Trade Payable $307,000 PO Box 440 Fairfield, AL 35064 Mark Doriety Tel: 205-788-1637 Fax: 205-788-1638 Lockwood Greene Professional Services/ $287,000 PO Box 75428 Subcontractor Charlotte, NC 28275-0428 Accounts Receivable Dept. Tel: 864-578-2000 Fax: 864-599-4546 Delta Metals Trade Payable $271,000 PO Box 531 Memphis, TN 38101-0531 Chuck Weaver, Sales Rep. Tel: 98041-575-3300 Fax: 870-739-0796 Ryder Transportation Lessor $260,000 Services 4712 South Freeway Forth Worth, TX 76115 Alan McCutcheon, Gen. Sales Manager Tel: 817-927-3300 Fax: 817-927-8659 McGriff, Seibels & Trade Payable $255,000 Williams, Inc. 2211 7th Avenue South Birmingham, AL 35233 Carol Moss, Claims Manager Tel: 205-252-9871 Fax: 205-581-9195 Ferralloy Corporation Trade Payable $249,000 Cookson Company Trade Payable $241,000 AmeriSteel Trade Payable $234,000 Xerox Canada Ltd. Trade Payable $219,000 New Process Steel Trade Payable $216,000 Vesey Air Lessor $206,000 SFS Intec Trade Payable $180,000 Sika Corporation Trade Payable $174,000 Arkansas Bolt Trade Payable $171,000 JG Schmidt Co. Inc. Trade Payable $163,000 OMI Industries Trade Payable $155,000 Dominion Building Products Trade Payable $153,000 Atlanta Metal Products Trade Payable $148,000 Navistar Leasing Trust Trade Payable $142,000 Navistar Leasing Company Lessor $126,000 McGraw Hill Construction Trade Payable $124,000 MALLARD CABLEVISION: Case Summary & Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Mallard Cablevision, L.L.C. 3281 Racquet Club Drive Suite B Traverse City, Michigan 49684 Bankruptcy Case No.: 03-11391 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- SunTel Communications, LLC 03-11392 SM Cable Holdings, LLC 03-11393 Mallard Holdings, Inc. 03-11394 Type of Business: The Debtors provide cable television services to non-metropolitan markets in 11 states. Chapter 11 Petition Date: May 9, 2003 Court: District of Delaware Debtors' Counsel: Michael David Debaecke, Esq. Blank Rome LLP 1201 Market St. Suite 800 Wilmington, DE 19899 Tel: (302) 425-6400 Fax : (302) 425-6464 Total Assets: Total Debts: ------------- ------------ Mallard Cablevision $68,961,787 $102,035,458 SunTel Communications $61,410,494 $22,899,115 SM Cable Holdings $49,363,409 $29,103,299 Mallard Holdings $0 $0 A. Mallard Cablevision's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ CDPQ SM Cable, Inc. $2,816,159 2001 Avenue McGill College, 7 'etage Montreal, Quebec, Canada H3A 1G1 Attn: Yvan Deschsamps VL Asset Management, LLC $1,065,000 Attn: Steven A. Buxbaum 1000 Louisiana, Suite 4300 Houston, TX 77002 National Cable Television Cooperative $759,485 Attn: Kelly Qandil PO Box 414826 Kansas City, MO 64141-4826 NC IV, Inc. d/b/a NCII $322,913 Attn: Bob Price 6150 Porter Road Sarasota, FL 34240 Georgia Power Company $259,652 96 Annex Atlanta, GA 30396 Orangeburg County Treasurer $225,714 NBC, Inc. $103,410 CBS Cable $129,538 Dechert Price & Rhoads $126,078 Citrus County Tax Collector $112,639 Savannah Electric $102,174 Gulf Power Company $60,044 Alabama Power Company $47,846 Baldwin County Electric $30,311 Fox Cable Networks Group $54,595 Pacificorp $47,023 Covington Electric Corp. $37,388 Snapping Shoals Electric $32,102 The Hartford $30,490 USA Cable $44,463 B. SunTel Communications' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ National Cable Television Cooperative $429,916 Attn: Kelly Qandil PO Box 414826 Kansas City, MO 64141-4826 A.D. Management, Inc. $328,165 Attn: Joe D. Acker PO Box 932 Fayette, AL 35555 Home Box Office $121,057 Alabama Power $186,851 McGuinn, Hillsman & Palefsky $90,000 Dechert Price & Rhoads $98,289 Cullman Electric Company $24,466 Delta Equipment $19,669 Disney/ABC Cable Networks $14,951 Flint Energies $14,118 Fox Cable Networks Group $44,442 Georgia Power Company $41,638 Houston County Board of Tax Assessors $35,474 Kern County California $54,661 PricewaterhouseCoopers, LLP $57,500 The Hartford $14,400 USA Network $19,409 Plumas County Treasurer $19,770 CBS Cable $21,101 Caisse de Depot ET $38,267 MANITOWOC CO.: Will Padlock National Crane Facility by Year-End --------------------------------------------------------------- The Manitowoc Company, Inc. (NYSE: MTW) will close its National Crane boom-truck manufacturing facility in Waverly, NE and will move production to the company's facility in Shady Grove, PA. Both facilities were acquired when Manitowoc purchased Grove Worldwide last year. The closing is expected to take place by the end of 2003. The transfer of production will improve long-term utilization and productivity given the advanced systems already in place at Shady Grove. Proceeds from the sale of assets are expected to equal or slightly exceed the after-tax costs associated with the move. These costs will primarily be reflected as an adjustment to the purchase price of Grove Worldwide. "As we continue to integrate Grove Worldwide, we will fully leverage the synergies available in order to ensure that the Crane segment is sized for profitability under current market conditions and that the business is positioned to take off when the economy improves," said Glen E. Tellock, president of Manitowoc's Crane Group. "Customers should be assured that our National Crane field sales and service support staff are not expected to change. Operationally, our Shady Grove plant offers world-class manufacturing equipment, processes, and systems. Our integration plans will include the creation of specialized teams from both locations to ensure a smooth transition, and our customers will continue to receive the highest quality products at exceptional values. Product quality and reliability will not be compromised. We will continue to focus on investing in new products, and our customers will continue to be supported by the highest quality sales and aftermarket support team in the industry," Tellock added. The Manitowoc Company, Inc. is the world's largest provider of lifting equipment for the global construction industry, including lattice-boom cranes, tower cranes, mobile telescopic cranes, boom trucks, and aerial work platforms. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. * * * As previously reported, Standard & Poor's assigned its single- 'B'-plus rating to The Manitowoc Company Inc.'s $175 million senior subordinated notes due 2012. At the same time, the double-'B' corporate credit rating was affirmed on the Manitowoc, Wisconsin-based company. In addition, the rating was removed from CreditWatch where it was originally placed on March 19, 2002, following the company's announcement of the acquisition of Grove Investors Inc. The outlook is negative. MISSION RESOURCES: Will Appeal Nasdaq Delisting Determination ------------------------------------------------------------- Mission Resources Corporation (Nasdaq:MSSN) announced that Nasdaq has rescheduled to June 5, 2003, a hearing before a Nasdaq Listing Qualifications Panel to review the Company's appeal of a Nasdaq Staff Determination to delist the Company's common stock from The Nasdaq National Market. The Company believes it has a business plan in place to achieve and sustain compliance with the Nasdaq Marketplace Rules and will present that plan during the hearing. Further, if Mission's request for continued listing on The Nasdaq National Market is ultimately denied, the Company will request that its common stock be transferred for trading on The Nasdaq SmallCap Market. Mission believes it will qualify for transfer to The Nasdaq SmallCap Market and will be eligible for an additional 180- calendar-day grace period to further implement its business strategy. Many of the details of this plan will be discussed tomorrow (10:00 a.m. CST) on the Company's scheduled First Quarter Earnings conference call Mission previously received a Nasdaq Staff Determination on Jan. 28, 2003, indicating that the Company had failed to comply with Nasdaq's minimum bid price requirement of $1.00 per share for continued listing of the Company's common stock on The Nasdaq National Market as set forth in Nasdaq Marketplace Rule 4450(a)(5). As a result, the Company's common stock was subject to delisting from The Nasdaq National Market at the opening of business on Feb. 6, 2003. Following procedures set forth in the Nasdaq Marketplace Rule 4800 Series, the Company requested an oral hearing before a Nasdaq Listing Qualifications Panel to review the Nasdaq Staff Determination. Prior to the hearing date, however, the Company was granted an additional 90 days or until April 28, 2003, to come into compliance with the minimum bid price requirement in accordance with SEC Release SR-NASD- 2003-34, and the hearing was therefore postponed. On May 2, 2003, Mission received a subsequent Nasdaq Staff Determination indicating that the Company had failed to regain compliance with Nasdaq's minimum bid price requirement during the aforementioned 90-day extension period. Accordingly, Nasdaq has rescheduled the hearing before the Nasdaq Listing Qualifications Panel for Thursday, June 5, 2003. The delisting of the Company's common stock will be stayed pending the Panel's decision, allowing it to continue to trade on The Nasdaq National Market under the symbol "MSSN." As previously stated, the Company intends to present a comprehensive plan to the Panel for achieving and sustaining compliance with the Nasdaq Marketplace Rules; however, the Company can make no assurance that the Panel will grant the Company's request for continued listing on The Nasdaq National Market or for transfer of its common stock for trading on The Nasdaq SmallCap Market. "Since our successful senior credit facility refinancing and the repurchase of $97.6 million of our senior notes in March, we have been developing a comprehensive business plan to further Mission's recovery. This plan includes a carefully evaluated exploration and development program that we are now implementing," said Robert L. Cavnar, chairman, president and chief executive officer. "We will present this plan to the Panel on June 5." Mission Resources Corporation is a Houston-based independent exploration and production company that drills for, acquires, develops and produces natural gas and crude oil in the Permian Basin of West Texas, along the Texas and Louisiana Gulf Coast and in the Gulf of Mexico. * * * As reported in Troubled Company Reporter's April 22, 2003 edition, Standard & Poor's Ratings Services withdrew its ratings on oil exploration and production company Mission Resources Corp. In addition, the ratings on Mission's senior subordinated notes due 2007 were also withdrawn. Standard & Poor's most recent corporate credit and subordinate ratings were 'CCC+' and 'CCC-', respectively, reflecting the ratings downgrade on April 1, 2003. The ratings prior to withdrawal reflected Mission's limited liquidity, diminished financial flexibility, and weak asset coverage. NATIONAL CENTURY: Proposes Medshares Sale Bidding Procedures ------------------------------------------------------------ To ensure that the Debtors' estates