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/raid1/www/Hosts/bankrupt/TCR_Public/030710.mbx T R O U B L E D C O M P A N Y R E P O R T E R Thursday, July 10, 2003, Vol. 7, No. 135 Headlines ABLE MANUFACTURING: Sells Certain Assets to NCI Building for $3M ACTERNA CORP: Court Moves General Claims Bar Date to July 31 AIR CANADA: NAV CANADA Wants to Accelerate Invoice Payments AK STEEL: Will Host Q2 2003 Earnings Conference Call on July 18 AMERCO: Secures Court Injunction against Utility Companies AMERICANA PUBLISHING: Will Sell Unit through Chapter 7 Filing AMERICANA PUBLISHING: Selling Notes & Warrants to Investor Group ARVINMERITOR: S&P Keeps Watch After $4.4 Bil. Dana Takeover Bid ARVINMERITOR: Fitch Cuts & Places Low-B Ratings on Watch Neg. BOYD GAMING: Hosting Q2 2003 Earnings Conference Call on July 30 CABLE DESIGN: Closes $110 Million Conv. Sub. Debenture Offering CHAMPION ENTERPRISES: S&P Puts B+ Credit Rating on Watch Neg. CINTECH SOLUTIONS: Introduces New CINPHONY Email Application COLUMBUS MCKINNON: Look for Fiscal 2004 Q1 Results by July 22 COLUMBUS MCKINNON: S&P Assigns B- Rating to $100M Sr. Sec. Notes CNE GROUP INC: Shoos-Away Eisner LLP as Independent Accountants CONSOLIDATED FREIGHTWAYS: Selling Mansfield Facility via Auction CONSOLIDATED FREIGHTWAYS: Puts Rutland Facility on Auction Block CONSOLIDATED FREIGHTWAYS: Auctioning-Off Topeka Prop. On July 17 CONSOLIDATED FREIGHTWAYS: Selling Carlisle Facility via Auction CONSOLIDATED FREIGHTWAYS: Selling Michigan Properties on July 17 CONSOLIDATED FREIGHTWAYS: Selling Lincoln Distribution Facility CONSOLIDATED FREIGHTWAYS: Puts Fairbanks Prop. on Auction Block CONSOLIDATED FREIGHTWAYS: Selling Iowa Distribution Facilities CONSOLIDATED FREIGHTWAYS: Wisconsin Facility Up on Auction Block CONSOLIDATED FREIGHTWAYS: Selling Virginia Facilities on July 17 CONSOLIDATED FREIGHTWAYS: Selling Providence Prop. via Auction CONSOLIDATED FREIGHTWAYS: Auctioning Off Reno Distribution Prop. CORTELCO SYSTEMS: Hires Horwath Velez & Co. to Replace Deloitte CROWN CASTLE: Will Publish Second-Quarter Results on July 31 CYTO PULSE: Gets Nod for Second Cash Collateral Use Extension DEAN FOODS: Fitch Affirms Low-B Credit Facility & Senior Notes DELTA AIR LINES: S&P Affirms BB- Corporate Credit Rating DIRECTV LATIN AMERICA: Court Resets Claims Bar Date to Sept. 2 ENRON CORP: Pushing for Approval of Five Settlement Agreements ENVOY COMMS: Sets Special Shareholders' Meeting for August 14 EXIDE: Court Clears Skadden Arps' Engagement as Special Counsel FLEMING COMPANIES: Inks Definitive Asset Purchase Pact with C&S FLEMING COMPANIES: Lease Decision Period Extended Until Sept. 30 FOCAL COMMS: Emerges from Chapter 11 Reorganization Proceedings FOSTER WHEELER: S&P Sees Diminishing Liquidity & Junks Rating FOSTER WHEELER: Says S&P's Rating Won't Trigger Loan Defaults GENTEK: Wins Blessing to Pay Exit Financing Due Diligence Fees HORNBECK OFFSHORE: Ratings Affirmed Following Asset Acquisition ICIFC: Fitch Drops Series 1997-2 Class B5 Rating Down to D IMPERIAL PLASTECH: A.G. Petzetakis Acquires Debt from Laurentian ISTAR FINANCIAL: Commences 7-7/8% Preferred Share Offering KAISER ALUMINUM: Sues Pechiney World Citing Breach of Contract KMART CORP: Seeks Entry of Final Decree Closing 16 Unit's Cases LEVEL 3 COMMS: Completes 2.875% Convertible Senior Note Offering LEVI STRAUSS: Fitch Cuts Unsec. Debt & Facility Ratings to BB-/B LTV CORP: Brings-In Professional Solutions as Tax Accountants MAGELLAN HEALTH: Court Clears Proposed Info Blocking Procedures MEGO FINANCIAL: Files for Chapter 11 Reorganization in Nevada MEGO FINANCIAL: Case Summary & Largest Unsecured Creditors MERRILL LYNCH: Fitch Affirms Class B-4 Notes' Rating at BB MOSAIC GROUP: JLL Completes Purchase of Sales Solutions Assets NATIONAL CENTURY: Gibbs & Bruns' Engagement Drawing Fire NEXIA HOLDINGS: Sells Wichita Unit to Diversified Financial NEXIA HOLDINGS: Diversified Financial Confirms Asset Acquisition OM GROUP: Will Publish Second-Quarter 2003 Results on July 29 ONLINE GAMING: Board Approves Plan to Retire $3 Million of Debts OWOSSO CORP: Commences Trading on OTCBB Effective July 9, 2003 PEGASUS: Fitch Takes Rating Actions on 1999-1 & 2001-1 Notes PEREGRINE SYSTEMS: SEC Drops Request for Financial Penalties PG&E ENERGY: Trading Units' 30-Largest Unsecured Creditors PG&E NATIONAL ENERGY: PG&E Corp. Unfazed by Chapter 11 Filing PG&E NAT'L ENERGY: S&P Drops Credit Rating to D over Bankruptcy PHASE2MEDIA: Delaware Court Confirms Chapter 11 Reorg. Plan POLAROID CORP: Wants More Time to Move Actions to Delaware Court PRIME RETAIL: Enters Pact to Sell Assets to Lightstone Group PSC INC: Successfully Emerges from Chapter 11 Proceeding RATEXCHANGE CORP: Completes Exchange Offer for Convertible Notes SAMUELS JEWELERS: Inks Release with Promissory Note Claimants SEITEL INC: Reaches Fin'l Restructuring Pact with Ranch Capital SHC INC: Wants to Honor & Pay $3 Mil. Critical Vendors Claims SUN HEALTHCARE: Wants Additional Time to Challenge Claims TANDYCRAFTS: Court Confirms Amended Liquidating Chapter 11 Plan THINKPATH INC: Sells IT Staffing Division to Treklogic Inc. TRANSDIGM: Receives Consents in Tender Offer for 10.375% Notes UNITED AIRLINES: U.S. Bank Seeks Stay Relief to Control Funds US MINERAL: Gets Court OK to Retain Ernst & Young as Accountants USG CORP: Futures Rep. Wants to Modify CIBC's Engagement Terms VIALINK CO.: Issues $800K of Promissory Notes to Shareholders WEIRTON STEEL: Gets Blessing to Hire Ketchum as PR Consultants WESTLAKE CHEMICAL: S&P Assigns BB- Corporate Credit Rating WESTPOINT STEVENS: Wants to Pay Prepetition Sales & Use Taxes WILLCOX & GIBBS: Ch. 7 Trustee Turns to Mainstream for Advice WORLDCOM INC: Asks Court to Approve $2.6M Jamestown Break-Up Fee * DebtTraders' Real-Time Bond Pricing ********* ABLE MANUFACTURING: Sells Certain Assets to NCI Building for $3M ---------------------------------------------------------------- NCI Building Systems, Inc. (NYSE: NCS), has acquired certain operating assets, including inventory, and the name of Able Manufacturing and Wholesale Garage Door Company in a cash transaction of approximately $3.3 million. Able manufactures and distributes a complete line of metal sectional doors for both the commercial and residential markets. Able manufactures its products in its Houston, Texas facility and distributes them through five distribution centers: two in the Dallas, Texas area; Atlanta, Georgia; Oklahoma City, Oklahoma; and Ontario, California. Able had been operating under Chapter 11 of the United States Bankruptcy Code since its voluntary bankruptcy filing in May 2003. Prior to that filing, Able generated annual sales of approximately $18 million. NCI plans to shorten the acquired name to Able Door Manufacturing. "We are pleased to announce this acquisition, which will complement and enhance NCI's position as one of the country's leading suppliers of metal doors," stated Johnie Schulte, President of NCI. "For the commercial market, this transaction expands our existing product line of commercial metal roll-up doors used by the building industry. Able's line of residential garage doors provides NCI with an additional product offering both to the residential construction market and our new retail factory direct stores. Able's metal sectional doors are manufactured using roll-forming technologies similar to those used in manufacturing NCI's existing products. We expect to market both commercial roll- up and sectional doors through both our existing and the acquired distribution networks. "This acquisition, which we expect will be accretive to our 2003 financial results, also reflects our continuing ability in a difficult economy to identify and act on strategic growth opportunities. We have great confidence in the long-term growth potential of both the construction industry and for the increasing use of metal within the construction industry. Therefore, we will continue to evaluate potential acquisition transactions that, like Able, not only provide immediate benefits, but that also position us for more substantial growth as the national economy and the construction industry improve." NCI Building Systems, Inc. is one of North America's largest integrated manufacturers of metal products for the nonresidential building industry. The Company operates manufacturing and distribution facilities located in 16 states and Mexico. ACTERNA CORP: Court Moves General Claims Bar Date to July 31 ------------------------------------------------------------ U.S. Bankruptcy Court Judge Lifland moved the deadline for creditors to file their proofs of claim against the bankruptcy estate of Acterna Corporation and its debtor-affiliates to July 31, 2003 -- giving creditors a couple of extra days. Original Proofs of Claim must be sent by overnight delivery or hand delivery to: United States Bankruptcy Court, Southern District of New York, One Bowling Green, Room 534, New York, NY 10004-1408 Those sent by mail must be addressed to: United States Bankruptcy Court, Southern District of New York, Bowling Green Station, New York, NY 10004 Proofs of Claim sent by facsimile will not be accepted. Each Proof of Claim to be filed must be: * written in the English language; * be denominated in lawful currency of the United States as of the Petition Date; * conform substantially with the Proof of Claim provided; and * indicate the particular Debtor against whom the claim is being filed. (Acterna Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) AIR CANADA: NAV CANADA Wants to Accelerate Invoice Payments ----------------------------------------------------------- NAV CANADA wants Air Canada to pay all