/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/030616.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, June 16, 2003, Vol. 7, No. 117 Headlines ACCESS WORLDWIDE: Secures Long-Term Financing from CapitalSource ACTERNA: Gets Interim Nod to Continue AP Services' Retention ACTION REDI-MIX: Seeking Court Nod to File Schedules on July 8 AIR CANADA: Citibank Seeks Stay Lift to Exercise Set-Off Rights ALAMOSA HLDGS: S&P Affirms & Drops CCC+ Credit Rating from Watch AMERICAN BAPTIST HOMES: S&P Revises BB+ Rating Outlook to Stable ANC RENTAL: Asks to Continue Cash Collateral Use Until Nov. 16 ARCH WIRELESS: Shareholders Okay Stock Transfer Restrictions AVON PRODUCTS: Redeeming Zero Coupon Convertible Senior Notes BAUSCH & LOMB: Appoints Paul G. Howes to Lead Americas Region BLACK DIAMOND CLO: Fitch Affirms Class B-2 Notes Rating at BB- BOUNDLESS CORP: Court Approves New Financing from Vision Tech. BURLINGTON: Gets Approval to Enter Into AIG Insurance Program CABLE SATISFACTION: Bankers Extend Debt Waivers Until June 24 CALPINE CORP: Unit Prices $802MM Senior Secured Notes Offering CEPHALON INC: S&P Assigns Low-B Corporate Credit Rating at B+ CHAMPION ENT.: Phyllis Knight Takes Over HomePride's Management CIENA CORP: Names Nick Jeffery as EMEA Region Managing Director COMM 2003-LNB1: S&P Assigns Prelim. Ratings to 2003-LNB1 Notes COMSTOCK: Improved Liquidity Prompts S&P to Affirm B+ Rating CONSECO FINANCE: U.S. Bank Airs Objection to Plan Confirmation CONSECO INC: Brings-In CB Richard Ellis as Hangar No. 76 Broker COOPERATIVE COMPUTING: Receives Tenders & Consents for Sr. Notes CYBEX INT'L: Obtains New Three-Year Senior Financing Facility DELTA FUNDING: Class B Notes' Rating Downgraded to B from BBB DIRECT INSITE: Fails to Maintain Nasdaq Listing Standards DYNEGY INC: Issues Statement on Indictments of Former Employees EBT INT'L: Shareholders Approve Proposed 1-For-50 Reverse Split EMMIS COMMS: Annual Shareholders' Meeting to Convene on June 25 ENRON CORP: EIM Unit Seeks Stay Lift to Pay Policy Advances EROOMSYSTEM: Projected Bankruptcy by June 1 Without New Equity E-SIM LTD: April 30 Balance Sheet Insolvency Widens to $5.7 Mil. FEI CO: S&P Rates New Convertible Subordinated Note Offer at B- FLEMING COS: Seeks Nod for Glass & Assoc. Termination Pact GERDAU AMERISTEEL: $350-Mill. Bank Facility Gets S&P's BB Rating GLOBAL CROSSING: XO Proposes Tender for 'Any and All' Bank Debt GUITAR CENTER: Ratings on Watch Positive over Planned Offering IMPERIAL PLASTECH: Court OKs Bank Lender's Receivership Petition IT GROUP: Taps GreenVest to Sell Woodbury Creek Site IUSACELL: Obtains Extension of Default Waiver Under Credit Pact J.B. POINDEXTER: Completes Exchange Offer for 12-1/2% Notes JUNO LIGHTING: Improved Financial Profile Earns Positive Outlook KASPER A.S.L.: Inks Pact with Kellwood to Acquire All Assets KASPER A.S.L.: Kellwood Confirms $163.6 Million Bid for Company KRAFT FOODS: Appoints Pleuhs to Succeed Moy as General Counsel LAMAR ADVERTISING: $250 Million Convertibles Gets Low-B Rating LODGENET ENTERTAINMENT: 79% of 10-1/4% Noteholders Tender LUMBERMENS MUTUAL: S&P Cuts Surplus Notes' Ratings to Default MANDALAY RESORT: Board Declares Quarterly Cash Dividend MDC CORP: Underwriters Plan to Exercise Over-Allotment Option MEDICALCV INC: April 30 Net Capital Deficit Narrows to $390K MIDWEST EXPRESS: Restructuring Negotiations Enter Final Phase MOBILE MINI: S&P Assigns B-Level Ratings to Corp. Credit & Notes MSW ENERGY: S&P Gives Stable Outlook to Sr Sec. Notes' BB Rating MUSIC SEMICONDUCTORS: Emerges from Chapter 11 Proceedings Intact NATIONSRENT INC: Emerges from Chapter 11 Reorganization Process NBTY INC: S&P Puts Ratings on Watch Neg. over Rexall Acquisition NEW WORLD RESTAURANT: Halpern Denny Discloses 50.72% Equity Stake NEXGEN VISION: Independent Auditors Air Going Concern Doubts NRG ENERGY: Moves for Injunction Against Utility Companies NVR INC: Sells $200 Million of 5% Senior Notes Due 2010 PAMECO CORPORATION: Retains Morrison Cohen as Bankruptcy Counsel PAPER WAREHOUSE: Gets Nod to Retain Michael L. Meyer as Counsel PENTON MEDIA: Shareholders Approve 1-For-3 Reverse Stock Split PRECISE IMPORTS: Securing Okay to Tap Piper Rudnick as Attorneys PSYCHIATRIC SOLUTIONS: Negative Outlook Given to B+ Credit Rating QWEST CORP: S&P Rates $500-Mill. Senior Unsecured Facility at B- RELIANT RESOURCES: S&P Affirms & Removes Ratings from CreditWatch ROGERS: Completes C$250MM Equity Issuance & Redeems Senior Notes SBA COMMUNICATIONS: S&P Affirms CCC Corporate Credit Rating SCANTEK MEDICAL: Working Capital Deficit Tops $6.8MM at March 31 TEAM AMERICA: Merges with Vsource to Form Outsourcing Company TECO ENERGY: S&P Rates $300MM Senior Unsecured Notes at BB+ TEMBEC: Commencing Temporary Shutdown of 2 Canadian Pulp Mills TITAN INT'L: S&P Changes Ratings Outlook to Negative from Stable UNITED AIRLINES: Taps Mercer as Executory Contract Consultants UNITED SURGICAL: S&P Affirms Speculative-Grade B+ Credit Rating UNIVERSAL ACCESS: Lance B. Boxer Resigning as Interim CEO UNIVERSAL ACCESS: Reschedules Shareholders' Meeting for July 21 USG CORP: Court Approves Amended Acquisition Protocol VERIDIAN: S&P Watching BB- Rating Following Acquisition News WACKENHUT CORRECTIONS: Offering $150MM of Senior Unsecured Notes WARNACO GROUP: Closes Offering of 8-7/8% Senior Notes Due 2013 WEIRTON STEEL: Retaining Houlihan Lokey as Investment Banker WESCO DISTRIBUTION: S&P Cuts Corporate Credit Rating to B+ WESTPOINT STEVENS: Honors Carrier & Warehousemen Claims WILLIAMS: Planned $500MM Sr. Debt Issue Earns S&P's B+ Rating WORLDCOM INC: Seeks Clearance for New Jersey Auction Procedures WORTH MEDIA: Look for Schedules & Statements on July 14 WYNDHAM INT'L: Completes $425MM Mortgage Refinancing With Lehman XEROX: $3-Bill. Financing Spurs S&P to Affirm BB- Credit Rating XM SATELLITE: Prices $175MM of 12% Senior Secured Notes Offering XML GLOBAL: Appoints Jun Li and Sergio Nesti to Board of Directors * FTI Says Required Pension Fund Contributions Will Exceed $35BB * Robert W. Doyle, Jr. Joins Sheppard Mullin as Partner * BOND PRICING: For the week of June 9 - 13, 2003 ********* ACCESS WORLDWIDE: Secures Long-Term Financing from CapitalSource ---------------------------------------------------------------- Access Worldwide Communications, Inc. (OTC Bulletin Board: AWWC), a leading marketing services organization, has signed a new multi- year agreement with CapitalSource Finance LLC, a commercial finance firm. The agreement is comprised of two facilities, a three-year revolving line of $10.0 million and a term loan of $0.5 million due on December 31, 2003. The New Credit Facility enabled Access Worldwide to terminate its previous loan arrangement with a syndicate of lending institutions led by Bank of America and will provide for future working capital needs. The Old Credit Facility was due to expire on July 1, 2003 at which time all amounts outstanding pursuant to the Old Credit Facility were to be paid. "We are delighted with this agreement with CapitalSource," commented Shawkat Raslan, Chairman and Chief Executive Officer of Access Worldwide. "The facility enables us to have access to the funding needed to support the business." "We are extremely pleased to have been able to provide Access Worldwide with the liquidity that it needs to achieve its business objectives," said Stephen Klein, a Director of the Healthcare Finance Group for CapitalSource. "Access Worldwide has a highly experienced and well-respected management team and Board of Directors and will be a valuable addition to our growing portfolio." In addition, the Company's Board of Directors has approved additional financing in the amount of $1.5 million to $3.0 million through private placement of convertible promissory notes and warrants to purchase shares of Access Worldwide's Common Stock to accredited investors only, including Company officers and directors. The proceeds of the offering will be used by Access Worldwide for working capital needs. The Board of Directors and officers of the Company have presubscribed to approximately $1.5 million and closing is expected no later than July 15, 2003. The use of the funds was contingent upon an executed refinancing agreement with an institutional lender which consented to the additional financing. The securities offered have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States absent such registration, or an exemption from such registration requirements. "During the past year, we have invested considerable time and efforts in the Company and have achieved a number of accomplishments," remarked Mr. Raslan. "We have attracted a strong management team and Board of Directors, expanded several departments, built a strong sales pipeline, and secured the needed financing. We believe we are now in a position to focus our resources in an attempt to build shareholder value." CapitalSource is one of the leading commercial finance companies in the United States offering asset-based, senior, cash flow and mezzanine financing to small and mid-sized borrowers through three focused lending units: Corporate Finance, Healthcare Finance, and Structured Finance. By offering a broad array of financial products and maintaining a strong balance sheet, CapitalSource has more than $2 billion in commitments issued. Headquartered in Chevy Chase, Md., CapitalSource has a national network of offices in Atlanta, Boston, Buffalo, Chicago, Dallas, Los Angeles, Nashville, New York, Philadelphia and San Francisco. The company has over 200 employees. More information is available at http://www.capitalsource.com Founded in 1983, Access Worldwide provides a variety of sales, marketing and education services. Among other things, the Company reaches physicians, pharmacists and patients on behalf of pharmaceutical clients, educating them on new drugs, prescribing indications, medical procedures and disease management programs. Services include product stocking, medical education, database management, clinical trial recruitment and teleservices. For clients in the telecommunications, financial services, insurance and consumer products industries, the Company reaches the growing multicultural markets with multilingual teleservices. Access Worldwide is headquartered in Boca Raton, Florida and has over 1,300 employees in offices throughout the United States. As reported in Troubled Company Reporter's May 5, 2003 edition, Access Worldwide Communications entered into the Seventh Amendment to its Credit Facility agreement with the Bank Group, effective April 29, 2003. The Amendment allows the Company to continue to use cash proceeds generated in the ordinary course of business to fund working capital and operations. In addition, the Amendment increases the effective rate of interest to Bank of America's prime rate of interest plus 5% and limits the revolving commitment line to $6.1 million through May 14, 2003, with periodic reductions thereafter, including $6.0 million from May 15, 2003 to May 31, 2003, and $5.8 million from June 1, 2003 to June 30, 2003. The outstanding balance on the Credit Facility becomes due on July 1, 2003. The total amount outstanding under the Credit Facility as of April 29, 2003 was $6.1 million. On April 1, 2003, the Company was unable to make a mandatory payment to reduce the outstanding balance on the Credit Facility to $5.7 million as required by the Sixth Amendment to the Credit Facility. However, on April 3, 2003, the Bank Group issued a letter waiving any defaults that had previously occurred. Additionally, the Bank Group allowed the Company to continue to use cash proceeds generated in the ordinary course of business to fund working capital and operations. ACTERNA: Gets Interim Nod to Continue AP Services' Retention ------------------------------------------------------------ Acterna Corp., and its debtor-affiliates obtained the Court's interim permission to continue the employment of AP Services LLC as crisis managers and designate Shyam Gidumal, a principal of AP Services, as their interim Chief Restructuring Officer. AP Services will provide temporary staff to assist the Debtors in their restructuring efforts. As the Debtors' Chief Restructuring Officer, Mr. Gidumal will report to the Debtors' Board of Directors and assist the Debtors in its evaluation and implementation of strategic and tactical options through the restructuring process. Another staff from AP Services, Bettina Whyte will assist Mr. Gidumal, on an as-needed basis. Ms. Whyte is a principal with AlixPartners, an AP Services affiliate, and is a leading professional in the area of corporate turnarounds and restructuring. The Debtors will compensate AP Services at its customary hourly rates: Principals $540 - 670 Senior Associates 430 - 495 Associates 300 - 390 Accountants & Consultants 225 - 280 Analysts 150 - 180 Mr. Gidumal will be receiving $620 an hour and will work full time. Ms. Whyte will receive $640 per hour. AP Services will also lend part-time personnel to provide specialized services at these hourly rates: Name Services Rate ---- -------- ---- Montgomery Cornell Business Planning $440 Adam Marr Cash Forecasting and Mgmt $390 Erik Post Chapter 11 Schedules & Process $540 * * * Committee Objects The Committee objects to the designation of Shyam Gidumal as Acterna's CRO and to the retention of AP Services to provide certain temporary personnel and to assist in their financial activities because, according to Andrew B. Eckstein, Esq., at Blank Rome LLP, in New York, the comparative magnitude of fees and bonuses to be paid to AP Services highlights the prejudice of the proposed fee cap to the Committee's professionals. "[The] Debtors contemplate binding the estates to pay AP Services substantial and excessive fees to perform overlapping services, while simultaneously constraining the ability of the Committee's professionals to discharge their fiduciary duty in a manner that preserves the integrity of the bankruptcy process," Mr. Eckstein says. The Debtors have sought postpetition financing from the DIP Lenders. The DIP Facility places the absolute $150,000 Committee Cap on the fees and expenses of the Committee and all professionals, which it may engage. Mr. Eckstein tells the Court that from August 2002 through the Petition Date, the Debtors have spent $3,386,113 on the Restructuring Professionals and $1,128,408 of which has been spent for APS since January 2003. This makes it easy to anticipate that the Debtors' fees from the Petition Date through the end of 2003, between APS's hourly rates, and the various monthly fees of the other restructuring professionals will exceed an additional $4,000,000, excluding both the success-based bonuses proposed as compensation for the professionals. Mr. Eckstein also contends that the Debtors and the DIP Lender intend to restrict the ability of any party that may look to evaluate the DIP Lender-blessed distribution of assets and equity so that only superficial scrutiny can be given to the bankruptcy process. (Acterna Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) ACTION REDI-MIX: Seeking Court Nod to File Schedules on July 8 -------------------------------------------------------------- Action Redi-Mix Corp., asks the U.S. Bankruptcy Court for the Southern District of New York to extend the time period within which it must file its schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtor relates that when it filed its voluntary petition commencing this case, it included lists of all of their creditors and their addresses to the extent known, but did not complete and file a formal Statement of Financial Affairs and comprehensive Schedules of Assets and Liabilities. The Debtor's books and records, which are needed to complete the schedules, are currently being reviewed and updated in order to allow filing of schedules. The Debtors believes it can prepare and deliver the Schedules by July 8, 2003. Action Redi-Mix Corp., filed for chapter 11 protection on June 4, 2003 (Bankr. S.D.N.Y. Case No. 03-22994). Jonathan S. Pasternak, Esq., at Rattet & Pasternak, LLP represents the Debtor in its restructuring efforts. As of November 30, 2002 the Debtor lists total assets of $4,221,942 and total debts of $9,803,273. AIR CANADA: Citibank Seeks Stay Lift to Exercise Set-Off Rights --------------------------------------------------------------- Citibank NA asks the Court to lift the automatic stay to permit it to issue a demand against the Applicants and exercise its set- off rights. Citibank guarantees some of Air Canada's obligations under an aircraft lease with Gamma Trans-Leasing Verwaltungs GmbH & Co. Dritte Finanzierungs-Management KG. Air Canada leases a Boeing 767-333ER aircraft from Gamma, a German limited partnership based in Germany. Citibank also acts as deposit bank pursuant to a deposit agreement with Air Canada. The deposit agreement governs a DM21,247,875 deposit plus accrued interest, which has been made with Citibank in Jersey, Channel Islands. In the event Citibank has to make a payment under the Guarantee, a Guarantee Reimbursement, Proceeds Application and Priorities Agreement governs the process of obtaining reimbursement. On April 9, 2003, Gamma delivered a notice to Air Canada to terminate the Aircraft Lease. At the same time, Gamma asked Air Canada to return the Aircraft and pay a stipulated loss value indicated in the Lease. Gamma also delivered to Citibank a payment demand for EUR23,673,312 pursuant to the Guarantee. Under the contract terms and the Jersey law, Citibank is entitled to issue a demand for payment to Air Canada pursuant to the Reimbursement Agreement. If not satisfied, Citibank is entitled to set off Air Canada's obligations against the deposit. However, because of the stay provisions of the CCAA Initial Order, Citibank fears that it may not be able to make the payment demand against Air Canada. Citibank has explored the possibility of seeking court declaration in Germany that it is not obligated to make any payments under the Guarantee. But Citibank believes that such a possibility is not feasible under German law. If it resisted payment under the Guarantee, Citibank also risks being sued by Gamma. Citibank has no choice but to make the payment to Gamma. As a result, Citibank tells the Court that it is in the awkward position of having to make substantial payment under the Guarantee without possibly being able to seek reimbursement, which it otherwise would have under its agreements with Air Canada. McCarthy Tetrault LLP represents Citibank.(Air Canada Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392- 0900) ALAMOSA HLDGS: S&P Affirms & Drops CCC+ Credit Rating from Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC+' corporate credit rating on Alamosa Holdings Inc. and removed the rating from CreditWatch, where it had been placed on June 26, 2002, because of liquidity concerns stemming from operating weakness and tightening bank covenants. The outlook is negative. The Lubbock, Texas-based company is the largest Sprint PCS affiliate and provides wireless services to about 653,000 subscribers in markets with combined covered population of about 11.8 million. Total debt was about $877.4 million at the end of March 2003. The rating action reflects modest stabilization of Alamosa's financial and operating performance since the third quarter of 2002, when churn spiked to 3.8% largely because of involuntary termination of non-paying customers on Sprint PCS' Clear Pay program. The company was in compliance with bank covenants in the first quarter of 2003 and avoided liquidity problems, which had been key reasons for the CreditWatch listing. During the first quarter of 2003, Alamosa added about 31,000 net subscribers, increased its deposit for subprime customers to $250 from $125 in more than half of its regions, and reduced churn to 3%. "The ratings on Alamosa continue to reflect a very weak business profile from the intensely competitive wireless industry, which is experiencing slowing demand from higher penetration levels and the soft economy," said Standard & Poor's credit analyst Eric Geil. "The ratings further reflect excessive financial risk as a result of a heavy debt burden incurred to finance wireless network construction and to fund operating cash flow losses during the company's launch and initial customer growth phase. Weaker than anticipated revenue and cash flow expansion could increase pressure on Alamosa to restructure its public debt obligations in the near-to-intermediate term." Alamosa likely has sufficient liquidity to meet its obligations during the next several months and should benefit from a seasonal revenue increase during the summer months from roaming traffic. However, the reciprocal roaming rate with Sprint has declined to 5.8 cents per minute from 10 cents per minute in the past year, hurting the company, which is a net beneficiary of roaming traffic. Industry competition remains intense amid the soft economy and will likely rise in November 2003 when required wireless number portability is expected to take effect. DebtTraders reports that Alamosa PCS Holdings Inc.'s 12.875% bonds due 2010 (APS10USR1) are trading between 60 and 62 cents-on-the- dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=APS10USR1for real-time bond pricing. AMERICAN BAPTIST HOMES: S&P Revises BB+ Rating Outlook to Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook to stable from positive on revenue debt issued by the Association of Bay Area Governments, California, for American Baptist Homes of the West (ABHOW), based on a downturn in mid-year fiscal 2003 financial performance. The rating is affirmed at 'BB+'. "While ABHOW's fiscal 2002 results showed another strong year of improvement, significant operational pressures have arisen in 2003--including occupancy issues at several campuses--that have impacted mid-year results," said Standard & Poor's credit analyst Lisa Zuckerman, adding that meaningful financial recovery may be more than two years away. The current rating and outlook do not consider a planned change in management structure, in which a new entity (Cornerstone Affiliates) will be created as the parent of ABHOW. Strengths maintaining the rating at 'BB+' include solid debt service coverage and liquidity that are at investment-grade levels. The revised outlook affects about $75 million in debt outstanding. In terms of future debt plans, there is a planned debt issue of approximately $60 million, which will be issued on a non-recourse basis by a separate subsidiary of the new Cornerstone Affiliates, to finance the reconstruction of Terraces of Squaw Peak property in Arizona. This transaction will be reviewed in light of any potential credit impact to ABHOW when full details are available later this year. American Baptist Homes of the West is a nonprofit corporation serving more than 4,500 residents at its facilities in four western states and Washington, DC. ANC RENTAL: Asks to Continue Cash Collateral Use Until Nov. 16 -------------------------------------------------------------- Pursuant to the Current Cash Collateral Order, ANC Rental Corporation and its debtor-affiliates are authorized to use Cash Collateral through and including July 19, 2003. By this motion, the Debtors seek the Court's permission to continue using the Cash Collateral through November 16, 2003, or other time as the Court deems appropriate, on the same terms and conditions as set forth in the Current Cash Collateral Order, in order to continue the operation of their business and fund these Chapter 11 cases. The failure to obtain Court authorization for the continued use of Cash Collateral would seriously undermine the Debtors' reorganization efforts and would be disastrous to their creditors, equity holders and employees. According to Mark J. Packel, Esq., at Blank Rome LLP, in Wilmington, Delaware, to supplement the DaimlerChrysler DIP credit facility, the Debtors fund their working capital needs through cash generated from their business operations. The expenses of the business include postpetition costs relating to, inter alia, the maintenance of the various vehicles used by the Debtors and the payment of rent, taxes, utilities, salaries and wages, employee benefits and necessary capital expenditures. In addition, the Debtors intend to pay certain other obligations during the pendency of these Chapter 11 cases. Finally, the most significant use of Cash Collateral is for the financing and purchase of the automobiles that are rented by the Debtors. This use of cash does not diminish the value of the collateral held by the Secured Creditors. In addition, in the ordinary course of the Debtors' business, Mr. Packel relates that the Debtors may, from time to time, provide liquidity to certain of their non-debtor foreign subsidiaries on an "as needed" basis to cover working capital shortfalls at certain times of the year, as indicated in the cash flow projections. These foreign subsidiaries represent important assets of the Debtors and are critical to the Debtors' ability to provide their customers with complete service. The use of Cash Collateral to continue this practice, in the ordinary course, would enable the Debtors to maintain and preserve the substantial value that these foreign subsidiaries bring to the Debtors. Moreover, the Debtors seek to use Cash Collateral to fund other administrative expenses incurred during the pendency of their Chapter 11 cases, including, without limitation: 1. professional fees and expenses allowed by the Bankruptcy Court pursuant to Sections 330 and 331 of the Bankruptcy Code; 2. reimbursement of allowed expenses incurred by the members of any official committee appointed by the Office of the United States Trustee in the Debtors' cases; 3. fees payable under Section 1930 of the Judiciary Procedures Code and related costs; and 4. other charges incurred in administering the Debtors' Chapter 11 cases. Mr. Packel states that ANC and its direct and indirect debtor subsidiaries currently use a centralized cash management system, which provides for a comprehensive set of internal controls governing the receipt and disbursement of funds within the cash management system and which govern inter-company debts. Specifically, pursuant to the Debtors' cash management system, all of the cash of ANC and its debtor subsidiaries is consolidated in a central account maintained by ANC Financial LP -- the Concentration Account -- on deposit with Bank of America, and in an investment account -- Provident Account and Bank of America Account. In addition, each operating subsidiary has its own master account in which funds are automatically transferred to and from ANC Financial, LP. Because the Debtors' revenues are primarily generated from car rentals, the Debtors' primary source of cash receipts is from credit cards. Mr. Packel asserts that authorization to use the Cash Collateral for the preservation of the Debtors' businesses will benefit secured creditors, unsecured creditors and the Debtors alike. Moreover, the Debtors use of Cash Collateral in their cases has been instrumental to the implementation of the Debtors' business plan that will result in the streamlining of their businesses and successfully emerging from Chapter 11 as a viable company. ANC Rental Corporation Cash Projection For the 17-Week Period Ending July 27, 2003 until November 16, 2003 Beginning Balance ($7,636,000) Operating Receipts Per Bank Credit Card 604,560,000 A/R Receipts 121,858,000 Other 75,990,000 ------------ Total Receipts 802,408,000 Operating Disbursements: Fleet Operating 42,378,000 Personnel 125,795,000 Travel, Meals Entertainment 1,971,000 Fuel 16,390,000 Airport Concession 61,925,000 Auto Liability 28,442,000 Other Insurance 10,431,000 Facility Fixed 64,214,000 Other -- TA/TO Commissions 23,921,000 Advertising 18,071,000 IT Consulting 25,483,000 IT Other 3,244,000 Car Rental/Sales Tax 72,010,000 Professional Fees 4,507,000 Other Misc. 4,364,000 Bonding - Liberty Payments 22,000,000 Liability Insurance Program 4,417,000 ------------ Total Operating Disbursements 529,562,000 Secured Lenders Payments -- Professional Fees Bankruptcy 9,163,000 Capital Expenditure Total 3,936,000 Interests and Financing Fees 10,105,000 Fleet Financing& Lease Payments 332,103,000 Manufacturer Incentives (11,989,000) Recovery from Wholesales (39,033,000) PDI and Warranty (9,148,000) Fleet Purchases & Enhancement (19,100,000) ------------ Total Cash Disbursements 805,599,000 Potential Funding for Europe & Canada -- ------------ Total Disbursements 805,599,000 Net Receipts(Disbursements) ($3,191,000) ------------ Ending Book Cash Balance ($10,828,000) ============ (ANC Rental Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) ARCH WIRELESS: Shareholders Okay Stock Transfer Restrictions ------------------------------------------------------------ Arch Wireless, Inc. (OTC Bulletin Board: AWIN; BSE: AWL), a leading wireless messaging and mobile information company, received stockholder approval for each of the five proposals submitted to stockholders at its annual meeting of stockholders held earlier today in Boston. At the meeting, stockholders approved the imposition of transfer restrictions on Arch's stock intended to help protect the tax benefits associated with Arch's federal income tax attributes, including net operating losses that may be used to offset future federal taxable income. The transfer restrictions will be imposed by merging Arch with a wholly owned subsidiary and converting each share of Arch's outstanding common stock into the right to receive one share of a new class of stock called Class A common stock. The new Class A common stock will be identical in all respects to the old common stock, except that it will be subject to certain restrictions on transfer that were described in the proxy statement for the annual meeting mailed to stockholders and filed with the Securities and Exchange Commission on May 9, 2003. The merger is expected to be effective at the close of business on June 13, 2003, and the new transfer restrictions will then become effective. Stockholders do not have appraisal rights in connection with the merger. Arch will continue to file reports with the Securities and Exchange Commission. The CUSIP number for the new Class A common stock is 039392-70-9. Effective today, the Class A common stock will trade in the over- the-counter market and on the Boston Stock Exchange under the same symbols, AWIN and AWL, respectively, under which the common stock traded prior to the merger. Stock certificates representing shares of common stock must be exchanged for new certificates representing shares of Arch's Class A common stock. Instructions for exchanging the stock certificates will be mailed to all stockholders within the next two weeks. In addition to approval of the imposition of transfer restrictions, stockholders elected the eight nominees for director, ratified the appointment of PricewaterhouseCoopers LLP as Arch's independent public accountants, approved an increase in the number of shares available for issuance under Arch's 2002 Stock Incentive Plan and approved an amendment to Arch's certificate of incorporation that will require stockholder approval for certain future issuances of Arch's stock that equal 15% or more of its stock outstanding before the issuance. Arch Wireless, Inc., headquartered in Westborough, Mass. And whose March 31, 2003 balance sheet shows a working capital deficit of about $6 million, is a leading wireless messaging and mobile information company with operations throughout the United States. The company offers a full range of wireless messaging services to business and consumers nationwide, including paging, two-way wireless e-mail and messaging and mobile data solutions for the enterprise. Arch provides wireless services to customers in all 50 states, the District of Columbia, Puerto Rico, Canada, Mexico and in the Caribbean principally through its nationwide sales force, as well as through resellers, retailers and other strategic partners. Additional information on Arch Wireless is available on the Internet at http://www.arch.com AVON PRODUCTS: Redeeming Zero Coupon Convertible Senior Notes ------------------------------------------------------------- Avon Products, Inc. (NYSE: AVP) has elected to redeem on July 12, 2003 its zero coupon convertible senior notes due 2020, which were originally issued in 2000. On July 12, 2003, Avon will pay a redemption price of $531.74 for each $1,000 principal amount at maturity of notes that then remain outstanding. After July 12, 2003, the original issue discount on the notes will cease to accrue and the holders of the notes will only be entitled to receive the redemption price for the notes. The principal amount at maturity of the notes is $840,938,000. Avon said that the notes are convertible into shares of the company's common stock any time prior to the close of business on July 11, 2003. Each $1,000 principal amount at maturity is convertible into 8.2723 shares of common stock. Avon said that assuming no conversion of the notes into the company's common stock prior to July 12, the total amount Avon will pay to redeem the notes would be $447.2 million. Avon -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $113 million -- is the world's leading direct seller of beauty and related products, with $6.2 billion in annual revenues. Avon markets to women in 143 countries through 3.9 million independent sales Representatives. Avon product lines include such recognizable brands as Avon Color, Anew, Skin-So-Soft, Advance Techniques Hair Care, beComing, and Avon Wellness. Avon also markets an extensive line of fashion jewelry and apparel. More information about Avon and its products can be found on the company's Web site http://www.avon.com BAUSCH & LOMB: Appoints Paul G. Howes to Lead Americas Region ------------------------------------------------------------- Bausch & Lomb (NYSE:BOL) announced that Paul G. Howes has been appointed senior vice president and president of the Company's Americas Region, effective July 1. Howes will be responsible for the commercial operations of Bausch & Lomb's vision care, pharmaceutical and surgical businesses in the United States, Canada and Latin America. Howes joins Bausch & Lomb from Merck & Co., Inc., where most recently he was vice president - Mid-Atlantic Business Group. His career at Merck began in 1987 and included progressively more responsible positions including vice president - Sales for Merck Frosst Canada; executive director of the Hospital Marketing Group of the U.S. Human Health business; president of Merck Frosst Canada; president and chief executive officer of the Dupont Merck Pharmaceutical Company; and vice president - Sales and Marketing for Specialty Products, including ophthalmic pharmaceuticals, in the U.S. Human Health business. "Paul Howes has extensive commercial experience that can be immediately and effectively applied to our sales and marketing operations in the Americas Region," said Ronald L. Zarrella, Bausch & Lomb chairman and chief executive officer. "We conducted an extensive search to find just the right person for this important position. The combination of fresh perspective and solid leadership experience that Paul brings to Bausch & Lomb will, I'm confident, contribute greatly to our future success." Prior to joining Merck, Howes spent 11 years with Price Waterhouse in Toronto and Montreal. He holds an M.B.A. from York University in Toronto, and an A.B. in liberal arts from Harvard College, Cambridge, Mass. Bausch & Lomb is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary in 2003, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2002 revenues were $1.8 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at http://www.bausch.com * * * As reported in Troubled Company Reporter's November 20, 2002 edition, Bausch & Lomb completed a public offering of $150 million five-year senior notes with a coupon rate of 6.95 percent. The company's effective cost of the offering was approximately 8.65 percent, which included the cost of the treasury rate hedge instrument entered into in May 2002. The notes were rated BBB- by Standard & Poor's Rating Services and Ba1 by Moody's Investors Service. The offering represents the first offering under the company's $500 million Shelf Registration filed with the Securities and Exchange Commission in June 2002. Bausch & Lomb Inc.'s 7.125% bonds due 2028 (BOL28USR1) are trading at 90.5 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=BOL28USR1for real-time bond pricing. BLACK DIAMOND CLO: Fitch Affirms Class B-2 Notes Rating at BB- -------------------------------------------------------------- Fitch Ratings affirmed the following classes of notes issued by Black Diamond CLO 1998-1 Limited: -- $20,000,000 class A-1 notes affirmed at 'AAA'; -- $290,000,000 class A-2 notes affirmed at 'AAA'; -- $10,000,000 class A-3 notes affirmed at 'AA-'; -- $15,000,000 class A-4 notes affirmed at 'A-'; -- $7,000,000 class B-1L notes affirmed at 'BBB-'; -- $18,000,000 class B-1 notes affirmed at 'BBB-'; -- $11,100,000 class B-2 notes affirmed at 'BB-'. The Issuer is a collateralized debt obligation consisting of high yield loans and bonds managed by Black Diamond Capital Management, LLC. Fitch has reviewed in detail the performance of the Issuer. In conjunction with its review, Fitch discussed the current state of the portfolio with the asset manager and their portfolio management strategy going forward. Since the closing of this transaction in January 1999, it has passed its overcollateralization tests on each payment date. According to the most recent trustee report dated June 2, 2003, the class A overcollateralization test is passing at 119.9% with a trigger of 110% and the class B overcollateralization test is passing at 108.1% with a trigger of 104%. The portfolio has 3.9% in defaulted securities and 15.1% in securities rated 'CCC+' or