realize the maximum sale price for the Medshares Claim, National Century Financial Enterprises, Inc., and its debtor-affiliates ask the Court to approve competitive bidding procedures in connection with the sale of the Medshares Claim. The proposed Competitive Bidding Procedures are: (a) Only pre-qualified bidders will be entitled to submit a bid to purchase the Medshares Claim for at least the Minimum Bid and otherwise on the terms and conditions set forth in the Transfer Agreement at the Auction Sale; To be a Qualified Bidder, an entity must, on or before 12:00 noon, Eastern Time two business days prior to the date of the Auction Sale, provide: (1) a deposit in the form of a cashier's or certified check or a letter of credit equal to 10% the Cash Portion -- a Bidder Deposit; (2) a fully executed purchase agreement, which will substantially conform to the Transfer Agreement, except as to price; and (3) a detailed description of the sources and relevant amounts of equity or debt financing. If financing will be provided by external sources, a bidder must include copies of relevant commitment letters and identify the individuals at the financing institutions so that the Debtors may contact them. (b) Nothing in these procedures will impair the right of any creditor whose claim is secured by a lien against the Medshares Claim to bid at the Auction Sale. In accordance with Section 363(k) of the Bankruptcy Code, if the creditor purchases the Medshares Claim, the creditor may offset its claim against the purchase price; (c) Copies of all written offers received by the Debtors, in care of David Coles, the Debtors' acting CEO, from a Qualified Bidder will be promptly provided to counsel to the Creditors' Committee and counsel to the Subcommittees; (d) The Auction Sale will take place by open bidding and will be presided over by the Debtors. Bidding at the Auction Sale will be limited to Qualified Bidders. Commencing with the highest bid submitted by a Qualified Bidder to purchase the Medshares Claim, competitive bidding among the two or more Qualified Bidders for the Medshares Claim will proceed in accordance with the Bidding Increment established; (e) The Auction Sale of the Medshares Claim will be on an "as is" and "where is" basis and will be without representation or warranties of any kind or nature whatsoever, except as set forth in the Transfer Agreement; (f) All bids for the Medshares Claim must be on a cash basis. Further, the bid of any Qualified Bidder will not be subject to any contingency whatsoever, except for Court approval and as may be contained in the Transfer Agreement; (g) Any offer must state that: (1) it constitutes a binding offer and that it will remain in effect through the date of closing of the sale of the Medshares Claim; and (2) the bidder is prepared to consummate the transaction one business day after the entry of the sale order. (h) At the conclusion of the Auction Sale, the Debtors will determine the highest and best offer for the Medshares Claim; (i) The Bidder Deposit submitted by a Qualified Bidder that is not the Successful Bidder will be returned to the Qualified Bidder within two business days after the closing of the sale of the Medshares Claim to the successful Bidder. The Bidder Deposit submitted by a Qualified Bidder that is the Successful Bidder will be retained by the Debtors as a credit against the winning bid; (j) In the event the Successful Bidder, as approved by the Court, fails to close its purchase of the Medshares Claim pursuant to the Transfer Agreement and the Sale Order, the Qualified Bidder who submitted the second highest competing bid at the Auction Sale, as approved by the Debtors, will be deemed to be the Successful Bidder and will be obligated to close its proposed purchase of the Medshares Claim on the terms and conditions of its last bid; and (k) The closing of the sale to the Successful Bidder will take place on the first business day after entry of the Sale Order or as soon thereafter as practicable, provided all terms and conditions of the Transfer Agreement are satisfied. Mr. Oellermann explains that the sale of the Medshares Claim to the highest and best bidder will permit the Debtors to monetize promptly this estate asset. The Debtors also seek Court approval of the manner of notice of the Competitive Bidding Procedures and the proposed sale. No later than five business days after the Court enters its order approving the Competitive Bidding Procedures, the Debtors will file and serve a notice of the proposed sale of the Medshares Claim and a scheduled auction with respect to the claim. The Sale Notice will describe: -- the Medshares Claim, -- the minimum acceptable competing bid for the Medshares Claim, -- the minimum bidding increment for the Auction Sale, -- the Purchaser's and other parties rights to participate in the Auction Sale and to make higher and better offers, and -- a description of the Competing Bidding Procedures. The Notice will be served to: -- the U.S. Trustee, -- the Creditors' Committee counsel, -- the Debtors' prepetition bank lenders' counsel, -- the counsel of the indenture trustees for the prepetition notes, -- the NPF VI Subcommittee's proposed counsel, -- the NPF XII Subcommittee's counsel, -- Uniscribe, -- Todd J. Garamella and his counsel, -- all parties that have asserted a security interest in the Medshares Claim, and -- parties that have filed requests for notice in these cases. Moreover, the Debtors will publish the Sale Notice in an appropriate industry-based periodical or website. "The proposed notice of the sale of the Medshares Claim is adequate and reasonable," Mr. Oellermann maintains. The Debtors believe that the Purchase Price that will be obtained through the Competitive Bidding Procedures for the Medshares Claim will be fair and reasonable under the circumstances. (National Century Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) NAVIGATOR GAS: Gets Court Nod to Hire Leaf Saltzman as Auditors --------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York gave its nod of approval to Navigator Gas Transport PLC and its debtor-affiliates' application to retain and employ Leaf, Saltzman, Manganelli, Pfeil & Tendler, LLP as their auditors. The Debtors are retaining Leaf Saltzman to audit financial statements and related disclosures and assist in preparing documents required by the Securities and Exchange Commission and statutory and other regulatory authorities around the world. Leaf Saltzman's auditing services are necessary to enable the Debtors to execute their duties as debtors and debtors in possession. The Debtors are required by various federal agencies to complete audited financial statements for the year ended December 31, 2002. Leaf Saltzman is particularly well suited to provide the type of professional services required by the Debtors since the firm provided audit services to the Debtors for their financial statements for the years 1999, 2000 and 2001. The Debtors will compensate Leaf Saltzman at a flat rate of $75,000 plus reimbursement of expenses, subject to a $13,000 cap. Navigator Gas Transport PLC's business consists of the transport by sea of liquefied petroleum gases and petrochemical gases between ports throughout the world. The Company filed for chapter 11 protection on January 27, 2003 (Bankr. S.D.N.Y. Case No. 03-10471). Adam L. Shiff, Esq., at Kasowitz, Benson, Torres & Friedman LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $197,243,082 in assets and $384,314,744 in liabilities. NAVISTAR INT'L: Schedules Conference Cal Web Cast for Thursday -------------------------------------------------------------- Navistar International Corporation, (NYSE:NAV) the nation's largest commercial truck, school bus and mid-range diesel engine producer, will hold a live audio web cast at 10:00 a.m. Central Daylight Time, Thursday, May 15, 2003 to discuss financial results for the second fiscal quarter ended April 30, 2003, business highlights and the outlook for the remainder of the year. The company's earnings news release will be distributed on Business Wire approximately three hours in advance of the call. Speakers on the call will be Daniel C. Ustian, president and chief executive officer and Robert C. Lannert, vice chairman and chief financial officer. The web cast can be accessed through a conference call link on the investor relations page of Navistar's Web site at http://www.nav-international.com/ Investors are advised to log on to the Web site at least 15 minutes prior to the call to allow sufficient time for downloading any necessary software. The financial and statistical information provided as part of the call will be available to investors on the investor relations page of the company's website prior to the start of the call. The web cast will be available for replay at the same address approximately three hours following its conclusion through 5 p.m. May 25. Headquartered in Warrenville, Illinois, Navistar International Corporation (NYSE:NAV) is the parent company of International Truck and Engine Corporation, a leading producer of mid-range diesel engines, medium trucks, heavy trucks, severe service vehicles and a provider of parts and service sold under the International(R) brand. IC Corporation, a wholly owned subsidiary, produces school buses. The company also is a private label designer and manufacturer of diesel engines for the pickup truck, van and SUV markets. Additionally, through a joint venture with Ford Motor Company, the company builds medium commercial trucks and sells truck and diesel engine services parts. International Truck and Engine has the broadest distribution network in the industry. Financing for customers and dealers is provided through a wholly owned subsidiary. Additional information can be found on the company's Web site at http://www.nav-international.com As reported in Troubled Company Reporter's December 17, 2002 edition, Fitch Ratings assigned a 'BB' to Navistar International Corporation's $190 million senior unsecured convertible notes. The Rating Outlook is Negative. Fitch Ratings downgraded Navistar's existing securities to reflect the continuing weak industry environment in Navistar's core medium and heavy-duty truck markets in North America, recent occurrences in Navistar's joint efforts with Ford, continued headwinds in certain cost areas such as employee and retiree healthcare costs, and concerns over the impacts of substantial cash calls associated with scheduled pension contributions and restructuring charges. Mitigating these negatives were some positive factors such as the completion of Navistar's major capital expenditure program, overall product competitiveness, restructuring efforts that have positioned them for the future, and the recent conclusion of contract negotiations with the UAW. NEENAH FOUNDRY: Moody's Hatchets Ratings over Limited Cash Flow --------------------------------------------------------------- Moody's Investors Service lowered