postpetition charges for civil air navigation services within two business days after receiving the weekly invoices. To the extent not paid, NAV CANADA seeks the Court's authority to withhold the civil air navigation services in relation to the Applicants. NAV CANADA is a non-stock, non-profit capital corporation with a statutory mandate to provide civil air navigation services in the Canadian airspace. In accordance with the Civil Air Navigation Services Commercialization Act, S.C. 1996, Chapter 20, as amended, NAV CANADA sets and levies charges for navigation services on a cost recovery basis. Clifton P. Prophet, Esq., at Gowling Lafleur Henderson LLP, in Toronto, Ontario, tells Mr. Justice Farley that the collection and recovery of charges for the navigation services is critical to NAV CANADA's financial stability and to maintain the integrity of the Canadian civil air navigation system. Mr. Prophet reports that, as of the Petition Date, Applicants Air Canada, Zip Air Inc. and Jazz Air Inc. owed NAV CANADA an aggregate $43,000,000 for civil air navigation services. They continue to use NAV CANADA's services and incur charges at $4,000,000 per week. To prevent increased credit exposure to the Applicants and potential further losses with respect to the navigation service charges, NAV CANADA requires the immediate payment of its weekly invoices upon receipt by the Applicants. NAV CANADA has placed the Applicants on a weekly billing cycle on March 31, 2003 in accordance with its charging terms. To date, the Applicants have not paid any outstanding obligations to NAV CANADA. Parties Stipulate To address NAV CANADA's concerns and to avoid further litigation, the Applicants agree that NAV CANADA will issue invoices for the civil air navigation services every Monday on an interim basis. The invoices will cover the charges for the prior week. The Applicants will pay the invoiced amounts by Friday of the same week without any provision for deposit or any other security. (Air Canada Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) AK STEEL: Will Host Q2 2003 Earnings Conference Call on July 18 --------------------------------------------------------------- In conjunction with its second quarter earnings release, AK Steel (NYSE: AKS) will provide live listening access on the Internet to its analyst conference call to be held at 11:00 a.m. Eastern Time on Friday, July 18, 2003. What: AK Steel Second Quarter 2003 Earnings Conference Call Webcast When: 11:00 a.m. Eastern Time, Friday, July 18, 2003. Where: Log on to http://www.aksteel.com How: Select "AK Steel Second Quarter, 2003 Earnings Conference Call" button on the homepage. The call will be archived on the company's Web site until July 25, 2003 and will be accessible from the company's home page. This webcast is copyrighted by AK Steel. All rights reserved. Any form of copying, rebroadcast, webcast or other distribution without express written permission is prohibited. AK Steel (S&P/BB- Corporate Credit Rating) produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. In addition, the company produces snow and ice control products and operates an industrial park on the Houston, Texas ship channel. Additional information about AK Steel is located on the company's Web site at http://www.aksteel.com AMERCO: Secures Court Injunction against Utility Companies ---------------------------------------------------------- Pursuant to Section 366 of the Bankruptcy Code, AMERCO sought and obtained a Court order: (a) prohibiting these utilities from altering, refusing, or discontinuing services on account of prepetition invoices: -- SBC/Nevada Bell, -- AT&T, -- AT&T Wireless, -- Great Basin Internet Service; and (b) establishing procedures for determining requests for additional adequate assurance of payment. Any Utility seeking adequate assurance of payment from AMERCO in the form of a deposit or other security are required to make a Request in writing, setting forth the location for which utility services are provided, so that the Request is actually received by AMERCO by July 10, 2003. The Request should set forth a payment history for the most recent six months and a description of any prior material payment delinquency or irregularity. Moreover, Mr. Zive rules that AMERCO is required to file a motion for determination of adequate assurance of payment if a Utility timely and properly issues a Request to AMERCO, which it believes is unreasonable. Until a Determination Hearing is conducted and decided on, the Utilities will be deemed to have adequate assurance of payment. Bruce T. Beesley, Esq., at Beesley, Peck & Matteoni, Ltd., in Reno, Nevada, relates that continued and uninterrupted utility service is essential to AMERCO's ability to sustain its business operations during this Chapter 11 case. Any interruption of utility