lower (excluding defaults). Fitch conducted cash flow modeling utilizing various default timing and interest rate scenarios to measure the breakeven default rates going forward relative to the minimum cumulative default rates required for the rated liabilities. As a result of this analysis, Fitch has determined that the original ratings on the above referenced notes, still reflect the current risk to noteholders. Fitch will continue to monitor and review this transaction for future rating adjustments. BOUNDLESS CORP: Court Approves New Financing from Vision Tech. -------------------------------------------------------------- Boundless Corporation (OTC Bulletin Board: BDLS) announced that the secured creditor and Boundless have agreed, with the consent of the unsecured creditors, to support a plan to reorganize the company with the help of new financing from Vision Technologies. The bankruptcy court approved the settlement agreements between Boundless and its secured creditor as well as the new financing from Vision. Vision is an investment group primarily made up of Boundless shareholders. This is a key milestone in the company's quest to re-emerge from the bankruptcy process as a self- sufficient organization capable of delivering strong financial results for some time to come. Under the provisions of this plan, the company should emerge from bankruptcy as early as Labor Day, this year! Boundless Corporation President and CEO, Joseph Joy said, "It has been a very long haul to get to this point, but through the continued hard-work of our associates, and the support of our wonderful customers and supplier- partners, we are moving forward once again. We have been in production since April 7th and our customers are receiving the same high quality products they have come to depend upon." The company's CFO, Joseph Gardner, said, "The Company filed for bankruptcy protection on March 13th, of this year. After a short shut down while arranging for DIP financing, the company began to operate again on April 7th. Since that period, the company has generated positive cash flow from operations. The company is right-sized and can support its supply chain and operations through ongoing cash collections." Tony Giovaniello, VP Business Development, commented, "The order rate has been excellent and our production team has been working very hard to catch-up on the order backlog. We expect to ship all of the backlogged orders by the end of July. At that point, our lead times will return to normal, less than 30 days after receipt of order. Our distributors will then have product on their shelves and resellers and end users will have the same quick access to our products as they have had for many years. Some of our products, such as our "Littlefoot" color terminal, the 260 lfc, are now available with lead times of less than 30 days." Boundless Corporation is a global technology company with two subsidiaries: Boundless Technologies, Inc. -- http://www.boundless.com/index-- a desktop display products company, and Boundless Manufacturing Services, Inc. (www.boundless.com/manufacturing), an emerging EMS company providing build-to-order systems manufacturing, as well as complete end-to-end solutions from design through product end-of- life to its customers. BURLINGTON: Gets Approval to Enter Into AIG Insurance Program ------------------------------------------------------------- Burlington Industries, Inc., and its debtor-affiliates sought and obtained the Court's authority to: (a) enter into an insurance program with National Union Fire Insurance Company of Pittsburgh, Pennsylvania, on behalf of itself and certain other entities related to American International Group, Inc.,; and (b) perform their obligations, including: -- issuing a Letter of Credit, and -- paying all premiums, administrative fees and other obligations owing to AIG in the ordinary course of the Debtors' businesses, as an administrative expense. Since October 2000, the Debtors have maintained their insurance policies with the Kemper Insurance Companies. However, beginning December 2002, A.M. Best, Standard & Poor's and Moody's have downgraded the financial strength ratings of certain members of Kemper below the "A" level. In effect, the Debtors were immediately required to seek replacement coverage for the Kemper Policies to preserve these critical contractual relationships. Rebecca L. Booth, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that the Debtors have reached an agreement with AIG. Pursuant to the Insurance Program, AIG will provide the Debtors with these insurance coverage: (a) Workers' Compensation and Employers' Liability Policies AIG has agreed to provide primary workers' compensation coverage and primary employers' liability coverage for the Debtors and their employees. In addition to the annual premium, in certain circumstances, the Debtors must pay a $500,000 deductible for each accident asserted under the workers' compensation or employers' liability policies. (b) Automobile Liability Insurance AIG has agreed to provide primary liability coverage for the automobiles used by the Debtors. In addition, the Debtors must pay a $500,000 deductible for each accident asserted under the automobile insurance policies. AIG provides the automobile insurance above the applicable deductible for an estimated $300,963 annual premium. (c) Excess Commercial General Liability Insurance AIG has also agreed to provide the Debtors with excess commercial general liability insurance to cover occurrences in the Debtors' businesses in excess of a $500,000 self-insured retention for which they may be determined to be liable. In addition, the Debtors must pay the first $500,000 plus all allocated lost adjustment expenses for each claim asserted under the excess commercial general liability insurance policy. AIG provides the excess commercial general liability insurance in excess of the self-insured retention for an estimated annual premium equal to $202,071. To initiate coverage under the Insurance Program, AIG required the Debtors to: -- pay all premiums under the Insurance Program in full; and -- provide AIG with a letter of credit to secure the Debtors' obligations under the Insurance Program. Accordingly, (1) on April 30, 2003, the Debtors paid $1,002,402 in premiums and program and administrative fees for the Insurance Program for the period May 1, 2003 through May 1, 2004; and (2) on May 8, 2003, the Debtors provided AIG with a $1,766,750 letter of credit as security for the Debtors' obligations under the Insurance Program. Ms. Booth explains that the Kemper downgrading put certain of the Debtors' critical contractual and business relationships in peril. In particular, any interruption in the insurance coverage would expose the Debtors to serious risks, including: (1) the possible incurrence of direct liability for the claims payment that otherwise would have been payable by AIG under the Insurance Program, (2) the possible incurrence of material costs and other losses that otherwise would have been reimbursed by AIG under the Insurance Program, (3) the possible loss of good-standing certification to conduct business in states that require companies like the Debtors to maintain certain types and levels of insurance coverage, (4) the possible inability to obtain similar types and levels of insurance coverage, and (5) the possible incurrence of higher costs for reestablishing lapsed policies or obtaining new insurance coverage. Thus, Judge Newsome rules that: (a) The Insurance Program is effective as of May 1, 2003 and the Debtors are authorized to execute all agreements under the Insurance Program and any amendments or schedules; (b) The Debtors are authorized to enter into further renewals of the Insurance Program without further Court order; (c) The Debtors are authorized and directed to pay their obligations under the Insurance Program, including premiums and deductibles, in the ordinary course of business in accordance with the relevant terms of the Insurance Program, without further Court order; (d) All collateral or security held at this time by AIG in connection with the Insurance Program and all prior payments to AIG under the Insurance Program are approved, and AIG is authorized to retain and use collateral or security in accordance with the terms of the collateral or security; (e) AIG may adjust, settle and pay insured claims, utilize funds provided for that purpose, and otherwise carry out the terms and conditions of the Insurance Program, without further Court order; (f) The Insurance Program will not, without AIG's written consent, be altered by any plan of reorganization approved in these cases and, absent AIG's consent, will survive any plan; (g) In the event of a default by the Debtors under the Insurance Program, subject to notice and cure provisions and the terms and conditions of the Insurance Program, AIG, without further Court order, may: (1) cancel the Insurance Program; (2) foreclose on any collateral, including without limitation, drawing on any letters of credit in part or full; and (3) receive and apply the unearned or returned premiums to the Debtors' outstanding obligations under the Insurance Program. The automatic stay imposed by Section 362 of the Bankruptcy Code will be modified for this limited purpose, provided, however, that AIG will provide the Debtors with five business days' written notice of any default and an opportunity to cure the default. If the Debtors fail to cure a default or obtain other appropriate relief from this Court within five business days of receiving the notice, AIG may exercise its rights to cancel the Insurance Program and foreclose on any collateral without further Court order, subject to the Debtors' right to challenge the cancellation or obtain other relief from the Court; (h) The Debtors' rights against all collateral held by AIG, in whatever form, will be governed by the terms of the Insurance Program and the related security documentation, and the Debtors will not take any action against AIG in the Court that is inconsistent with the terms of the documentation or this Order; and (i) The Debtors' obligations to AIG under the Insurance Program will be administrative obligations entitled to priority under Section 503(b) of the Bankruptcy Code. (Burlington Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) CABLE SATISFACTION: Bankers Extend Debt Waivers Until June 24 ------------------------------------------------------------- Cable Satisfaction International Inc.'s bankers agreed to extend the waivers pertaining to the maturity date of the credit facility of its subsidiary Cabovisao - Televisao por Cabo, S.A. until June 24, 2003, subject to certain conditions. Csii builds and operates large bandwidth (750 Mhz) hybrid fibre coaxial (HFC) networks and, through its subsidiary Cabovisao - Televisao por Cabo, S.A. provides cable television services, high- speed Internet access, telephony and high-speed data transmission services to homes and businesses in Portugal through a single network connection. The subordinate voting shares of Csii are listed on the Toronto Stock Exchange (TSX) under the trading symbol "CSQ.A". DebtTraders says that Cable Satisfaction International's 12.750% bonds due 2010 (CSQ10CAR1) trade at 30 and 32 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CSQ10CAR1 for real-time bond pricing. CALPINE CORP: Unit Prices $802MM Senior Secured Notes Offering -------------------------------------------------------------- Calpine Corporation [NYSE:CPN], a leading North American power company, announced that Power Contract Financing, L.L.C., a wholly owned stand-alone subsidiary of Calpine Energy Services, L.P. (CES), has priced an offering of approximately $340 million of 5.2% Senior Secured Notes Due 2006 and approximately $462 million of 6.256% Senior Secured Notes Due 2010 in a private placement under Rule 144A. The two tranches of Senior Secured Notes, totaling approximately $802 million of gross proceeds, are secured by fixed cash flows from one of CES' fixed-priced, long-term power sales agreements with the State of California Department of Water Resources and a new fixed-priced, long-term power purchase agreement with a third party. Calpine expects to complete the financing on June 13, 2003. Net proceeds, after funding of debt reserves and payment of transaction costs and fees, will be used to fund capital expenditures. The noteholders' recourse is limited to the assets of PCF. Calpine is not providing a guarantee of the Senior Secured Notes or any other form of credit support. The Senior Secured Notes will be offered in a private placement under Rule 144A, have not been and will not be registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. * * * As previously reported in Troubled Company Reporter, Calpine Corp.'s senior unsecured debt rating was downgraded to 'B+' from 'BB' by Fitch Ratings. In addition, CPN's outstanding convertible trust preferred securities and High TIDES were lowered to 'B-' from 'B'. The Rating Outlook was Stable. Approximately $9.3 billion of securities were affected. Calpine Corporation's 10.500% bonds due 2006 (CPN06USR2) are trading at about 85 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CPN06USR2for real-time bond pricing. CEPHALON INC: S&P Assigns Low-B Corporate Credit Rating at B+ ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to the emerging specialty pharmaceutical company Cephalon Inc. At the same time Standard & Poor's assigned its 'B-' subordinated debt rating to Cephalon's existing $600 million 2�% convertible subordinated notes due 2006. It also assigned a 'B-' rating to Cephalon's proposed subordinated issues. These include $300 million in zero coupon convertible subordinated notes due 2033 (putable in June 2008) and another $300 million also due 2033 (but putable in June 2010). The outlook is positive. Following the transaction, Cephalon will have approximately $1.3 billion of debt. Cephalon plans to use the proceeds from the proposed convertible issues mainly to refinance its existing 5�% convertible notes due 2006, as well as to finance acquisitions. The company may also be stockpiling cash in anticipation of increased marketing support for one of its products, Provigil, a drug related to sleep disorders that Cephalon is currently hoping to market for uses beyond those currently indicated by the FDA. "The speculative-grade ratings on West Chester, Pa.-based Cephalon reflect the company's aggressive growth strategy and leveraged financial profile, factors mitigated by the growing cash flows from the company's two main pharmaceutical products, Provigil, as well as Actiq," said Standard & Poor's credit analyst Arthur Wong. Provigil, which has been approved to treat excessive daytime sleepiness associated with narcolepsy, is expected to have sales in the $120 million area for the six months ending June 2003, up from roughly 30% for the same period the previous year. The drug accounts for roughly 40% of the company's total revenues. Despite its FDA-approved indication, however, much of Provigil's growth can be attributed to "off label" uses. These include treatment for sleepiness associated with disorders such as depression and Attention Deficit Hyperactivity Disorder. So that it can market Provigil for these diseases, Cephalon is pursuing supplemental new drug applications. If the company is successful, product sales may reach $500 million by year-end 2005. There is some concern, however, regarding Cephalon's patent position on Provigil. A number of generic companies have filed abbreviated new drug applications, and, if successful at contesting Cephalon's patent, they may be able to enter the market with generic Provigil by mid-2006. Actiq, which has been approved for breakthrough cancer pain, is expected to have sales in the $100 million area for the six months ending June 2003, up more than 100% from the same period the previous year. Although Actiq accounts for only about 30% of the company's total revenues, the cancer market is relatively under- penetrated, and the drug will continue to be an important contributor to growth in the company's cash flows. Cephalon has experienced substantial revenue growth during the past three years. The company is expected to continue to be aggressive, acquiring products and businesses with cash raised through its convertible debt offerings. CHAMPION ENT.: Phyllis Knight Takes Over HomePride's Management --------------------------------------------------------------- Champion Enterprises, Inc. (NYSE: CHB), the nation's leading housing manufacturer, announced that Abdul H. Rajput, President, HomePride Finance Corp., has resigned his position to pursue other interests. Phyllis Knight will be overseeing HomePride's operations. "We regret Abdul's decision to leave Champion and wish him well in his future endeavors," said Knight. "However, we are fortunate to have an experienced team of people at HomePride who continue to provide strong operational management for our finance company." Champion Enterprises, Inc., headquartered in Auburn Hills, Michigan, is the industry's leading manufacturer and has produced more than 1.5 million homes since the company was founded. The company is currently operating 34 homebuilding facilities and 120 retail stores. Further information can be found using the company's Web site at http://www.championhomes.net As reported in Troubled Company Reporter's March 4, 2003 edition, Standard & Poor's Ratings Services lowered its ratings on Champion Enterprises Inc.,and its subsidiary, Champion Home Builders Co. At the same time, the ratings were removed from CreditWatch with negative implications, where they were placed August 14, 2002, following an announced restructuring. The outlook is negative. The rating actions followed the company's recent earnings announcement, which reflected a weaker-than-expected fourth quarter, driven by continued losses within Champion's retail division, additional charges related to realignment efforts, and the carrying costs associated with the company's new finance arm. Standard & Poor's believed the company had adequate liquidity to support the revised ratings, given current unrestricted cash balances and revolver capacity, the absence of any near-term debt maturities and minimal capital expense needs for the coming year. However, given continued slippage in shipment levels -- the result of limited consumer financing availability and competition from repossessions -- conditions will remain challenging for Champion, the industry's largest producer. Ratings Revised Rating To From Champion Enterprises Inc. * Corporate credit B+/Negative BB-/Watch Neg * $170 mil 7.625% sr unsecured notes due 2009 B- B Champion Home Builders Co. * Corporate credit B+/Negative BB-/Watch Neg * $150 mil 11.25% sr unsecured notes due 2007 B- B CIENA CORP: Names Nick Jeffery as EMEA Region Managing Director --------------------------------------------------------------- CIENA(R) Corporation (NASDAQ:CIEN), a leading provider of global network solutions, announced the appointment of Nick Jeffery to the position of Managing Director, Europe, Middle East and Africa. Jeffery joins CIENA from UK service provider Cable and Wireless, where he held the position of CEO for the company's Global Markets and Service Providers division. In that role, he was responsible for constructing the division, and for developing and managing relationships with the company's largest corporate customers. Gary Smith, president and chief executive officer of CIENA, said: "We are pleased to announce the appointment of an industry veteran of the caliber of Nick Jeffery to head up our EMEA operations. European telecom operators have gone through a very challenging period with pressure to cut network expenditure. CIENA is well placed to help operators use their existing network infrastructure more efficiently and to create new opportunities in the substantial enterprise data services market." Jeffery's appointment will further strengthen CIENA's European team as it continues to target the region's incumbent carriers. This appointment follows the Company's recent announcement with BT to become a strategic partner for the delivery of the UK operator's next-generation network. Jeffery will be responsible for maintaining the BT relationship, as well as spearheading CIENA's efforts to target other major European telecom operators. One of Jeffery's first tasks will be the implementation of CIENA's recently announced LightWorks(TM) Services initiative. This next phase of the Company's ongoing network evolution strategy aims to provide solutions to carriers to improve their margins and offer new data services while building upon their existing network infrastructure. Prior to joining CIENA, Jeffery spent 12 years at Cable and Wireless. He was responsible for the successful restructuring of Cable and Wireless' Enterprise division and led the creation of the company's India Centre of Excellence in Bangalore between 2001 and 2002. CIENA Corporation delivers innovative network solutions to the world's largest service providers, increasing the cost-efficiency of current services while enabling the creation of new carrier- class data services built upon the existing network infrastructure. Additional information about CIENA can be found at http://www.ciena.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's lowered the corporate credit rating on optical telecommunications systems and equipment provider, Ciena Corp., to single-'B' from single-'B'-plus, reflecting the company's dramatic decline in sales, and expectations that business conditions will remain weak over the intermediate term. The outlook remains negative. "The ratings continue to reflect the company's narrow business position, substantial leverage, and the risks of continuing technology evolution offset by the company's good financial flexibility," said Standard & Poor's credit analyst Bruce Hyman. COMM 2003-LNB1: S&P Assigns Prelim. Ratings to 2003-LNB1 Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to COMM 2003-LNB1's $846 million commercial mortgage pass- through certificates series 2003-LNB1. The preliminary ratings are based on information as of June 12, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the fiscal agent, the economics of the underlying mortgage loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, B, C, D, and E are being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage ratio of 1.55x, a beginning loan- to-value (LTV) ratio of 87.0%, and an ending LTV of 72.1%. LIMINARY RATINGS ASSIGNED M 2003-LNB1 Commercial mortgage pass-thru certs series 2003-LNB1 Class Rating Amount ($) A-1 AAA 162,434,000 A-2 AAA 347,583,000 B AA 28,553,000 C AA- 12,691,000 D A 19,036,000 E A- 10,575,000 X-1 AAA 846,037,513 X-2 AAA 817,601,000 A-1A AAA 182,676,000 F BBB+ 10,576,000 G BBB 8,460,000 H BBB- 12,691,000 J BB+ 16,921,000 K BB 4,230,000 L BB- 5,287,000 M B+ 4,231,000 N B 4,230,000 O B- 3,172,000 P N.R. 12,691,513 COMSTOCK: Improved Liquidity Prompts S&P to Affirm B+ Rating ------------------------------------------------------------ Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating on oil and gas exploration and production company Comstock Resources Inc. and revised its outlook to stable from negative. As of March 31, 2003, Frisco, Texas-based Comstock had $351 million worth of debt outstanding. "The outlook revision reflects Comstock's improved liquidity, debt reduction, and likely continued debt repayment during the remainder of 2003," noted Standard & Poor's credit analyst Paul B. Harvey. "A total of $15 million in bank debt was repaid during first-quarter 2003, with roughly an additional $30 million expected to be repaid during the remainder of 2003," he continued. Total liquidity stood at $129 million as of March 31, 2003, and is expected to improve as the level of outstanding bank borrowings declines further. Capital expenditures are expected to be paid through internal cash flows in 2003 and 2004, with excess cash flows used to reduce levels of bank debt. Due to Comstock's lack of hedges on future production, levels of debt repayment will depend on the strength of hydrocarbon prices, particularly natural gas. The ratings for Comstock reflect challenges the company faces as an independent E&P company with a small, concentrated reserve base (614 billion cubic feet equivalent as of year-end 2002; 80% natural gas; 66% proved developed) and high debt leverage. These risks are partially offset by competitive finding costs and substantial operating leverage to North American natural gas, a commodity with attractive medium-term supply and demand fundamentals. EBITDA and expenses interest coverage is expected to be above 5x for 2003 because of strong expected commodity prices, especially natural gas. If natural gas prices remain strong through 2004, coverage could approach 6x. The 2003 capital expenditure budget of $100 million (exploration and development) should be funded through internal cash flows and allow for some repayment of bank debt. Debt leverage is expected to decline to the mid-50% range during 2003, with further reductions dependent on the strength of hydrocarbon pricing. These solid statistics, however, are not indicative of potential results during times of nonrobust pricing, especially given Comstock's policy of not hedging. The stable outlook reflects the likelihood of further improvement in Comstock's capital structure as excess cash flows are used to reduce outstanding debt. The outlook assumes that any acquisitions will be financed in manner so as to not weaken progress that has been made in the capital structure and liquidity. CONSECO FINANCE: U.S. Bank Airs Objection to Plan Confirmation -------------------------------------------------------------- U.S. Bank, as Trustee for 138 Securitization Trusts and the largest creditor of the Conseco Finance Corp. Debtors, supports the CFC Debtors' quick emergence from Chapter 11 and the Asset Sale. However, with over $3,000,000,000 in claims against the estates, U.S. Bank has some unresolved issues. First, on February 20, 2003, U.S. Bank filed Proofs of Claims against CIHC, Conseco, CTIHC and Partners Health Group, asserting preferential transfer, fraudulent conveyance and equitable subordination. U.S. Bank believes that in the past 18 months, more than $1,000,000,000 may have been upstreamed by CFC to the Parent in the form of improper fund transfers, dividends or other distributions. James E. Spiotto, Esq., at Chapman & Cutler, says that U.S. Bank will not support the Plan until these concerns are resolved. Second, there are more than $1,000,000,000 of Documentary Exceptions for the Securitization Trusts, which do not meet the standards set forth in the Pass-Through Agreements. When the CFN Sale is consummated, a $35,000,000 reserve has been established for resolution of Documentary Exceptions related to manufactured housing loan contracts. The CFC Debtors contend this reserve covers Home Equity and Home Improvement loan contracts as well. The Ad Hoc Committee asserts that it pertains only to manufactured housing. Mr. Spiotto says the CFC Debtors need to establish a reserve to cover exceptions in Home Equity and Home Improvement and to cover exceptions if the CFN Sale is not consummated. Currently, U.S. Bank has more than $600,000,000 in claims relating to Home Equity and Home Improvement Document Exceptions. A claim of this size cannot remain unresolved post- confirmation. Third, the Plan must comply with all compromises, settlements and the Consent Agreement previously approved by the Court, which are material to the manufactured housing lines of business and include the right to the increased servicing fee. The Confirmation Order or the Plan should provide a final accounting on the increased servicing fee and stipulate that any remaining funds be turned over to the Trustee. These funds are not property of the estate, but are the rightful property of the Securitization Trusts. Fourth, U.S. Bank has by far the largest potential claim against the estate and the most complex relationship with it. U.S. Bank will be required to interact with the Plan Administrator on a regular basis to resolve Documentary Exceptions. As a result, U.S. Bank should have a say in the selection of a Plan Administrator and any Post-Consummation Estate Agreement. Conseco Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) CONSECO INC: Brings-In CB Richard Ellis as Hangar No. 76 Broker --------------------------------------------------------------- Conseco, Inc., asks Judge Doyle for permission to employ CB Richard Ellis to effect a sublease or assignment of Hangar No. 76 at Indianapolis International Airport. James H.M. Sprayregen, Esq., at Kirkland & Ellis tells Judge Doyle that on February 4, 1994, Conseco leased the Hangar from the Indianapolis Airport Authority. The lease term extends until June 30, 2004. Conseco does not need the Hangar as part of its reorganized operations and wants to find another tenant. Conseco agrees to pay CB Richard Ellis a professional service fee not to exceed $34,500 from the sale proceeds of a Transaction. Also, CB Richard Ellis will be entitled to split with Conseco any earnest money or deposit a prospective purchaser makes pursuant to a letter of intent, an option, sublease or assignment. The Engagement Letter indicates that CB Richard Ellis stands to receive 1% of the Assumption Premium, defined as the one-time lump-sum advance payment made by assignee to assignor to induce the transaction. Conseco submits that the services of CB Richard Ellis are necessary as the Debtors are ill-equipped to do the job alone. Jonathan M. Hardy, Senior Associate of CB Richard Ellis, attaches an affidavit. To the best of his knowledge, no member of his firm owns or represents any interest materially adverse to the estate of Conseco. (Conseco Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 609/392-0900) COOPERATIVE COMPUTING: Receives Tenders & Consents for Sr. Notes ---------------------------------------------------------------- Cooperative Computing, Inc., (CCITRIAD) announced that as of 1:30 p.m., New York City time, Thursday, it received tenders and consents in excess of a majority of its 9% Senior Subordinated Notes due 2008. The consent period for which holders of notes may tender 9% Senior Subordinated Notes and consent to the proposed indenture amendments expired at 5:00 p.m., New York City time, Thursday last week. Holders who tender notes and consents prior to such time shall be entitled to consent payments with respect to the notes. The tender offer is scheduled to expire on June 26, 2003. In the event that the other conditions to the tender offer and consent solicitation are met or waived, CCITRIAD expects to execute a supplemental indenture effecting amendments to the indenture governing the 9% senior subordinated notes in accordance with the terms of the tender offer and consent solicitation. CCITRIAD is an industry leader in enterprise systems and information services for the automotive aftermarket, and hardlines and lumber industries. Headquartered in Austin, TX, the company has operations in Livermore, CA, Denver, CO, Canada, France, Ireland and the UK. As reported in Troubled Company Reporter's June 4, 2003 edition, Standard & Poor's Ratings Services assigned its 'B+' rating to the proposed new $175 million senior unsecured notes issue of Cooperative Computing Inc., issued under Rule 144a with registration rights. Proceeds from the sale of the new notes are expected to be used to tender for the existing $100 million senior subordinated notes, pay off remaining senior bank debt, and buy out certain equity holders. At the same time, Standard & Poor's affirmed its 'B+' corporate credit, 'BB-' senior secured bank loan, and 'B-' subordinated debt ratings on the Austin, Texas-based company. CCI will have $175 million of debt outstanding following the issuance of the notes and the tendering of the existing notes and repayment of existing senior bank debt. The outlook is stable. CYBEX INT'L: Obtains New Three-Year Senior Financing Facility ------------------------------------------------------------- Cybex International, Inc. (AMEX: CYB), a leading exercise equipment manufacturer, has received commitment letters from CIT Business Credit and Hilco Capital LP to provide a $30 million, three-year senior financing facility which would re-finance the Company's current bank debt with FleetBoston Financial and Wachovia Bank. Additionally, the Company's principal stockholder, UM Holdings, has agreed to provide up to $8.0 million in subordinated loans and other guarantees, including advances made to date, as part of such refinancing, which would also provide the Company with additional working capital. These transactions are subject to the execution and delivery of definitive documentation and customary closing conditions. John Aglialoro, Chairman and CEO, commented "The new debt facility is a vital step for Cybex in the company's continued growth and profitability. We expect that Q2 will see double-digit revenue growth, exceeding prior guidance of 3%-5%." Cybex International, Inc. is a leading manufacturer of premium exercise equipment for commercial and consumer use. Cybex and the Cybex Institute, a training and research facility, are dedicated to improving human performance based on an understanding of the diverse goals and needs of individuals of varying physical capabilities. Cybex designs and engineers each of its products and programs to reflect the natural movement of the human body, allowing for variation in training and assisting each unique user - from the professional athlete to the rehabilitation patient - to improve their daily human performance. For more information on Cybex and its product line, visit the Company's Web site at http://www.eCybex.com As reported in Troubled Company Reporter's May 15, 2003 edition, the Company's March 29, 2003 balance sheet shows a working capital deficit of about $23 million, while its total shareholders' equity dwindled to about $640,000 from about $2.4 million three months ago. The Company also reported on the status of its credit arrangements. The Company entered into a forbearance agreement with its lenders pursuant to which the lenders have agreed not to exercise their rights with respect to certain financial covenant defaults under its Credit Agreement during a forbearance period that runs through June 30, 2003, subject to extension to August 30, 2003 if certain conditions are met. UM Holdings Ltd., a principal stockholder of the Company, has continued to provide financial support, with $3,950,000 in subordinated loans outstanding as of May 9, 2003. DELTA FUNDING: Class B Notes' Rating Downgraded to B from BBB ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on the class B asset-backed certificates from Delta Funding Home Equity Loan Trust 2000-4 to 'B' from 'BBB'. At the same time, ratings are affirmed on the remaining classes from the same series. The lowered rating reflects: -- Remaining credit enhancement insufficient to support the previously assigned rating due to negative collateral performance; -- Realized losses in each of the most recent six months that have exceeded excess interest cash flow by an average of at least 5x; -- Serious delinquencies (90-plus days, foreclosure, and REO) during the same six-month period that averaged 28.16%; and -- A loss trend that is expected to continue in the near term. Standard & Poor's reviewed the results of stressed cash flow runs for the transaction and determined that the credit support for the class was not consistent with the prior rating. Therefore, Standard & Poor's will continue to monitor the performance of the transaction on a monthly basis to ensure the assigned rating accurately reflects the risks associated with this security. The affirmations reflect sufficient levels of credit support to maintain the current ratings, despite the high level of delinquencies. Credit support for class B is provided by excess interest and overcollateralization. In addition, all other classes receive further support from subordination. Furthermore, the senior certificates receive additional credit support provided by an 'AAA' bond insurance provider (Financial Security Assurance Inc.). The collateral consists of fixed- and adjustable-rate home equity first and second lien loans secured by one- to four-family residential properties. RATING LOWERED Delta Funding Home Equity Loan Trust 2000-4 Asset-backed certificates Rating Class To From ----- -- ---- B B BBB RATINGS AFFIRMED Delta Funding Home Equity Loan Trust 2000-4 Asset-backed certificates Class Rating ----- ------ A, IO AAA M-1 AA M-2 A DIRECT INSITE: Fails to Maintain Nasdaq Listing Standards --------------------------------------------------------- Direct Insite Corp. (NASDAQ: DIRI) received a Nasdaq staff determination dated June 5, 2003 indicating that the Company fails to comply with the requirements for continued listing regarding stockholders' equity as set forth in Marketplace Rule 4310(C)(2)(B), and the Company's securities are therefore subject to delisting from The Nasdaq SmallCap Market. The Company submitted its request for a hearing before a Nasdaq Listing Qualifications Panel to review the staff determination. Submission of this hearing request delays the delisting of the Company's securities pending the Panel's decision. At this hearing, the Company intends to discuss its plans for complying with the continued listing requirements in order to maintain its NASDAQ listing. There can be no assurance, however, that the Panel will grant the Company's request for continued listing. The effect of this Nasdaq rule with respect to stockholders' equity has no effect on the Company's ability to continue its day to day business in the ordinary course since, among other things, if the Company's