the ratings of Neenah Foundry Company and revises outlook to stable. Downgraded Ratings To From * Neenah's aggregate $282 million C Caa3 11.125% guaranteed senior sub. notes, Series B, D and F, due May 2007; * Neenah's $120 million of remaining Caa3 Caa1 rated guaranteed senior secured bank credit facilities, consisting of: * $1.6 million guaranteed senior secured tranche A term loan due September 2003; * $112.7 million guaranteed senior secured tranche B term loan due September 2005; * $7.2 million guaranteed senior secured acquisition loan facility due June 2004 * Neenah's senior implied rating; and Caa3 Caa1 * Neenah's senior unsecured issuer rating Ca Caa2 The ratings downgrade reflect Moody's belief that Neenah's will continue to have insufficient cash flow to pay for the company's high debt load. Neenah is in violation of its March 2003 bank covenants and failed to make its $15.8 million May 1, 2003, interest payment on its senior subordinate notes. The company is 7operating under a forbearance pact and the interest payment is subject to a 30-day grace period. Neenah Foundry Company, a manufacturer and marketer of metal castings and forgings for the heavy municipal market and selected segments of the industrial markets, is based in Neenah, Wisconsin. NQL DRILLING: Dec. 31 Working Capital Deficit Tops $17 Million -------------------------------------------------------------- NQL Drilling Tools Inc. announces year end and fourth quarter results for the period ended December 31, 2002. (All monetary amounts are expressed in Canadian dollars unless specified otherwise). The Company recorded revenues of $96.7 million for the year ended December 31, 2002. This represents a decrease of 23% over revenues for the year ended December 31, 2001, which were $125 million. A net loss of $5.9 million was recorded in 2002, a decrease of 138% over the 2001 income before goodwill amortization of $15.6 million. The Company recorded revenues of $30.3 million during the fourth quarter of fiscal 2002. This represents a decrease of 1% over 2001 revenues, which were $30.7 million. A net loss of $2.5 million was recorded for the quarter compared to income before goodwill amortization of $1.4 million. Revenues Geographic Segments Canadian revenues for the quarter were $8.7 million compared to $10.2 million in 2001 and $6.6 million in Q3 of 2002. The decrease in revenues can be attributed to general decline in drilling activity in the Canadian market compared to the prior year. Black Max operations in Canada posted revenues of $3.4 million compared to $5.1 million last year and $2.7 million last quarter. CanFish operations showed revenues for the quarter of $4.4 million, which equaled the revenues, earned in Q4 of 2001. The remaining revenues came from DPI and NBJ, which posted revenues of $0.60 and $0.40 million, respectively. Similar results occurred in the US, with the substantial decline in drilling activity in that market. Overall, US revenues for the fourth quarter were $12.8 million compared to $12.6 million in the fourth quarter of 2001 and $9.0 million in the third quarter of 2002. Black Max operations in the US had revenues of $6.6 million compared to $8.7 million in the prior year. Ackerman International posted revenues of $2.1 million compared to $2.6 million. DPI had revenues for the quarter in the US of $4.2 million. Internationally, the Company had revenues of $8.8 million compared to $7.9 million in 2001 and $7.7 million in the third quarter of 2002. The largest contributor to international revenues for the quarter was the Company's DPI operation, posting revenues of $3.8 million. Venezuelan operations posted revenues of $1.6 million compared to $4.1 million in the prior year. U.A.E. operations had revenues of $1.1 million compared to $0.9 million in the prior year. Other international revenues came from operations in Holland, Bolivia, Argentina and Mexico. DPI's revenues were earned in the Middle East, Europe, Africa and Asia Pacific regions. The Company's geographic revenue distribution in the fourth quarter of 2002 was divided as follows: Canada - 29%; US - 42%; and International - 29%. (Total for 2002: Canada - 30%; US - 40%; International - 30%) In the fourth quarter of 2001, this allocation was Canada - 33%, US - 41% and International - 26%. Expenses Direct expenses for the fourth quarter of 2002 were $17.5 million (58% of sales) compared to $17.7 million (58% of sales) for 2001. This resulted in a gross margin for the quarter of 42%, which equaled that of the prior year. General and administrative expenses were $10.4 million, representing 34% of revenues, compared to $5.8 million or 19% in 2001. Amortization expense increased to $14.8 million in 2002 from $12.4 million in the prior year. Interest expense in the quarter was $2.3 million compared to $0.8 million last year. The increase can be attributed to interest and financing costs incurred on funds borrowed to acquire DPI, as well as increases in the Company's operating lines. Net Earnings Net loss for the fourth quarter was $2.5 million compared to income before goodwill amortization of $1.4 million in 2001. Effective January 1, 2002, the Company adopted new accounting standards for business combinations, goodwill and other intangible assets. Under the new standards of accounting, goodwill is no longer amortized. Goodwill amortization recorded in the fourth quarter of 2001 was $0.7 million. Restatement of Historical Financial Results The Company has recently restated its financial statements for the years ended 2001 and 2000 and the sixteen months ended December 31, 1999. These restated financial statements have recently been filed on Sedar. The restatements related primarily to changes in the areas of foreign currency translation and future income taxes. Financing The Company is presently in violation of its profit-based covenants, as stipulated in the terms of its current financing arrangements. The Company's bankers continue to work with management on restructuring its debt facilities and have provided an extension to May 30, 2003. Outlook Due to the short-term nature of the Company's present debt facilities, management will take a cautious approach for the balance of 2003 to ensure continued stability for its worldwide group of companies. Management will continue to work with its bankers and financial advisors to secure a long-term solution for its debt facilities. We will also continue to focus on increasing utilization of existing downhole tools and inventory and plan to transfer these assets into areas where the best return can be achieved. While many tools were moved into Canada from the US during the busy winter drilling season, many of these tools are now being returned to the US as this market begins to strengthen. Due to the slowdown in some the Company's South American markets, downhole tools and inventory are being shifted to more active markets. With the recent increase in drilling activity in many of the Company's markets, we are optimistic of the prospects for the balance of 2003 and into 2004. NQL Drilling Tools' December 31, 2002 balance sheet shows that its total current liabilities exceeded its total current assets by about $17 million. NQL Drilling Tools Inc. is an industry leader in providing downhole tools and technology used primarily in drilling applications in the oil and gas, environmental and utility industries on a worldwide basis. NQL Drilling Tools Inc. shares are traded on the Toronto Stock Exchange under the symbol: "NQL.A". Update on Financing Arrangements As reported in Troubled Company Reporter's April 9, 2003 edition, the Company said that under the terms of its current financing arrangements the Company is subject to various financial covenants. Due to the aforementioned factors, the Company is presently in violation of its profit-based covenants. The Company's bankers continue to work with management on restructuring its debt facilities and have extended the bridge loan to April 9, 2003. The Company has appointed a Special Committee of the Board of Directors having as its mandate to work with management and its financial advisors to explore refinancing alternatives and to resolve issues relating to the Company's bridge financing. OMNOVA: Fitch Rates New Notes & Debt Facility at BB/BB+ ------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to OMNOVA Solutions Inc.'s proposed $165 million senior secured notes due 2010 and a rating of 'BB+' to Omnova's proposed senior secured credit facility. Omnova recently announced its plans to refinance its existing $60 million accounts receivable securitization program and $180 million senior secured credit facility. These existing facilities would be replaced by $165 million senior secured notes and a $100 million senior secured credit facility. The new notes would be secured by domestic property, plant and equipment (PPE). The new credit facility will be a borrowing base revolver with availability based on eligible accounts receivable and eligible inventory. In addition, the three-year credit facility will be secured by a first perfected lien in all assets of the company other than the PPE securing the new notes and pledges of subsidiary stock will be limited to 100% of two domestic subsidiaries. The ratings reflect the company's size, market position, liquidity and financial performance. Omnova is a small company with EBITDA of $37 million on revenue of $678 million for the trailing twelve month period ended Feb. 28, 2003. Its size makes the company vulnerable to downside events. However, the company has remained cash flow positive during the current cyclical downturn. In addition, although Omnova is small, the company provides differentiated design and performance products; has leading market positions in commercial wall covering, coated fabrics, and vinyl and paper laminates; and is a leading producer of styrene butadiene latex. These market positions, as well as reductions in capital expenditure and the elimination of the dividend, have helped the company during the trough. On a trailing twelve month basis for the period ended Feb. 28, 2003, Omnova's EBITDA-to-interest incurred was 4.0x and its total debt (including the A/R program balance)-to-EBITDA was 5.4x. The rating on the new secured credit facility is one notch higher than the rating on the new notes in part because of the liquidity of its collateral and the expected recovery for the lenders in the event of default. OMNOVA Solutions is a specialty chemical company with nearly $44 million in EBITDA on sales of $681 million in 2002. The company produces commercial wallcovering, coated fabrics, commercial roofing membrane systems, adhesives, and paper and paperboard chemicals. End-use markets for Omnova's products include construction and home furnishings, textiles, and paper. OMNOVA SOLUTIONS: Fitch Puts BB+ Rating Outlook on Watch Neg. ------------------------------------------------------------- Fitch Ratings has changed the