service would severely disrupt AMERCO's business operations, its restructuring efforts and jeopardize its ability to preserve the value of the estate. According to Mr. Beesley, AMERCO heavily relies on advanced technology to oversee its business and manage its property. Therefore, continued and uninterrupted electrical service is critical. AMERCO is similarly dependent on the continuation of other utility service like the telephone, water and gas. Mr. Beesley reports that prepetition, AMERCO regularly made prompt and complete payments to Utilities, and any amounts owing to them on account of prepetition services result from the fact that the Petition Date occurred during the middle of the Utilities' billing cycle. Mr. Beesley assures the Court that the owed amounts are insignificant. Thus, AMERCO believes that the administrative expense priority provided by Sections 503(b) and 507(a)(1) of the Bankruptcy Code and its excellent payment history with the Utilities adequately assure its payment to the Utilities for postpetition services without the need for deposits or other security. AMERCO has and will continue to have sufficient funds to make timely payments to the Utilities for all postpetition utility service. Furthermore, AMERCO believes that any Utilities seeking a security deposit would be doing so as an automatic reaction to a filing for relief under the Bankruptcy Code and not based on the facts of this case or AMERCO's creditworthiness. AMERCO will serve a copy of the order to each of the Utilities to notify them of their rights. Any Utility not identified in this motion but subsequently identified will be served a copy of the order and be afforded 20 days from the date of service to make any request to AMERCO for adequate assurance payment. Contemporaneously, AMERCO will file with the Court a supplement to the Order adding the Utilities so service. Mr. Beesley asserts that this procedure will avoid the need for AMERCO to make continual requests to modify or amend the Order, yet still afford the subsequently identified Utilities the same relief granted in the Order. (AMERCO Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMERICANA PUBLISHING: Will Sell Unit through Chapter 7 Filing ------------------------------------------------------------- Americana Publishing, Inc. (OTC Bulletin Board: APBH) said it is on track for a third consecutive quarter of operating profits. The Company said revenues in its core business, audio and print book publishing, were up nearly 400 percent in the first quarter ended March 31, 2003 compared to the same period in 2002. While the Company did report a loss due to non-cash expenses, stock options, etc., it had an operating pro-forma profit in its core business for the second consecutive quarter. Currently, the truck-stop market accounts for nearly 80 per cent of the Company's sales. However, they have established agreements with such major national retailers such as Barnes and Noble, Ingram Book Company and Amazon.com to name a few. "In an attempt to further vertically integrate our Company, we had acquired a Tennessee-based tape and CD duplication firm," said George Lovato, Jr., Americana Publishing, Inc. chairman and chief executive officer. "Unfortunately, the assets were grossly misrepresented and our efforts to resuscitate the company through significant cash infusions were not successful. We intend to dispose of the company through a chapter 7 filing and more than $2-and-a-half million in unsecured debt will be removed from our balance sheet." Americana Publishing, Inc. is a leading publisher in the nearly $2 billion audio books industry. The Company currently has approximately 350 audio book titles, and should have well over 400 by year-end, which it sells through the Internet, nearly 30,000 retail stores, approximately 5,000 libraries as well as major truck stop distributors. The Company also has a growing print book division and will soon launch a film production and distribution division, Americana Entertainment, Ltd. On Monday, the Company announced an investment group, led by Florida-based Advantage Fund I, LLC, had arranged the acquisition of all of the Company's outstanding convertible notes and related A & B warrants. As a result of this transaction, the Company withdrew an SB-2 filing that would have had a tremendously dilutive impact on its common stock. "We are working with the investment group on a new capitalization structure and subsequent financing," said Lovato. "We anticipate to have something in place within the next 12 months that calls for the restructuring of our notes as well as canceling the majority of our outstanding warrants." "The investment group, lead by the Advantage Fund I, LLC, is extremely confident in our business model and our senior management," Lovato added. "They have indicated