securities were no longer listed on Nasdaq, they will be automatically be listed for quotation on the OTC Bulletin Board unless the Company voluntarily lists its securities on another exchange. Chairman and CEO Jim Cannavino stated, "I, and the board are committed to the Company and its plan to continue to focus on the higher margin recurring revenues associated with our EIP&P offering. We believe this is the best strategy to deliver a profitable company in the shortest period of time". Direct Insite Corp operates primarily as an Application Service Provider, generally referred to as an ASP, providing an Electronic Invoice Presentment and Payment solution targeted at large enterprise customers. The Company's offering is based on a "data centric" approach that improves the delivery and management of high volumes of invoice related data while providing a customer workflow system that better manages the complexity of the presentation, analysis, dispute resolution, approval and payment process. This reduces the administrative and operating expenses for both "Biller" and "Payer" alike. Direct Insite also provides managed services using our patented d.b.Express(TM) technology, a management information tool that allows users to visually data mine large volumes of transactional data via the Internet. A complete Internet Customer Care tool set integrated with the EIP&P product set is also available. Additionally, the Company offers an integrated solution of order entry, workflow management, provisioning, and invoice verification for large enterprise clients, currently marketed under the trade name AMS (Asset Management System) sometimes referred to as TAMS. Headquartered in Bohemia, NY, with offices in Dallas, TX, and Chicago, IL, Direct Insite Corp. employs a staff of 65. For more information about Direct Insite Corp. visit http://www.directinsite.com Direct Insite's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $700,000, while its total shareholders' equity deficit further dwindled to about $130,000 from about $1.2 million three months ago. DYNEGY INC: Issues Statement on Indictments of Former Employees --------------------------------------------------------------- Dynegy Inc. (NYSE:DYN) issued the following statement on the indictments brought against three former employees: "While it is Dynegy's policy not to discuss former employees or matters pertaining to their employment, the company has been and remains committed to complete cooperation with the U.S. Attorney's Office in Houston and other government agencies. "In addition to resolving its past issues, the company is focused on the present and the future through its self- restructuring initiatives and the reliable, physical delivery of energy products and services to customers. Dynegy has been, and will continue to be, committed to restoring the confidence of all stakeholders." As previously reported in Troubled Company Reporter, ratings for Dynegy Holdings Inc., Dynegy Inc. and affiliated companies, Illinois Power and Illinova Corp. were affirmed and removed from Rating Watch Negative by Fitch Ratings. They were originally placed on Rating Watch Negative on Nov. 9, 2001. The Rating Outlook for DYN and its affiliates is Stable. In addition, Fitch assigned a 'B+' rating to DYNH's secured $1.1 billion revolving credit facility and $200 million term loan A, both maturing on Feb. 15, 2005. Fitch also assigned a 'B' rating to its $360 million term loan B, maturing on Dec. 15, 2005. The removal of the Negative Rating Watch status reflects the lessening of near-term default risk as a result of several favorable actions and events. On April 2, 2003, DYNH entered into its new $1.66 billion secured bank credit facility. The facility requires no scheduled amortization of principal and should be adequate to fund ongoing collateral and operating needs through 2004. In addition, the risk of a default and resulting debt acceleration triggered by certain financial covenants contained in the prior credit facilities and Polaris lease has been eliminated. Other favorable recent events were: the filing of audited financial statements for years 1999 through 2002 with material disclosures consistent with expectations, the sale of DYN's U.S. communications business, the reporting of stronger than anticipated operating results for the first quarter of 2003, and the closing of an agreement with Southern Co. to terminate three wholesale tolling arrangements eliminating $1.7 billion of future capacity payments. Current ratings at DYN reflect Fitch's latest assessment of the company's overall credit profile and recognize the structural subordination of unsecured lenders to its secured bank lenders and project debt. The revolver and term loan A are secured by a first priority interest in substantially all assets and stock of DYNH and a second priority interest in the assets and stock of DYN, including the stock of ILN. The term loan B is secured by a first priority interest in the assets and stock of DYN and a second priority interest in substantially all assets and stock of DYNH. The new facilities are secured on a subordinated basis to more than $1.8 billion of DYNH project debt. The one notch separation between the bank facilities recognizes the expected higher collateral coverage for the revolver and Term Loan A to that for the term loan B. Ratings Actions DYN -- Indicative senior unsecured debt 'CCC+'. DYNH -- Secured revolving credit facility and term loan A 'B+'; -- Secured term loan B 'B'; -- Senior unsecured debt 'CCC+'. Dynegy Capital Trust I -- Trust preferred stock 'CC'. Illinois Power Co. -- Senior secured debt and pollution control bonds 'B'; -- Indicative senior unsecured debt 'CCC+'; -- Preferred stock 'CC'. Illinova Corp. -- Senior unsecured debt 'CCC+'. Dynegy Holdings Inc.'s 8.750% bonds due 2012 (DYN12USR1) are trading at 88 cents-on-the-dollar, DebtTraders reports. See http://www.debttraders.com/price.cfm?dt_sec_ticker=DYN12USR1for real-time bond pricing. EBT INT'L: Shareholders Approve Proposed 1-For-50 Reverse Split --------------------------------------------------------------- eBT International, Inc., (OTC Bulletin Board: EBTI) Tuesday held its Annual Meeting of Stockholders in Boston, MA for the purpose of electing directors and amending the Company's Certificate of Incorporation to effect a 1-for-50 reverse stock split of the outstanding shares of the Company's common stock, as set forth in the Company's Proxy Statement dated May 12, 2003. There were 14,019,262 shares of the Company's common stock represented at the Annual Meeting in person or by proxy, which is approximately 95.5% of the shares of common stock outstanding and entitled to vote based on the April 25, 2003 record date for the Annual Meeting. The persons nominated for election as directors were elected and the reverse stock split was approved by the holders of the requisite number of shares. The reverse stock split became effect at 6:00 pm, Eastern time, on June 10, 2003, as the result of filing a Certificate of Amendment to the Company's Certificate of Incorporation with the Delaware Secretary of State. The exchange agent, EquiServe Trust Company, will send a letter of transmittal to the holders of fractional shares as of June 10, 2003. Stockholders who hold fewer than 50 shares in any discrete account will receive $0.11 for each pre-split share in cash after surrendering their stock certificates to the exchange agent, and as a result will no longer be stockholders of the Company with respect to such shares. As a result of this reverse stock split, the Company is expected to have fewer than 300 holders of record of common stock, permitting the Company to terminate the registration of its common stock with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended. The Company intends to file for termination of such registration as soon as practicable. Prior to May 23, 2001, the Company developed and marketed enterprise-wide Web content management solutions and services. The Company's stockholders approved a plan of liquidation and dissolution on November 8, 2001, and a certificate of dissolution was filed with the State of Delaware on November 8, 2001. An initial cash liquidation distribution in the amount of $44,055,000 (or $3.00 per share) was returned to stockholders on December 13, 2001. A second cash liquidation distribution in the amount of $4,406,000 (or $0.30 per share) was returned to stockholders on October 30, 2002. It is unlikely that any future liquation distributions will be made to stockholders until final resolution of all matters, including potential indemnification claims related to the restatement of the Company's financial results for the first three quarters of 1998. EMMIS COMMS: Annual Shareholders' Meeting to Convene on June 25 --------------------------------------------------------------- On Tuesday, July 1, 2003, Emmis Communications will host a conference call to discuss first quarter earnings. Emmis Chairman/Chief Executive Officer Jeff Smulyan and Executive Vice President/Chief Financial Officer Walter Berger will host the call. To access this conference call, please dial 1.773.756.4619, or listen online at http://www.emmis.com DATE/TIME Tuesday, July 1, 2003 Eastern 9 a.m. Central 8 a.m. Mountain 7 a.m. Pacific 6 a.m. CALL NAME/PASSCODE Emmis Communications MODERATORS Jeff Smulyan Walter Berger PLEASE NOTE To facilitate call entry, we recommend that you place your call five minutes before the scheduled start time. CALL PLAYBACK A digital playback of the call will be available until Tuesday, July 8 by dialing 1.402.220.3459. Investors have the opportunity to listen to the conference call over the Internet through the Emmis Web site, http://www.emmis.com To listen to the live call, please go to the Web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay will be available on the site shortly after the call. Emmis also announced that its Annual Shareholder Meeting is scheduled for 10 a.m. on Wednesday, June 25, 2003 at Emmis' Corporate headquarters in Indianapolis. Emmis Communications is an Indianapolis-based diversified media firm with radio broadcasting, television broadcasting and magazine publishing operations. Emmis' 18 FM and 3 AM domestic radio stations serve the nation's largest markets of New York, Los Angeles and Chicago as well as Phoenix, St. Louis, Indianapolis and Terre Haute, IN. In addition, Emmis owns two radio networks, three international radio stations, 16 television stations, award- winning regional and specialty magazines, and ancillary businesses in broadcast sales and publishing. Emmis has announced the acquisition of a majority interest in six radio stations in Austin, Texas. Pending approvals from the Federal Communications Commission and other regulatory agencies, the transaction is expected to close in the company's second fiscal quarter. After the close of the transaction, Emmis will own 27 radio stations in eight markets. * * * As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services assigned its single-'B'-plus bank loan rating to the $500 million senior secured term loan B of Emmis Operating Co. All other ratings on Emmis and its parent company, Emmis Communications Corp., including the single-'B'-plus corporate credit rating, are affirmed. The outlook is stable. ENRON CORP: EIM Unit Seeks Stay Lift to Pay Policy Advances ----------------------------------------------------------- Energy Insurance Mutual asks the Court, pursuant to Section 362(d) of the Bankruptcy Code, for relief from the automatic stay, to the extent applicable, to advance or pay defense costs to, and settlement proceeds on behalf of, individual defendants under the Debtors' Excess Directors and Officers Liability Indemnity Policy. Louis Scarcella, Esq., at Scarcella Rosen & Slome LLP, in Garden City, New York, relates that in 2000, Enron Corp. purchased an Excess Directors and Officers Liability Indemnity Policy from EIM. This policy provides $65,000,000 of excess insurance coverage, including coverage for legal fees and associated expenses incurred in defending covered "Claims", excess of a Directors and Officers Liability Insurance Policy from Associated Electric & Gas Insurance Services Limited, which provides $35,000,000 of primary insurance coverage. The EIM Excess Policy is a "followform" policy and, thus, incorporates all terms and provisions of the AEGIS D&O Policy that are not otherwise inconsistent with the terms and provisions of the EIM Excess Policy. Coverage under the Policies for certain D&O Defense Costs, settlements and judgments is provided directly to or on behalf of the Debtors' present and former officers and directors if the Loss is not reimbursed by the Debtors through indemnification payments. The Policies also insure the Debtors to the extent the Debtors indemnify their present and former officers and directors for covered Loss. Further, the EIM Excess Policy insures the Debtors for certain claims asserted against the Debtors and for certain expenses the Debtors incurred pursuant to Endorsements 6 and 7 of the AEGIS D&O Policy. According to Mr. Scarcella, the EIM Excess Policy originally applied to Covered Claims first made during the period from September 1, 1998 through September 1, 2001. The EIM Excess Policy was renewed and expired by its terms on September 1, 2002, at which time the Debtors purchased a three-year Discovery Period under the EIM Excess Policy. The Debtors supplemented the coverage provided under the AEGIS D&O Policy and EIM Excess Policy with additional excess policies from a number of different insurance carriers. Total insurance coverage under all of the D&O Policies is $350,000,000. As noted, the AEGIS D&O Policy and the EIM Excess Policy generally provide that, subject to certain conditions and other terms, AEGIS and, if the limit of liability under the AEGIS D&O Policy is exhausted, then EIM will pay, among other things, the legal fees and related expenses and certain settlement amounts of the Debtors' covered directors and officers incurred in a covered Claim. Endorsement 13 of the AEGIS D&O Policy, which is incorporated into the EIM Excess Policy and which is entitled "Priority of Payments Endorsement," adds an additional subparagraph to Section I(B) of the AEGIS D&O Policy, which states: "With respect to the ULTIMATE NET LOSS [which includes D&O Defense Costs and settlement amounts] for which payment is due the INSURER shall: first, pay such CLAIM which is covered by Insuring Agreement (A)(1), and then with respects [sic] to any remaining Limits of Liability after the payment of any CLAIM made under Insuring Agreement (A)(1), at the written request of the chief executive officer of the COMPANY, either pay or withhold payment of such other remaining portion of the ULTIMATE NET LOSS for which overage is provided under this POLICY." As a result of this priority of payment provision, the Debtors' interests in the EIM Excess Policy are secondary to the Individual Defendants' interest. EIM acknowledges that it would pay or advance covered Defense Costs and settlement amounts to various Individual Defendants upon exhaustion of the limits of liability of the AEGIS D&O Policy, subject to: (a) EIM's full reservation of rights; and (b) other standard conditions, as the execution by each covered Individual Defendant of a binding written undertaking to repay all monies advanced if it ultimately is determined that the individual is not entitled to insurance coverage. Mr. Scarcella notes that the Debtors and their present and former officers and directors are defendants in class action and individual lawsuits, investigations and proceedings, including numerous purported class actions against the Individual Defendants alleging, inter alia, violations of federal and state securities laws. Most of the Lawsuits have been consolidated before Judge Melinda Harmon of the United States District Court for the Southern District of Texas. On February 27, 2002, Mr. Scarcella relates, Judge Harmon issued an accelerated pre-trial Scheduling Order that "will require the expenditure of a great deal of time and energy by the lawyers and parties, but one that will bring this case to a resolution in as short a time frame as humanly possible, while serving the interest of justice." Among other things, Judge Harmon's Scheduling Order requires that the parties establish and fund, "as promptly as possible," a document depository for the voluminous documents to be reviewed in connection with those actions. Moreover, the Scheduling Order requires that that trial commence no later than December 1, 2003. The Individual Defendants have incurred -- and, in light of Judge Harmon's Order, likely will continue to incur on an expedited basis -- significant Defense Costs in the defense of the Lawsuits. AEGIS has authorized $30,516,902 Defense Costs advancement under the AEGIS D&O Policy, and of that amount the Individual Defendants have already received interim payment or advancement from AEGIS equal to $29,615,700. EIM anticipates that coverage under the AEGIS D&O Policy will soon be exhausted and that the Individual Defendants will then turn to EIM to advance defense costs under the terms and conditions of the EIM Excess Policy. Mr. Scarcella clarifies that EIM has fully reserved all of its rights and defenses under the Policies and available at law with respect to the Lawsuits and any related matters or with respect to any information which the Insureds provided to or failed to provide to EIM in connection with the EIM Excess Policy or the underwriting thereof. Nothing in or relating to this request constitutes a waiver, modification or limitation of the full reservation of rights or an admission or acknowledgment that the EIM Excess Policy properly incepted, currently exist or creates any liability for or obligations by EIM. Mr. Scarcella disclosed that certain Insureds recently presented to AEGIS and EIM confidential settlement demands in one of the Lawsuits. Because the settlement demands exceed the remaining limit of liability of the AEGIS policy, the obligation to respond to these settlement demands will fall to EIM. Since many of the Lawsuits were filed more than a year ago, it is likely additional settlement demands will be submitted to EIM in the future. The settlement demands submitted to AEGIS and EIM to date have been conditioned upon the existence and terms of the specific demands and any resulting settlement being held in strict confidence. EIM, therefore, is not at liberty to disclose anything about the settlement demands received to date. Consistent with EIM's rights and obligations under the EIM Excess Policy, any settlement demand submitted to EIM will be evaluated both regarding its reasonableness under the circumstances and its coverage under the EIM Excess Policy. EIM will consent to any demand only if and to the extent EIM determines the proposed settlement is reasonable and covered under the EIM Excess Policy. To the extent the automatic stay may apply to the EIM Excess Policy and its proceeds, EIM asks the Court for relief from the automatic stay for purposes of payments or advancements by EIM, upon exhaustion of the limits of liability of the AEGIS D&O Policy, of reasonable and necessary Defense Costs and settlement amounts, which EIM determines to be owing under the EIM Excess Policy for the Individual Defendants, subject to EIM fully reserving its rights and defenses and the execution of a written undertaking by each of the covered Insureds to repay any amounts advanced if it ultimately is determined that they are not entitled to coverage. Mr. Scarcella tells the Court that EIM is not requesting that the Court approve, review or otherwise become involved in decisions by EIM regarding what amounts are or are not reasonable, necessary, covered or otherwise owing under the Policies. Mr. Scarcella points out that the issue presented by EIM's request as to Defense Costs was previously submitted to this Court pursuant to AEGIS' Motion for an Order Granting Relief from the Automatic Stay, to the Extent Applicable, to Pay or Advance Defense Costs to Individual Defendants under the AEGIS D&O Policy. After briefing and oral argument, the Court granted AEGIS' request. In prior filings with the Court, the Debtors and several objectors presented arguments regarding whether or not the AEGIS D&O Policy and its proceeds are assets of the Debtors' bankruptcy estate. EIM does not take a position with respect to that issue for purposes of this motion. Instead, EIM simply seeks relief from the automatic stay if and to the extent the EIM Excess Policy and its proceeds may be assets of the Debtors' bankruptcy estate, in order to allow EIM to fulfill its contractual obligations under the EIM Excess Policy to the Individual Defendants. Absent an order, Mr. Scarcella fears, EIM will be placed in the impossible dilemma of either advancing Defense Costs under the EIM Excess Policy or not advancing Defense Costs under the EIM Excess Policy. Because settlement demands have been made and will likely continue to be made under the Policies, EIM further asks the Court to lift the automatic stay, if applicable, to allow the Insureds to exercise whatever rights they may have under the EIM Excess Policy and to allow EIM to discharge whatever obligations it may have under the EIM Excess Policy with respect to settlement demands. (Enron Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 609/392-0900) EROOMSYSTEM: Projected Bankruptcy by June 1 Without New Equity -------------------------------------------------------------- Since inception, eRoomSystem Technologies Inc. has suffered recurring losses. During the year ended December 31, 2002 and the three months ended March 31, 2003, the Company had losses of $3,550,923 and $490,989, respectively. During the year ended December 31, 2002 and the three months ended March 31, 2003, the Company's operations used $1,626,305 and $105,338 of cash, respectively. The Company had a cash balance of $133,603 as of March 31, 2003, of which $110,395 was restricted for the purpose of paying the final two payments of certain long-term obligations. These matters raise substantial doubt about the Company's ability to continue as a going concern. Management is attempting to obtain debt and equity financing for use in its operations. Realization of profitable operations or proceeds from the financing is not assured. Management is also attempting to find an entity interested in purchasing or merging with the Company. Completion of a sale or merger can not be assured. eRoomSystem Technologies, Inc. is a Nevada corporation that was incorporated on August 31, 1999. Its core business is the development and installation of an intelligent, in-room computer platform and communications network, or the eRoomSystem, for the lodging industry. The eRoomSystem is a computerized platform and processor-based system designed to collect and control data. The eRoomSystem supports the Company's fully-automated and interactive eRoomServ refreshment centers, eRoomSafes, and other proposed applications. In addition, the Company has expanded the products and services offered through the introduction in 2002 of its eRoomEnergy products, the eRoomServ upright multi-vending rack and the eRoomTray (ambient tray for dry goods). Additional products and services will include information management services, additional in-room energy management capabilities, credit card/smart card capabilities for direct billing and remote engineering and maintenance services. The Company's products interface with the hotel's property management system through the eRoomSystem communications network. The hotel's property management system posts usage of the Company's products directly to the hotel guest's room account. The solutions offered by the eRoomSystem and related products have allowed the Company to install its products and services in several premier hotel chains, including Marriott International, Hilton Hotels and Carlson Hospitality Worldwide, in the United States and abroad. Revenues Revenues from product sales were $7,166 for the three months ended March 31, 2003 as compared to $10,239 for the three months ended March 31, 2002, representing a decrease of $3,073, or 30.0%. Revenue from revenue sharing arrangements was $291,741 for the three months ended March 31, 2003 as compared to $304,019 for the three months ended March 31, 2002, representing a decrease of $12,278, or 4.0%. Maintenance fee revenues were $87,397 for the three months ended March 31, 2003 and $54,989 for the three months ended March 31, 2002, representing an increase of $32,408, or 37.1%. This increase was due to the installation of additional products in the field during the twelve months ended March 31, 2003. Cost of Revenue Cost of product sales revenue for the three months ended March 31, 2003 was $39,809, compared to $1,226 for the three months ended March 31, 2002, an increase of $38,584, or 3147%. The significant increase in costs was due to the write-off of units with a book value of $34,875 during the three months ended March 31, 2003. The gross margin percentage on revenue from product sales revenue was a negative 455.5% for the three months ended March 31, 2003, compared to 88.0% for the three months ended March 31, 2002. Cost of revenue sharing revenue was $179,481 for the three months ended March 31, 2003 and $94,868 during the three months ended March 31, 2002, representing an increase of $84,613, or 89.2%. The increase in the cost of revenue sharing revenue was due to an increased number of units previously placed pursuant to the Company's revenue sharing program, and the resulting costs associated with maintaining such units. The gross margin percentage on revenue sharing revenue was 38.5% for the three months ended March 31, 2003 and 68.8% for the three months ended March 31, 2002. The increase in gross margin percentage on revenue sharing revenue was primarily due to the reduction in salaries and overhead associated with the administration of the revenue stream. Cost of maintenance revenue was $51,616 for the three months ended March 31, 2003 and $112,497 for the three months ended March 31, 2002, representing a decrease of $60,881, or 54.1%. The gross margin percentage on maintenance revenues was 40.9% for the three months ended March 31, 2003 and a negative 104.6% for the three months ended March 31, 2002. The decrease in cost of maintenance revenue and the significant increase in the gross margin percentage were primarily due to cost-cutting measures realized through a reduction in field operations personnel responsible for maintaining the units, and not having a significant event such as the one-time repair costs f $35,000 associated with a hotel property in the three months ended March 31, 2002. eRoomSystem incurred losses attributable to common stockholders of $490,989 and $589,480 during the three months ended March 31, 2003 and 2002, respectively. The $98,491 decrease in the loss attributable to common stockholders was due primarily to increased revenue and realization of better operating margins. However, the Company has continued to incur losses subsequent to March 31, 2003 and, as a result, has experienced an increase in accumulated deficit. Management believes that the Company will continue to incur losses for the foreseeable future. The Company has been attempting to secure third party equity financing since June 2002 and a new debt financier since September 18, 2002. To date, it has had no success in achieving either objective. The Company has reduced expenses in every way possible and management has not received compensation in nearly two months, but eRoomSystem's cash position is extremely precarious. Consequently, if unable to secure a substantial equity infusion by June 1, 2003, management has stated that it is likely that the Company will have no choice but to file for protection under the United States Federal bankruptcy laws. E-SIM LTD: April 30 Balance Sheet Insolvency Widens to $5.7 Mil. ---------------------------------------------------------------- e-SIM Ltd. (OTCBB: ESIM.OB), a leading provider of MMI solutions for the wireless industry, announced its financial results for the first quarter, ended April 30, 2003. Revenues for the first quarter were $1,160,886, compared with the $1,080,796 for the comparable quarter of 2002, representing an increase of 7.4%. Revenues for Q4 2002 were $1,852,232. Gross profit for the current quarter was $712,370 as compared to $680,069 for Q1 2002, and $1,324,547 for Q4 2002. Net loss for the quarter was $831,763, compared with $826,648 for the comparable quarter. The previous quarter saw a net loss of $76,339. e-SIM management has noted that revenues were negatively affected owing to the postponement of a sizable payment for a major contract due to financial difficulties. e-SIM hopes to receive this payment in the near future. The company's backlog of orders remains strong at $3,928,200. e-SIM Ltd.'s April 30, 2003 balance sheet shows a working capital deficit of about $6 million and a total shareholders' equity deficit of about $5.7 million. Commenting on the results, Marc Belzberg, Chairman and CEO of e- SIM Ltd. said, "We are obviously disappointed by the lower than expected revenues for the first quarter. However, our outlook remains very positive. The close to $4,000,000 in backlog attests to our MMI solution's relevance for the wireless industry. The e- SIM name is increasingly recognized as a leader in the field and we see our business and opportunities developing very positively. I am confident that e-SIM is well positioned to grow significantly and increase its revenues from royalties, product licenses and professional services." Founded in 1990, e-SIM Ltd. -- http://www.e-sim.com/-- is a major provider of MMI (Man-Machine Interface) solutions for wireless and electronic products. e-SIM's MMI solutions are used by a wide range of wireless and electronic consumer goods manufacturers as well as by makers of aerospace and military equipment. e-SIM's RapidPLUS(TM) line of software products enables product designers and engineers to expedite the concept-to-market life cycle of products by easily creating simulated computer prototypes that are fully functional, and generating code from them to be used in the actual product. The RapidPLUS(TM) solution enables smooth development of wireless and electronic products and brings them to market faster with lower development costs. e-SIM's proprietary technology enables the creation and distribution of electronic LiveManuals, which are "virtual products" that look and behave like real products, over the Internet. FEI CO: S&P Rates New Convertible Subordinated Note Offer at B- --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on FEI Co. to negative from stable, affirmed its 'B+' corporate credit rating on the company, and assigned its 'B-' rating to FEI's new $150 million convertible subordinated note offering. Hillsboro Oregon- based FEI is a niche provider of high-end metrology and process equipment to the semiconductor, data storage, industrial, and research end markets. As of March 30, 2003 FEI had $175 million of debt outstanding. "The outlook change reflects an expected increase in net debt resulting from the note offering, combined with weakened operating profitability due to sluggish market conditions," said Standard & Poor's credit analyst Joshua Davis. The note offering has a zero coupon and is convertible into FEI common stock at a price of $27.132 per share. FEI will use approximately $25 million of the proceeds to enter into a hedge arrangement that effectively offsets dilution from conversion of the notes, up to a price of $40.80. Purchasers have been granted a "green-shoe" option to purchase up to $50 million of additional notes, which could increase gross proceeds to $200 million. The notes are puttable to the company on June 15, 2008, at 100.25 percent of par value. FLEMING COS: Seeks Nod for Glass & Assoc. Termination Pact ---------------------------------------------------------- Before the Petition Date, Fleming Companies, Inc., and its debtor- affiliates employed Glass & Associates, Inc. as their restructuring advisor pursuant to a Management Services Agreement on March 14, 2003. Because of the size and complexity of the assignment, Glass was required to immediately devote substantial resources to the project, which in turn required the firm to both divert personnel from other existing projects and decline other employments to ensure it had sufficient resources available to meet the Debtors' demands. From March 14 to April 1, 2003, 11 Glass professionals spent 932.8 hours working for the Debtors. The firm was paid $331,076 in professional fees and reimbursed $13,635 in expenses before the Debtors filed for Chapter 11. The Debtors want Glass to continue its services as restructuring advisor. Accordingly, Glass continued to perform restructuring advisory services on and after the Petition Date using essentially the same team of professionals. Unfortunately, as a result of developments in the cases, including discussions with various creditors, the Debtors subsequently determined not to continue with Glass' services and instead seek restructuring advisory services from AlixPartners LLC. The Debtors advised Glass of this decision on April 10, 2003, but requested the firm to continue to provide restructuring advisory services during an interim period while the restructuring advisory role was transitioned to AlixPartners. Glass continued to render the same services through April 17, 2003. In connection with the decision to utilize AlixPartners and discontinue Glass' services, the Debtors and Glass negotiated a Termination Agreement, which in material part provides that: (1) Glass' services under the Management Services Agreement will terminate effective April 17, 2003; (2) The Debtors will file an application to approve Glass' employment nunc pro tunc to April 1, 2003 under the terms of the Management Services Agreement; (3) Glass will file a final application for compensation for services rendered and reimbursement of expenses incurred under the Management Services Agreement between April 2, 2003 and April 17, 2003 amounting to $450,000. The full amount compensation and reimbursement contemplated by the Termination Agreement will be paid from the $500,000 retainer that Glass held since the Petition Date pursuant to the Management Services Agreement. The balance of the retainer will be returned to the Debtors; and (4) Glass and the Debtors mutually release each other from any claims under the Management Services Agreement, with limited exceptions related to, among other things, the confidentially of information and use of work product. Fleming Interim CEO and President Peter S. Willmott tells the Court that the services performed by Glass were necessary to enable the Debtors to prepare for the Chapter 11 filing and to comply with the requirements of the Bankruptcy Code during the first few weeks of their cases. During this period, Glass stationed its professionals at the Core-Mark operation in California, the Debtors' accounting operation in Oklahoma City, Oklahoma and at the Debtors' corporate headquarters in Lewisville, Texas and performed these services: (a) completed and communicated to the Debtors' management team, secured lenders and professionals a comprehensive cash flow forecast, including a three-week forecast and a 13-week forecast; (b) completed a comprehensive business financial model, including income statement, balance sheet, cash flow statement and borrowing base calculation; (c) analyzed the Debtors' financial statements for the first three accounting periods of fiscal year 2003, provided observations to the management and integrated results into the 13-week cash flow forecast and business financial model; (d) worked with the Debtors' professional support team on various operating and financial issues relating to the Chapter 11 filing and post-filing period, including issues with taxing authorities, vendor claims and reclamation claims; (e) counseled Fleming's Board of Directors and management regarding numerous operational and financial issues, including a risk adjusted 2003 financial plan addressing the variances in the first three accounting periods coupled with the significant lack of liquidity uncovered in Glass' initial cash analysis, the difficulties in maintaining acceptable customer service levels and ongoing relationships with trade suppliers and the retention of key employees, unprofitable units and high corporate overhead; (f) prepared for and attended meetings with the Debtors' secured lenders, trade suppliers and bondholder representatives; (g) prepared for and attended Board meetings; (h) developed the initial cash collateral budget for submission to the Bankruptcy Court; (i) assisted the management in developing a prioritization process for daily cash disbursements; (j) continued communications with trade suppliers initiated before the Chapter 11 filing and continued working with the ad hoc trade group on various issues, including the Debtors' Critical Vendor Program and Trade Lien; (k) initiated the segregation of and separate management focus on excess assets, including retail operations and locations, inventory, leases and fixed assets; and (l) initiated an analysis of past due accounts receivable and actions to institute an improved collection process. Pursuant to the Management Services Agreement, the Debtors agreed to pay Glass on an hourly basis with the ability to earn Amendment and Restructuring Fees. The Debtors also promised to reimburse Glass' actual and necessary costs and expenses. The hourly rates of Glass professionals who performed services for the Debtors are: Principal $425 - 550 Case Director 375 - 425 Senior Associate 325 - 375 Consultant 190 - 300 Clerical/Administrative 75 - 95 Because of the extraordinary demands placed on Glass by the assignment, including the need to redirect professionals from other projects and decline other employment to ensure that it had sufficient resources to meet Fleming's needs, and the lost opportunity to earn a Restructuring Fee, the Debtors support Glass' request in its compensation application for an enhancement of $94,432 above its total fees and costs incurred. Both the Debtors and Glass expected the project would last for many months, and indeed, in the first 30 days of the engagement Glass' fees exceeded $700,000, Mr. Willmott says. In recognition of the demands of the engagement, an enhancement of Glass' hourly fees is therefore appropriate. Consequently, the Debtors ask the Court to approve Glass' interim employment as restructuring advisor. The Debtors also seek approval of the Termination Agreement as well as permission to pay outstanding compensation and reimbursement obligations to Glass. Before the Petition Date, Mr. Willmott discloses that Glass received $500,000 as a retainer for its services in the Chapter 11 cases. The firm has been paid the full $344,712 for its prepetition services rendered and expenses incurred. Jack R. Stone, a Principal at Glass, assures the Court that the firm is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code. Glass does not hold or represent an interest adverse to the estates that would impair its ability to objectively perform professional services for the Debtors. (Fleming Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) GERDAU AMERISTEEL: $350-Mill. Bank Facility Gets S&P's BB Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' bank loan rating to Gerdau Ameristeel Corp.'s proposed $350 million senior secured revolving bank credit facility due 2008. Standard & Poor's also assigned its 'B+' rating to the company's proposed $400 million senior unsecured notes due 2011. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the company. The outlook remains stable. "The credit facility is rated one notch above the corporate credit rating reflecting Standard & Poor's assessment of the strong prospect for full recovery in a default or bankruptcy scenario," said Standard & Poor's credit analyst Dominick D'Ascoli. Standard & Poor's said that the rating on the bank loan is based on preliminary terms and conditions and is subject to review once full documentation is received. Standard & Poor's said that its ratings on Tampa, Fla.-based Gerdau Ameristeel reflect the company's fair business position as a producer of rebar; structural shapes; and merchant bar, rod, flat-rolled, and fabricated steel. GLOBAL CROSSING: XO Proposes Tender for 'Any and All' Bank Debt --------------------------------------------------------------- XO Communications, Inc. is prepared to launch immediately an "any and all" tender offer for the $2,250,000 billion of Senior Secured Global Crossing LTD Bank Debt. The tender offer would be priced at $210 per $1,000 of Bank Debt, or $472.5 million in the aggregate. XO's tender offer will not be subject to due diligence or financing, but is predicated on the termination of the Singapore Technologies Telemedia Pte Ltd Purchase Agreement. In addition, to facilitate the certainty that Global Crossing emerges from bankruptcy, XO recently made a purchase offer comprised of cash and securities valued at $700 million. Various Global Crossing creditors have questioned the "value" of XO's offer. Therefore, as an alternative, XO, alone or together with an Icahn affiliate, is prepared to offer $700 million in cash to acquire all of the assets of Global Crossing as a "Stalking Horse" bidder in a Section 363 sale. This offer will be subject to higher and better offers from third parties through a Bankruptcy Court administered auction process. As the largest single creditor of Global Crossing, XO is very concerned about the debilitating effects of the continued uncertainty surrounding the purchase of Global Crossing by a foreign entity and the adverse effects it continues to have on Global Crossing's cash balance and continuing operations. "Global Crossing's future prospects are contingent on its customers, vendors and employees gaining immediate certainty as to the company's future. XO is prepared to offer that today," stated Carl C. Icahn, Chairman of XO Communications. In a May 15, 2003 letter from Senior Commerce Committee Senators Burns and Hollings serious concerns were raised regarding ownership and control of US critical infrastructure and other telecommunications assets by a foreign government -- even a friendly government such as Singapore. "It is unfair to customers, employees and creditors for Global Crossing's Board to continue to ignore our bona fide purchase offer and it is important for them to understand that time is running out," Mr. Icahn concluded. XO Communications is a leading broadband communications service provider offering a complete set of communications services, including: local and long distance voice, Internet access, Virtual Private Networking, Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband communications services in more than 60 markets throughout the United States. GUITAR CENTER: Ratings on Watch Positive over Planned Offering -------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating and 'B' senior unsecured debt rating of specialty music retailer Guitar Center Inc. on CreditWatch with positive implications. "The CreditWatch placement is based on the company's announcement of a $90 million senior unsecured convertible note offering due 2013," stated Standard & Poor's credit analyst Robert Lichtenstein. The proceeds will be used to redeem $66.8 million of its senior unsecured notes due 2006 and reduce the balance on its revolving credit facility. As a result, cash flow protection measures will improve with pro forma, lease-adjusted EBITDA coverage of interest of about 4x, compared with about 3.5x under the previous capital structure because of the significantly lower interest rate on the convertible note offering compared with the existing senior notes. Moreover, financial flexibility will be enhanced by the lengthened maturity and by about $20 million more of availability under the company's revolving credit facility. Upon completion of the deal, Standard & Poor's will raise the corporate credit rating to 'BB-' from 'B+'. In addition, Guitar Center's proposed $90 million senior unsecured convertible note offering will be assigned a 'B+' rating. The outlook will be stable. The senior unsecured notes are rated one notch below the corporate credit rating because of the significant amount of secured debt outstanding during peak needs. Guitar Center is the nation's largest retailer of music products in a highly fragmented industry. The company's market position has been enhanced by the liquidation of competitor MARS Music, which filed for federal bankruptcy in September 2002. Moreover, Guitar Center plans to continue to accelerate its expansion in 2003 through new store openings and acquisitions. Same-store sales rose 4% in the first quarter of 2003 after increasing 6% in both 2002 and 2001. Same-store sales benefited from the closure of 11 competing Mars Music stores in the company's markets. Operating margins improved to 9% from 8.3% for the 12 months ended March 31, 2003, despite higher expenses related to the company's new distribution center and an increase in wages and insurance costs. Leverage declined even though additional capital was required to support the company's expansion plan, acquisitions, infrastructure improvements, and new distribution center. For the 12 months ended March 31, 2003, total debt to EBITDA decreased to 3.2x from 4x the year before. Liquidity is adequate, with $5.5 million in cash and $46.6 million of availability on a $200 million revolving credit facility subject to borrowing base limitations. IMPERIAL PLASTECH: Court OKs Bank Lender's Receivership Petition ---------------------------------------------------------------- Imperial PlasTech Inc. (TSE: Symbol IPQ) announced that its operating lender, the Laurentian Bank of Canada, has obtained an order of the Ontario Superior Court of Justice, effective immediately, appointing Richter & Associates as interim receiver to administer the affairs of Imperial PlasTech and all of its subsidiaries. The company had made significant efforts to secure alternative financing to replace the Laurentian facility and had secured a commitment that was scheduled to close this morning. The new facility, however, was not sufficient to satisfy the Laurentian Bank and, consequently, the interim receivership order was sought and obtained. Shortly following the issuance of the order, the company and each of its subsidiaries received board resignations from Victor D'Souza and Nick Di Stefano and resignations from all senior officers. IT GROUP: Taps GreenVest to Sell Woodbury Creek Site ---------------------------------------------------- By resolution dated July 11, 1995, the Freshwater Wetlands Mitigation Council conditionally approved a proposal by IT Group, Inc., and its debtor-affiliates to construct a wetland mitigation bank on a 200-acre tract at West Deptford Township in Gloucester County, New Jersey. On May 8, 1996, the New Jersey Department of Environmental Protection issued a Freshwater Wetlands Individual Permit, a Waterfront Development Permit and a Water Quality Certificate to construct the wetland mitigation project on the Woodbury Creek Site. It was a condition of these permits that the Debtors comply with all the terms and conditions as stipulated in the Resolution. On July 12, 2001, a detailed wetland delineation report was submitted to the NJDEP, which indicated that the Debtors' construction activities had resulted in the creation of some wetlands on the Woodbury Creek site, but that 18.924 acres of existing wetlands had been drained and no longer met the definition of a wetland. Six months later, the NJDEP sent a letter to the Debtors requesting that the Debtors submit a remedy within 45 days for the loss of the 18.924 acres of wetlands on the Woodbury Creek Site. But the Debtors failed to provide a remedy. As a result, the NJDEP issued an Administrative Order and Notice of Civil Penalty on July 17, 2002. The Order alleges that the Debtors failed to: -- adhere to the conditions of the Resolution by draining 18.924 acres of existing wetlands; -- continue monitoring the Woodbury Creek Site; and -- provide financial assurances. The Administrative Order requires the Debtors to mitigate the loss of 18.9242 acres of drained wetlands at the Woodbury Creek site by creating new wetlands at a ratio of three acres created for each acre disturbed, or creation of 57 new acres of wetlands. The Debtors estimate that compliance with the Order's obligations will exceed $9,000,000. These costs are not dischargeable in bankruptcy because the Order seeks their compliance with applicable law and does not represent a monetary claim. In addition to the significant costs that compliance with the Order presents, the Declaration imposes numerous environmental and conservation restrictions on the Woodbury Creek Site. These restrictions, which must be recorded in any subsequent deed or legal instrument that divests the Debtor of title or possessory interest in the Woodbury Creek Site, limits the property to uses that are not detrimental to its preservation as a component of a freshwater wetlands ecosystem and prohibit owners and operators of the Woodbury Creek Site from making any alteration, improvement or any disturbance that would create an unacceptable risk of exposure to contamination at the Woodbury Creek Site. Current and future owners of the Woodbury Creek Site are also prohibited from constructing or placing structures on the property and from storing materials on or under its surface. Furthermore, the NJDEP retains the right to enter the Woodbury Creek Site and to prevent any activity or use of the property that is inconsistent with the environmental and conservation restrictions imposed on the Woodbury Creek Site. Finally, the Declaration requires the Debtors to transfer the Woodbury Creek Site in fee simple to a government agency or charitable conservancy on completion of all requirements of the Resolution. To clear the title and sell the Woodbury Creek Site, the Debtors must resolve their obligations under the Order, as well as obtain numerous approvals from the State and local governments releasing them from the site's environmental and conservation restrictions, and other use-restrictions currently encumbering the property. As a means of resolving the Order and releasing restrictions on the Woodbury Creek Site, the Debtors have entered into negotiations with the NJDEP. The Agency has indicated a willingness to discharge the Debtors' mitigation obligations under the Order, in exchange for payment from the proceeds of the sale of the Woodbury Creek Site. To help them sell the Woodbury Creek Site, the Debtors sought and obtained the Court's permission to employ GreenVest LLC as advisors and consultants nunc pro tunc to March 28, 2003. GreenVest will also advise and assist the Debtors with respect to resolution of the Administrative Order. Specifically, GreenVest will provide services to the Debtors in connection with the Sale of the Woodbury Creek Site, which will require GreenVest to: (a) market the property; (b) identify a potential purchaser or purchasers; (c) apply for, procure and seek amendments to certificates, licenses, permits, deeds, easements and approvals as will make the Woodbury Creek Site suitable for the proposed purchaser's end-use or as are otherwise necessary or desirable in connection with a sale transaction; (d) broker and negotiate sale transactions; and (e) communicate with the Debtors' stakeholders, including but not limited to its creditors, the Court and local, state and federal regulatory authorities, with respect to the transactions. The Debtors will pay an amount equal to one-third of the Woodbury Creek Site sale price as compensation for GreenVest. The Debtors will also pay for all of GreenVest's reasonable and documented out-of-pocketed expenses. Douglas L. Lashley, president and CEO of GreenVest, attests that his firm does not hold or represent an interest adverse to the Debtors' estate. GreenVest is a "disinterested person" as the term is defined in Section 101(14) of the Bankruptcy Code. (IT Group Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) IUSACELL: Obtains Extension of Default Waiver Under Credit Pact --------------------------------------------------------------- Grupo Iusacell, S.A. de C.V. (BMV:CEL)(NYSE:CEL) announced that its subsidiary, Grupo Iusacell Celular, S.A. de C.V., has received an additional extension of its temporary Amendment and Waiver of certain provisions and technical defaults under its US$266 million Amended and Restated Credit Agreement, dated as of March 29, 2001. The Amendment was originally scheduled to expire on May 22, 2003 and, in April 2003, it was extended to June 13, 2003. As modified, the Amendment is now scheduled to expire on June 26 2003, subject to earlier termination under certain circumstances. This action was obtained in cooperation with the Senior Syndicated lender group, as part of the Iusacell's debt restructuring effort and provides the Company with additional time to continue working with its financial advisors, Morgan Stanley, towards the formulation of a consensual and comprehensive restructuring plan. If the Amendment is not further extended, upon its expiration, Iusacell Celular would be in default of a financial ratio covenant under the Credit Agreement, which would constitute an Event of Default (as defined in the Credit Agreement) as if the Amendment had never become effective. Additionally, the Company announced that, on June 6, 2003, Iusacell was officially notified that by disposition of the appeal filed by the government, Mexico's Supreme Court affirmed the October 21, 2002 ruling by a federal district court of Mexico City in favor of Iusacell's cellular service concessionaires in their injunction (amparo) filed against the special telecommunications tax enacted by the Mexican Congress on January 1, 2002. Grupo Iusacell, S.A. de C.V. (Iusacell, NYSE:CEL; BMV:CEL) is a wireless cellular and PCS service provider in seven of Mexico's nine regions, including Mexico City, Guadalajara, Monterrey, Tijuana, Acapulco, Puebla, Leon and Merida. The Company's service regions encompass a total of approximately 92 million POPs, representing approximately 90% of the country's total population. Iusacell is under the management and operating control of subsidiaries of Verizon Communications Inc. (NYSE:VZ). J.B. POINDEXTER: Completes Exchange Offer for 12-1/2% Notes ----------------------------------------------------------- J.B. Poindexter & Co., Inc., completed the exchange of substantially all of its outstanding Poindexter 12.50% Senior Notes due 2004 for 12.50% Senior Secured Notes due 2007 effective June 10, 2003. Bond holders representing $84,985,000 of Old Notes tendered and exchanged the Old Notes for $84,985,000 of New Notes. $15,000,000 of Old Notes, held by Poindexter, will be cancelled in accordance with the terms of the Exchange Offer. As reported in Troubled Company Reporter's March 20, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on commercial van body manufacturer J.B. Poindexter Co. Inc., to 'CC' from 'B' following the company's announcement that it has initiated discussions with its bondholders on restructuring its 12.5% senior unsecured notes due May 2004. At the same time, Standard & Poor's lowered the Houston, Texas-based company's senior unsecured debt rating to 'C' from 'B-'. In addition, all ratings were placed on CreditWatch with negative implications. At Sept. 30, 2002, the company had about $104 million of debt outstanding. If the transaction is completed, Standard & Poor's will lower the rating on the company's current 12.5% senior unsecured notes to 'D', and the company's corporate credit rating would be lowered to 'SD'. Subsequently, the ratings would be reassessed, taking account of the benefits realized through the transaction. JUNO LIGHTING: Improved Financial Profile Earns Positive Outlook ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Juno Lighting Inc., to positive from stable. At the same time, Standard & Poor's affirmed its 'B+' corporate credit and 'B-' subordinated debt ratings on the Des Plaines, Illinois-based company and raised its senior secured bank loan rating to 'BB-' from 'B+'. At Feb. 28, 2003, Juno had approximately $174 million of debt outstanding. The outlook revision reflects the company's improving financial profile. Good profitability and limited fixed capital investments requirements have enabled the firm to consistently generate free cash flow, which has largely been used to reduce debt balances. The upgrade of the senior secured bank loan reflects Juno's continuing pay-down of its $90 million term loans (total outstanding was $34 million at Feb. 28, 2003), which has improved the senior lender's position. Based on Standard & Poor's enterprise value analysis, senior lenders now can expect a strong likelihood of full recovery of principal in the event of a default or bankruptcy. "Continued demonstration of a less aggressive financial policy would enhance liquidity, which could lead to a ratings upgrade in the intermediate term," said Standard & Poor's credit analyst Joel Levington. Juno engineers, assembles, and markets a broad range of recessed and track-lighting fixtures, which are sold mainly through distributors in the U.S. and in Canada. These markets, which represent about 9% of the roughly $9 billion lighting industry, have fair long-term growth characteristics. New residential activities remain solid. National accounts and commercial construction, especially in the retailing end-market, however, are not expected to meaningfully improve in the near- term, as a result of the general slowdown in the U.S. economy, and to a lesser extent, overcapacity in the office space market. KASPER A.S.L.: Inks Pact with Kellwood to Acquire All Assets ------------------------------------------------------------ Kasper A.S.L., Ltd. (OTC Bulletin Board: KASPQ.OB) has entered into an agreement to be acquired by Kellwood Company (NYSE: KWD). The purchase price consists of $111 million in cash, $40 million in Kellwood common stock, and the assumption of pre-paid royalties projected to be $12.6 million at closing, for an aggregate value of $163.6 million, plus the assumption of certain other liabilities. In addition, the purchase price is subject to adjustments as set forth in the purchase agreement. The transaction has the support of the Official Creditors' Committee. The agreement with Kellwood is subject to higher and better offers, Bankruptcy Court approval and an auction to be conducted pursuant to Court-approved bidding procedures to determine the highest or best offer to the Company. Following the auction, the successful bid will be implemented through an amended plan of reorganization that will require, among other things, the approval of the requisite majority of the Company's creditors and confirmation by the Bankruptcy Court. Under the proposed Kellwood transaction, it is not contemplated that any distribution would be made to equity holders. The Company also announced that, if the Kellwood transaction is consummated, it is intended that Gregg I. Marks will be promoted to Chief Executive Officer of Kasper and Joseph B. Parsons will be promoted to President and Chief Operating Officer of Kasper. The remainder of the management team is intended to remain in place. John D. Idol, Chairman of the Board and Chief Executive Officer said, "The employees of Kasper have done an excellent job of revitalizing the Company and returning it to profitability. Kellwood, with its strong balance sheet, worldwide sourcing network, extensive customer base and excellent merchandising capabilities, will allow Kasper to achieve its next level of growth. The partnership of leveraging Kellwood's existing expertise with Kasper's strong brands will allow the Company to grow both its top and bottom lines, continuing as a strong division in Kellwood's portfolio." Mr. Idol continued, "I intend to remain Chairman of the Board and CEO for a transition period, at which time I will resign to pursue other interests. The Kasper division will report directly to Stephen L. Ruzow, President of Womenswear at Kellwood. I look forward to working with Steve during this transition period." Kasper A.S.L., Ltd. is a leading marketer and manufacturer of women's apparel and accessories. The Company's brands include Albert Nipon, Anne Klein, Kasper and Le Suit. These brands are sold in over 3,900 retail locations throughout the United States, Europe, the Middle East, Southeast Asia and Canada. The Company also licenses its Albert Nipon, Anne Klein, and Kasper brands for various men's and women's products. Celebrating over 40 years of value, fashion and diversity, Kellwood is a $2.2 billion marketer of apparel and consumer soft goods. Kellwood specializes in branded as well as private label products, and markets to all channels of distribution with product specific to a particular channel. Kellwood brands include Sag Harbor(R), Koret(R), Jax(R), David Dart(R), Gerber(R), Democracy(R), David Meister(TM), Dorby(TM), My Michele(R), Briggs(TM), Vintage Blue(TM), EMME(R), Bill Burns(R), David Brooks(R), Kelty(R), XOXO(R), and Sierra Designs(R). Gerber(R), EMME(R), XOXO(R), and Bill Burns(R) are produced under licensing agreements. KASPER A.S.L.: Kellwood Confirms $163.6 Million Bid for Company --------------------------------------------------------------- Kellwood Company announced the signing of an agreement to acquire Kasper A.S.L., Ltd., according to Hal J. Upbin, Kellwood chairman, president, and chief executive officer. "After working on this opportunity for several months, Kellwood management is extremely pleased to reach an agreement with Kasper, subject to approval of the Bankruptcy Court. Kasper will be structured as a stand-alone company under the Kellwood Womenswear umbrella. We look forward to welcoming the Kasper associates into our worldwide organization," commented Upbin. Kasper sales for 2002 were approximately $350 million. "Kasper has a strong portfolio of brands itself, which will augment Kellwood's already diverse brand assortment and multichannel strategy," added Upbin. The Kasper organization consists of five distinct brands, targeting different consumers, price points and distribution channels. Le Suit(R) is created for the upper moderate market. Kasper(R) suits, sportswear and dresses along with AK Anne Klein(TM) sportswear and Anne Klein(R) dresses are designed for the better market. Albert Nipon(R) and the Anne Klein New York(TM) collections are targeted to the bridge market. "The Kasper(R) brand holds the largest and strongest brand position in the department store channel -- and represents 62 percent of the company's overall sales. Suit design and development is one of Kellwood's greatest strengths. Now with the addition of Kasper to our existing suit businesses, Kellwood has become the dominant force in the suit category," said Stephen L. Ruzow, president Kellwood Womenswear. "We are delighted to have acquired the prestigious Anne Klein name. The late designer has been called the all-American designer of classic sportswear. We cherish the heritage her namesake brings to the Kellwood family and plan to continue the outstanding tradition that will follow the legacy of Louis Dell'Olio and Donna Karan, who designed the line after Anne Klein's death," commented Ruzow. Celebrating over 40 years of value, fashion and diversity, Kellwood is a $2.2 billion marketer of apparel and consumer soft goods. Kellwood specializes in branded as well as private label products, and markets to all channels of distribution with product specific to a particular channel. Kellwood brands include Sag Harbor(R), Koret(R), Jax(R), David Dart(R), Gerber(R), Democracy(R), David Meister(TM), Dorby(TM), My Michele(R), Briggs(TM), Vintage Blue(TM), EMME(R), Bill Burns(R), David Brooks(R), Kelty(R), XOXO(R), and Sierra Designs(R). Gerber(R), EMME(R), XOXO(R), and Bill Burns(R) are produced under licensing agreements. KRAFT FOODS: Appoints Pleuhs to Succeed Moy as General Counsel -------------------------------------------------------------- Kraft Foods International, Inc., a subsidiary of Kraft Foods Inc. (NYSE: KFT), a global leader in branded foods and beverages, announced that Edward J. Moy, 60, Senior Vice President and General Counsel, has decided to retire, effective July 1, 2003. He will be succeeded by Gerhard Pleuhs, 46, currently Vice President and Chief Legal Counsel for Kraft Foods International's CEEMA (Central and Eastern Europe, Middle East and Africa) region. Pleuhs will relocate from Vienna, Austria to the Kraft Foods International headquarters located in Rye Brook, New York. "Ned has made a significant contribution to the company over his 30 year career with Kraft. He has been a trusted advisor on key legal and business issues and successfully led the effort that established a world-class law department in Kraft Foods International," said Roger Deromedi, Co-CEO, Kraft Foods Inc., and President & CEO, Kraft Foods International, Inc. "We wish him and his family all the best." In naming Pleuhs, Deromedi added, "Gerd's current experience has been instrumental in helping build our growing business in developing markets. We welcome his valuable insight to our management team." Pleuhs began his career with Jacobs Suchard, based in Germany, in 1985. He has since held a number of positions with increasing responsibility within the law department, most recently as the Vice President and Chief Legal Counsel for the CEEMA region. Kraft Foods markets many of the world's leading food brands, including Kraft cheese, Maxwell House and Jacobs coffees, Nabisco cookies and crackers, Philadelphia cream cheese, Oscar Mayer meats and Milka chocolates, in more than 150 countries. For more information about Kraft, visit the Company's Web site at http://www.kraft.com As previously reported in Troubled Company Reporter, Kraft Foods Inc. (NYSE:KFT) said that recent downgrades by credit rating agencies have eliminated the Company's current access to the commercial paper market. These credit rating agency actions were in conjunction with similar actions for Altria Group, Inc. resulting from a bonding requirement on Philip Morris USA Inc. ordered by an Illinois State judge related to a tobacco class action lawsuit. Kraft is not a party to, and has no exposure to, the tobacco litigation. Kraft has begun borrowing against its revolving credit facilities. These borrowings will be used to meet Kraft's normal business needs, including the repayment of maturing commercial paper and funding of working capital needs. While the use of the revolving credit facilities in lieu of commercial paper will result in higher overall borrowing costs, Kraft indicated that the impact is not expected to be significant to 2003 full year results and reconfirmed its previously issued guidance of fully diluted earnings per share of $2.10-$2.15 in 2003. LAMAR ADVERTISING: $250 Million Convertibles Gets Low-B Rating -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' senior unsecured debt rating to Lamar Advertising Co.'s $250 million 2.875% convertible notes due 2010. These securities were drawn down from the company's shelf registration. Combined with additional cash, net proceeds will be used to redeem $250 million of the outstanding $287.5 million 5.25% convertible notes due 2006. Standard & Poor's also affirmed its 'BB-' corporate credit ratings on Lamar Advertising and its operating company subsidiary, Lamar Media Corp. The outlook is stable for the Baton Rouge, Louisiana- headquartered outdoor advertising company. About $1.5 billion of total debt is outstanding. The ratings are based on the consolidated credit quality of Lamar Advertising and reflect the company's significant debt levels, attributable to growth through acquisition over the years. "These factors are tempered by the company's strong and geographically diverse market positions and an emphasis on the better-margin and more stable local advertising revenues," said Standard & Poor's credit analyst Donald Wong. "In addition, with very strong operating cash flow margins, manageable capital expenditures, and minimal cash taxes, Lamar generates healthy levels of free operating cash flow," Mr. Wong added. Recent results have been affected by the continued soft economy on advertising revenues, particularly on the general coverage bulletins and posters portions of the outdoor advertising segment. While the company has grown through acquisitions, Lamar has sold or used common equity in the past to help fund some of these purchases. Financial flexibility is provided by availability under the company's revolving credit facility. With operations in 44 states, Lamar is the third largest outdoor advertising company in terms of net revenues and the largest based on advertising displays. Lamar historically was focused on small- to mid-size markets, but acquisitions have expanded its operations to major markets. The company also has the nation's largest logo sign business (about 4% of revenues) and operates transit- advertising displays (about 1%). Consolidated revenues total more than $750 million. LODGENET ENTERTAINMENT: 79% of 10-1/4% Noteholders Tender --------------------------------------------------------- LodgeNet Entertainment Corporation (Nasdaq: LNET) has received the requisite tenders and consents from holders of its 10-1/4% Senior Notes due 2006 to amend the Indenture governing such Notes. On June 3, 2003, LodgeNet commenced a cash tender offer and consent solicitation relating to all of the $150,000,000 outstanding principal amount of the Notes. The consent date relating to the consent solicitation expired at 5:00 p.m., New York City time, on Wednesday, June 11, 2003. On or prior to the consent date, holders of approximately 79% of the outstanding principal amount of the Notes had tendered their Notes and consented to the proposed amendments to the Indenture governing the Notes and related documents. LodgeNet intends to enter into a supplemental indenture relating to the Notes that effectuates the proposed amendments described in the Offer to Purchase and Consent Solicitation Statement. The proposed amendments will not become operative, however, unless and until the Notes are accepted and paid for pursuant to the terms of the tender offer. Once the proposed amendments to the Indenture become operative, the holders of Notes not tendered into the offer will be bound thereby. The tender offer for the Notes will expire at 12:00 Midnight, New York City time, on Monday, June 30, 2003, unless extended or earlier terminated. The tender offer is conditioned upon, among other things, the completion by LodgeNet of certain related financing transactions. Bear, Stearns & Co. Inc. is acting as the exclusive dealer manager and solicitation agent for the tender offer and the consent solicitation. The depositary for the tender offer is HSBC Bank USA. The tender offer and consent solicitation are being made pursuant to an Offer to Purchase and Consent Solicitation Statement dated June 3, 2003, and related Letter of Transmittal and Consent, which more fully set forth the terms and conditions of the tender offer and consent solicitation. Questions regarding the tender offer and consent solicitation may be directed to Bear, Stearns & Co. Inc., Global Liability Management Group, at (877) 696-2327. Requests for copies of the Offer to Purchase and Consent Solicitation Statement and related documents may be directed to D.F. King & Co., Inc., at (212) 269- 5550. LodgeNet Entertainment Corporation is a broadband, interactive services provider which specializes in the delivery of interactive television and Internet access services to the lodging industry throughout the United States and Canada as well as select international markets. These services include on-demand digital movies, music and music videos, Nintendo(R) 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 one of the largest companies in the industry, LodgeNet provides services to more than 960,000 rooms in more than 5,700 hotel properties worldwide. LodgeNet is listed on the NASDAQ and trades under the symbol LNET. As reported in Troubled Company Reporter's June 5, 2003 edition, Standard & Poor's Ratings Services assigned its 'B-' rating to LodgeNet Entertainment Corp.'s proposed $185 million senior subordinated notes due 2013. The notes are issued under LodgeNet's $225 million shelf registration filed May 2002. All existing ratings, including the 'B+' long-term corporate credit rating, are affirmed. The outlook remains stable. LUMBERMENS MUTUAL: S&P Cuts Surplus Notes' Ratings to Default ------------------------------------------------------------- Standard & Poor's Ratings Services revised its ratings on Lumbermens Mutual Casualty Co.'s $100 million 8.45% surplus notes due Dec. 1, 2097, and the $200 million 8.3% surplus notes due Dec. 1, 2037, to 'D' from 'C' and removed the ratings from CreditWatch where they were placed on Feb. 18, 2003. "This action follows the expected nonpayment of interest on these notes," said Standard & Poor's credit analyst John Iten. On March 25, 2003, the company disclosed that the Illinois Insurance Department had denied its request to make further interest payments on these notes. On March 26, 2003, Standard & Poor's lowered its ratings on Lumbermens surplus notes to 'C' from 'CCC' and stated then that the ratings on these notes would be revised to 'D' as the interest due dates were reached. The $400 million 9.15% notes due 2026 will be revised to 'D' following the expected nonpayment of interest on July 1, 2003. MANDALAY RESORT: Board Declares Quarterly Cash Dividend ------------------------------------------------------- Mandalay Resort Group's (NYSE: MBG) Board of Directors has instituted a policy of quarterly cash dividends to shareholders. The company's first quarterly payment will be $.23 per share. This dividend will be payable on August 1, 2003 to shareholders of record on June 26, 2003. The company indicated that its dividend policy reflects strong and reliable cash flows in its core operations and underscores its long-standing practice of returning cash to owners, which the company has done in the past through periodic share repurchases. Separately, the company announced that on July 15, 2003, it will redeem its $275 million 9-1/4% Senior Subordinated Notes due 2005 at the redemption price of 104.625% plus interest accrued to the redemption date. Mandalay Resort Group owns and operates 11 properties in Nevada: Mandalay Bay, Luxor, Excalibur, Circus Circus, and Slots-A-Fun in Las Vegas; Circus Circus-Reno; Colorado Belle and Edgewater in Laughlin; Gold Strike and Nevada Landing in Jean and Railroad Pass in Henderson. The company also owns and operates Gold Strike, a hotel/casino in Tunica County, Mississippi. The company owns a 50% interest in Silver Legacy in Reno, and owns a 50% interest in and operates Monte Carlo in Las Vegas. In addition, the company owns a 50% interest in and operates Grand Victoria, a riverboat in Elgin, Illinois, and owns a 53.5% interest in and operates MotorCity in Detroit, Michigan. As previously reported, Fitch Ratings affirmed the 'BB+' rating on Mandalay Resort Group's (NYSE: MBG) senior debt and the 'BB-' rating on the company's senior subordinated debt. The rating action affected approximately $2.1 billion in debt securities. Fitch assigned a 'BB+' rating to the company's $1.1 billion senior unsecured bank credit facility. The Rating Outlook has been revised to Stable from Negative. MDC