Outlook on OMNOVA Solutions Inc.'s ratings to Negative from Stable. The current rating on the company's senior secured debt is 'BB+'. Omnova's ratings are based on the company's strong market positions, its size, liquidity and financial performance. The company is a leader in areas such as commercial vinyl wallcovering, vinyl and urethane fabrics, and styrene-butadiene latex. In addition, OMNOVA has been able to remain cash flow positive at the trough of the business cycle. However, the company's cash flows are relatively small and EBITDA has weakened. Moreover, the February 2003 amendment to the existing credit facility has reduced facility commitments to $180 million in May and increased interest rates. For the trailing twelve months ended Feb. 28, 2003, EBITDA-to-interest incurred was 4.0x and total debt (including the A/R program balance)-to-EBITDA was 5.4x. The Negative Rating Outlook reflects the uncertainty of demand improvement in the near-term and the potential for higher average raw material costs for 2003. Omnova has been negatively affected by price increases in styrene, butadiene, and polyvinyl chloride; higher average raw material costs may continue to pressure operating margin. In addition, the company awaits an improvement in refurbishment activity, but the pace and strength of improving demand in the near-term remains unclear. OMNOVA Solutions is a specialty chemical company with nearly $37 million in EBITDA on sales of $681 million in 2002. The company produces commercial wallcovering, coated fabrics, commercial roofing membrane systems, adhesives, and paper and paperboard chemicals. End-use markets for Omnova's products include construction and home furnishings, textiles, and paper. PAC-WEST: CPUC Votes on New Interconnection Agreement with SBC -------------------------------------------------------------- Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of integrated communications services to service providers and business customers in the western U.S., announced that the California Public Utilities Commission voted on its new interconnection agreement with SBC Communications for operations in California. The new three-year agreement establishes the rules under which Pac-West and SBC interconnect their networks so that each carrier's customers can successfully call customers on the other carrier's network, and each carrier will be compensated for the associated costs. John Sumpter, Pac-West's Vice President of Regulatory, commented, "The modified alternate decision adopted today is a vast improvement over what was initially proposed. We are grateful to the CPUC for their efforts in reworking the ICA to find a middle ground we believe both parties can live with." Sumpter continued, "The terms of the agreement require Pac-West to modify our network. In recognition of the effort that is required, the CPUC has granted Pac-West until July of 2004 to enact these modifications. The CPUC has also made revenue concessions in the modified alternate proposal that will allow Pac-West to offset potential increased transport costs. We would like to recognize the CPUC for taking the time necessary for crafting a decision that appears to act in the best interests of both parties, but more importantly, for California's consumers." Wally Griffin, Pac-West's Chairman and CEO, commented, "We are very pleased that the uncertainty surrounding our ICA with SBC is over and we can now move forward with finalizing the contract details. Once this is complete, we will be in a position to assess the impacts to our business model and make any required modifications. In general, the decision appears to be within a range that is workable. While it does require us to make significant investments in our network that we wouldn't otherwise do, the decision provides us the time to do so with the benefits of potential revenue upside and an expanded network to serve our customers." Founded in 1980, Pac-West Telecomm, Inc. is one of the largest competitive local exchange carriers headquartered in California. Pac-West's network carries over 100 million minutes of voice and data traffic per day, and an estimated 20% of the dial-up Internet traffic in California. In addition to California, Pac- West has operations in Nevada, Washington, Arizona, and Oregon. For more information, please visit Pac-West's Web site at http://www.pacwest.com As reported in Troubled Company Reporter's May 1, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Stockton, Calif.-based competitive local exchange carrier Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on the 13.5% senior notes due 2009 has been lowered to 'D' from 'C'. The downgrade is due to the company's completion of a cash tender offer to exchange its 13.5% senior notes at a significant discount to par value. Standard & Poor's views such an exchange as coercive and tantamount to a default on the original terms of the notes. Given the company's significant dependence on reciprocal compensation (the rates of which the company expects to further decline in 2003) and its limited liquidity, Pac-West will likely find the implementation of its business plan continue to be challenging. POLYPHALT: Discussing Likely Default Under Grandwin Credit Pact --------------------------------------------------------------- Polyphalt Inc. reported results for the first quarter of operations, ended March 30, 2003. Polyphalt's revenues for the first quarter of the year were $1.5 million, an increase of $100,000 compared to the prior period. The Company reported a loss of $871,049 for the first quarter compared to a loss of $550,156 in the same period of 2002. The increase in the loss was mainly related to a lower 2003 licensing fee and royalties by $98,500 due to the timing difference and an increase in expenses of approximately $263,000. Factors that contributed to the increase in expenses include: - One time gain due to reversal of a non-recurring accrual in 2002 $ 100,000 - Foreign exchange gain in 2002 vs foreign exchange loss in 2003 due to stronger Canadian dollars compared to the US dollars $ 72,000 - One time legal fee relating to the loan offered by Grandwin and increase in insurance costs due to the tight insurance market after 911, etc. $ 91,000 On February 21, 2003, Polyphalt secured a loan facility of up to $4,000,000 from its majority shareholder, Grandwin Holdings Limited. The loan bears interest at the Canadian Imperial Bank of Commerce prime rate plus 1% to be paid monthly on the outstanding balance. In addition, Polyphalt is responsible for paying the applicable withholding taxes related to the interest payments to Grandwin. Proceeds from the loan will be used to meet Polyphalt's working capital requirements for 2003. As at the end of March 2003, $1,000,000 of the loan has already been drawn down. In 2003, Polyphalt restructured its business along market lines into Paving and Roofing Divisions. For the Paving Division, revenue activities are typically lower in the first quarter reflecting the seasonality of asphalt paving. During the quarter, the Division continues to actively pursue new licensing agreements in Europe and North America and the sale of Polyblend(TM), a formulated polymeric modifier in powder form. As the market in North America becomes more mature in the PMA technologies, the ability to retain current licensees becomes more challenging. Polyphalt is currently considering different models to maximize the utilization of our technical capabilities to better serve our customers. In March, one of Polyphalt's largest licensees (representing approximately 22% of Polyphalt's licensing and royalty revenue in 2002) provided the company with notice that it was terminating its agreement with the company, effective June, 2003. This termination will greatly affect the outlook of Polyphalt for 2003. Management is currently working with this licensee to review alternatives in order to continue the relationship. Polyphalt is also currently discussing with Grandwin whether or not the termination of this license constitutes an event of default under the loan agreement with Grandwin. The results for the Roofing Division in the first quarter were encouraging with 2003 sales 19% stronger than 2002. The growth in sales revenue was both a direct result of an increase in prices instituted in December 2002 and a slow but steady improvement in the markets that the Roofing Division serves. The Division will continue to pursue new sales opportunities in the retail and contractor business in order to increase its capacity utilization. ISO registration is expected to complete in 2003 which will enhance the Division's focus in quality and continuous improvement. While we are cautious regarding the outlook of the world economy and its impact on Polyphalt customers in 2003, Polyphalt is forecasting that through a blend of cost control, margin improvement and continued expansion, our bottom line performance will continue to improve. Polyphalt is a publicly traded, Canadian based, technology company that develops and commercializes novel Polymer Modified Asphalt products and technology to serve North American and international infrastructure markets. Polyphalt has a broad portfolio of proprietary technologies, several of which combine blends of plastics and rubbers, including recycled materials. These processes help to produce cost-effective and longer- lasting pavements, roofing materials and other bituminous building and industrial products. Polyphalt's international license network comprises thirteen leading Asphalt refiners and suppliers throughout the United States, Canada, Australia, Europe and China. In February 2001, Polyphalt acquired GH International, a leading Canadian producer of roof coatings, adhesives and pavement maintenance products. Polyphalt is a member of Cheung Kong Infrastructure group of companies. CKI is the largest publicly listed infrastructure company in Hong Kong with investment in power, infrastructure projects, infrastructure materials and infrastructure-related businesses. The company has operations in Hong Kong, mainland China, Australia, Canada and the Philippines. PRESTOLITE: S&P Keeps Watch on Low-B Ratings over Potential Sale ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' corporate credit and senior unsecured ratings on Ann Arbor, Michigan-based Prestolite Electric Inc., on CreditWatch with positive implications, indicating that ratings could be raised or affirmed. The CreditWatch listing follows Prestolite's announcement that it has retained CIBC World Markets Corp. to assist in the potential sale of the company, a global manufacturer of alternators and starter motors for automotive original equipment manufacturers and the aftermarket. "We expect that a sale of the company could result in a higher rating, should Prestolite be sold to a significant strategic buyer or a financial buyer that intended to establish a more robust capital structure," said Standard & Poor's credit analyst