their willingness to work closely with our Company to develop a capitalization structure and future financings that are in the best interests of our shareholders and that omit the "toxic" features of the current securities." Americana Publishing, Inc. is a vertically integrated multimedia publishing company whose primary business is publishing and selling audio books, print books and electronic books in a variety of genres. Sales of its products are conducted through the Internet as well as a distribution network of more than 35,000, retail stores, libraries and truck stops. According to the Audio Publishers Association, annual sales of audio books are nearly $2 billion. Currently 42 million Americans listen to audio books and 58 percent of that group listen to more than 2 per month. The median income of listeners is $54,900 while the median age of male listeners is 41.9 and female listeners is 44.2 years. AMERICANA PUBLISHING: Selling Notes & Warrants to Investor Group ---------------------------------------------------------------- Americana Publishing, Inc. (OTC Bulletin Board: APBH) announced an investment group, led by Florida-based Advantage Fund I, LLC, has arranged the acquisition of all of the Company's outstanding convertible notes and related A & B warrants. As a result of this transaction, the Company is withdrawing an SB-2 filing that would have had a tremendously dilutive impact on its common stock. "This transaction and the resulting withdrawal of our SB-2 filing will eliminate the negative pallor that has hung over our Company's stock," said George Lovato, Jr., Americana Publishing, Inc. chairman and chief executive officer. "We also believe this sends a strong message to the market, specifically that since the Company is growing and showing an operating profit, we are taking necessary steps to see this growth reflected in our share price. Lovato also said the Company will work with the investment group on a new capitalization structure and subsequent financing and anticipates having that in place within the next 12 months. The plan calls for restructuring the notes and canceling the majority of the outstanding warrants. "The investment group, lead by the Advantage Fund I, LLC, is extremely confident in our business model and our senior management," Lovato added. "They have indicated their willingness to work closely with our Company to develop a capitalization structure and future financings that are in the best interests of our shareholders and that omit the "toxic" features of the current securities." Americana Publishing, Inc. is a leading publisher in the nearly $2 billion audio books industry. The Company currently has relationships with some 17,000 publishers and has approximately 350 audio book titles, which it sells through the Internet, nearly 30,000 retail stores, approximately 5,000 libraries as well as major truck stop distributors. The Company also has a growing print book division and will soon launch a film production and distribution division, Americana Entertainment, Ltd. Americana Publishing, Inc. is a vertically integrated multimedia publishing company whose primary business is publishing and selling audio books, print books and electronic books in a variety of genres. Sales of its products are conducted through the Internet as well as a distribution network of more than 35,000, retail stores, libraries and truck stops. According to the Audio Publishers Association, annual sales of audio books are nearly $2 billion. Currently 42 million Americans listen to audio books and 58 percent of that group listen to more than 2 per month. The median income of listeners is $54,900 while the median age of male listeners is 41.9 and female listeners is 44.2 years. The Advantage Fund I, LLC is a Miami-based investment fund that invests in small and mid-size public companies either through debt or equity. The fund and its related investment banking group seek to work with companies whose business plans and management have the potential to achieve long-term growth and profitability. The Fund also purchases outstanding securities to help in the restructure of its client's capitalization structures. ARVINMERITOR: S&P Keeps Watch After $4.4 Bil. Dana Takeover Bid --------------------------------------------------------------- Standard & Poor's Ratings Service placed its 'BB+' corporate credit and senior unsecured debt ratings on ArvinMeritor Inc. on CreditWatch with negative implications. In addition, Standard & Poor's placed its 'BB' corporate credit and senior unsecured debt ratings on Dana Corp., on CreditWatch with negative implications. The CreditWatch listing follows the announcement that ArvinMeritor has begun an unsolicited cash offer, having a $4.4 billion enterprise value, to acquire all outstanding common shares of Dana. It also