CORP: Underwriters Plan to Exercise Over-Allotment Option ------------------------------------------------------------- MDC Corporation Inc. and Custom Direct Income Fund announced that the underwriters plan to exercise their over-allotment option to purchase 1,650,000 units of the Fund, raising additional gross proceeds of $16.5 million. The closing will result in total gross proceeds from the Fund's initial public offering of $126.5 million. The gross proceeds of the offering and the term loan portion of Custom Direct's credit facility (before commissions, fees and expenses) will total $178.5 million and will be paid (net of commissions, fees and expenses) to MDC, directly and through a subsidiary, for the 80% interest in Custom Direct. Subsequent to the exercise of the over-allotment option, MDC will own 19.0% of the Fund (or 2,963,804 units) and a 20% subordinated interest in the business (which it has agreed not to sell until after December 31, 2003) for a fully diluted interest in the Fund of 35.2%. The over-allotment closing is expected to occur on or before June 16, 2003. The offering has been underwritten by a syndicate led by CIBC World Markets Inc. and TD Securities Inc., which includes Scotia Capital Inc., BMO Nesbitt Burns Inc., National Bank Financial Inc. and Griffiths McBurney & Partners. The Fund units have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. "We are delighted with the market's strong response to this offering. The exercise of the over-allotment option provides MDC with further financial resources required to execute its recently announced plan of capitalizing on the tremendous opportunities presenting themselves in the marketing services sector." said Miles S. Nadal, Chairman, President and Chief Executive Officer of MDC. About Custom Direct Based in Maryland and Arkansas, Custom Direct has been selling cheques and cheque related accessories across the United States since 1992 and offers the industry's widest selection of product designs. Custom Direct is the second largest participant in the direct-to-consumer segment of the U.S. cheque industry with sales and EBITDA for the year ending December 31, 2002 of approximately US$103 million and US$20 million respectively. About MDC Corporation Inc. MDC is a publicly traded international business services organization with operating units in Canada, the United States, United Kingdom and Australia. MDC provides marketing communication services, through Maxxcom Inc., and offers security sensitive transaction products and services in four primary areas: personalized transaction products such as personal and business cheques; electronic transaction products such as credit, debit, telephone & smart cards; secure ticketing products, such as airline, transit and event tickets; and stamps, both postal and excise. About Maxxcom Inc. Maxxcom, a subsidiary of MDC, is a multi-national business services company with operating units in Canada, the United States and the United Kingdom. Maxxcom is built around entrepreneurial partner firms that provide a comprehensive range of communications services to clients in North America and the United Kingdom. Services include advertising, direct marketing, database management, sales promotion, corporate communications, marketing research, corporate identity and branding, and interactive marketing. Maxxcom Shares are traded on the Toronto Stock Exchange under the symbol MXX. MDC, at March 31, 2003, disclosed a working capital deficit of about CDN$4.6 million. MEDICALCV INC: April 30 Net Capital Deficit Narrows to $390K ------------------------------------------------------------ MedicalCV, Inc. (OTCBB:MDCVU), a heart valve manufacturer, reported net sales for the fourth quarter ended April 30, 2003, of $1,023,835, up 32 percent compared to $774,722 in the fourth quarter of 2002. The fourth-quarter net loss was $918,299, compared to a net loss of $1,455,227 in the same period last year. MedicalCV's fourth-quarter gross profit margin improved to 58.7 percent from 26.0 percent in the same period last year due primarily to achieving additional manufacturing efficiencies, a key priority for the company over the last 18 months. The company's full-year gross margin was 45.3 percent, up from 29.3 percent in fiscal year 2002. For the 12-month period, net sales totaled $3,135,041, up 5.2 percent over $2,982,198 in net sales recorded in fiscal year 2002. Planned increases in sales and marketing expenses were the principal reason for an increase in MedicalCV's net loss for the year of $4,667,709, compared with a net loss of $4,297,665 in fiscal year 2002. "MedicalCV continued to make notable progress during both our fourth quarter and the second half of the year," said Blair Mowery, MedicalCV's president and chief executive officer. "We experienced continued sales growth and strong improvement in our gross margins. We're beginning to experience acceptance of our core product consistent with our expectations - the Omnicarbon(R) heart valve - in the U.S. market. Surgeons are impressed with the very low complication rate for our valve, which was demonstrated in our PMA (premarket approval) filing with the FDA as well as in numerous peer-reviewed studies." Fourth Quarter Highlights -- Sales growth and continued improvement in our gross margin were driven by significant increases in sales in key European markets and continued progress in introducing the Omnicarbon valve into additional U.S. hospitals. -- Progress continued towards the launch of the Northrup Universal Annuloplasty System(TM). The company announced an exclusive licensing agreement to manufacture and sell the new annuloplasty surgical repair system last October. Annuloplasty, which is approximately a $50 million a year worldwide market, is the surgical repair of the heart's mitral and tricuspid valves. -- Earlier this month, the company announced a three-year agreement with Premier Purchasing Partners, LP, the group purchasing division of Premier, Inc., for MedicalCV's Omnicarbon mechanical heart valves, effective immediately. The Omnicarbon valve will be available to Premier's nearly 1,500 member and affiliated hospitals at competitive terms and conditions. -- The company continues to pursue FDA clearance of its pyrolytic carbon manufacturing process. The data accumulation is on track and the company anticipates receiving FDA approval in 2004. Liquidity and Financing In early April 2003, the company completed the sale-leaseback of its headquarters and manufacturing facility in Inver Grove Heights, Minnesota. The facility was sold to PKM Properties, LLC, an entity owned by one of the company's directors, and was simultaneously leased back for 10 years with options for additional years. Under the terms of the sale transaction, MedicalCV received proceeds totaling $3.5 million consisting of $1 million in cash, and PKM assumed the entire $2.5 million balance of the company's outstanding bank debt. Of the $1.0 million cash received, $300,000 was required to be used to pay down the bridge loan. In addition, approximately $340,000 of additional obligations of the company were assumed by PKM which will be paid by the company as part of the leaseback arrangement. As of April 30, 2003, the company had borrowed $943,333 under the previously announced discretionary credit agreement with PKM. MedicalCV is seeking $2.5 to $5 million of new permanent financing to fund operations and working capital requirements, acquire new products and refinance the bridge debt. There can be no assurance that the company will be able to obtain the required financing. MedicalCV Inc.'s April 30, 2003 balance sheet shows a total shareholders' equity deficit of about $390,000. Outlook MedicalCV anticipates further increases in net sales and gross margin in the first quarter of fiscal year 2004. The company expects cumulative net losses to continue through fiscal year 2004, as it builds market share for the Omnicarbon heart valve in the United States, and internationally maintains a strong sales organization to support worldwide growth. MedicalCV believes the developing world, particularly China, offers substantial opportunities for both revenues and profitable margin growth. MedicalCV, Inc. is a Minnesota-based heart valve manufacturer with a fully integrated manufacturing facility, where it designs, tests and manufactures all of its products. In July 2001, the U.S. Food and Drug Administration gave premarket approval for the Omnicarbon valve, based on 18 years of excellent clinical results in Europe, Japan and Canada, without requiring additional U.S. clinical trials. To date, more than 35,000 Omnicarbon valves have been implanted in patients in more than 30 countries. For more information on the company, visit its Web site at http://www.medcvinc.com MIDWEST EXPRESS: Restructuring Negotiations Enter Final Phase ------------------------------------------------------------- Midwest Express Holdings, Inc. (NYSE: MEH) has met with its aircraft lenders and lessors to bring negotiations regarding the restructuring of its aircraft-related obligations into their final phase. The airline holding company extended a 100-day moratorium on aircraft lease and debt payments in place since February 28 until negotiations are complete, targeted for mid-summer. The discussions are part of the company's out-of-court restructuring plan to return to profitability. Essential elements of the plan, in addition to the renegotiated aircraft agreements, include permanent pay concessions and productivity improvements from the company's three labor unions; enhanced productivity from all employee groups; adjustments to the company's fleet plan; and new financing to replace its current line of credit, which expires at the end of August. Components of the restructuring plan are progressing simultaneously, according to Robert S. Bahlman, senior vice president and chief financial officer. The company's three labor unions are engaged in concessionary bargaining, also targeted for mid-summer completion. Non-represented employee productivity improvements are being addressed. Internal cost-reduction measures announced in February have been fully implemented. Midwest Airlines continues to acquire Boeing 717 aircraft on schedule each month, and its new low-fare Saver Service takes off in August. "Significant progress has been made, but much more needs to be accomplished," said Bahlman. "The full participation of our lenders and lessors, unions and employees is absolutely essential." He added that if the company is not successful as to each component by mid-summer, it will consider restructuring with judicial assistance. Midwest Airlines features nonstop jet service to major destinations throughout the United States. Skyway Airlines, Inc. - - its wholly owned subsidiary -- operates Midwest Connect, which offers connections to Midwest Airlines as well as point-to-point service between select markets on regional jet and turboprop aircraft. Together, the airlines offer service to 50 cities. More information is available at http://www.midwestairlines.com MOBILE MINI: S&P Assigns B-Level Ratings to Corp. Credit & Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Tempe, Arizona-based Mobile Mini Inc. In addition, Standard & Poor's assigned its 'BB-' rating to Mobile Mini's proposed $150 million of senior notes due 2013. The ratings outlook is stable. "The corporate credit rating is based on Mobile Mini's leading market position as a lessor of portable storage units and its respectable credit profile," said Standard & Poor's credit analyst Betsy Snyder. "However, this is offset by the company's small revenue base and the relatively small size of the mobile storage leasing sector in which Mobile Mini operates," the analyst continued. The rating on the senior notes is one notch lower than the corporate credit rating based on a considerable amount (approximately 25%) of secured debt in the company's capital structure. Mobile Mini provides portable storage solutions in North America, primarily through its lease fleet of approximately 76,000 portable storage units. The company's lease fleet also includes approximately 10,000 combined portable storage/office units and mobile offices. The company, the largest lessor of mobile storage units in North America, is one of only two providers with a national network. Portable storage provides a flexible, low-cost and convenient alternative to permanent warehouse space and self- storage sites. However, portable storage is a relatively small niche segment of the large self-storage business. The leasing of mobile storage units has tended to be somewhat recession- resistant, due to the wide customer base, including consumer service and retail businesses, construction, consumers, industrial and commercial businesses, institutions, and government agencies. As a result, the company's utilization rates, while seasonal, have historically tended to be relatively stable in the high-70% to mid-80% range, resulting in predictable and stable cash flow. More recently, utilization has weakened somewhat due to economic weakness and the company's significant branch expansion in 2002. Most of Mobile Mini's credit ratios are comparable to those of similarly rated transportation equipment lessors. Pro forma for the company's proposed financings, which will increase interest expense, pretax interest coverage is expected to average in the mid-2x area, EBITDA interest coverage in the mid-3x area, and funds flow to debt around 20%. The company's debt to capital is relatively strong-in the mid-50% area-well below that of the typical 70%-80% range of other transportation equipment lessors. The company's financial flexibility is also relatively strong for a company of its size, with access to the public debt and equity markets, as well as its credit facilities. The company has no debt maturities until 2008, and capital spending is almost all discretionary. The outlook is stable. Increasing demand for mobile storage units should aid the company's earnings and cash flow. However, continued heavy capital spending to meet added demand and/or acquisitions will likely constrain any significant improvement in Mobile Mini's credit ratios. MSW ENERGY: S&P Gives Stable Outlook to Sr Sec. Notes' BB Rating ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB' rating to MSW Energy Holdings LLC's $200 million seven-year senior secured notes ("the senior notes"). The proceeds will be used to acquire Duke Global Energy's 50% ownership interest in Duke/UAE Ref-fuel LLC (Duke/UAE), whose sole asset is 100% ownership of American Ref- fuel Co. LLC (ARC; BBB/Stable/--). The company will rely on cash distributions from ARC to pay interest expense on the senior notes. The rating on MSW's senior notes reflects the structural subordination of payments from ARC, relatively stable and predictable nature of the cash flow from ARC projects, and refinancing risk. The stable outlook on MSW reflects the outlook on ratings assigned to ARC. The senior notes may be downgraded should the ratings on ARC be lowered. Upgrades will be limited by structural subordination, market conditions that may affect refinancing risk, and require demonstrated strength in coverage ratios. "The rating on MSW is assigned based on the special purpose entity structure of the issuer, which meets Standard & Poor's criteria. In addition to an independent director at the board of directors of the company, the 50/50 joint ownership by an affiliate of AIG Highstar and an affiliate of CSFB Private Equity provides effective controls to limit exposure to any one of the owners' bankruptcy risks," said Standard & Poor's credit analyst Elif Acar. "The debt service coverage ratios on a consolidated basis are adequate for the rating level given the organizational structure. Average DSCR is 1.5x, with a minimum of 1.4x in the pro forma projections," continued Ms. Acar. The MSW Energy Holdings senior notes are interest-only and there is refinancing risk. Furthermore, most of ARC project revenues are derived from long-term contracts and some of the contracts expire before the term of the senior notes. Most significantly, the Hempstead, New York. project, which accounted for 41% of ARC's 2002 cash available for debt service, has both power-sales and waste-management-service contracts expiring in 2009. The uncertainty regarding the extension or renegotiation of such contracts, which build up most of the relatively stable and predictable cash flow, put additional stress on the refinancing risk. However, the attractive portfolio of ARC assets mitigates the contract renegotiation risk to a certain extent. ARC's assets benefit from economies of scale, process the largest amount of waste in the region, are near major population centers, and serve a diversified client group. MUSIC SEMICONDUCTORS: Emerges from Chapter 11 Proceedings Intact ---------------------------------------------------------------- On June 11, the United States Bankruptcy Court of the Northern District of California, declared that MUSIC Semiconductors, Inc., -- http://www.musicsemi.com-- a subsidiary of Philippine listed company, Music Corporation (PSE:MUSX), has satisfied the conditions for dismissal of bankruptcy status under Chapter 11. The Court confirmed that creditors have voted in favor of the company's Plan of Reorganization, which meets the requirements of Section 1129(b) of the Bankruptcy Code. The pioneer of Content Addressable Memory, MUSIC has endured the overall slump in the semiconductor industry emerging smaller and focused on binary CAM's, a still profitable niche market with sound gross margins. MUSIC enjoyed revenues of $5.3 million in 2002. The evolving need to accelerate the "last mile" of the network has spawned many new design wins for MUSIC in Wi-Fi (wireless fidelity) related products including the PON, a VOIP optical interface, wireless DSLAM and ATM applications. NATIONSRENT INC: Emerges from Chapter 11 Reorganization Process --------------------------------------------------------------- NationsRent, Inc., has emerged from the Chapter 11 reorganization process after completing all required actions and satisfying all remaining conditions to its consensual Plan of Reorganization, which was confirmed by the U.S. Bankruptcy Court for the District of Delaware on May 14, 2003. In conjunction with its emergence from Chapter 11, the Company has obtained a $150,000,000 senior secured revolving credit facility from a syndicate of lenders. In addition, The Baupost Group, L.L.C. has invested $80,000,000 of new capital into the Company. As a result of the consummation of the Plan of Reorganization, the Company emerges as a privately held company controlled by Baupost and Phoenix Rental Partners, L.L.C. All of the Company's existing equity securities, including its common stock, have been cancelled and the Company will no longer be a public reporting company. Commenting on this milestone, Jeff Putman, the newly elected Chief Executive Officer of the Company, said, "Our emergence from Chapter 11 reorganization marks the birth of a new NationsRent, a feat due in large part to the dedication of our employees, our vendors, and our alliance partners to persevere and succeed through what has been a difficult economic period. This team will continue to provide superior service to our growing customer base. This restructuring has enabled us to put our financial house in order, significantly reducing debt and increasing our capital base." Mr. Putman continued, "Our new, financially sound company is well positioned for success. We will build on this solid foundation by providing our customers with a single source for a wide range of equipment and services, tailored to suit their individual needs, so they will return to NationsRent time after time. We believe the timing of this emergence could not be better in light of our improving business environment." In addition to Mr. Putman, the Company's senior leadership team will include Thomas J. Hoyer, who will serve as the Chief Financial Officer. The Company's regional vice presidents will consist of Ron Halchishak, Francis Hassis, John Jackson, Fernando Pinera, Tim Stommel, and Bill Stewart. Headquartered in Fort Lauderdale, Florida, NationsRent is one of the country's leading construction equipment rental companies and operates more than 250 locations (over 80 at Lowe's Home Improvement locations) in 26 states. NationsRent stores offer a broad range of high-quality construction equipment with a focus on superior customer service at affordable prices with convenient locations in major metropolitan markets throughout the U.S. More information is available on its home page at http://www.nationsrent.com The Baupost Group, L.L.C. was established in 1982, and today manages approximately $4.0 billion of equity capital for a diverse group of clients. The firm employs a value oriented investment philosophy and is an experienced investor in a broad range of asset classes, both in the United States and abroad. CONTACT: Thomas Blumenthal and James Mooney, The Baupost Group, L.L.C., at (617) 210-8388. Phoenix Rental Partners, L.L.C. was formed in 2001 for the specific purpose of acquiring debt securities of NationsRent in the secondary markets. In 2002, Phoenix formed an investment alliance with Baupost to leverage the combined talents and capital of each organization as it relates to distressed investment opportunities in the construction equipment rental industry. Phoenix is majority owned by Bryan Rich and Douglas Suliman, who have over 30 years of operating and financing experience in the construction equipment rental industry. CONTACT: Bryan Rich and Douglas Suliman, Phoenix Rental Partners, at (954) 759-7200. NBTY INC: S&P Puts Ratings on Watch Neg. over Rexall Acquisition ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB' corporate credit, 'BB+' senior secured, and 'B+' subordinated debt ratings for NBTY Inc. on CreditWatch with negative implications. The CreditWatch placement reflects NBTY's recent announcement that it has agreed to acquire Rexall Sundown Inc., a U.S. nutritional supplement manufacturer, from Royal Numico NV. Rexall Sundown manufactures its products under the Rexall, Sundown, and WORLDWIDE Sports Nutrition brands, among others. Standard & Poor's expects that the $250 million acquisition will be financed by bank debt. Closing of the transaction is expected in July 2003, upon regulatory approval in the U.S. At March 31, 2003, about $175.4 million in total debt was outstanding at Bohemia, New York-based NBTY. "While Standard & Poor's believes the acquisition will enhance NBTY's distribution capabilities and broaden its portfolio of brands, Rexall Sundown's business operates at a lower EBITDA margin than that of NBTY," said Standard & Poor's credit analyst Martin S. Kounitz. "In addition, Rexall Sundown's financial performance has been weak, with fiscal 2002 net sales down 22% from the prior year. Furthermore, an acquisition of this size, which increases NBTY's sales by approximately 45% on a pro forma basis, contains significant integration risk." Standard & Poor's will continue to monitor current developments and meet with NBTY's management to discuss the firm's financial policies, pro forma credit measures for the transaction, and business strategies. NBTY's ratings reflect the company's moderate debt leverage, its aggressive growth strategy, and competitive industry dynamics, factors somewhat mitigated by the company's strong position and diversified distribution channels in the vitamins, minerals, and supplements (VMS) industry. NBTY manufactures a diverse line of VMS products in the U.S., and has a strong presence in the U.K. The VMS market in both countries continues to be highly competitive and fragmented in all distribution channels. The market includes national brands, specialty and health food stores, pharmacies, and national chain stores, as well as small, regional mail-order companies. A three- tiered distribution strategy that includes retail, wholesale, and direct response (including mail-order and Internet sales) provides the company with diversification and lowers distribution risk. NEW WORLD RESTAURANT: Halpern Denny Discloses 50.72% Equity Stake ----------------------------------------------------------------- Halpern Denny III and the General Partner beneficially own an aggregate 28,561,925 shares (including 5,297,818 shares of common stock which Halpern Denny III has the right to acquire upon exercise of its warrants) of common stock of New World Restaurant Group, Inc. which constitutes approximately 50.72% of the 51,016,857 shares of common stock outstanding as of April 30, 2003. However, as previously disclosed pursuant to the terms of the Warrants and the Warrant Amendment, Halpern Denny III is entitled to receive certain Step-Up Warrants and Antidilution Warrants. Halpern Denny III has received certain Step-Up Warrants and Antidilution Warrants, however, Halpern Denny III has not received Step-Up Warrants issuable to it on December 31, 2002, nor Antidilution Warrants issuable to it after September 15, 2002. Halpern Denny III is unable to determine or confirm the number of Step-Up Warrants or Antidilution Warrants it will receive upon the issuance of these additional Warrants. Such additional Warrants could materially increase the beneficial ownership of the shares of common stock held by Halpern Denny III and the General Partner. Each of the managing members of the General Partner may be deemed to share the power to vote, or direct the voting of, and to dispose, or to direct the disposition of the common stock owned by Halpern Denny III. Each of the managing members of Halpern Denny III disclaims beneficial ownership of all shares of common stock other than the shares of common stock he or she may own directly, if any, or by virtue of his or her indirect pro rata interest, as a managing member of Halpern Denny III. As previously disclosed, on March 14, 2003, Halpern Denny III agreed to acquire warrants to purchase 4,551,326 shares of common stock of New World and 6,422.914 shares of Series F Preferred Stock of New World in a private transaction pursuant to the terms of a Stock Purchase Agreement between Special Situations Fund III, L.P., Special Situations Cayman Fund, L.P., Special Situations Private Equity Fund, L.P.and Halpern Denny III. Subsequent to the closing of the transactions contemplated by the Stock Purchase Agreement, Halpern Denny III and the SP Funds determined that there were warrants to purchase an additional 745,492 shares of common stock of New World that should have been transferred to Halpern Denny III pursuant to the Stock Purchase Agreement. In a letter agreement dated May 15, 2003, the SP Funds instructed New World to transfer the additional SP Warrants to Halpern Denny III. The aggregate consideration which Halpern Denny III agreed to pay for both the warrants (including the Additional SP Warrants) and the Series F Preferred Stock, pursuant to the Stock Purchase Agreement, is $5,000,000, which was funded from contributions from Halpern Denny III's partners. The aggregate purchase price of the underlying common stock, if the warrants are exercised in full, is $52,968.18. The warrants have an exercise price of $.01 per share, and expire on June 20, 2006. * * * As previously reported, Standard & Poor's Ratings Services revised its CreditWatch implications on the 'CCC-' ratings of New World Restaurant Group Inc. to developing from negative. The revision follows the quick-casual restaurant operator's announcement that it plans to offer $160 million of senior secured notes maturing in 2010. The proceeds will be used to refinance the company's existing $140 million notes that mature in June 2003. "Upon completion of the deal, Standard & Poor's will raise the corporate credit rating to 'B-' from 'CCC-' as it will eliminate the significant near-term refinancing risk facing the company," said Standard & Poor's credit analyst Robert Lichtenstein. In addition, New World's proposed $160 million senior secured notes will be assigned a 'B-' rating. The outlook will be negative. The ratings are based on preliminary information and are subject to review upon final documentation. About $164 million of total debt was outstanding at April 1, 2003. NEXGEN VISION: Independent Auditors Air Going Concern Doubts ------------------------------------------------------------ NexGen Vision, Inc. is incorporated under the laws of the State of Delaware. The Company is engaged, through its wholly-owned subsidiary, Cobra Vision, Inc., in the distribution of ophthalmic polycarbonate lenses used in eyeglasses. Through its wholly- owned subsidiary, FB Optical Manufacturing, Inc., the Company refurbishes used optical equipment for resale to customers in the United States and developing markets located outside the United States. In addition to lens sales and distribution, the Company also conducts operations in research and development, in casting and print coat sales, in photochromic lens distribution, and in licensing proprietary technologies relating to the ophthalmic field. The Company's revenues were $776,146 for the three-month period ended March 31, 2003 compared to $63,438 for the same period ended March 31, 2002, an increase of $712,708. The increase is a result of the acquisition of Cobra Vision in April 2002. Cobra Vision revenues for the three months ended March 31, 2003 were $727,887. FB Optical generated $48,259 of revenue during the three month period ended March 31, 2003. Nexgen continues to experience steady growth in revenues in the polycarbonate and glass ophthalmic lens distribution business. If the Company obtains the necessary financing, Cobra Vision anticipates continued growth in sales of distributed polycarbonate and glass ophthalmic lenses and expects significant sales to be generated from the sale of the NexGen lens casting systems and NexGen lens casting supplies and materials planned for launch in the third quarter of 2003. Gross profit was $265,758, or 34.2%, for the three months ended March 31, 2003 versus $55,116, or 86.9%, for the three months ended March 31, 2002. The $210,642 increase in gross profit is a result of the Company's acquisition of Cobra Vision in April 2002. The decrease in percent gross profit for the three months ended March 31, 2002 is attributable to the fact that the gross margins are lower from revenues generated by Cobra Vision lens sales than from FB Optical refurbished equipment sales. Selling, general and administrative ("SG&A") expenses for the three-month period ended March 31, 2003 increased $969,542 from $87,792 to $1,057,334. The increase is attributable to the acquisition of Cobra Vision and the pre-launch expenses related to commercialization of NexGen casting equipment, supplies and materials. Research and development ("R&D") expenditures for the three-month period ended March 31, 2003 were $300,000 as compared to no R&D costs during the same period in 2002. The increase in R&D costs is attributable to the acquisition of Cobra Vision and is related to the research and development of casting equipment, supplies and materials. FB Optical has not historically incurred research and development costs. In addition, unaudited pro forma R&D costs for the three month period ended March 31, 2003 increased by $250,000 from the prior year three month period ended March 31, 2002. This increase is associated with the Research and Development Agreement entered into with Technology Resource International in September 2001 and amended on April 10, 2002 and again on September 1, 2002. Depreciation and amortization expense for the three month period ended March 31, 2003 was $16,240 compared to no expense in the respective period in 2002. This increase was due to the acquisition of Cobra Vision in April 2002. Prior to the acquisition of Cobra Vision, the Company had no depreciable assets. It also incurred $6,998 of interest expense during the three months ended March 31, 2003 as a result of the debt assumed in connection with the acquisition of Cobra Vision. The Company's net loss for the three months ended March 31, 2003 was $1,114,814 in contrast to $32,690 for the three months ended March 31, 2002. The $1,082,124 increase in net loss was due to the acquisition of Cobra Vision and the increased staff, research and development and sales marketing expenses to support the NexGen lens casting systems and NexGen lens casting supplies and materials launch planned for the third quarter of 2003. At March 31, 2003, Nexgen's cash balance was $81,340 and the Company had a working capital deficit of $4,925,637. It generated a deficit in cash flow from operating activities for the six month period ended March 31, 2003 of $1,571,060. This deficit in cash flow from operating activities is primarily due to the net loss from operations of $2,184,306 adjusted for depreciation and amortization of $28,501, compensation expense on options granted to consultants of $35,948, a increase in accounts receivable of $8,934, a decrease in inventory of $146,579, and an increase in accounts payable of $521,351. In addition, to support increased sales of lenses and the launch of NexGen lens casting systems, prepaid expenses increased by $110,293. In order to satisfy current obligations, pay ongoing expenses and to provide sufficient working capital to support the growth of business and the lens casting systems as well as expand the supply of polycarbonate lenses, Nexgen ia currently seeking to raise up to $2,500,000 from accredited investors and $18,000,000 from institutional investors through Jesup & Lamont Securities Corp. It has raised $300,000 through the sale of Series A Preferred Stock and warrants to accredited investor including $100,000 in May 2003. There can be no assurances that it will be able to raise substantial capital. Management believes that if the Company raises at least $3,000,000, sufficient capital will exist to fund its operations, capital expenditures, debt, and other obligations for the next 12 months. As of May 12, 2003, it has only $59,996 in remaining cash. Management expects that if the Company does not receive any financing, it will have to restructure the business to continue operations. Nonetheless, management believes the Company will receive interim bridge financing in an amount to permit it to sustain its current operations. Additionally, based upon meetings had management believes that the Company will close the institutional financing during the third quarter. There can be no assurances that it will obtain the necessary financing. The independent auditors report on the Company's September 30, 2002 financial statements included in the Form 10-KSB states that Nexgen's difficulty in generating sufficient cash flow to meet its obligations and sustain operations raise substantial doubts about the ability to continue as a going concern. NRG ENERGY: Moves for Injunction Against Utility Companies ---------------------------------------------------------- James H.M. Sprayregen, Esq., at Kirkland & Ellis, in New York, relates that the NRG Companies obtain gas, water, sewer, electric, telephone and other similar utility services provided by over 50 utility companies. The Debtors estimate that the average aggregate monthly cost of the services provided by the Utility Companies has been approximately $1,500,000. With limited exceptions arising from billing disputes under interconnection agreements, the Debtors have had a solid payment history with respect to all undisputed invoices for utility services. In addition, the Debtors believe that their cash reserves, together with the cash generated in the ordinary course of their business, will provide more than sufficient liquidity for postpetition payments to the Utility Companies. Mr. Sprayregen informs Judge Beatty that five of the Utility Companies hold prepetition security deposits totaling $3,400. Moreover, approximately $4,200,000 in cash collateral is being held in a third party escrow in connection with the provision of station service power under the Interconnection Agreement, dated July 1, 1999, between NRG and Connecticut Light & Power Company. At the Debtors' request, Judge Beatty issues an Interim Order: (a) determining that the Utility Companies have been provided with adequate assurance of payment, pending the entry of a Final Order; (b) prohibiting the Utility Companies from altering, refusing or discontinuing services on account of prepetition amounts outstanding, including the making of prepayments and demands for security deposits or accelerated payment terms, pending the entry of a Final Order; (c) determining that the Debtors are not required to make any postpetition deposits to the Utility Companies pending the entry of a Final Order; (d) prohibiting the Utility Companies from drawing upon any existing cash security deposit, surety bond or other form of security to secure future payment for utility services pending the entry of a Final Order; and (e) providing the Utility Companies with notice and an opportunity for hearing on the Proposed Adequate Assurance before entering a final order. The Court also grants the Debtors authority to provide their Utility Companies with adequate assurance of payment for postpetition obligations, including: (a) the granting of administrative expense status for services provided by Utility Companies following the Petition Date; (b) timely payment of those amounts which the Debtors determine, in good faith, are undisputed for each invoice for postpetition services; (3) providing copies of the monthly operating reports, upon written request, to a representative selected by the Utility Companies within one day of submission of the reports to the U.S. Trustee; (4) the exchange of contact information between the Debtors and any Utility Company, upon written request, for employees with sufficient authority to deal