Nancy Messer. If no sale is consummated, Standard & Poor's would review the company's stand-alone strategies and financial policies, and ratings could be affirmed. Standard & Poor's will resolve the CreditWatch listing when details of a sale transaction are made final or the plans to sell the company are discontinued. The company had total balance sheet debt of about $106 million as of year-end 2002. Prestolite's products are sold in the heavy- and medium-duty truck and bus markets, accounting for more than 50% of sales, and the light-vehicle automotive market. PROTECTION ONE: Dr. Gene A. Budig Resigns from Company's Board -------------------------------------------------------------- Protection One, Inc. (NYSE: POI) announced that Dr. Gene A. Budig has resigned from the Board of Directors of Protection One, Inc., and Protection One Alarm Monitoring, Inc., effective immediately, to further pursue his academic interests. Dr. Budig had served as a director since 2001. "Dr. Budig brought a great deal of experience and insight to our board. We are grateful for his contributions to the Protection One board and wish him much success in his future endeavors," said Richard Ginsburg, President and Chief Executive Officer of Protection One. Protection One, one of the leading commercial and residential security service providers in the United States, provides monitoring and related security services to more than one million residential and commercial customers in North America and is a leading security provider to the multifamily housing market through Network Multifamily. For more information on Protection One, go to http://www.ProtectionOne.com As previously reported in Troubled Company Reporter, Standard & Poor's placed its 'B' corporate credit and other ratings for Protection One Alarm Monitoring Inc., on CreditWatch with negative implications. The action was taken because of concerns associated with the intention of 88% owner Westar Energy Inc., (BB+/Watch Neg/--) to dispose of Protection One and the potentially negative impact of recent directives by the Kansas Corporation Commission. RIVERWOOD INT'L: Invests $75M to Enhance Technology & Production ---------------------------------------------------------------- Riverwood International Corporation, a leading provider of paperboard and packaging solutions, plans to add new manufacturing technology and equipment designed to enhance the competitiveness of its beverage carton converting operations. The capital investment of approximately $75 million and other initiatives will be made over the next 30 months. "We intend to build on our competitive position as a low cost, high quality supplier to our global beverage carton customers," said Stephen M. Humphrey, President and Chief Executive Officer of Riverwood. "These improvements are designed to enable us to maintain our high production standards and provide some of the most sophisticated graphic packaging products available." As part of implementing new automated systems and adding press capacity, Riverwood will now serve customers from four converting facilities located in Ohio, Louisiana, Mississippi and Georgia. Specific features of these initiatives include: * A capital investment of approximately $75 million in plant automation and new press capacity. * Transfer of beverage carton converting operations from its Fort Atkinson, WI plant to its West Monroe, LA facility. * Consolidation of soft drink carton converting operations to Riverwood's Perry, GA facility. "We are fortunate that our business model, our stature with our customers and our employee commitment will enable us to implement these improvements as seamlessly as possible," said Mr. Humphrey. Riverwood expects the consolidation of facilities to take place over the next 30 months and to result in the addition of new positions in some locations and reductions elsewhere, and at the same time to enhance the Company's ability to produce quality products. Riverwood International Corporation is a leading integrated provider of paperboard packaging solutions to multinational beverage and consumer products companies. Headquartered in Atlanta, Riverwood has annual sales of over $1.2 billion and approximately 4,100 employees at its operations in six countries. Riverwood has approximately $900 million in public debt outstanding and represents substantially all of the business assets of Riverwood Holding, Inc. A fund managed by CD&R led the $2.8 billion purchase of Riverwood from Manville Corporation in March 1996. Additional information about Riverwood can be found at http://www.riverwood.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's said that its ratings on Riverwood International Corp., including its single-'B' corporate credit rating, remain on CreditWatch with positive implications where they were placed on May 9, 2002, following the company's announcement of a planned initial public offering (IPO) of $350 million of common stock. SIEBEL SYSTEMS: Conducts Internal Review of Executive Statements ---------------------------------------------------------------- Siebel Systems, Inc. (Nasdaq:SEBL), a leading provider of eBusiness applications software, announced that, in response to an inquiry from the Securities and Exchange Commission, it is conducting an internal review of the circumstances involving recent statements that were reported by CBS MarketWatch to have been made by company executives. On May 6, 2003, the SEC contacted the company and indicated that a May 1, 2003 article on CBS MarketWatch had raised questions regarding the company's compliance with Regulation FD. The article stated that the company's stock had risen by $0.63 during the course of the day after a dinner attended by certain financial analysts, investors and executives of the company. The audit committee of the company's Board of Directors is directing the review of the company's compliance with applicable laws and company policies, and has engaged counsel in connection with such review. The company has not concluded that any violation has occurred. Upon completion of the review, Siebel Systems intends to take required and appropriate actions, if any. The company is cooperating in full with the SEC inquiry. The members of the company's audit committee are George T. Shaheen (Chairman), James C. Gaither and Charles R. Schwab. Shaheen is the former President, Chief Executive Officer and Chairman of the Board of Webvan Group, Inc. and the former Managing Partner and Chief Executive Officer of Andersen Consulting (now Accenture). Gaither is a Managing Director of Sutter Hill Ventures. Schwab is the Chairman and Co-Chief Executive Officer of The Charles Schwab Corporation. Siebel Systems, Inc. is a leading provider of eBusiness applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 3,500 customers worldwide, Siebel Systems provides organizations with a proven set of industry- specific best practices, CRM applications, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 28 countries. As reported in Troubled Company Reporter's April 29, 2003 edition, Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and 'B+' subordinated ratings on Siebel Systems Inc. At the same time, Standard & Poor's revised the company's outlook to negative from stable, reflecting a large decline in license revenues amid a still-challenging software spending environment. SIX FLAGS INC: Completes Tender Offer for 10% Senior Disc. Notes ---------------------------------------------------------------- Six Flags, Inc. (NYSE: PKS) has successfully completed the tender offer for its 10% Senior Discount Notes due 2008 (CUSIP No. 740540 AE 9). As of 5:00 p.m., New York City time, on May 7, 2003, the scheduled expiration date, Six Flags had accepted tenders of Senior Discount Notes from holders of 99.1% of the $401 million outstanding Senior Discount Notes pursuant to the Offer to Purchase dated April 9, 2003. Holders of Senior Discount Notes who tendered their Senior Discount Notes on or prior to 12:00 midnight, New York City time, on April 15, 2003, received the Total Consideration of 105.5% of the principal amount of the Senior Discount Notes validly tendered, plus accrued and unpaid interest up to, but not including, April 16, 2003. Holders who tendered their Senior Discount Notes after 12:00 midnight, New York City time, on the Early Tender Date but prior to the Expiration Date, received 105% of the principal amount of the Senior Discount Notes validly tendered, plus accrued and unpaid interest up to, but not including, the payment date. As previously announced, on April 16, 2003, Six Flags called for redemption, in accordance with the terms of the indenture governing the Senior Discount Notes, all Senior Discount Notes that remain outstanding after the expiration date of the tender offer, at the applicable redemption price of 105% of the principal amount thereof, plus interest accrued to the redemption date of May 16, 2003. Six Flags is the world's largest regional theme park company, currently with thirty-nine parks throughout North America and Europe. As reported in Troubled Company Reporter's April 11, 2003 edition, Standard & Poor's Ratings Services assigned its 'B' rating to Six Flags Inc.'s $430 million senior notes due 2013. Proceeds from the offering will be used to refinance its $401 million 10% senior discount notes due 2008. At the same time, Standard & Poor's affirmed its ratings, including its 'BB-' corporate credit rating, on the company. Oklahoma City, Oklahoma-based Six Flags is the largest regional theme park operator and the second-largest theme park company in the world. Total debt and preferred stock as of December 31, 2002, was $2.6 billion. SPECIAL METALS: Files Reorganization Plan in Lexington, Kentucky ---------------------------------------------------------------- Special Metals Corporation and its U.S. subsidiaries, as Debtors-in-Possession, have filed a joint plan of reorganization and accompanying disclosure statement in the U.S. Bankruptcy Court for the Eastern District of Kentucky in Lexington. The plan of reorganization contemplates a stand-alone plan in which the Company and its subsidiaries will continue to operate the businesses following the reorganization. As part of the reorganization process, numerous discussions and negotiations have been and will continue to be held among the Company and its major constituencies, including the Company's lenders, the unsecured creditors' committee, the salaried retirees' committee, the United Steelworkers of America, the International Association of Machinists and Aerospace Workers, and other parties in interest. The need to reduce costs and existing debt are the keys to the success of the Company's plan. While the plan as filed provides for a stand-alone reorganization, the Company has reserved the right to sell its assets instead. The Company has received various proposals for the sale of substantially all of its assets, and it continues to evaluate this