reflects the potential for lower ratings, given the significantly increased pro forma leverage to complete the acquisition of Dana and ArvinMeritor's ability to generate financial measures appropriate for the current ratings. Troy, Michigan-based ArvinMeritor and Toledo, Ohio-based Dana are both global suppliers of systems, modules, and components to the light- and heavy-duty motor vehicle industry. Revenues for ArvinMeritor and Dana were about $7.3 billion and $9.5 billion, respectively, for the 12 months ended March 31, 2003. "The acquisition could produce a somewhat stronger business position for the larger ArvinMeritor in the highly competitive auto supplier industry, given the complementary nature of the products manufactured by the two companies," said Standard & Poor's credit analyst Nancy Messer. "However," Ms. Messer added, "the acquisition, if completed at the offered price, would add about $2.4 billion of new debt to the capital structure of the combined company. This incremental debt would reduce credit quality unless the higher leverage was mitigated by sufficient near-term cash flow from operations, asset sales, or the issuance of some equity." Furthermore, it is possible that a higher price may be required to consummate the transaction. In addition, an acquisition of this magnitude would entail significant execution risk during an already challenging period for the auto supplier industry. Standard & Poor's anticipates that resolution of the CreditWatch listing on ArvinMeritor and Dana Corp., will involve examining the proposed financial structure of the transaction, the pro forma financials of the combined firm, and the combined business model to determine the final ratings outcome. ARVINMERITOR: Fitch Cuts & Places Low-B Ratings on Watch Neg. ------------------------------------------------------------- Fitch Ratings has downgraded the ratings of ArvinMeritor Inc.'s senior unsecured debt to 'BB+' from 'BBB-' and capital securities to 'BB-' from 'BB+' and placed the Ratings on Watch Negative. The rating action follows the announcement today by ARM to launch a hostile tender offer for Dana Corporation in a proposed debt financed acquisition. The downgrade reflects ARM's intent to acquire growth through debt financed acquisitions and a willingness to substantially raise the leverage in its capital structure. If the transaction is completed on the proposed terms, further rating action is expected. New financing for the transaction is likely to be on a secured basis, further impairing unsecured debt holders. The ratings have been placed on Rating Watch Negative. ARM announced its intent to acquire all outstanding shares of Dana Corporation for $15 per share or $2.2 billion for all outstanding shares in an all cash transaction. In addition, ARM would assume the outstanding net debt and minority interest of Dana Corporation at approximately $2.2 billion. While specific terms and structure of the proposed transaction will emerge as the transaction details become clearer, ARM proposes to finance the transaction with an assortment of debt funding. Consolidated debt of the combined entity would be in the range of $6 billion with consolidated EBITDA of approximately $1.3 billion. Faced with intensifying pressures from OEM customers, over capacity in many of the vehicle component areas, and a desire to grow the business and its content per vehicle penetration in an uncertain volume demand environment, ARM intends to grow through acquisition and consolidation with concomitant rationalizations. While Fitch recognizes ARM's historical track record of integration success, a transaction in the magnitude of the proposed Dana acquisition carries execution risk to fully realize the potential synergies. ARM's willingness to incur substantial leverage, when combined with the cyclical nature f its businesses, indicates higher financial risk going forward, even in the event that the transaction does not close. At March 31, 2003, ARM's balance sheet debt amounted to $1.483 billion with adjusted debt of $1.773 billion (including about $290 million of asset securitization funding). Cash of $121 million and a largely un-drawn unsecured bank line of $1.15 billion were available for liquidity. To fund the proposed Dana transaction announced today, however, will require large external funding. Although the funding for the transactions is still in its preliminary stages, Fitch expects that the all debt financing structure initially proposed, when it becomes finalized will result in further rating actions. Furthermore, Fitch expects that bank lines will likely become secured in the proposed capitalization. In the event that the transaction is not consummated, the senior unsecured rating is likely to remain below investment grade. ArvinMeritor, Inc., headquartered in Troy, Michigan, is