with disputes, if any, regarding postpetition payments; and (5) a mechanism for modification of these requirements if there is a material and adverse change with respect to the Debtors' solvency or liquidity. Any objections to the entry of the Final Order must be filed with Court and served so as to be received by 4:00 p.m. Eastern Time on June 11, 2003, on these parties: -- the Debtors, -- the Debtors' counsel, -- counsel to any official committee appointed in these cases, -- counsel to the Ad Hoc Committees, -- the U.S. Trustee, -- counsel to the Debtors' postpetition secured lenders, -- Xcel and its counsel; -- counsel to the administrative agents for the Debtors' prepetition secured lenders; and -- the indenture trustees pursuant to the Debtors' secured indentures. If a Utility Company submits a timely objection, the Court will hold a hearing on June 18, 2003 at 3:00 p.m., at which the Court will determine whether the Proposed Adequate Assurance satisfies the requirements of Section 366 of the Bankruptcy Code. Pursuant to Section 366 of the Bankruptcy Code, within 20 days after the commencement of the Debtors' Chapter 11 cases, the Utility Companies "may not alter, refuse, or discontinue service to, or discriminate against, the [Debtors] solely on the basis of the commencement of [their chapter 11 cases]. . ." However, after the 20-day period, the Utility Companies arguably may discontinue service if the Debtors have not provided adequate assurance of future performance of the Debtors' postpetition obligations to the Utility Companies. If the Utility Companies are permitted to terminate service on the 21st day, Mr. Cantor notes, the Debtors may be unable to continue operations at their power generation facilities, offices and other properties. Any interruption, however brief, would damage customer relationships, revenues and profits, and adversely affect the Debtors' reorganization efforts. It is therefore critical to the success of these bankruptcy cases that the Debtors' utility services continue uninterrupted. Moreover, given the number of Utility Companies and the various locations throughout the United States, it is impracticable, if not possible, for the Debtors to contact all of the Utility Companies and obtain assurances that they will not discontinue services within the first 20 of these bankruptcy cases. Mr. Cantor also points out that in determining adequate assurance, the Court is not required to give utility companies the equivalent of an absolute guaranty of payment, but must only determine that the utility is not subject to an unreasonable risk of non-payment for postpetition services. (NRG Energy Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392- 0900) NVR INC: Sells $200 Million of 5% Senior Notes Due 2010 ------------------------------------------------------- NVR, Inc. (Amex: NVR) (S&P/BB+/Positive) sold $200 million of 5% senior notes due 2010 pursuant to an effective shelf registration. The Company will use a majority of the proceeds of the senior notes offering to redeem all of its issued and outstanding 8% senior notes due 2005, which the Company is calling at a premium of 104% plus accrued and unpaid interest to July 14, 2003, the date fixed for redemption. NVR, Inc. is headquartered in McLean, Virginia and is one of the largest homebuilders in the United States. PAMECO CORPORATION: Retains Morrison Cohen as Bankruptcy Counsel ---------------------------------------------------------------- Pameco Corporation, and its debtor-affiliates want to employ Morrison Cohen Singer & Weinstein, LLP as their attorneys in their chapter 11 cases and ask the U.S. Bankruptcy Court for the Southern District of New York for permission to do so. The Debtors relate that Morrison Cohen has represented them throughout the prepetition negotiations and sale of assets leading up to the commencement of these chapter 11 cases. The Debtors believe that retention afforded Morrison Cohen the relevant background and experience to serve as Debtors' counsel in this case. Morrison Cohen has developed a working knowledge of the Debtors' capital structure, financing documents, and other material agreements, as well as with the Debtors' business affairs and many of the potential legal issues that may arise in the context of this case. The Debtors believe that continued representation by their prepetition restructuring, litigation, and bankruptcy counsel, Morrison Cohen, is critical to the Debtors' efforts to wind-down their business. The Debtors expect Morrison Cohen to: a) advise the Debtors with respect to their powers and duties as debtors-in-possession in the continued management of their businesses and properties; b) attend meetings and negotiate with representatives of creditors and other parties in interest and advise and consult on the conduct of the case, including all of the legal and administrative requirements of operating in chapter 11; c) take all necessary action to protect and preserve the Debtors' estates, including the prosecution and defense of any actions, negotiations concerning all litigation involving the Debtors, and objections to claims filed against the Debtors' estates, if any; d) prepare on the Debtors' behalf all motions, applications, answers, orders, reports, and papers necessary to the administration of this case; e) take all necessary action on the Debtors' behalf to: (i) obtain approval of the Disclosure Statement and confirmation of the Plan of Reorganization, (ii) negotiate any modifications to the Plan that may be required, (iii) implement all transactions related thereto and (iv) consummate the Plan; f) appear before this Court, any appellate courts, and the United States Trustee; g) advise the Debtors with respect to corporate matters; h) perform all other necessary legal services and provide all other necessary legal advice to the Debtors in connection with these chapter 11 cases; and i) provide other general legal advice to the Debtors that may be required in connection with this case. The hourly rates of Morrison Cohen's professionals are: Members ------- Joseph T. Moldovan $480 per hour Salomon R. Sassoon $480 per hour Jack Levy $480 per hour Theodore L. Marks $475 per hour Jeffrey P. Englander $475 per hour Brian B. Snarr $495 per hour Senior Counsel -------------- Janice H. Eiseman $335 per hour Edward P. Gilbert $390 per hour Associates ---------- Michael R. Dal Lago $300 per hour Mathew Manuelian $330 per hour Steven M. Cooperman $310 per hour Stacy L. Nader $235 per hour Michael Samuels $225 per hour Paraprofessional ----------------- Mariola Wiatrak $160 per hour Pameco Corporation distributes central air conditioners, heat pumps, and furnaces, as well as walk-in coolers and ice machines. The Company filed for chapter 11 protection on May 3, 2003 (Bankr. S.D.N.Y. Case No. 03-13589). Joseph Thomas Moldovan, Esq., at Morrison Cohen Singer & Weinstein, LLP leads the engagement team in assisting the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $10 million and estimated debts of over $50 million. PAPER WAREHOUSE: Gets Nod to Retain Michael L. Meyer as Counsel --------------------------------------------------------------- Paper Warehouse, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the District of Minnesota to employ Michael L. Meyer at Ravish Meyer Kirkman McGrath & Nauman, A Professional Assocation, to represent it in connection with all matters relating to its chapter 11 case. The Debtor believes that its best interest is served by retaining Ravish Meyer to represent it in this chapter 11 proceeding. Ravish Meyer is experienced and is agreeable to performing legal services for the estate on an hourly basis. The attorneys and paralegal that will provide services to the Debtor and their current hourly rates are: Michael L. Meyer $325 per hour Michael F. McGrath $290 per hour Will R. Tansey $150 per hour Barbara A. Waggie $105 per hour Paper Warehouse, Inc., and its subsidiaries are retail stores specializing in party supplies and paper goods filed for chapter 11 protection on June 2, 2003 (Bankr. Minn. Case No. 03-44030). As of May 2, 2003, the Company listed $20,763,924 in total assets and $26,546,615 in total debts. PENTON MEDIA: Shareholders Approve 1-For-3 Reverse Stock Split -------------------------------------------------------------- Penton Media, Inc. (NYSE:PME) stockholders voted at the Company's annual meeting Thursday to approve a reverse stock split. The approved proposal provides the Company's Board of Directors with approval to effect a reverse split at one of three ratios within one year. Chairman & CEO Thomas L. Kemp announced at the meeting that the Board does not expect to act on its authority to effect the reverse split in the near term. Stockholders also elected three directors to serve three-year terms expiring in 2006. The directors include: Daniel J. Ramella, president and chief operating officer of the Company, and a director since 1998; and Vincent D. Kelly, president and chief executive officer of Metrocall, Inc., a provider of paging and advanced wireless data and messaging services, and Perry A. Sook, president and chief executive officer of Nexstar, a television broadcasting company. In other votes, stockholders approved the selection of PricewaterhouseCoopers LLP as independent accountants for Penton. A proposal to amend the Company's Certificate of Designations governing the Company's Series B Convertible Preferred Stock to amend the definition of "change of control" was not approved, and a proposal to remove a limit on the number of directors on the Company's Board to 13 was not approved. The Company's second-quarter guidance, first provided on May 1, was reaffirmed. That guidance was that revenues are expected to decline year-on-year by about 15%, although the Company anticipates that revenues for ongoing businesses will decline by single digits. Operating income should improve due to the absence of restructuring charges, which impacted last year's second quarter. The Company anticipates that second-quarter adjusted EBITDA for ongoing businesses will be about even with 2002. Penton also announced at the meeting that its shareholder rights agreement expired at the close of business June 12. Penton Media -- whose December 31, 2002 balance sheet shows a net capital deficit of about $61 million -- is a diversified business- to-business media company that produces market-focused magazines, trade shows and conferences, and online media. Penton's integrated media portfolio serves the following industries: aviation; design/engineering; electronics; food/retail; government/compliance; Internet/information technology; leisure/hospitality; manufacturing; mechanical systems/construction; natural products; and supply chain. PRECISE IMPORTS: Securing Okay to Tap Piper Rudnick as Attorneys ---------------------------------------------------------------- Precise Imports Corporation seeks permission from the U.S. Bankruptcy Court for the Southern District of New York to retain and employ Piper Rudnick LLP as its attorneys under a general retainer. Precise Imports will look to Piper Rudnick to perform all legal services necessary as the Company restructures under chapter 11. The Debtor discloses that when it became apparent that a bankruptcy filing was likely, the Debtor hired Piper to provide advice regarding, among other things, preparation for the commencement and prosecution of a case under chapter 11 of the Bankruptcy Code. The Debtor has employed and retained Piper Rudnick as its attorneys in connection with the filing. The Debtor has selected Piper Rudnick to serve as bankruptcy counsel because Piper's attorneys have extensive experience and knowledge in the fields of debtor and creditor rights, debt restructuring and corporate reorganizations, tax law, real estate matters, employee benefits and commercial litigation, among others. In addition, in connection with their engagement by the Debtor, Piper has become familiar with the Debtor's operations and business. The Debtor submits that if they be required to retain attorneys other than Piper Rudnick, the Debtor and its estate would be prejudiced by the time and expense necessary for such attorneys to become familiar with the Debtor's business operations. In this engagement, Piper Rudnick will: (a) advise the Debtor with respect to its powers and duties as a debtor and debtor in possession in the continued management and operation of its business and properties; (b) attend meetings and negotiate with representatives of creditors and other parties in interest, and advise and consult on the conduct of case, including all of the legal and administrative requirements of operating in chapter 11; (c) advise the Debtor in connection with any contemplated sales of assets or business combinations, including negotiating any asset, stock purchase, merger or joint venture agreements, formulating and implementing any bidding procedures, evaluating competing offers, drafting appropriate corporate documents with respect to the proposed sales, and counseling the Debtor in connection with the closing of any such sales; (d) advise the Debtor in connection with postpetition financing and cash collateral arrangements, negotiate and draft documents relating thereto, provide advice and counsel with respect to the Debtor's prepetition financing arrangements, provide advice to the Debtor in connection with issues relating to financing and capital structure under any plan or reorganization, and negotiate and draft related documents; (e) advise the Debtor on matters relating to the evaluation of the assumption or rejection of unexpired leases and executory contracts; (f) advise the Debtor with respect to legal issues arising in or relating to the Debtor's ordinary course of business, including attendance at senior management meetings, meetings with the Debtor's financial and turnaround advisors, and meetings of the board of directors, advise the Debtor on employee, workers' compensation, employee benefits, labor, tax, environmental, banking, insurance, securities, corporate, business operation, contract, joint ventures, real property, press/public affairs and regulatory matters, and advise the Debtor with respect to continuing disclosure and reporting obligations, if any, under securities laws; (g) take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on its behalf, the defense of any actions commenced against the estate, any negotiation concerning litigation in which the Debtor may be involved, and the prosecution of objections to claims filed against the estate; (h) prepare on behalf of the Debtor all motions, applications, answers, orders, reports and papers necessary to the administration of the estate; (i) negotiate and prepare on the Debtor's behalf any plans(s) of reorganization, disclosure statement(s) and related agreements and/or documents, and take any necessary action on behalf of the Debtor to obtain confirmation of such plan(s); (j) attend meetings with third parties and participate in negotiations with respect to the above matters; (k) appear before this Court and any appellate courts, and protect the interests of the Debtor's estate before such courts; and (l) perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with this chapter 11 case. Thomas R. Califano, Esq., a Piper Rudnick member, reports that the Piper Rudnick attorneys that are likely to represent the Debtor in this case have current standard hourly rates ranging from $190 to $500 per hour. Additionally, Piper Rudnick's paralegal rates range from $65 to $225 per hour Precise Imports Corporation, Inc., does business as Wenger, NA. WNA holds the exclusive United States rights for the distribution of knives, watches, and fragrances, and administers a sublicense for camping/outdoor equipment under the "Wenger" cross and trade names. The Company filed for chapter 11 protection on June 3, 2003 (Bankr. S.D.N.Y. Case No. 03-13595). As of December 31, 2002, the assets of Debtor on a consolidated book basis were valued at $32,111,075 and the total liabilities at $45,790,795. PSYCHIATRIC SOLUTIONS: Negative Outlook Given to B+ Credit Rating ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' corporate credit rating to Franklin, Tennessee-based Psychiatric Solutions Inc. At the same time, Standard & Poor's assigned its 'B-' to the company's $150 million subordinated ratings due 2013. The proceeds will be used to refinance existing debt and finance an acquisition. After the completion of the transaction, total debt outstanding will approximate $175 million. The outlook is negative. "The speculative-grade rating on Psychiatric Solutions reflects concern related to its ability to successfully integrate the operations of recently acquired businesses that increase the company's size dramatically in a short period of time, and the challenges to extend its limited record of success as a specialty health service provider given ongoing reimbursement risk from large third-party payors," said credit analyst David Peknay. After the completion of two significant acquisitions, Psychiatric Solutions will have established itself as one of the three largest operators of behavioral health facilities in the U.S. Inclusive of the eleven facilities in the pending acquisition of Ramsay Youth Services and the completion of the acquisition of six facilities from the Brown Schools in April 2003, the company will have increased its total number of inpatient facilities to 22 from only 5. Additionally, the company will have a total of 58 facilities that it manages for third parties, including units in hospitals. With an experienced management team, the company will be well- positioned for further consolidation opportunities in this highly fragmented industry. Psychiatric Solutions anticipates adding four to six facilities per year through acquisitions, but not until these latest two significant acquisitions are integrated into the company's operations. QWEST CORP: S&P Rates $500-Mill. Senior Unsecured Facility at B- ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned a 'B-' rating to Denver, Colorado-based local telephone operator Qwest Corp.'s $500 million senior unsecured term loan facility due 2010. The outlook is developing. "Proceeds will be used to refinance Qwest Corp.'s senior notes due in 2003 and fund its business needs; the notes are rated the same as the corporate credit rating because there are no material obligations senior to the notes," said credit analyst Catherine Cosentino. At the same time, Standard & Poor's affirmed the 'B-' corporate credit rating of Qwest Corp. and its parent, Qwest Communications International Inc. All other ratings of Qwest and related entities were also affirmed, including the previously rated Qwest Corp.'s $1.25 billion senior unsecured bank facility due 2007, which was upsized from $1 billion. While Qwest Capital Funding Inc.'s debt is rated 'CCC+', one notch below the corporate credit rating, Qwest does not have addition cushion to add substantial debt at Qwest Corp. without causing a downgrade in debt at Qwest Capital Funding. Qwest Capital Funding is structurally subordinated to all other debt in Qwest's capital structure, including debt at Qwest Corp. If the notching of debt at Qwest Capital Funding is revisited, the notching of the Qwest Communications Corp. $350 million senior notes would also be revisited. The ratings reflect the high degree of risk surrounding Qwest because of the ongoing U.S. Department of Justice criminal and SEC investigations, as well as the existence of various shareholder lawsuits, and near-term liquidity remains a source of concern. Despite these risks, Standard & Poor's recognizes that Qwest continues to hold a leading position in its local exchange markets in a 14 state region in the western U.S., with 17 million access lines. Qwest's business position should benefit from its receipt of approval from the FCC to offer in-region long distance services in 12 of its 14 states. The company's overall business risk could therefore support a higher rating if Qwest is able to satisfactorily address Standard & Poor's liquidity concerns with completion of the directories sale. Conversely, the ratings could be lowered if the completion of the directories sale is delayed beyond 2003. RELIANT RESOURCES: S&P Affirms & Removes Ratings from CreditWatch ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit rating on Reliant Resources Inc. and its subsidiaries: Reliant Energy Mid-Atlantic Power Holdings LLC; Reliant Energy Capital (Europe) Inc., and Orion Power Holdings (OPH). At the same time, Standard & Poor's removed the ratings from CreditWatch. The outlook on all ratings is negative. Standard & Poor's also raised its rating to 'B-' from 'CCC+' on OPH's 12% senior unsecured bonds due 2010. This rating action reflects Standard & Poor's analysis of the asset coverage at OPH and determination that, while the OPH bonds are structurally subordinated to senior secured loans at Orion NY and Orion Midwest, the asset coverage is adequate for only a one notch differential. As the secured debt continues to decline at Orion NY and Orion Midwest, the rating differential will continue to reflect the improved position of the OPH bondholders vis a vis the secured debtholders. These rating actions have no affect on Reliant Energy Power Generation Benelux N.V.'s (REPGB) rating. REPGB is a European subsidiary that RRI expects to sell by the end of the third quarter 2003. The sale is currently awaiting regulatory approval from the Dutch authorities. RRI's ratings and those of its major subsidiaries are based on the consolidated credit profile of the corporation, but also reflect the fact that monies are currently trapped at the Orion operating companies and cannot be relied on to service corporate-level debt. The consolidated business profile incorporates the credit quality of the wholesale and retail operations that RRI owns. The wholesale operation is characterized by high business risk including regulatory uncertainty and volatile cash flows. While RRI expects the wholesale operation to contribute approximately one-half of operating cash flow over the next five years, Standard & Poor's wholesale price outlook would suggest that the wholesale operation will contribute approximately 38% of operating cash flow. This segment, however, represents a significant investment by RRI and will necessitate capital expenditures of approximately $850 million in the next two years to complete assets currently under construction in the Midwest and Western regions and other maintenance. RRI's financial profile has weakened considerably due to low margins in the wholesale business, higher interest costs, high leverage and restrictive covenants at its large OPH subsidiary The negative outlook reflects the continued weak wholesale lower market characterized by low margins, overcapacity, regulatory uncertainty, and uncertain cash flows from its wholesale asset base, partially offset by its Texas retail business. The continued negative trend in the wholesale operations and potential for diminished gross margin in the retail segment may put pressure on the rating in the foreseeable future. RRI is exposed to a possible negative outcome of the FERC proceedings related to the California markets. Should significant monetary penalties or adverse business outcomes hamper RRI's ability to generate adequate cash flow to service debt, the rating could decline. Should RRI successfully settle the issues surrounding California and pay down adequate levels of debt to bring credit protection measures in line with a higher rating, then a rating upgrade could occur. ROGERS: Completes C$250MM Equity Issuance & Redeems Senior Notes ---------------------------------------------------------------- Further to its release of May 28, 2003, Rogers Communications Inc. (TSX: RCI.A and RCI.B, NYSE: RG) has successfully completed the issuance of 12,722,647 Class B Non-Voting shares to a syndicate of Canadian underwriters. The Shares were sold on a "bought deal" basis at a price of C$19.65 per Share for net proceeds of approximately C$240 million. As part of the Company's focus on deleveraging, the net proceeds of the offering will be used, together with other available funds, to redeem (pursuant to a redemption notice) US$205.4 million aggregate principal amount of the Company's Senior Notes, due 2007 on July 17, 2003 at a redemption price of 102.958% of the aggregate principal amount. Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RG) is Canada's national communications company, which is engaged in cable television, Internet access and video retailing through Rogers Cable Inc.; digital PCS, cellular, and wireless data communications through Rogers Wireless Communications Inc.; and radio, television broadcasting, televised shopping, and publishing businesses through Rogers Media Inc. * * * As previously reported, Standard & Poor's Ratings Services revised the outlook to negative from stable on Rogers Communications Inc., and its subsidiary, Rogers Cable Inc. At the same time, the ratings on Rogers Communications, including its 'BB+' long-term corporate credit rating, as well as the ratings on its subsidiaries, were affirmed. The outlook reflects Standard & Poor's concerns about Rogers Communications' financial profile, particularly its leverage, which is high for the rating. Lease-adjusted total debt to EBITDA has increased to 5.9x in 2002 from 5.3x in 2001, largely due to negative free cash flows as the company completes its cable system upgrades. SBA COMMUNICATIONS: S&P Affirms CCC Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'CCC' corporate credit rating on Boca Raton, Florida-based wireless tower operator SBA Communications Corp. and removed the rating from CreditWatch. The outlook is developing. The ratings were originally placed on CreditWatch with negative implications in late 2002 because of concerns that the company might violate tight covenants under its bank facility in 2003 and possibly require a financial restructuring. SBA Communications, however, has recently closed on the sale of 679 towers for about $160 million in gross cash proceeds and expects to sell another 122 towers for about $43 million around October 2003. The proceeds from the first tower sale, in addition to borrowings from a new credit facility, have allowed the company to refinance the bank facility and have reduced the likelihood that the company will restructure in the near term. The new $195 million senior secured credit facility, maturing in 2007, comprises a $95 million term loan and a $100 million revolving credit facility. It also contains covenants that are somewhat less restrictive than those of the refinanced bank facility. However, it does not afford much cushion against severe execution missteps. Availability under the new revolving credit facility and prospective proceeds from the second group of tower sales should strengthen the company's liquidity, thereby reducing the risk of a distressed debt exchange or bankruptcy filing in the near term. "The rating of SBA Communications reflects its very aggressive financial leverage and longer term liquidity concerns," said Standard & Poor's credit analyst Michael Tsao. SBA Communications is among the largest independent operators of wireless communications towers in the U.S., and derives its revenues from tower leases and network services. (After adjusting for the tower sales, the company will have about 3,075 towers at the end of 2003.) SBA also leases antenna space on towers owned and operated by the company primarily to the major wireless carriers and their affiliates under long-term contracts with annual rent escalator provisions. The company also serves as a consultant to wireless service providers in areas of site acquisition, network planning, radio frequency engineering, and construction. This business, which accounts for about 35% of SBA Communications' total revenues, has been hard hit by reduced carrier spending and increased competition. The company had more than $1 billion of debt for the quarter ended March 2003, debt incurred largely to acquire and construct new towers in anticipation of steep cash flow growth that did not materialize. SCANTEK MEDICAL: Working Capital Deficit Tops $6.8MM at March 31 ---------------------------------------------------------------- Scantek Medical, Inc. and its subsidiaries operates in one industry segment and is engaged in developing, manufacturing, marketing, and licensing the BreastCare(TM)/BreastAlert(TM). The BreastCare(TM)/BreastAlert(TM) is an early screening device which can detect certain breast tissue abnormalities, including breast cancer. This device has been patented and has Food and Drug Administration approval for sale. The Company has experienced losses during its development stage. Losses and negative cash flows from operations have continued in the current fiscal year subsequent to June 30, 2002. As of March 31, 2003, the Company had working capital deficit of approximately $6.8 million. The activities of the Company are being financed through the sale of its common stock and debt securities. Its continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing, and the commercial acceptability of the BreastCare(TM)/BreastAlert(TM) to create sales that will help the Company achieve a profitable level of operations. However, there is no assurance that additional capital will be obtained or the BreastCare(TM)/BreastAlert(TM) will be commercially successful. This raises substantial doubt about the ability of the Company to continue as a going concern. The Company had no sales for the nine months ended March 31, 2003 and 2002. The Company expects sales to commence in the last quarter of its fiscal year. Cost of sales (which consists of depreciation expense) decreased 1.7% to $198,288 during the nine months ended March 31, 2003 from $201,636 during the nine months ended March 31, 2002. General and administrative expenses increased 68.2% to $932,709 during the nine months ended March 31, 2003 from $554,473 during the nine months ended March 31, 2002 due to increases in travel expenses, rent, outside services, accrued wages and professional fees attributable to stock and stock options issued for services offset by higher consulting fees in 2002 also attributable to stock options issued for services. Interest expense increased to $396,438 during the nine months ended March 31, 2003 from $313,651 during the nine months ended March 31, 2002 primarily due to interest expense on stock issuance for loan financing and additional interest on increase in debt. Research and development decreased from $210,000 for the nine months ended March 31, 2002 to $-0- for the nine months ended March 31, 2003. The Company fully developed the BreastCare(TM)/BreastAlert(TM) but in the future contemplates to develop other products to market. Until cash flow generated from the shipment of the BreastCare(TM) device is sufficient to support the Company's operations, the Company will require financing to fund its current overhead and various capital requirements. As of March 31, 2003, the Company borrowed approximately $2.7 million from unaffiliated third parties. These loans are payable by the Company on various dates through December 31, 2003. In addition, as of March 31, 2003, the Company's President advanced the Company approximately $1.1 million. These loans have supported the Company through the prior and the current fiscal year. The Company expects the cash flow from sales commencing in 2003 to cover the operations of the Company through December 2003, provided the Company is successful in raising additional capital to support the operations until cash flows generated from the sales of the BreastCare(TM)/BreastAlert(TM) device commences. TEAM AMERICA: Merges with Vsource to Form Outsourcing Company ------------------------------------------------------------- TEAM America, Inc. (Nasdaq: TMOS), a leading business process outsourcing company specializing in Human Resources, and Vsource, Inc. (OTC Bulletin Board: VSCE), a global leader in providing customized business process outsourcing services to Fortune 500 and Global 500 companies, have executed a definitive merger agreement. "The new company, which will operate under the name Vsource Corp., will combine the strengths of Vsource and TEAM America to deliver a new level of unparalleled value and service quality to our BPO clients," said Phil Kelly, Chairman and CEO of Vsource. "We expect the new Vsource to be a Global BPO leader, specializing in both Human Resource Solutions for enterprise level clients and small to medium-sized companies currently serviced by TEAM America across the United States, and Customized BPO Outsourcing Solutions for Fortune 500 and Global 500 companies." For the previous fiscal year, TEAM America and Vsource generated combined revenues in excess of $85 million. The combined company will deliver services to clients in the United States, Asia- Pacific and Europe. Following completion of the merger, Phil Kelly will serve as Chairman and CEO of the new Vsource. S. Cash Nickerson, current Chairman and CEO of TEAM America, will serve as Vice Chairman of the combined company concurrently with Dennis M Smith, Vsource's Vice Chairman and Chief Financial Officer, who will hold the same positions after the merger. S. Cash Nickerson, Chairman and CEO of TEAM America, commented, "For over sixteen years, TEAM America has provided small to medium-sized clients with benefits and human resource solutions generally only available to Fortune 500 companies. This merger will propel our clients to the next level, utilizing the capabilities of Vsource's Fortune 500 and Global 500 service levels, world-class operating skills and the introduction of advanced human capital management solutions, including state-of- the-art web-based services, allowing our customers to access payroll and human resource reports through a complete range of self-service tools via the Internet. We are clearly excited about the opportunities this merger presents as the combined international company will be on the leading edge of the BPO and human resource outsourcing markets." "We are enthused about the merger with TEAM America," added Mr. Kelly. "It enables the new Vsource to leverage our customized solutions, global reach, operational efficiencies and deep domain knowledge to provide breakthrough levels of service and efficiencies to TEAM America's client base, while helping us build significant scale required to deliver world-class BPO services." Mr. Nickerson stated further, "This is clearly a defining event for both companies as the value of this merger lies not only in what it is today but in what it will be in the future. The new Vsource brings significant benefits to our clients and to our shareholders, and when combined with the restructuring of our debt, which is a part of this transaction, substantially improves our balance sheet and prospects for rapid growth in our HCM services, as well as the addition of new enterprise level BPO services globally." Under the terms of the merger agreement, which was unanimously approved by the Boards of Directors of both companies, stockholders of Vsource will receive newly issued shares of TEAM America common stock based on the following exchange ratios: 3.10 TEAM America shares for each share of Vsource common stock, 1.172 TEAM America shares for each share of Vsource Series 1-A convertible preferred stock, 1.398 TEAM America shares for each share of Vsource Series 2-A convertible preferred stock, and 3,100 TEAM America shares for each share of Vsource Series 4-A convertible preferred stock. Based on these exchange ratios, Vsource stockholders will own approximately 80% and TEAM America stockholders approximately 20% of the merged company. However, the merger agreement provides that these exchange ratios may be increased by up to 24% based on the outcome of a review of certain due diligence matters, which could change the post-closing ownership of the merged company to up to 83% held by Vsource stockholders and down to 17% held by TEAM America stockholders. Based on the closing price of TEAM America's common stock on June 10, 2003, the market capitalization of the combined company will be approximately $82 million. In addition, TEAM America and Vsource intend to file a listing application for the merged company's stock on the Nasdaq SmallCap Market. The transaction is expected to be tax-free to shareowners of both companies for U.S. federal income tax purposes. Shareholders representing over 70% of TEAM America's common shares and more than 80% of Vsource common shares, on a fully converted basis, have agreed to vote their shares in favor of the merger. Various shareholders of Vsource and TEAM America have also entered into an agreement among themselves pursuant to which they have agreed to vote together on certain matters after the merger is completed. In conjunction with the execution of the merger agreement, term sheets have been executed with TEAM America's banks to restructure $9.0 million in principal amount of TEAM America's outstanding debt. The term sheets provide that upon closing of the merger, the monthly principal repayment amount with respect to $4.1 million of such debt will be reduced, the final maturity date of such debt will be extended to a date that is 48 months after the merger's closing, certain fees will be payable at maturity and the interest rate will be reduced to prime plus 1%. Such debt will become senior to all other debt of TEAM America and will be secured by cash collateral of $1 million and a lien on all of the company's real and personal property, and letters of credit issued by the banks in the amount of $508,000 will be separately secured with additional cash collateral equal to the amount of the letters of credit. The term sheets also provide that Vsource or a third