option. "The filing of the reorganization plan is a pivotal step forward for the Company. It signals the beginning of our process of emergence from Chapter 11 bankruptcy," said Special Metals President T. Grant John. "While we still have a number of significant issues to address and court procedures to complete over the next 90 days or so, the stage has been set for the Company to emerge from bankruptcy with a reduced cost structure, an improved balance sheet, and all of our business units intact." Special Metals is the world's largest and most-diversified producer of high-performance nickel-based alloys. Its specialty metals are used in some of the world's most technically demanding industries and applications, including: aerospace, power generation, chemical processing, and oil exploration. Through its 10 U.S. and European production facilities and a global distribution network, Special Metals supplies over 5,000 customers and every major world market for high-performance nickel-based alloys. STRUCTURED ASSET: Fitch Takes Rating Actions on Various Classes --------------------------------------------------------------- Fitch Ratings takes rating action on the following Structured Asset Securities Corporation's mortgage pass-through certificates: SASCO 1997-2 Group 1: -- Class 1B3 affirmed at 'C'; -- Class 1B4 affirmed at 'D'; -- Class 1B5 affirmed at 'D'. SASCO 1997-2 Group 2: -- Class 2B3 downgraded to 'C' from 'BBB'; -- Class 2B4 downgraded to 'D' from 'BB'; -- Class 2B5 downgraded to 'D' from 'C'. As a result of these rating actions at the component level, the current class ratings for SASCO 1997-2 are as follows: -- Class B3 'C'; -- Class B4 'D'; -- Class B5 'D'. SASCO 2000-3 Group 1: -- Class 1B1 affirmed at 'AAA'; -- Class 1B2,1BX downgraded to 'A' from 'AA'; -- Class 1B3 downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- Class 1B4 downgraded to 'C' from 'BB'; -- Class 1B5 downgraded to 'D' from 'CCC'. SASCO 2000-3 Group 2: -- Class 2B1 upgraded to 'AAA' from 'AA+''; -- Class 2B2,2BX affirmed at 'A'; -- Class 2B3 downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- Class 2B4 downgraded to 'C' from 'CCC'; -- Class 2B5 affirmed at 'D'. SASCO 2000-3 Group 3: -- Class 3B1 upgraded to 'AAA' from 'AA'; -- Class 3B2 affirmed at 'A'; -- Class 3B3 downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- Class 3B4 downgraded to 'C' from 'BB'; -- Class 3B5 downgraded to 'D' from 'B'. SASCO 2000-3 Group 4: -- Class 4B1 upgraded to 'AAA' from 'AA+'; -- Class 4B2 downgraded to 'A' from 'A+'; -- Class 4B3 downgraded to 'BB' from 'BBB' and placed on Rating Watch Negative; -- Class 4B4 downgraded to 'C' from 'BB'; -- Class 4B5 downgraded to 'D' from 'B'. As a result of these rating actions at the component level, the current class ratings for SASCO 2000-3 are as follows: -- Class B1 'AAA'; -- Class B2 'A'; -- Class B3, rated 'BB' and placed on Rating Watch Negative; -- Class B4 'C'; -- Class B5 'D'. SASCO 2000-5 Group 1 & 2: -- Class 1B1,2B1 affirmed at 'AAA'; -- Class 1B2,2B2 affirmed at 'AA'; -- Class 1B3,2B3 affirmed at 'A'; -- Class 1B4,2B4 affirmed at 'BB'; -- Class 1B5,2B5 affirmed at 'B'. SASCO 2000-5 Group 3: -- Class 3B1 upgraded to 'AAA' from 'AA+'; -- Class 3B2 upgraded to 'AA' from 'A+'; -- Class 3B3 upgraded to 'A' from 'BBB+'; -- Class 3B4 affirmed at 'BB'; -- Class 3B5 affirmed at 'B'. As a result of these rating actions at the component level, the current class ratings for SASCO 2000-5 are as follows: -- Class B1 'AAA'; -- Class B2 'AA'; -- Class B3 'A'; -- Class B4 'BB'; -- Class B5 'B'. The classes of the above mentioned transactions are component bonds (components) of rated classes. Each group of components is backed by a separate mortgage group. Each mortgage group provides for its respective level of credit enhancement and the groups are not-crossed collateralized. Because the components are not severable and each component shares solely in its affiliated group's performance, each rated class reflects the performance of the weakest component outstanding. The action is the result of a review of the level of losses incurred to date and the current high delinquencies relative to the applicable credit support levels. TDZ HOLDINGS: Narrows Net Loss to $1 Million for Full-Year 2002 --------------------------------------------------------------- TDZ Holdings Inc., announced its results for the year ended December 31, 2002. Overview As a result of the restructuring that occurred in April 1999, the only material assets of TDZ Holdings Inc., are its 33% minority equity interest in Nualt Enterprises Inc., and certain receivables the proceeds of which will be dedicated to paying the Contingent Rights. The company's former 10% minority equity interest in 1266529 Ontario Limited was sold to Management in November 2002. Nualt is the principal holding company of the Construction Technology Business and the Residential Real Estate Business. The Residential Real Estate Business is limited to completing the development, marketing, construction and sale of its remaining high-density real estate projects located in Toronto and Pickering, Ontario. The Company's investment in Nualt has been pledged to collateralize the Company's guarantees of the debt of Nualt and its subsidiaries. It is anticipated that all available cash flow of Nualt will be used to repay its indebtedness. On January 15, 2002, the Company announced that its common shares were automatically delisted from the Toronto Stock Exchange. The Company was unable to meet the continued listing requirements of the Exchange including asset and revenue levels each being below $3 million, and market value of the total and the publicly held shares being below $3 million and $2 million respectively. The Company's shares may continue to be traded over the counter. Summary of results Net loss for the year ended December 31, 2002 was $1,137,000 on revenues of $284,000 as compared to a net loss of $2,537,000 on revenues of $656,000 for the year ended December 31, 2001. Net loss for the three months ended December 31, 2002 was $2,483,000 on revenues of $80,000 as compared to a net loss of $1,530,000 on revenues of $66,000 for the three months ended December 31, 2001. The net losses of all of these periods were the result of the equity share of Nualt's net loss. Cash provided by operations before other working capital items was $2,000 during the year ended December 31, 2002. During November 2002, the Company sold its 10% investment in New Projectco to Management for proceeds of $316,000. Overall there was a $64,000 net increase in cash during the year ended December 31, 2002 (2000 - $49,000 net decrease). All of the general and administrative costs of the Company are reimbursed by the Businesses as revenue to the Company. After exhaustion of all projects in the Residential Real Estate Business all of the general and administrative costs of the Company shall be reimbursed solely by the Construction Technology Business. If at any time the Construction Technology Business is sold the Company shall become responsible for funding all of its own general and administrative expenses. Obligations Due to Guarantee of Debt of Nualt At April 28, 1999, Nualt had a shareholder's deficiency of $69,776,000. Since the Company (as a result of its restructuring) assumed guarantee obligations for approximately $190,000,000 (as at April 28, 1999) of the debt of Nualt and its subsidiaries, the Company recorded a liability for the estimated fair value of these guarantees. The fair value of these obligations at April 28, 1999 has been determined to be the full amount of Nualt's shareholder deficiency at that date. As at December 31, 2002 these guarantee obligations aggregate to approximately $116,000,000. The net investment in Nualt is accounted for by the equity method and accordingly includes the Company's share of net income or loss of Nualt since April 28, 1999. During the period April 29, 1999 to December 31, 2002, Nualt had cumulative net losses of $19,898,000 and the Company recorded its 33% cumulative share in the amount of $6,567,000. Contingent Rights The Contingent Rights are payable by the Company solely out of any payments made by the Businesses pursuant to the Cash Flow Notes issued in favour of the Company. Payments made on the Cash Flow Notes are being distributed at the discretion of the Contingent Rights trustee within the terms of the Trust Indenture. The trustee distributed approximately $761,000 to holders of the Contingent Rights during the year ended December 31, 2002 (2000 - $816,000). An additional $166,000 was remitted to the trustee during February 2003. TEXAS PETROCHEMICALS: S&P Junks Corporate Credit Rating at CCC+ --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Texas Petrochemicals LP to 'CCC+' from 'B' and its subordinated debt rating to 'CCC-' from 'CCC+', citing the chemical company's poor financial results and increasing liquidity pressures. The current outlook is negative. Houston, Texas-based Texas Petrochemicals had more than $360 million in total debt outstanding as of March 31, 2003. "The downgrade reflects deterioration in the company's operating performance and credit profile, as well as heightened concerns about the company's liquidity position," said Standard & Poor's credit analyst Peter Kelly. Profitability and cash flow have been negatively affected by a significant decline in demand for the commodity gasoline additive MTBE and higher raw material and energy costs. The earnings shortfall will make it difficult for the company to strengthen credit protection measures in the near term and to satisfy financial covenants under its bank credit agreement. Also, increased pressure on liquidity could constrain the company's ability to upstream funds to allow interest payments on the discount notes at the holding company level, thereby raising the likelihood of a payment default. Texas Petrochemicals is the largest North American merchant producer of butadiene and specialty butylene chemicals, which are key ingredients for synthetic and specialty rubber, plastics, lubricant additives and coatings. TRICO MARINE: Elects J. Landis Martin to Expanded Company Board --------------------------------------------------------------- Trico Marine Services, Inc.'s (Nasdaq: TMAR) Board of Directors has expanded the Board to add an additional independent director. J. Landis Martin was elected to the new seat. The addition of the independent director is intended to enhance corporate governance and the company's ability to comply with new SEC rules and proposed Nasdaq regulations increasing demands on independent directors. Mr. Martin is currently President and CEO of NL Industries (NYSE), one of the world's largest producers of pigments used in paints, plastics, paper and cosmetics. Mr. Martin is also Chairman and CEO of Titanium Metals Corporation (NYSE) the world's largest producer of titanium metal. Mr. Martin currently serves on the Board of Directors of Halliburton (NYSE), Crown Castle International Corporation (NYSE), Special Metals Corporation and Apartment Investment and Management Corporation (NYSE), a Denver based real estate investment trust. Mr. Martin served as Chairman and CEO of Baroid Corporation from 1987 to 1994. Before that, he was a senior partner at the law firm of Kirkland and Ellis where he worked from 1972 to 1987. Mr. Martin earned a B.B.A. and J.D. from Northwestern University. Trico Marine provides a broad range of marine support services to the oil and gas industry, primarily in the Gulf of Mexico, the North Sea, Latin America and West Africa. The services provided by the Company's diversified fleet of vessels include the marine transportation of drilling materials, supplies and crews, and support for the construction, installation, maintenance and removal of offshore facilities. As previously reported, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on Trico Marine Services Inc. At the same time, Standard & Poor's revised the company's outlook to negative, following a review of 2002 results and expected 2003 earnings. The outlook revision reflects Standard & Poor's concerns that continued weakness in the company's primary offshore support markets could lead to additional financial deterioration. TWINLAB CORP: Hosting First-Quarter Webcast Today ------------------------------------------------- The management of Twinlab Corporation will be reviewing the Company's financial results for the 1st Quarter Earning Results for 2003. Ross Blechman, Chairman, Chief Executive Officer and President, and Joseph Sinicropi, Chief Financial Officer and Chief Operating Officer, will host the webcast that is scheduled for today at 9:30 AM (Eastern Time). You are invited to listen to our webcast live via the World Wide Web. Simply go to http://www.twinlab.comand click on the link located on the homepage "Management Reviews 1st Quarter Earnings Results 2003." Twinlab Corporation, headquartered in Hauppauge, N.Y., is a leading manufacturer and marketer of high quality, science- based, nutritional supplements, including a complete line of vitamins, minerals, nutraceuticals, herbs and sports nutrition products. At December 31, 2002, Twinlab's balance sheet shows a total shareholders' equity deficit of about $11 million. U.S. INDUSTRIES: Files Amended Form 10Q for Period Ended Mar. 29 ---------------------------------------------------------------- U.S. Industries, Inc. (NYSE:USI), a leading manufacturer of bath and plumbing products -- led by the JACUZZI(R) and ZURN(R) brand names, and premium RAINBOW(R) vacuum cleaner systems -- has filed an amended Form 10Q for the period ended March 29, 2003 with the Securities and Exchange Commission to correct the classification of an item in the Form 10Q filed Thursday last week. The Company has reclassified $8.6 million from cost of goods sold to selling, general and administrative expenses in the Company's Condensed Consolidated Statements of Operations for the second quarter and first half of fiscal 2003. Operating income, income from continuing operations, net income and all other items remain unchanged. U.S. Industries owns several major businesses selling branded bath and plumbing products, along with its consumer vacuum cleaner company. The Company's principal brands include JACUZZI(R), ZURN(R), SUNDANCE(R) Spas, ELJER(R), and RAINBOW(R) Vacuum Cleaners. Learn more at http://www.usindustries.com As reported in Troubled Company Reporter's February 18, 2003 edition, Fitch Ratings assigned 'B' ratings to U.S. Industries, Inc.'s 11.25% senior secured notes and its senior secured bank facilities and upgraded the rating on USI's 7.25% senior secured notes to 'B' from 'B-' and removed it from Rating Watch Negative. Fitch Ratings also assigned an indicative senior unsecured rating of 'B-' to USI. The Rating Outlook is Stable. In addition, Fitch's 'D' rating on USI's 7.125% senior secured notes was withdrawn. The rating actions affect approximately $580 million of debt. WARNACO: Strikes Stipulation Partially Allowing Schwartz Claim -------------------------------------------------------------- On December 28, 2001, Allen B. Schwartz filed Proof of Claim No. 1383 asserting a claim against The Warnaco Group Debtors' estates on several separate bases, including, but not limited to: (i) a claim of not less than $18,904,721 in respect of the Debtors' obligations under the Stock Purchase Agreement wherein Mr. Schwartz sold to Warnaco A.B.S. Clothing Collection, Inc.; (ii) a contingent and unliquidated amount arising pursuant to the Employment Agreement "including, but not limited to amounts owed to Claimant for Bonus, Design Fee, Employee Benefits and Business Expenses"; (iii) any an all claims relating to the rejection of the Employment Agreement; and (iv) $140,000 arising pursuant to a certain tax refund Mr. Schwartz claimed. On February 22, 2002, the Debtors and Mr. Schwartz entered into a Stipulation wherein the Debtors agreed to pay Mr. Schwartz his quarterly Design Fee. The Design Fee payment was to be applied against and reduce the amount of the Deferred Purchase Price on a dollar for dollar basis. Pursuant to the Debtors' confirmed Plan, the Employment Agreement was rejected as of the Effective Date. The Parties wish to fix the amount of Mr. Schwartz's Claim that is to be allowed as a general unsecured claim and to preserve Mr. Schwartz's right to continue to assert other portions of his Claim. Judge Bohanon approves these terms and conditions of the parties' stipulation: A. The Schwartz Claim will be allowed as a non-priority general unsecured claim for $18,659,746, which will receive the treatment set forth for Class 5 under the Plan. This claim consists of: -- $18,019,746 to be the net balance due to Mr. Schwartz for the obligations under the Purchase Agreement less amounts paid to Mr. Schwartz as a Design Fee; -- $500,000 in damages resulting from the Debtors' rejection of the Employment Agreement; -- $140,000 arising pursuant to the Tax Refund; and -- all other claims Mr. Schwartz asserted except for the Reserved Portion. The Allowed Schwartz Claim does not include the Reserved Portion, which remains an outstanding claim against the Debtors' estates; B. Mr. Schwartz reserves all rights and retains under the Remaining Schwartz Claim -- the Reserved Portion, which consists of his right to seek: -- payment as reimbursement of the Tax Refund other than as a non-priority general unsecured claim; and -- compensation on account of Employee Benefits arising from the Debtors' rejection of the Employment Agreement. There is no necessity or requirement for Mr. Schwartz to file a proof of claim with regard to the Reserved Portion; and C. In the event that Mr. Schwartz recovers any amount pursuant to the Tax Refund portion of the Reserved Portion, the amount will be reduced by $10,000. (Warnaco Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392- 0900) WERNER HOLDING: S&P Affirms B+ Credit Rating with Stable Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including its 'B+' corporate credit rating, on ladder manufacturer Werner Holdings (DE) Inc. The outlook remains stable. At the same time, Standard & Poor's assigned its 'B+' senior secured bank loan rating to the company's new $230 million credit facilities based on preliminary terms and conditions. "The ratings are being affirmed despite the substantial increase in debt and debt-like preferred stock that the company will incur in connection with it recently announced recapitalization," said Standard & Poor's credit analyst Cynthia Werneth. "Recent operating cash flow improvement--due to productivity and cost reduction initiatives and product mix enhancement--should help the company to support the heavier debt load." The new bank credit facilities will consist of a $60 million 5- year revolving credit facility and a $170 million six-year amortizing term loan. "Although the collateral should permit the secured lenders to recover a portion of their loan in a bankruptcy," said Ms. Werneth, "Standard & Poor's simulated default scenario indicates that recovery may be substantially below 100%." Standard & Poor's said that the ratings continue to reflect Greenville, Pennsylvania-based Werner's position as the leading North American manufacturer of professional and consumer ladders, offset by limited product diversity, cyclical markets, significant customer concentration, and a very aggressive financial profile. WESTAR ENERGY: Directors Frank J. Becker & Gene A. Budig Resign --------------------------------------------------------------- Westar Energy announced that Frank J. Becker and Gene A. Budig have resigned from Westar Energy's Board of Directors. Mr. Becker desires to focus his attention on his business and personal interests, and Dr. Budig intends to pursue his research and writing objectives. Mr. Charles Q. Chandler IV, chairman of the Westar Energy Board of Directors, said: "Frank and Gene have faithfully served Westar Energy for many years. I wish each of them the very best in the future and thank them for their long and devoted service to the company." Westar Energy, Inc. (NYSE: WR) is the largest electric utility in Kansas and owns interests in monitored security and other investments. Westar Energy provides electric service to about 647,000 customers in the state. Westar Energy has nearly 6,000 megawatts of electric generation capacity and operates and coordinates more than 36,600 miles of electric distribution and transmission lines. The company has total assets of approximately $6.4 billion, including security company holdings through ownership of Protection One, Inc. (NYSE: POI) and Protection One Europe, which have approximately 1.1 million security customers. Through its ownership in ONEOK, Inc. (NYSE: OKE), a Tulsa, Okla.