a global supplier of various automotive products such as exhaust systems, axles, brakes, suspension and ride control systems, door and roof systems and filters, serving both the original equipment and replacement aftermarkets. ARM was formed in July 2000 through the merger of Arvin Industries, Inc., and Meritor Automotive, Inc. BOYD GAMING: Hosting Q2 2003 Earnings Conference Call on July 30 ---------------------------------------------------------------- Boyd Gaming Corporation's (NYSE: BYD) second quarter 2003 conference call to review the Company's results will take place on Wednesday, July 30, 2003 at 4:30 p.m. EDT. The conference call number is 800-289-0494 and the reservation number is 330747. Please call up to 15 minutes in advance to ensure you are connected prior to the call's initiation. The Company will report its results on July 30 at approximately 4:00 p.m. EDT. The conference call will also be available live on the Internet at http://www.boydgaming.comor http://www.firstcallevents.com/service/ajwz381458937gf12.html Following the call's completion, a replay will be available by dialing 888-203-1112 or 719-457-0820 with the reservation number on Wednesday, July 30, beginning two hours after the completion of the call and continuing through Friday, August 8, 2003. The replay will also be available on the Internet at http://www.boydgaming.com Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 13 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming recently opened Borgata Hotel, Casino and Spa at Renaissance Pointe (AOL keyword: borgata or http://www.theborgata.com), a $1.1 billion entertainment destination hotel in Atlantic City, through a joint venture with MGM MIRAGE. Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com * * * As previously reported in Troubled Company Reporter, Standard & Poor's assigned its 'B+' rating to Boyd Gaming Corp.'s $300 million senior subordinated notes offering. Standard & Poor's also affirmed it 'BB' corporate credit rating on Boyd. The outlook is stable. CABLE DESIGN: Closes $110 Million Conv. Sub. Debenture Offering --------------------------------------------------------------- Cable Design Technologies Corporation (NYSE: CDT) has closed the previously announced sale of $110 million aggregate principal amount of its 4% Convertible Subordinated Debentures due 2023 through an offering within the United States to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933 and outside the United States to non-U.S. persons pursuant to Regulation S under the Securities Act. The company used a portion of the net proceeds of the offering (1) to repay approximately $83 million of indebtedness, representing substantially all of the current amount outstanding under the company's bank facilities and (2) for repurchases of $20 million of shares of its common stock. It intends to use the remaining proceeds for general corporate purposes. As reported in Troubled Company Reporter's July 2, 2003 edition, Standard & Poors Ratings Services affirmed its 'BB' corporate credit and senior secured debt ratings on Cable Design Technologies Corp. At the same time, Standard & Poor's assigned its 'B+' rating to CDT's proposed $110 million subordinated convertible note offering. The outlook was revised to negative from stable, reflecting weakened profitability combined with a modest increase in leverage. Pittsburgh, Pennsylvania-based CDT had $85 million of debt outstanding as of April 30, 2003. Proceeds from the proposed notes offering are expected to be used to pay down existing $85 million of bank debt in its entirety and to repurchase stock. Funded debt outstanding will increase by approximately $20 million, the difference between net proceeds from the note offering and existing debt outstanding. CHAMPION ENTERPRISES: S&P Puts B+ Credit Rating on Watch Neg. ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B+' corporate credit rating on Champion Enterprises Inc., on CreditWatch with negative implications. The CreditWatch placement affects approximately $270 million of senior unsecured debt. The CreditWatch placement follows the recent announcement that Champion has named Al Koch as its new chairman as well as its interim CEO and president, replacing Walter Young, and reflect uncertainty with regards to the company's future operating strategy. Mr. Koch is charged with improving Champion's operating efficiencies and cost structure, and returning the nation's largest manufactured homebuilder to profitability. Most recently Mr. Koch served as the interim CEO at Kmart Corp. Auburn Hills, Michigan-based Champion was an aggressive consolidator in the late 1990s when the industry's liberal lending practices helped fuel unsustainably high demand for the homes that it produced and retailed. As is now the case with most industry