party must purchase the remaining $4.9 million in principal amount of TEAM America's bank debt, and all of the shares of Team common stock, Class A Shares and warrants to acquire shares of Team common stock held by an affiliate of one of the banks, for an aggregate purchase price of $1.6 million. Vsource has provided a non- refundable deposit in connection with the debt purchase, which will be applied to the payment of the purchase price. The restructuring and debt purchase, which is subject to completion of definitive documentation with the lenders, is a condition of closing of the merger. In addition, TEAM America has executed a Memorandum of Understanding with Stonehenge Opportunity Fund, LLC, the holder of its $1.5 million bridge note, and the other holders of its Series 2000 9.75% Cumulative Convertible Redeemable Class A Preferred Shares. Pursuant to the MOU, the bridge note will be exchanged for a new subordinated note of equal amount but with an extended maturity date of June 30, 2006 and a reduced interest rate equal to 1.5% over the rate paid by TEAM America under its restructured bank debt. In addition under the MOU, all of TEAM America's outstanding Class A Shares, and warrants to acquire 1,777,777 shares of TEAM America common stock, will be exchanged for subordinated notes with an aggregate principal amount of $2.5 million and 5,634,512 shares of TEAM America common stock. These subordinated notes, which will have the same terms as the subordinated note being issued in exchange for the bridge note, will be subordinated to senior indebtedness such as the merged company's bank debt and will have customary restrictive covenants including limitations on the borrower's ability to incur additional indebtedness. Interest will accrue but will not be paid in cash until all of the senior obligations have been paid in full. The completion of the transactions contemplated by the MOU is subject to customary closing conditions, including execution of definitive agreements and the completion of the merger and the bank debt restructuring described above. The merger is expected to close in the third quarter of 2003. Completion of the transaction is subject to completion of the bank debt restructuring and purchase, completion of the transactions contemplated by the MOU, the parties agreeing on the appropriate adjustment, if any, to the exchange ratios as described above and satisfaction of customary closing conditions, including obtaining TEAM America and Vsource shareholder approval. In connection with the merger, TEAM America is expected to reincorporate in Delaware and, if necessary, effect a reverse stock split in order to meet the Nasdaq SmallCap Market's minimum bid price for an initial listing. Vsource, Inc., headquartered in San Diego, Calif., provides business process outsourcing (BPO) services under the Vsource Versatile Solutions(TM) trade name, to Fortune 500 and Global 500 organizations across the Asia- Pacific region, Europe and the US. Vsource Versatile Solutions include Human Resource Solutions, Warranty Solutions, Sales Solutions, and Vsource Foundation Solutions(TM), which include Financial Services, Customer Relationship Management and Supply Chain Management. Vsource operates shared customer service centers in Malaysia and Japan, and has offices in the United States, Hong Kong, Singapore, and Australia. Vsource clients include ABN AMRO, Agilent Technologies, EMC, Gateway, Haworth, Network Appliance and other Fortune 500 and Global 500 companies. For more information, visit the Vsource Web site at http://www.vsource.com TEAM America, Inc., headquartered in Columbus, Ohio, provides comprehensive and integrated human resource management services to small and medium sized businesses in the PEO segment of the Human Capital Management industry. TEAM America ranks in the top ten companies providing PEO services in the country. These services allow clients to outsource their human resource responsibilities to TEAM America, who offers a broad range of "back office" services, including human resource administration, regulatory compliance management, employee benefits administration, risk management services, employer liability protection, payroll and payroll tax administration and placement services. For more information regarding TEAM America, visit http://www.teamamerica.com As reported in Troubled Company Reporter's March 25, 2003 edition, TEAM America reached an agreement to restructure its loan agreement with its senior lenders, extending the maturity date of the loans and waiving all prior defaults. In addition, on March 20, 2003 the Board of Directors approved an agreement in principle to restructure the Preferred Shares of the Company. Under the agreement in principle, the Preferred holders will exchange approximately $13.5 million liquidation preference for $2.5 million of new non-convertible preferred shares, 4.8 million common shares and approximately 2.5 million warrants. TECO ENERGY: S&P Rates $300MM Senior Unsecured Notes at BB+ ----------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB+' rating to electricity provider TECO Energy Inc.'s $300 million senior unsecured notes offering. The proceeds will be used primarily to repay short-term debt. The outlook is negative. Tampa, Florida-based TECO has about $3.8 billion in outstanding debt. On May 30, 2003, Standard & Poor's lowered its long-term corporate credit ratings on TECO and affiliates to 'BBB-' from 'BBB'. The downgrade of TECO and its subsidiaries reflected continued exposure to power plant projects that are being severely impacted by a weak power price environment, ongoing asset sale execution risk, and the paramount importance of continuing to execute planned strategic initiatives to arrest the company's weakening credit quality. Standard & Poor's assessment of the consolidated creditworthiness of the TECO enterprise upon completion of company's announced strategic plans is consistent with a 'BBB-' corporate credit rating. "The negative outlook reflects the substantial execution risk TECO faces as it attempts to rationalize its merchant plant exposure and complete potential asset sales, such as TECO Transport, the Hardee power station, Guatemalan assets, and other assets. We are closely monitoring the firm's success in these endeavors with expectations for continued steady progress throughout 2003," said Standard & Poor's credit analyst William Ferara. "Importantly, lack of movement on these issues in a timely fashion will result in a ratings downgrade to noninvestment grade. Conversely, rapid completion of TECO's stated objectives at expected values could be the catalyst for ratings stability at the 'BBB-' corporate credit rating level," added Mr. Ferara. TEMBEC: Commencing Temporary Shutdown of 2 Canadian Pulp Mills -------------------------------------------------------------- Tembec announced that it will curtail operations at two of its Canadian Kraft pulp mills due to a temporary wood fiber shortage. The mills, which will be down for two weeks, are located in Marathon and Smooth Rock Falls, Ontario. The reduction is estimated to be 15,000 MT of pulp production, equivalent to approximately 10% of the company's quarterly Canadian Kraft production. Wood supplies to the pulp and paper industry, particularly in Eastern Canada, have been seriously impacted by the US countervail duties on lumber exported to the US. "We are well sold out at all of our pulp mills, so the timing of this shortage is unfortunate" said T. P. Kavanagh, President of the Tembec Pulp & Paper Group. "We are currently working on contingency arrangements to mitigate any potential supply interruptions for our customers." The Tembec Pulp Group produces in excess of 2.2 million tonnes per year of market pulp and is a leading supplier of pulps to the world market. Tembec is an integrated Canadian forest products company principally involved in the production of wood products, market pulp and papers. The Company has sales of approximately $4 billion, with over 55 manufacturing sites in the Canadian provinces of New Brunswick, Quebec, Ontario, Manitoba, Alberta and British Columbia, as well as in France, the United States and Chile. Tembec's Common Shares are listed on The Toronto Stock Exchange under the symbol TBC. Additional information on Tembec is available on its web site at http://www.tembec.com * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on diversified paper and forest products producer Tembec Inc., to negative from stable. At the same time, the ratings outstanding on the Temsicaming, Quebec-based company, including the double-'B'-plus long-term corporate credit rating, were affirmed. The outlook revision stemmed from protracted weakness in Tembec's credit measures that is unlikely to subside in the near term due to weakened market conditions across all paper and forest products grades. TITAN INT'L: S&P Changes Ratings Outlook to Negative from Stable ---------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Titan International Inc. to negative from stable. In addition, Standard & Poor's affirmed its 'B-' corporate credit rating and the 'CCC' rating on the company's $137 million of senior subordinated notes. The outlook revision reflects Titan's weak operating results during the first quarter of 2003 and the expectation that results will remain weak in the near to intermediate term. Credit protection measures remain very weak, with total debt to EBITDA of more than 10x and EBITDA interest coverage of about 1x for the 12 months ended March 31, 2003. In the first quarter of 2003, sales for the agricultural and construction segments were essentially flat, year over year, excluding favorable benefits of currency fluctuations. Consumer segment sales declined 15%, primarily because of lower sales to boat trailer manufacturers. Higher costs (steel, rubber, insurance, and employee benefits) reduced gross margin to 8.1% for the quarter, from 9.8% in the year-earlier quarter. The company generated $7.6 million of EBITDA in the first quarter, down from $10.2 million for the first quarter of 2002, but negative cash flow after capital expenditures in the first quarter of 2003 totaled $17 million, because of the net loss from operations and higher seasonal working capital requirements. Weak market fundamentals are expected to continue to restrain Titan's financial performance through much of 2003, although the company will attempt to raise prices, reduce costs, and tap new distribution channels. Titan's balance sheet debt increased by $6 million from Dec. 31, 2002, to total $266 million at March 31, 2003. "The ratings on Quincy, Illinois-based Titan reflect the company's very weak operating results and marginal credit protection measures, along with its well-below-average business profile as a manufacturer of steel wheels and tires for off-highway vehicles," said Standard & Poor's credit analyst Nancy Messer. Titan's business risk derives from the cyclical, seasonal, and highly competitive nature of the markets into which its products are sold; concentration in the company's customer base; and the capital-intensive nature of the wheel and tire manufacturing process. Although Titan dominates the domestic market for off-the- road wheels, financial performance in the past several years has been depressed by the combination of high costs related to a long labor dispute and the ongoing economic downturn that has restrained demand for the company's products. Titan's sales are derived from three business segments: Agricultural sales contribute about 60% of the total; environmental/construction, 30%; and consumer, 10%. About 75% of the company's sales are in the U.S. and 25% are from international markets. UNITED AIRLINES: Taps Mercer as Executory Contract Consultants -------------------------------------------------------------- UAL Corporation seeks the Court's authority to employ Mercer Management Consulting as Executory Contract Consultants. Since January 23, 2003, Mercer has rendered executory contract consulting services to the Debtors in connection with their restructuring efforts. Mercer has become familiar with the Debtors' operations and is well qualified to represent the Debtors in a cost-effective and efficient manner. Mercer continues to provide non-bankruptcy ordinary course services to United, subject to separate work orders. Mercer is expected to: -- track all executory contracts to disposition; -- perform contract analysis; and -- make recommendations on assumption, renegotiation and rejection. The Debtors will pay Mercer $254,100 per month, resulting in an average hourly rate equal to $254. Reimbursable expenses will be invoiced after incurred. Peter Walsh, Vice President of Mercer, assures Judge Wedoff that Mercer is a "disinterested person" within the meaning of Section 101(14) of the Bankruptcy Code, and holds no interest adverse to the Debtors and their estates. (United Airlines Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) UNITED SURGICAL: S&P Affirms Speculative-Grade B+ Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its speculative-grade 'B+' corporate credit rating on United Surgical Partners International Inc. and revised its rating outlook to positive from stable. The outlook change indicates that Standard & Poor's could raise United Surgical's ratings if the surgery center chain can sustain noteworthy improvements in its operating performance and capital structure. In recent years, measured expansion and efficiency initiatives have yielded increasingly strong operating cash flow that has enabled United Surgical to deleverage and reinvest. This improvement could, if sustained, provide credit insulation against near-term competitive risks that is more indicative of a higher rating category. In particular, Standard & Poor's will monitor the company's expansion discipline and its progress toward a bank loan refinancing by late-2005. "The low, speculative-grade ratings on United Surgical Partners International Inc. reflect the company's narrow operating focus, its aggressive growth strategy, uncertain pricing prospects, and third-party reimbursement risks," said Standard & Poor's credit analyst Jill Unferth. "Attractive industry demand characteristics and strong operating performance partly offset these risks." Dallas, Texas-based United Surgical has ownership interests in or operates 66 short-stay surgery centers and a private surgical hospital in the U.S., Spain, and the U.K. These facilities predominantly handle orthopedic and pain management cases. About 40% are co-owned with not-for-profit hospital partners. One such partnership, with the Baylor Health Care System, comprises 13 of the company's surgery centers and one surgical hospital. United surgical has grown rapidly through acquisitions, new-build facilities, and joint ventures. Before forming the company in 1998, management successfully operated and sold a similar company that may be viewed as a blueprint for the now firmly established outpatient surgery market. UNIVERSAL ACCESS: Lance B. Boxer Resigning as Interim CEO --------------------------------------------------------- Universal Access Global Holdings Inc. (Nasdaq: UAXS) announced that effective July 15, 2003, Lance B. Boxer will resign as the Company's Interim CEO and as a director. Mr. Boxer will participate in the transition process, including the board's planned search for a new CEO. After Mr. Boxer's departure, Randall Lay, the Company's CFO, will assume responsibility for executive management of the Company pending the outcome of the board's search for a new CEO. "During my time at Universal Access, we have recruited a new management team, reduced our expenses and contingent liabilities, strengthened our business and diversified our customer base," said Boxer. "The Company's experienced senior management team is well positioned to lead the Company in the future." Universal Access (Nasdaq: UAXS) specializes in telecommunications procurement services for carriers, service providers, cable companies, system integrators and government customers worldwide. Universal Access is headquartered in Chicago, IL. Additional information is available on the company's Web site at http://www.universalaccess.net At December 31, 2002, Universal Access' balance sheet shows a working capital deficit of about $12 million, while total shareholders' equity has further shrunk to about $9 million from about $100 million a year ago. UNIVERSAL ACCESS: Reschedules Shareholders' Meeting for July 21 --------------------------------------------------------------- Universal Access Global Holdings Inc. (Nasdaq:UAXS) has changed the date of its Annual Meeting of Stockholders to July 21, 2003. A notice of the rescheduled meeting and proxy statement will be mailed to stockholders of record as of May 23, 2003, which remains the record date for stockholders entitled to vote at the Annual Meeting. Universal Access (Nasdaq: UAXS) specializes in telecommunications procurement services for carriers, service providers, cable companies, system integrators and government customers worldwide. Universal Access is headquartered in Chicago, IL. Additional information is available on the company's Web site at http://www.universalaccess.net At December 31, 2002, Universal Access' balance sheet shows a working capital deficit of about $12 million, while total shareholders' equity has further shrunk to about $9 million from about $100 million a year ago. USG CORP: Court Approves Amended Acquisition Protocol ----------------------------------------------------- To recall, on February 4, 2002, the Court established procedures for completing acquisitions of the USG Corporation Debtors' existing businesses of limited size to lessen the administrative burden and costs associated with the acquisitions that they may consummate. The established procedures apply to the acquisition of an ongoing business involving $7,500,000 or less in consideration, as measured by the amount of cash to be expended by the Debtors on account of the stock or assets to be purchased. Under the Existing Procedures, after the Debtors enter into a contract contemplating an acquisition, they will serve a notice describing the terms of the proposed acquisition on certain key parties. The Debtors may consummate the acquisition if there are no objections. Paul N. Heath, Esq., at Richards, Layton & Finger PA, in Wilmington, Delaware, tells the Court that the Debtors anticipate opportunities for strategic acquisitions and joint ventures. However, Mr. Heath points out that while certain of the potential transactions fall within the Existing Procedures, the language of the Existing Order may not cover the exact legal structure of these proposed transactions. At the Debtors' request, the Court approved these modifications to the Existing Procedures: (a) The Existing Procedures will apply to the acquisition of some or all of an ongoing business, rather than potentially applying only to the acquisition of an entire business; (b) The Existing Procedures will apply to the Debtors' participation in or contribution to a joint venture or similar business arrangement. Some of the Debtors' historical "acquisitions" of less than an entire business have taken the form of joint ventures. The Debtors may continue this form of transaction to maximize their business opportunities; (c) The technology the Debtors may utilize in a business would not be considered in determining whether the acquisition falls within the established $7,500,000 transaction cap. The Court noted that in most cases, it is difficult and expensive to determine the value of the technology because the valuations are inherently uncertain, and in certain cases, the Debtors' contributed technology may be of limited or no value unless coupled with the technology or rights of a joint venture partner; (d) The Existing Procedures provide that the Debtors are not authorized to expend more than $25,000,000 in any calendar year on proposed acquisitions. Given the number of transaction opportunities currently available to the Debtors, the limit is raised to $50,000,000. The Court noted that this figure is still relatively small when compared to the Debtors' overall asset base, which exceeds $3,000,000,000. The increase in the yearly limit will allow the Debtors to consummate three to four additional transactions each year under the Procedures. However, the cap will remain at $7,500,000; and (e) Under the Existing Procedures, an Interested Party who wishes to object to a proposed acquisition must file its objection with the Court before the expiration of the notice period. One benefit of the Existing Procedures is that it preserves the confidentiality of the proposed transactions. Requiring that objections be filed with the Court runs counter to the confidentiality concerns of the third parties to the transactions since the objections by necessity will disclose certain important information. Accordingly, the Court rules that objections to a proposed acquisition will be submitted to the counsel and the Interested Parties and not filed with the Court. Once an objection has been received, the Debtors will not be authorized to consummate the proposed transaction without resolving the objection or submitting the matter for resolution by the Court. (USG Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) VERIDIAN: S&P Watching BB- Rating Following Acquisition News ------------------------------------------------------------ Standard & Poor's Ratings Services placed its 'BB-' corporate credit and senior secured debt ratings of Alexandria, Va.-based computer services company Veridian Corp. on CreditWatch with positive implications. "The CreditWatch listing follows General Dynamics Corp. Corp.'s (A/Stable/--) announced acquisition of Veridian," said credit analyst Philip Schrank. The transaction is valued at $1.5 billion, including the assumption of $270 million of Veridian's debt. Standard & Poor's will review General Dynamic's plans for the Veridian debt. Ratings will be withdrawn if the debt is retired, or raised following a review of Veridian's strategic importance to General Dynamics. WACKENHUT CORRECTIONS: Offering $150MM of Senior Unsecured Notes ---------------------------------------------------------------- Wackenhut Corrections Corporation (NYSE: WHC) plans to offer approximately $150.0 million in aggregate principal amount of senior unsecured notes in a private offering to qualified institutional buyers under Rule 144A of the Securities Act and to persons outside the United States pursuant to Regulation S and to enter into an amendment to its senior secured credit facility. The notes have not been registered under the securities laws of the United States and may not be offered or sold in the United States except to qualified institutional buyers. WCC will use the net proceeds from the offering, together with approximately $100.0 million of borrowings under its amended senior credit facility, and approximately $16.0 million in cash-on-hand to repurchase 12.0 million shares of its common stock from Group 4 Falck A/S, its 57% shareholder, and to refinance amounts outstanding under its existing senior secured credit facility. The completion of the offering is subject to certain conditions and there can be no assurance that the offering will be completed. As reported in Troubled Company Reporter's May 5, 2003 edition, Standard & Poor's Ratings Services placed its 'BB-' corporate credit and 'BB' senior secured debt ratings on Wackenhut Corrections Corp. on CreditWatch with negative implications. Negative implications mean that the ratings could be lowered or affirmed, following Standard & Poor's review. Boca Raton, Florida-based WCC, a provider of a comprehensive range of prison and correctional services, had about $125 million of debt outstanding at Dec. 29, 2002. WARNACO GROUP: Closes Offering of 8-7/8% Senior Notes Due 2013 -------------------------------------------------------------- The Warnaco Group, Inc. (Nasdaq: WRNC) has closed its previously announced offering of $210 million aggregate principal amount of 8-7/8% Senior Notes due 2013 issued by its subsidiary, Warnaco Inc. The Notes are guaranteed by The Warnaco Group, Inc. and by the domestic subsidiaries of Warnaco Inc. The Notes are priced at 100% of the principal amount. The proceeds from the offering were used to refinance Warnaco Inc.'s floating rate five-year amortizing second lien notes that mature in 2008. The Notes have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. WEIRTON STEEL: Retaining Houlihan Lokey as Investment Banker ------------------------------------------------------------ Weirton Steel Corporation seeks to employ Houlihan Lokey Howard & Zukin Capital as investment banker during this Chapter 11 case. Mark E. Freedlander, Esq., at McGuireWoods LLP, in Pittsburgh, Pennsylvania, relates that Houlihan Lokey is a highly qualified investment banking firm whose professionals have substantial experience in projects of this type. Houlihan Lokey's depth of expertise renders it particularly well qualified to represent Weirton's interests during the pendency of this case. Weirton contemplates that Houlihan Lokey will provide investment banking services in connection with: (a) the assessment of Weirton's financial restructuring or other strategic alternatives, and (b) a possible financial restructuring transaction of the Debtor; a possible merger or other transaction involving the sale of all or substantially all of the business, assets or equity interests of Weirton in one or more transactions; or a possible private placement of equity and debt securities. Specifically, Houlihan Key will be: (a) reviewing the Company's financial condition, operations, competitive environment, business plans, historical and projected financial results, and forecasted capital requirements; (b) analyzing the Company's restructuring or other strategic alternatives and presenting findings to the Company's board of directors; (c) evaluating indications of interest and proposals regarding a Transaction; (d) assisting in the drafting, preparation and distribution of selected information and other related documentation describing the Company and the terms of a potential Transaction; (e) advising the Company as to the financial terms of the Transaction; (f) negotiating the financial aspects, and facilitating the consummation, of any Transaction; and (g) providing other investment banking services reasonably necessary to accomplish the foregoing. Mr. Freedlander tells the Court that Weirton employed Houlihan Lokey prior to the Petition Date. Weirton paid Houlihan Key $150,000 on April 28, 2003 and $175,023 on May 16, 2003. To the best of Weirton's knowledge, the members and associates of Houlihan Lokey principally involved in advising Weirton does not have any connection with the Debtor, its creditors or any other party-in-interest, or its attorneys, except to the extent Jonathan B. Cleveland, a Houlihan Lokey director, disclosed to Judge Friend. Mr. Cleveland attests that Houlihan Lokey is "disinterested" and does not hold or represent an interest adverse to the Debtor's estate. Pursuant to the Engagement Letter, Mr. Cleveland relates that Houlihan Lokey is entitled to receive compensation generally summarized as: (a) Commencing as of April 17, 2003, and ending on the termination of the Engagement Letter, and whether or not a Transaction is proposed or consummated, a monthly cash advisory fee equal to $150,000 per month. The Advisory Fee will be payable by Weirton in advance on the 17th day of each month without notice or invoice; (b) In the event a Restructuring Transaction entails any modification, repayment or refinancing of any outstanding indebtedness of Weirton, Weirton will pay Houlihan Lokey a fee equal to $3,000,000, less 50% of all Advisory Fees received by Houlihan Lokey after the first six payments of Advisory Fees hereunder. For purposes of this application, Indebtedness will include any bank debt, mortgage debt, capital leases, notes, bonds, or any other liabilities outstanding as of the consummation of the Restructuring Transaction. The Restructuring Transaction Fee will be payable in cash upon: (1) the effective date of an out-of-court restructuring through an exchange or tender offer, refinancing or other mechanism, (2) obtaining the requisite consents to a "pre-packaged" Chapter 11 plan of reorganization solicited pursuant to Section 1126(b) of the Bankruptcy Code, or (3) the confirmation of a Chapter 11 plan of reorganization. A Restructuring Transaction Fee will not be payable if a Chapter 11 case is converted to a Chapter 7 liquidation; (c) Upon consummation of a Sale Transaction, a fee equal to 1% of the Transaction Value, less 50% of all Advisory Fees received by Houlihan Lokey after the first 12 payments of Advisory Fees; and (d) Upon the consummation of a Financing Transaction, a fee equal to the sum of: (1) 7% of the aggregate amount of all equity or common stock placed or committed, (2) 5% of the aggregate amount of all preferred stock and convertible debt securities placed or committed, and (3) 3.5% of the aggregate principal amount of all unsecured, non-senior and subordinated debt securities placed or committed. In the event that both a Restructuring Transaction Fee and a Sale Transaction Fee are due, Houlihan Lokey will be entitled to only one Transaction Fee equal to the greater Transaction Fee or the Sale Transaction Fee. If Weirton terminates Houlihan Lokey's engagement for any reason, and within nine months Weirton enters into any agreement to engage in any Transaction, Houlihan Lokey will be entitled to receive any applicable Transaction Fee upon the consummation of any Transaction as if Houlihan Lokey's engagement had not been terminated. Pursuant to the Engagement Letter, Mr. Freedlander reports that Weirton agreed to pay Houlihan Lokey on a monthly basis for services rendered to it, and will reimburse Houlihan Lokey for reasonable and customary out-of-pocket expenses incurred in connection with services including transportation, lodging, food, telephone, copying and messengers. Furthermore, Houlihan Lokey agrees to apply for compensation for professional services to be rendered in connection with this Chapter 11 case and for reimbursement of expenses incurred. Mr. Freedlander relates that Houlihan Lokey has never billed its clients on an hourly basis for investment banking services. Thus, Houlihan Lokey's investment banking professionals do not generally keep a log of time spent on each assignment. Houlihan Lokey does not have the administrative capability to easily maintain detailed time records in 1/10th hour increments. However, in this case, the professionals at Houlihan Lokey will maintain descriptive time records in one-hour increments that will be submitted with Houlihan Lokey's fee applications. Mr. Freedlander asserts that as set forth in Engagement Letter, Weirton's agreement to provide indemnification, contribution and reimbursement is reasonable and appropriate and should be approved by the Court. (Weirton Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESCO DISTRIBUTION: S&P Cuts Corporate Credit Rating to B+ ---------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Pittsburgh, Pennsylvania-based WESCO Distribution Inc. to 'B+' from 'BB-' and removed it from CreditWatch where it was placed on March 31, 2003. Total outstanding consolidated debt at March 31, 2003, was about $450 million. The outlook is stable. "The downgrade reflects poor operating performance due to continued weakness in WESCO's key end-markets that has stretched credit measures well beyond Standard & Poor's expectations," said Standard & Poor's credit analyst Daniel DiSenso. Credit measures are expected to strengthen, to levels consistent with the ratings, as the company benefits from continued cost and working capital reductions, and a gradual market recovery. Continued focus on cost reduction, productivity improvement, and asset management combined with a gradual recovery of markets should enable the firm improve operating performance and generate credit measures compatible with the ratings. WESTPOINT STEVENS: Honors Carrier & Warehousemen Claims ------------------------------------------------------- WestPoint Stevens Inc. and its debtor-affiliates sought and obtained the Court's authority to pay certain prepetition Custom Duties, Common Carrier Claims, and Warehousemen Claims and maintain their ordinary course of business practices with respect to paying these Claims as such practices were followed prior to the Petition Date. John J. Rapisardi, Esq., at Weil Gotshal & Manges LLP, in New York, informs the Court that in connection with the normal operation of their businesses, the Debtors import into the United States raw materials and finished goods from overseas suppliers and manufacturers for use by the Debtors in their manufacturing operations. All merchandise is subject to certain customs import duties imposed by the laws of the United States. The Debtors estimate that, on average, they incur $1,000,000 per month in Customs Duties from the importation of Surcharged Goods. Pursuant to their standard operating procedures in effect prior to the Petition Date, the Debtors effect payment of the Customs Duties obligations, which arise after entry of the Surcharged Goods into the United States, in one of two ways: A. Where a letter of credit has been issued in favor of the foreign supplier, the supplier draws thereon, pays the Customs Duties and then delivers the Surcharged Goods to the Debtors in the United States; or B. The United States Customs Service and the Debtors' customs brokers mutually determine the Customs Duties owing and the Debtors pay the Customs Duties directly to the Service via the Federal Reserve Automated Clearing House. After receipt of payment of the Customs Duties, the Service releases the Surcharged Goods for shipment by the Debtors in the United States. Mr. Rapisardi explains that these payment procedures generally enable Surcharged Goods to be released to the Debtors within five days after their arrival into customs, thereby promoting the Debtors' uninterrupted flow of merchandise, which is critical to the Debtors' operations. The Debtors estimate that the amount of prepetition Customs Duties that are accrued and unpaid as of the Petition Date and that are not subject to existing letters of credit aggregate $350,000. In the ordinary course of their businesses, Mr. Rapisardi relates that the Debtors also rely on certain shippers, including trucking companies, railroads, and air freight operators, to transport materials and work-in-process among the Debtors' manufacturing facilities, and to complete the delivery of finished goods to the Debtors' customers and sales locations. The Debtors also rely on certain vendors that store unfinished products and materials, supplies and work-in-process owned by the Debtors. These vendors may provide finishing work, like embroidery, on certain of the Debtors' unfinished products and may hold their products after completion until the Debtors are able to accept delivery. In addition, the Debtors rely on third party warehouse vendors to store raw materials, finished goods and supplies. As a result, the Common Carriers and Warehousemen have possession of the Debtors' materials or products in the ordinary course of their businesses. As of the Petition Date, certain of the Common Carriers and Warehousemen had claims -- Transit Claims -- for goods and services previously provided to the Debtors. The Debtors estimate that the amount of Prepetition Common Carriers Claims that are accrued and unpaid as of the Petition Date aggregate $960,000 and the amount of Prepetition Warehouseman Claims that are accrued and unpaid as of the Petition Date aggregate $2,900,000. The Debtors believe that, as of the Petition Date, the aggregate value of goods in the possession of the Common Carriers and Warehousemen substantially exceeds the Transit Claims. Mr. Rapisardi notes that a significant portion of the Debtors' merchandise and materials for production are purchased in foreign countries and imported into the United States. Any failure to pay the Prepetition Customs Duties is likely to result in a refusal by the Service to clear these goods as well as any additional goods that are imported. At this critical point in the Debtors' business operations, any interruption in this supply would have severely deleterious effects on the Debtors' efforts to reorganize. The Debtors submit that any claim for Prepetition Customs Duties is a priority claim in accordance with Section 507(a)(8)(F) of the Bankruptcy Code. As a result, the Prepetition Customs Duties would be paid in their entirety in any event. Consequently, creditors will not be prejudiced by the payment. To the contrary, these payments will inure to the creditors' benefit through the continuation of the Debtors' operations unabated. The Debtors submit that the Prepetition Customs Duties and Prepetition Transit Claims, estimated not to exceed the aggregate amounting to $4,200,000, are de minimis in comparison to the value that the Debtors' estates will receive from an uninterrupted supply of imported goods. Judge Drain directs all applicable banks and other financial institutions to receive, process, honor and pay any and all checks drawn on the Debtors' accounts to pay the Prepetition Customs Duties and Prepetition Transit Claims, whether those checks were presented prior to or after the Petition Date, and make other transfers provided that sufficient funds are available in the applicable accounts to make the payments. The Debtors represent that each of these checks can be readily identified as relating directly to the authorized payments of Prepetition Customs Duties and Prepetition Transit Claims. Accordingly, the Debtors believe that checks and transfers other than those relating to the authorized payments will not be honored inadvertently. Mr. Rapisardi affirms that authorization to pay the Prepetition Transit Claims will not be deemed to constitute the postpetition assumption of any executory contract between the Debtors and their Common Carriers and Warehousemen pursuant to Section 365 of the Bankruptcy Code. The Debtors are in the process of reviewing these matters and reserve all of their rights under the Bankruptcy Code with respect thereto. Moreover, authorization to pay the Prepetition Customs Duties and Prepetition Transit Claims will not affect the Debtors' right to contest the amount or validity of any charges, in whole or in part. (WestPoint Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS: Planned $500MM Sr. Debt Issue Earns S&P's B+ Rating ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to integrated natural gas company The Williams Cos. Inc.'s planned $500 million issuance of senior unsecured notes. Standard & Poor's also affirmed its 'B+' long-term corporate credit rating on Williams and the ratings on its subsidiaries. The outlook remains negative. Oklahoma-based Williams has $13 billion worth of debt. "A significant credit concern is Williams' ability to stem the cash drain from the energy marketing and trading (EM&T) business unit," noted Standard & Poor's credit analyst Jeffrey Wolinsky, CFA. "For example, EM&T was responsible for a $790 million cash drain in 2002 and for a $292 million cash drain in first-quarter 2002," he continued. However, because EM&T performs all commodity risk management for Williams, less than 60% of the cash usage is actually for the EM&T trading operations. More than 40% is for Canadian and domestic midstream fuel and gas shrink requirements and for margin on hedged exploration and production gas contracts in the $4 area. However, Williams must demonstrate that this business unit will not be a significant user of cash in 2003. The negative outlook reflects the weak financial ratios for 2002 and continued, expected weakness in 2003. For example, funds from operations (FFO) interest coverage ratios for 2002 were 1.4x, and FFO to debt was 5.6%, which is indicative of a rating at the lower end of the 'B' category. The expectation for 2003 does not show significant improvement. However, the projected ratios for 2004 are more in line with the current rating. If Williams is able to stem the cash drain from EM&T and meet or exceed 2003 financial ratio expectations, the outlook could be revised. However, if financial ratios fall considerably below expectations, the rating could be lowered. WORLDCOM INC: Seeks Clearance for New Jersey Auction Procedures --------------------------------------------------------------- Worldcom Inc. and its debtor-affiliates' agreement to sell their property located in Somerset, New Jersey to DGX Deutsche Funds II, LLC, an affiliate of Lehman Brothers, Inc., for $31,000,000, is subject to prior Bankruptcy Court approval and any higher and better offers that might emerge in a competitive bidding process. To be certain that WorldCom receives maximum value for the New Jersey Property, Judge Gonzalez orders that competing offers for the Assets will be governed by these Auction Procedures: A. The Debtors will provide: 1. notice of the Sale Hearing and Auction Procedures together with a copy of the Agreement and the Lease to all parties known to the Debtors as having expressed a bona fide interest in acquiring the Assets; and 2. a copy of the Agreement and the Lease to all other prospective offerors and parties-in-interest after written request to the Debtors through their real estate consultant, Hilco Real Estate, LLC. B. Any party wishing to conduct due diligence on the Assets will, after execution by the prospective offeror of a confidentiality agreement and access agreement, each in form and substance satisfactory to the Debtors, and delivery to the Debtors of the prospective offeror's certified financial statements for the preceding two years, be granted access to the Property and to all relevant business and financial information necessary to enable the party to evaluate the Assets for the purpose of submitting a competing offer for an Alternative Transaction. The Debtors will make the access available during normal business hours as soon as reasonably practicable. Parties interested in conducting due diligence should contact Josh Joseph at Hilco Real Estate, LLC, 5 Revere Drive, Suite 320, Northbrook, Illinois 60062, Telephone (847) 504-2459, Facsimile (847) 714-1289. C. To be considered, each competing offer for an Alternative Transaction will: 1. be irrevocable through the date of the closing of the sale of the Assets; 2. be made by a party satisfying the conditions, 3. be submitted in writing and delivered so as to be received not later than 12:30 p.m. (Eastern Time), on July 11, 2003 to: a. WorldCom, Inc., Corporate Real Estate, 2400 North Glenville, Richardson, Texas 75082, Attn: Brian Trosper, b. Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, Attn: Elliot L. Hurwitz, Esq., Sharon Youdelman, Esq. and Troy L. Cady, Esq., counsel to the Debtors, c. Hilco Real Estate, LLC, 5 Revere Drive, Suite 320, Northbrook, Illinois 60062, Attn: Josh Joseph, and d. Akin Gump Strauss Hauer & Feld, LLP, 590 Madison Avenue, New York, New York 10022, Attn: Daniel Golden, Esq., counsel to the statutory committee of unsecured creditors, and 4. include: a. A statement of the Competing Offeror's intent to bid at the Auction; b. A written agreement executed by the Competing Offeror, together with a copy of such agreement marked to show the specific modifications, if any, to the Agreement that the Competing Offeror requires; c. A purchase price for the Assets that exceeds the Purchase Price, as defined in the Agreement, by at least $600,000; d. A good faith deposit amounting to $3,160,000 in cash or in other form of immediately available U.S. funds and a written commitment or other evidence acceptable to the Debtors of the Competing Offeror's ability to provide, in the event the offer ultimately is determined by the Debtors to be the Final Auction Offer, a further deposit in cash or other form of immediately available U.S. funds in the amount sufficient to bring the total amount of the Competing Offeror's deposit up to the amount that is equal to 10% of the gross purchase price proposed by the Competing Offeror within one business day after the Debtors have notified the Competing Offeror that its offer has been determined by the Debtors to be the Final Auction Offer; 5. Evidence, acceptable to the Debtors, of the Competing Offeror's ability to consummate a transaction within three business days after entry of an order approving the sale and ability to perform under the Lease. D. Competing offers will be unconditional and not contingent on any event, including, without limitation, any due diligence investigation, the receipt of financing or the receipt of any further approval, including from any board of directors, shareholders or otherwise. E. The Debtors may, in their discretion, communicate prior to the Sale Hearing with any Competing Offeror, in which event, the Competing Offeror will provide to the Debtors, within one business day after the Debtors' request therefor, any additional information reasonably required by the Debtors in connection with the Debtors' evaluation of the Competing Offeror's offer. F. Prior to the Auction, the Debtors will evaluate Purchaser's offer, as embodied in the Agreement, and any competing offers they have received and, after consultation with the Committee, will select the offer the Debtors determine to be the highest and best offer for the Assets. In considering Purchaser's Offer and competing offers, the Debtors will consider, among other things, the value thereof to their estates, the changes to the Agreement required by the Competing Offeror, and the Competing Offeror's ability to finance, and timely consummate, its proposed Alternative Transaction. If the Debtors do not receive any qualified competing offers, then the Debtors, in their sole discretion, may elect to forego the Auction, deem the Purchaser as the Successful Offeror and deem the Purchaser's offer for the sale of the Assets on the terms set forth in the Agreement as the Final Auction Offer. G. The Auction will be conducted by the Debtors or their representatives on invitation to Purchaser and all qualified Competing Offerors that have submitted competing offers in accordance with these procedures, and will commence on July 16, 2003 at 10:00 a.m. (Eastern Time) at the offices of the Debtors' counsel, Weil, Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153. H. At the commencement of the Auction, the Debtors will announce the Initial Auction Offer. All bids at the Auction will be increased therefrom, and thereafter made, in increments of no less than $100,000. The Purchaser may submit competing offers without waiving its right to the Break-Up Fee in the event an Alternative Transaction is consummated with a Successful Offeror other than Purchaser. The Purchaser may not apply or credit any portion of the Break-Up Fee as a component of Purchaser Subsequent Offers. I. Following the conclusion of the Auction, and after consultation with the Committee, the Debtors will select the offer that they determine to be the highest and best offer for the Assets and will inform the party having submitted the Final Auction Offer and file with the Court a notice of selection. Within one business day after the Debtors so notify the Successful Offeror that its offer has been determined by the Debtors to be the Final Auction Offer, the Successful Offeror, whether or not the party is Purchaser, will deliver the Remaining Deposit to the Debtors. At the Sale Hearing, the Court will consider the Final Auction Offer for approval. J. Each Initial and Remaining Deposit will be maintained in an interest-bearing account and be subject to the jurisdiction of this Court. The Full Deposit, together with any interest paid, will be applied by the Debtors against the purchase price to be paid by the Successful Offeror at the closing of the transaction approved by the Court. Promptly following the closing, each Initial Deposit submitted by a party other than a Successful Offeror, together with any interest paid, will be returned. K. In the event the Successful Offeror fails to consummate the transaction due to its breach of the terms of its agreement with the Debtors, the Successful Offeror's Full Deposit, together with any interest paid, will be forfeited to the Debtors and the Debtors may request authority to consummate a transaction with the Competing Offeror having submitted the next highest and best offer at the final price and terms bid by the Competing Offeror at the Auction, subject to the delivery by any Successful Offeror of the Remaining Deposit within one business day after notification by the Debtors. L. No offer will be deemed accepted unless and until it is approved by this Court. The Debtors submit the Auction Procedures provide a fair and reasonable means of ensuring the Assets are sold for the highest and best offer attainable. These procedures afford potential purchasers a reasonable opportunity to investigate the Assets and afford the Debtors requisite time to consider and evaluate competing offers submitted. (Worldcom Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORTH MEDIA: Look for Schedules & Statements on July 14 ------------------------------------------------------- Worth Media LLC, and its debtor-affiliates wants more time to file their schedules of assets and liabilities, statements of financial affairs and lists of executory contracts and unexpired leases required under 11 U.S.C. Sec. 521(1). The Debtors tell the U.S. Bankruptcy Court for the Southern District of New York that their chapter 11 petitions were accompanied by schedule of the names and addresses of the Debtors' twenty largest unsecured creditors, on a consolidated basis; Schedule D listing the names and addresses of the Debtors' secured creditors; and a creditor matrix. The documents filed to date, the Debtors say, provide substantial information concerning the Company and its businesses. In particular they describe the financial condition of the Debtors and identify their secured and major unsecured creditors, substantial assets, and leased premises. Pursuant to Bankruptcy Rule 1007(c), comprehensive schedules and statements are required to be filed with the debtor's petition unless the petition is accompanied by a list of all the debtor's creditors, in which case such schedules and statements are to be filed within 15 days. The Debtors say they've had insufficient time to collect and assemble all of the requisite financial data and other information or to prepare all of the Remaining Schedules and Statements required by the Bankruptcy Rules. Their ability to prepare the Remaining Schedules and Statements has been hampered by the fact that they've been operating with a skeleton crew of former employees since the beginning of April 2003. Moreover, the Debtor's former employees have been required to devote substantial time and energy to responding to requests for due diligence information requests relating to the Asset Purchase Agreement, consolidating their operations onto a single floor, and addressing inquiries from creditors. Nevertheless, the Debtors have begun and will continue to work diligently to compile the information necessary to complete the Remaining Schedules and Statements. Once all necessary information is compiled, the Debtors must then review that information and prepare and verify the Remaining Schedules and Statements. Given the substantial amount of information necessary, and the critical matters that have, and continue to require the time and attention of the Debtors' personnel, the Debtors cannot complete the preparation of the Remaining Schedules and Statements within the fifteen days required by Bankruptcy Rule 1007(c). The Debtors need until July 14, 2003, to complete and file the Remaining Schedules and Statements with the Court. Worth Media LLC, a magazine publishing company filed for chapter 11 protection on May 29, 2003 (Bankr. S.D.N.Y. Case No. 03-13471). Larry Ivan Glick, Esq., represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $2,599,000 in total assets and $9,710,000 in total debts. WYNDHAM INT'L: Completes $425MM Mortgage Refinancing With Lehman ---------------------------------------------------------------- Wyndham International, Inc. (AMEX:WBR) completed a $425 million mortgage refinancing secured by 19 hotel properties. The loan was made by affiliates of Lehman Brothers. The new loan has an initial maturity date of June 9, 2005, and Wyndham, in its sole discretion, may extend the maturity date to July 8, 2008. The refinancing closely follows Wyndham's June 2, 2003 press release announcing the successful amendment of its senior corporate credit facilities. Upon the satisfaction of certain conditions, the maturity date of the credit facilities will be extended to April 1, 2006. This refinancing satisfies approximately 65 percent of the pay down required to achieve the maturity extensions under the amendment. "This mortgage refinancing is yet another significant achievement for our company. With today's announcement, we are highly confident that the remaining conditions to the maturity extension of our corporate credit facilities will be accomplished well before the nine month deadline," stated Fred J. Kleisner, Wyndham's chairman and chief executive officer. "Without any significant debt maturities due until 2006, we can now focus our efforts on running our business through operational initiatives and innovative marketing programs in preparation for the expected economic recovery." Wyndham International, Inc. offers upscale and luxury hotel and resort accommodations through proprietary lodging brands and a management services division. Based in Dallas, Wyndham International owns, leases, manages and franchises hotels and resorts in the United States, Canada, Mexico, the Caribbean and Europe. For more information, visit http://www.wyndham.com As reported in Troubled Company Reporter's May 14, 2003 edition, Hospitality Properties Trust (NYSE: HPT) terminated Wyndham International's occupancy and operations of 12 Wyndham hotels. HPT has two leases with WBR subsidiaries: one lease includes 15 Summerfield by Wyndham hotels; the second lease includes 12 Wyndham hotels. On April 1, 2003, WBR failed to pay rent due HPT under these leases. On April 2, 2003, HPT declared WBR in default and simultaneously exercised its rights to retain certain collateral security HPT held for the WBR lease obligations, including security deposits of $33 million (which were not escrowed) and capital replacement reserves totaling about $7 million (which were previously escrowed). On April 28, 2003, HPT terminated WBR's occupancy of the 15 Summerfield hotels and appointed Candlewood Hotel Company as manager of those hotels. HPT terminated WBR's occupancy of the 12 Wyndham hotels. Starting Monday, these 12 hotels are being operated for HPT's account under a management agreement with Crestline Hotels & Resorts, Inc. Crestline Hotels & Resorts is a USA subsidiary of the Spanish hotel company Barcelo Corporacion Empresarial, S.A. XEROX: $3-Bill. Financing Spurs S&P to Affirm BB- Credit Rating --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating on Xerox Corp. In addition, Standard & Poor's assigned the following ratings in connection with the recently announced financing transactions totaling approximately $3 billion: 'BB-' to the proposed $700 million senior secured revolving credit facility; 'BB-' to the proposed $300 million Term Loan A; 'B+' to the proposed $1 billion senior notes; and 'B-' to the proposed $650 million mandatorily convertible preferred stock. Upon the successful completion of the announced financing transactions, which include a proposed 40 million common share offering, the outlook will remain negative. Xerox, based in Stamford, Connecticut, reported total debt of $14.3 billion as of March 31, 2003, including $4.2 billion under its securitization programs. "When successfully completed, the proposed financings will represent an additional milestone in the execution of Xerox's turnaround program," said Standard & Poor's credit analyst Martha Toll-Reed. Although the proposed financings are not expected to materially alter debt maturities in 2003, the debt maturity profile thereafter will be extended. Nevertheless, Xerox's capital structure--adjusted for capitalized operating leases, captive finance operations, and underfunded postretirement obligations-- remains leveraged. Xerox is expected to use cash flow from operations to reduce total debt over the next few years. Xerox is a defendant in numerous litigation and regulatory matters. The potential impact of litigation risk on Xerox's liquidity and financial flexibility is difficult to quantify and will continue to be closely monitored. XM SATELLITE: Prices $175MM of 12% Senior Secured Notes Offering ---------------------------------------------------------------- XM Satellite Radio Holdings Inc. (Nasdaq: XMSR) announced that its subsidiary, XM Satellite Radio Inc., priced a $175 million high yield offering of 12% Senior Secured Notes due 2010, guaranteed by XM Satellite Radio Holdings Inc. The closing is expected to occur tomorrow subject to customary closing conditions. In addition, XM has granted the initial purchaser an option to purchase up to an additional $25 million of notes to cover over-allotments. The notes are being offered by the initial purchaser solely to certain qualified institutional buyers pursuant to Rule 144A, 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 under the Securities Act and applicable state securities laws. XM is transforming radio with a programming lineup featuring 101 coast-to-coast digital channels: 70 music channels, more than 35 of them commercial-free, from hip hop to opera, classical to country, bluegrass to blues; and 31 channels of sports, talk, children's and other entertainment programming. XM's strategic investors include America's leading car, radio and satellite TV companies -- General Motors, American Honda Motor Co. Inc., Clear Channel Communications and DIRECTV. For more information, visit XM's Web site: http://www.xmradio.com As reported in Troubled Company Reporter's February 3, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit ratings on satellite radio provider XM Satellite Radio Inc., and its parent company XM Satellite Radio Holdings Inc. (which are analyzed on a consolidated basis) to 'SD' from 'CCC-'. At the same time, Standard & Poor's lowered its rating on the company's $325 million 14% senior secured notes due 2010 to 'D' from 'CCC-'. These actions follow XM's completion of its exchange offer on the senior secured notes, at par, for new 14% senior secured notes due 2009. All ratings were removed from CreditWatch with negative implications where they were placed on Nov. 18, 2002. XML GLOBAL: Appoints Jun Li and Sergio Nesti to Board of Directors ------------------------------------------------------------------ XML Global Technologies, Inc. (OTC BB: XMLG), a developer of XML middleware, announced that Jun Li and Sergio Nesti have joined the board of directors. Dr. Li combines technical expertise, entrepreneurial success and venture fund experience. Mr. Nesti brings extensive experience building technical teams, including management and pre- and post-sales professionals, with a view to enhancing the value of corporate intellectual property. Together, these individuals will offer an invaluable contribution in planning for business growth. Dr. Jun Li is currently Vice Dean of the School of Information Science and Technology at Tsinghua University in Beijing. He is also President and CEO of Tsinghua Unisplendour (USA) Co. Ltd. in Fremont, California, where he has worked since 2001. In addition, Mr. Li is a Co-founder and Managing Director of Versatile Venture Capital I and II in Fremont California, where he has worked since 2000. From 2001 to April 2003 he held various positions, including General Manager, at ServGate Technologies, Inc. a company that he co-founded in 1999. Dr. Li holds a PhD degree in Computer Science from the New Jersey Institute of Technology, and MS and BS degrees in Control and Information from Tsinghua University in Beijing. Mr. Nesti is currently Director of Technical Evaluation for Paradigm Ventures, LLC where he has consulted since January 2002. Paradigm Ventures, LLC is part of the Paradigm Group, which has invested significantly in XML Global in the last year. Before joining Paradigm Group, Mr. Nesti worked at Autonomy, Inc., as Technical Consultant and Trainer from January 2002 until January 2003. From 2000 until 2001, he worked as an Executive in Technology and Services for Brience, Inc. From 1999 until 2000 he worked for Click-n-Done, LLC, as Chief Technology Officer. Mr. Nesti worked at Inverse Network Technology/Visual Networks as Vice President Technology Services from 1998 until 1999. Mr. Nesti holds a Masters Degree in Information Technology from the Illinois Institute of Technology in Illinois. Peter Shandro, XML Global's Chairman of the Board commented, "We welcome the benefit of Jun and Sergio's experience and practical business advice. XML Global's board now has a majority of non- employee directors and the resulting independence marks a further stage in the company's development". XML Global Technologies, Inc. is an XML Middleware Company focused on providing a methodical approach to the adoption of XML-based solutions. The Company's GoXML(TM) Transform product line provides an intuitive, modular solution for integration of structured data. Its powerful transformation engine links XML to traditional data formats, like relational and EDI. It also transforms data between various XML dialects. Transformation solutions developed with GoXML(TM) Transform can be deployed with GoXML Transform Enterprise Edition (API) or with the GoXML(TM) Communication Server, which includes centralized management and connectivity to integration platforms, message queues, and workflow engines. Interfaces for Web Services and ebXML allow it to plug into popular e-business infrastructures. To find out more about XML Global Technologies (OTCBB: XMLG), visit its Web site at http://www.xmlglobal.com As previously reported, XML Global's independent auditor's report stated that XML's consolidated financial statements for the year ending June 30, 2002 have been prepared assuming that the Company will continue as a going concern. However, the Company has incurred losses since inception and has an accumulated deficit. These conditions raise substantial doubt about its ability to continue as a going concern. It has incurred costs to design, develop and implement search engine and electronic commerce applications and to grow its business. As a result, it has incurred operating losses and negative cash flows from operations in each quarter since commencing operations. As of September 30, 2002 the Company had an accumulated deficit of $12,860,900. At September 30, 2002 XML's cash funds are insufficient to fund operations through the end of fiscal 2003 based on historical operating performance. In order for the Company to maintain its operations it will have to seek additional funding, generate additional sales or reduce its operating expenses, or some combination of these. At current and planned expenditure rates, taking into consideration cash received from the first part of the Paradigm financing, current reserves are sufficient to fund operations only through December 2002. * FTI Says Required Pension Fund Contributions Will Exceed $35BB ---------------------------------------------------------------- The under-funded status of defined benefit pension plans sponsored by S&P 500 companies could require additional contributions of approximately $36 billion over the next 16 months, according to a study by FTI Consulting, a multi-disciplined firm with leading practices in the areas of turnaround, restructuring and litigation consulting services. The study is a comprehensive analysis of defined benefit pension fund details disclosed in 10-K filings with the SEC by S&P 500 companies. The estimate is based on end-of-year GAAP pension data and disclosures for fiscal 2002. Of the 354 S&P 500 companies with defined benefit plans, FTI Consulting estimates that 215 will likely need to make additional contributions over the next 16 months. For 19 of those companies, estimated funding requirements will exceed 30% of their most recent fiscal year free cash flow; and 30% of their cash balance or net working capital, which ever is greater. "Our analysis has identified companies that don't have the current resources on hand to make the contributions nor the ability to generate the needed cash through operating activities," said Mr. Dominic DiNapoli, co-head of FTI Consulting's restructuring practice. "These companies face complex choices on how to fund required contributions. They may need to divert internally generated funds from reinvestment or shareholder distribution. Alternatively they may need to draw on bank lines or other external sources of capital," said Mr. DiNapoli. The analysis found that pension fund obligations were under funded by $213 billion. According to FTI, of the 319 companies in the S&P 500 that had under-funded pension plans at the end of 2002, 195 are in fact reporting an over-funded pension plan position, based on GAAP pension accounting rules. "There are also longer term consequences for pension fund sponsors to consider," said Mr. DiNapoli. "Over the next several years, sizeable unrecognized losses from the previous two years will fully hit sponsors' P&L's due to GAAP's pension accounting rules that delay recognition of gains and losses. Therefore companies need to look ahead to anticipate whether accounting or funding issues are going to present trouble down the road." Longer term ramifications for companies with under-funded pension plans may include: -- Negative earnings impact of growing Net Periodic Pension Costs; -- Financial covenant violations of loan agreements or bond indentures; -- Credit ratings downgrades by rating agencies; -- Inability to reinvest capital in business which may impede long-term competitiveness; and -- Payment defaults by companies with inadequate liquidity to cover mandatory pension fund payments. "Another issue is that some of the most strained companies may be required to make difficult decisions about prioritizing between retired employees and the long-term viability of their business," said Mr. DiNapoli. "Already, we've seen health care benefits for some retirees fall by the wayside, but there may be more sacrifices to come. FTI Consulting is a multi-disciplined consulting firm with leading practices in the areas of turnaround, restructuring, bankruptcy and litigation-related consulting services. Modern corporations, as well as those who advise and invest in them, face growing challenges on every front. From a proliferation of "bet-the- company" litigation to increasingly complicated relationships with lenders and investors in an ever-changing global economy, U.S. companies are turning more and more to outside experts and consultants to meet these complex issues. FTI is dedicated to helping corporations, their advisors, lawyers, lenders and investors meet these challenges by providing a broad array of the highest quality professional practices from a single source. * Robert W. Doyle, Jr. Joins Sheppard Mullin as Partner ------------------------------------------------------- Sheppard, Mullin, Richter & Hampton LLP announced that Robert W. Doyle, Jr. has joined the Firm as a partner. Doyle specializes in antitrust and trade regulation law with an emphasis on private and government antitrust investigations and litigation, including merger and acquisition matters and Hart-Scott-Rodino pre-merger counseling. Commented Gary Halling, Chair, Antitrust and Trade Regulation Practice Group, "We are delighted to welcome Bob to the Firm. His extensive experience with government investigations and government-litigated matters will serve as a tremendous resource to clients." Added Bob Magielnicki, Administrative Partner of the Washington, D.C. office, "The addition of an accomplished antitrust expert like Bob Doyle augments the breadth and depth of the competition law capabilities of the Washington, D.C. office. More than ever, we are able to service all of the trade regulation requirements of our clients." Commented Doyle, "I am very excited to join Sheppard Mullin. This is a first-rate firm with a distinguished antitrust practice and prominent litigators. I look forward to being a member of and growing the firm's already thriving antitrust, corporate and litigation practices that serve leading companies in several industries." Doyle brings to Sheppard Mullin over 20 years of experience in representing the FTC in merger and acquisition investigations and litigation. Previously, he served as the Deputy Assistant Director in the FTC's Bureau of Competition. Doyle has a broad knowledge of many industries, including cable, telecommunications, chemical processing, oil and gas production, refining and distribution, metals, printing, paper manufacturing, insurance, automotive parts, retail office products, supermarkets and health care, in addition to other service-related markets. He supervised complex government investigations and litigation in these industries and was lead counsel on many government-litigated matters challenging mergers and/or acquisitions in domestic and international markets. While serving as Deputy Assistant Director for Litigation, Doyle was one of the lead attorneys who successfully litigated FTC v. Staples. Doyle received his law degree from Temple University School of Law in 1976, his graduate degree from Temple University Graduate School of Business in 1972, and his undergraduate degree from Temple University in 1970. He is admitted to practice in the District of Columbia, Pennsylvania, and the U.S. Supreme Court. In addition to being a member of the American Bar Association, Doyle is Co-Chair of the FTC Committee, Section of Antitrust Law. He has published articles on antitrust law and government practice and has given numerous presentations on various antitrust issues. Joining Doyle in the Firm's Washington, D.C. office are three associates: Andre Barlow, Camelia Mazard, and M. June Casalmir. Barlow has broad experience in antitrust counseling, investigations and litigation relating to domestic and international antitrust matters. He received his law degree from George Washington University Law School in 1997, and his undergraduate degree, summa cum laude, from West Virginia University in 1993. Mazard focuses her practice in the area of domestic and international antitrust matters. She received her law degree from the University of California, Berkeley (Boalt Hall School of Law) in 1998, and her undergraduate degree, summa cum laude, from the University of Southern California in 1994. Casalmir focuses her practice on domestic and international antitrust and trade regulation matters. She received her law degree from Washington University School of Law in St. Louis in 1999, and her undergraduate degree, magna cum laude, from Duke University in 1995. The office also previously welcomed three additional associates: Richard F. Trimber, Bart T. Valad, and Joanna Citron Day. Trimber represents issuers and underwriters in connection with public and private offerings of debt and equity financings. He received his law degree, cum laude, from the Columbus School of Law, The Catholic University of America in 1997, and his undergraduate degree from George Mason University in 1994. Valad focuses his practice in the area of complex litigation, including antitrust litigation. He received his law degree, magna cum laude, from George Mason University School of Law in 1998, and his undergraduate degree, cum laude, from American University in 1983. Day represents corporate clients in a variety of complex litigation matters, including environmental and general commercial litigation. She received her law degree from George Washington University in 2001, and her undergraduate degree from Cornell University in 1996. Sheppard Mullin has more than 370 attorneys among its eight offices in Washington, D.C., Los Angeles, San Francisco, Orange County, San Diego, Santa Barbara, West Los Angeles, and Del Mar Heights. The full-service firm provides counsel in Antitrust and Trade Regulation; White Collar and Civil Fraud Defense; Business Litigation; Construction, Environmental, Real Estate and Land Use Litigation; Corporate; Entertainment and Media; Finance and Bankruptcy; Financial Institutions; Government Contracts and Regulated Industries; Healthcare; Intellectual Property; Labor and Employment; Real Estate, Land Use, Natural Resources and Environment; and Tax, Employee Benefits, Trusts and Estates. The Firm celebrated its 75th anniversary in 2002. * BOND PRICING: For the week of June 9 - 13, 2003 ------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 10.875% 10/01/10 58 Akamai Technologies 5.500% 07/01/07 74 AMR Corp. 9.000% 08/01/12 58 AMR Corp. 9.000% 09/15/16 61 AnnTaylor Stores 0.550% 06/18/19 67 Best Buy Co. Inc. 0.684% 06/27/21 75 Burlington Northern 3.200% 01/01/45 61 Calpine Corp. 7.875% 04/01/08 70 Calpine Corp. 8.500% 02/15/11 71 Calpine Corp. 8.625% 08/15/10 70 Calpine Corp. 8.750% 07/15/07 73 Charter Communications, Inc. 4.750% 06/01/06 59 Charter Communications, Inc. 5.750% 01/15/05 63 Charter Communications Holdings 8.250% 04/01/07 74 Charter Communications Holdings 8.625% 04/01/09 72 Charter Communications Holdings 9.625% 11/15/09 72 Charter Communications Holdings 10.000% 04/01/09 73 Charter Communications Holdings 10.000% 05/15/11 72 Charter Communications Holdings 10.250% 01/15/10 72 Charter Communications Holdings 10.750% 10/01/09 75 Charter Communications Holdings 11.125% 01/15/11 74 Collins & Aikman 11.500% 04/15/06 73 Comcast Corp. 2.000% 10/15/29 32 Conseco Inc. 8.750% 02/09/04 22 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 40 Crown Cork & Seal 7.375% 12/15/26 70 Delco Remy International 10.625% 08/01/06 70 Dynex Capital 9.500% 02/28/05 2 Elwood Energy 8.159% 07/05/26 70 Finisar Corp. 5.250% 10/15/08 74 Finova Group 7.500% 11/15/09 43 Fleming Companies Inc. 10.125% 04/01/08 17 Foamex L.P. 9.875% 06/15/07 33 Gulf Mobile Ohio 5.000% 12/01/56 67 Health Management Associates Inc. 0.250% 08/16/20 65 I2 Technologies 5.250% 12/15/06 74 Inhale Therapeutic Systems Inc. 3.500% 10/17/07 69 Internet Capital 5.500% 12/21/04 39 Level 3 Communications Inc. 6.000% 09/15/09 70 Level 3 Communications Inc. 6.000% 03/15/10 69 Lehman Brothers Holding 8.000% 11/13/03 71 Liberty Media 3.750% 02/15/30 65 Liberty Media 4.000% 11/15/29 69 Lucent Technologies 6.450% 03/15/29 69 Lucent Technologies 6.500% 01/15/28 69 Magellan Health 9.000% 02/15/08 39 Mirant Americas 7.200% 10/01/08 60 Mirant Americas 7.625% 05/01/06 74 Mirant Americas 8.300% 05/01/11 59 Mirant Americas 8.500% 10/01/21 55 Mirant Americas 9.125% 05/01/31 56 Mirant Corp. 5.750% 07/15/07 62 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 74 Missouri Pacific Railroad 5.000% 01/01/45 71 NTL Communications Corp. 7.000% 12/15/08 19 Northern Pacific Railway 3.000% 01/01/47 59 Penton Media Inc. 10.375% 06/15/11 63 Revlon Consumer Products 8.625% 02/01/08 46 Southern Energy 7.400% 07/15/07 62 Southern Energy 7.900% 07/15/09 49 United Airlines 10.670% 05/01/04 8 United Health Services 0.426% 06/23/20 62 US Timberlands 9.625% 11/15/07 56 Westpoint Stevens 7.875% 06/15/05 21 Westpoint Stevens 7.875% 06/15/08 21 Xerox Corp. 0.570% 04/21/18 65 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***