- based natural gas company, Westar Energy has a 27.4 percent interest in one of the largest natural gas distribution companies in the nation, serving more than 1.4 million customers. For more information about Westar Energy, visit http://www.wr.com * * * As reported in Troubled Company Reporter's April 2, 2003 edition, Standard & Poor's Ratings Services said that its ratings on Westar Energy Inc. (BB+/Developing/--) and subsidiary Kansas Gas & Electric Co. (BB+/Developing/--) would not be affected by the company's announcement of an annual loss of $793.4 million in 2002. The bulk of this charge had already been recorded in the first quarter of 2002 and relates to valuation adjustments for the impairment of goodwill and other intangible assets associated with 88%-owned Protection One Alarm Monitoring Inc., Westar Energy's monitored security business. The credit outlook is developing, indicating that ratings may be raised, lowered, or affirmed. Upward ratings potential is solely related to the Kansas Corporation Commission's approval of Westar Energy's plan to reduce its onerous debt burden and become a pure-play utility, as well as successful implementation of Westar Energy's proposed transactions. Downside ratings momentum recognizes the company's frail financial condition coupled with execution risk of the plan, including possible KCC rejection of the plan. WHEREHOUSE ENTERTAINMENT: Committee Gets Nod to Hire Pachulski -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to the Official Committee of Unsecured Creditors' application to employ Pachulski, Stang, Ziehl, Young, Jones & Weintraub PC as its attorneys, in Wherehouse Entertainment's bankruptcy proceedings. The professionals expected to provide services in this retention and their current hourly rates are: Laura Davis Jones $560 per hour Marc A. Beilinson $550 per hour Brad R. Godshall $495 per hour Curtis A. Hehn $300 per hour Patricia Cuniff $130 per hour Cheryl Knotts $130 per hour The Committee anticipates Pachulski Stang will: a. provide legal advice and assistance to the Committee in its consultation with the Debtors' relative to the Debtors' administration of their reorganization; b. represent the Committee at hearings held before the Court and communicate with the Committee regarding the issues raised, as well as the decisions of the Court; c. assist and advise the Committee in its examination and analysis of the conduct of the Debtors' affairs and the reasons for its chapter 11 filings; d. review and analyze all applications, motions, orders, statements of operations and schedules filed with the Court by the Debtors or third parties, advise the Committee as to their propriety, and, after consultation with the Committee, take appropriate action; e. assist the Committee in preparing applications, motions and orders in support of positions taken by the Committee, as well as prepare witnesses and review documents in this regard; f. apprise the Court of the Committee's analysis of the Debtors' operations; g. confer with the accountants and any other professionals retained by the Committee, if any are selected and approved, so as to advise the Committee and the Court more fully of the Debtors' operations; h. assist the Committee in its negotiations with the Debtors and other parties-in-interest concerning the terms of any proposed plan of reorganization; i. assist the Committee in its consideration of any plan of reorganization proposed by the Debtors or other parties- in-interest as to whether it is in the best interest of creditors and is feasible; j. assist the Committee with such other services as may contribute to the confirmation of a plan of reorganization; k. advise and assist the Committee in evaluating and prosecuting any claims that the Debtors may have against third parties; l. assist the Committee in the determination of whether to, and if so, how to, sell the assets of the Debtors for the highest and best price; and m. assist the Committee in performing such other services as may be in the interest of creditors, including, but not limited to, the commencement of, and participation in, appropriate litigation respecting the estates. Wherehouse Entertainment, Inc., sells prerecorded music, videocassettes, DVDs, video games, personal electronics, blank audio cassettes and videocassettes, and accessories. The Company filed for chapter 11 protection on January 20, 2003, (Bankr. Del. Case No. 03-10224). Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $227,957,000 in total assets and $222,530,000 in total debts. WORLDCOM INC: Intends to Assume ICG Remote Access Service Deal -------------------------------------------------------------- According to Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP, in New York, prior to the Petition Date, ICG Telecom Group, Inc. and UUNET Technologies Inc. entered into a Remote Access Services Agreement, which was subsequently amended by an Amended & Restated Remote Access Services Agreement, dated March 30, 2000, and a Second Amended & Restated Remote Access Agreement, dated April 26, 2001. On May 23, 2001, UUNET assigned and transferred to MCI WorldCom Network Services, Inc., the RAS Agreement and all of UUNET's rights and obligations under and interest in the RAS Agreement. Pursuant to the RAS Agreement, the Debtors committed to purchase a certain amount of ICG's remote access services. After the Petition Date, Ms. Goldstein informs the Court that ICG and the Debtors entered into a First Addendum to the Second Amended & Restated Remote Access Services Agreement, effective as of April 1, 2003, wherein, inter alia, the Debtors agreed to assume the RAS Agreement, as amended and modified by the Addendum. The parties have entered into the Addendum to, among other things: (i) amend, restate, assume, and affirm the RAS Agreement, as amended by the Addendum; and (ii) provide for the final resolution of all disputes, claims and issues arising from or relating to the RAS Agreement. As modified by the Addendum, the salient terms of the RAS Agreement are: A. Term: The term of the RAS Agreement, as amended by the Addendum, will be from April 1, 2003 and continue through and including September 30, 2004. B. Cure: ICG and the Debtors have agreed to resolve certain prepetition defaults under the contract in the form of a cure payment. The Debtors will pay to ICG $1,520,000 as cure in full and complete satisfaction of any and all prepetition defaults under the RAS Agreement. The Debtors and ICG agree that there will be no additional prepetition cure obligation other than the payment of the Cure Amount. C. Releases: After entry of a final, non-appealable order by the Bankruptcy Court approving the assumption of the RAS Agreement, as modified by the Addendum, ICG irrevocably waives any claim for material breach of, or any right to terminate, alter, limit or suspend its performance in any way under the RAS Agreement due to: (i) the fact that the Debtors and certain of its affiliates filed petitions under the Bankruptcy Code; (ii) any claim that the Debtors were insolvent or unable to pay its debts as they come due; or (iii) any disclosure by the Debtors at any time regarding its prepetition financial condition. After entry of the Approval Order, except as explicitly provided in the Addendum, the Debtors and ICG will be deemed to have fully and forever waived, released, extinguished and forever discharged each other from any and all claims, actions, complaints, causes of action, debts, costs and expenses, demands or suits, at law or in equity or in bankruptcy or otherwise, known or unknown, present or future, fixed or contingent, which each party has or may have against the other which arise from or relate to any transactions between the parties, actions taken or inactions, as of or prior to the Petition Date. The Debtors submit that the Court has the authority to grant the request pursuant to Section 365 of the Bankruptcy Code. Section 365(a) of the Bankruptcy Code authorizes a debtor-in-possession to assume an executory contract or unexpired lease subject to the bankruptcy court's approval. Section 365(b) of the Bankruptcy Code provides that a debtor may not assume an executory contract if there has been a default under the contract unless, at the time of assumption, the debtor cures this default. The RAS Agreement, as amended by the Addendum, benefits the Debtors in a number of ways including, but not limited to: (a) allowing the Debtors to continue to obtain the remote access services from ICG; (b) allowing the Debtors to disconnect unneeded services and obtain other services from ICG needed for its business; (c) reducing the Debtors' minimum purchase commitment; and (d) resolving various prepetition defaults and disputes between the parties. As a result of these benefits, the RAS Agreement, as modified by the Addendum, represents substantial cost savings to the Debtors and the estates. Accordingly, Ms. Goldstein insists that the RAS Agreement, as amended by the Addendum, is a critical asset of the estate, which is necessary to the generation of significant revenues and authority should be granted for the Debtors to assume the RAS Agreement, as amended by the Addendum. The Debtors submit that the proposed settlement incorporated into the RAS Agreement, as amended by the Addendum, is fair and reasonable under the circumstances, represents the exchange of reasonably equivalent value between the parties, and in no way unjustly enriches any of the parties. In addition, this settlement constitutes the contemporaneous exchange of new value and legal, valid, and effective transfers between the Parties. Further and perhaps most importantly, the RAS Agreement, as amended by the Addendum, and incorporating the resolution of certain issues between the parties, represents substantial cost savings to the Debtors and the estates. Absent authorization to enter into and implement the RAS Agreement, as amended by the Addendum, Ms. Goldstein is concerned that the parties might require extensive judicial intervention to resolve their many disputes and it is uncertain which of the parties would emerge with a favorable and successful resolution of their claims. This litigation would be costly, time-consuming, and distracting to management and employees alike. Moreover, approval of the Debtors' request would eliminate the attendant risk of litigation and would avoid the delay of the implementation of the changes effected in, and the cost savings associated with, the Addendum. (Worldcom Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Advisory Board ABCO (16) 48 (20) Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (115) 242 52 Actuant Corp ATU (44) 295 18 Acetex Corp ATX (11) 373 126 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Blount International BLT (369) 428 91 Broadwing Inc. BRW (2,104) 1,468 327 Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Echostar Comm DISH (1,206) 6,260 1,674 D&B Corp DNB (19) 1,528 (104) Graftech International GTI (351) 859 108 Hollywood Casino HWD (92) 553 89 Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (5) 474 295 Gartner Inc. IT (5) 825 18 Jostens JOSEA (512) 327 (71) Journal Register JRC (4) 702 (20) Kos Pharmaceuticals KOSP (75) 69 (55) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 630 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) Petco Animal PETC (11) 555 113 Penthouse International PHSL (53) 15 (58) Primedia Inc. PRM (559) 1,835 (248) Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp. RAD (93) 6,133 1,676 Revlon Inc. REV (1,641) 939 (44) Ribapharm Inc. RNA (363) 199 92 Sepracor Inc. SEPR (392) 727 413 St. John Knits Int'l SJKI (76) 236 86 I-Stat Corporation STAT 0 64 33 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) TiVo Inc. TIVO (25) 82 1 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Technology VLNC (16) 30 3 Ventas Inc. VTR (54) 895 N.A. Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* 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. 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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. 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