participants, Champion's sales have been adversely affected by the prolonged recession in the sector, with revenues falling sharply to $1.4 billion in 2002 from a peak of more than $2.5 billion in fiscal year 1999. "Despite ongoing efforts to rationalize its cost structure during this period, Champion's corporate credit rating has been lowered several times over the past three years as a result of ongoing operating losses, with the most recent rating action/company downgrade occurring in February 2003," said Standard & Poor's credit analyst James Fielding. CINTECH SOLUTIONS: Introduces New CINPHONY Email Application ------------------------------------------------------------ Cintech Solutions (TSX:CTM), developer of interaction management software solutions for mid- to small-size contact centers, announced the general availability of its new CINPHONY Email application. CINPHONY Email applies the principles of ACD, or voice call management, to an enterprise's incoming e-mail contacts. With CINPHONY Email in place, a contact center can intelligently queue, send text announcements, and distribute e-mails to agents. It also provides real-time status displays and reporting to help companies manage this facet of the contact center. For more information on product features and capabilities, visit Cintech's Web site at http://www.cintechsolutions.com "CINPHONY Email is designed to help mid- and small-size contact centers manage their e-mail without disruption to their voice call center," commented Troy Gross, vice president of marketing and business development. "We have thousands of customers using our CINPHONY, PRELUDE and MINUET ACD for Norstar solutions, many of them struggling with a growing volume of e-mail. And of course and this challenge is not limited to the Cintech ACD/Norstar environment. Most customers will be able to implement CINPHONY Email within hours, and will immediately realize the same benefits as in their voice call center -- typically higher productivity, improved customer service, and higher revenues and/or reduced costs." CINPHONY Email can be used in tandem with Cintech's ACD for Norstar portfolio - CINPHONY, PRELUDE and MINUET -- or any other ACD solution. CINPHONY Email is built on Cintech's NetVIA technology, that handles e-mail as well as voice and web interactions. Steve Baker, President and CEO of SMaRT Technology Services, Inc., a consulting and services firm based in Chicago, explains the strategic value of CINPHONY Email as he grows his company's service capabilities. "CINPHONY Email will expand our ability to respond to customers without adding significant resources. Many service calls and inquiries to our call centers are repetitive in nature. By directing customers to the web to complete e-mail forms, we can send automatic responses that address known issues, and intelligently route e-mails when assistance or follow-up is needed. We can also track and monitor the e-mail activity and provide comprehensive feedback to our clients. Ultimately, we expect to respond to more customers with fewer people and to reduce call volumes, while providing improved service." CINPHONY Email is available in 3, 6, 9 and 15 agent license packages. Each package includes one supervisory license for administration, reporting, and status display. Cintech Solutions is a provider of interaction management technology to medium and small contact centers in North America. Cintech Solutions' products and services improve customer service and provide rapid return on investment through the intelligent delivery and management of incoming customer contacts. With over 13,000 installations and over 15 years commitment to its market, Cintech Solutions delivers its solutions through an extensive distribution channel across North America. For more information on Cintech Solutions, visit http://www.cintechsolutions.com Cintech Solutions filed for Chapter 11 reorganization on March 13, 2003, in the U.S. Bankruptcy Court for the Southern District of Ohio (Cincinnati) (Bankr. Case No. 03-11661). COLUMBUS MCKINNON: Look for Fiscal 2004 Q1 Results by July 22 ------------------------------------------------------------- Columbus McKinnon Corporation (Nasdaq: CMCO) announced its guidance for the first quarter of fiscal 2004, which ended on June 29, 2003. Columbus McKinnon expects to report consolidated net sales in the range of $106 million to $108 million for the first quarter of fiscal 2004. Income from operations is expected to range from $6.5 million to $7.0 million after restructuring charges of approximately $0.8 million. Depreciation and amortization for the quarter was approximately $2.7 million. Net income for the first quarter of fiscal 2004 is expected to range between $0.2 million to $0.4 million. Results for the fiscal 2004 first quarter will include a $3.5 million pre-tax gain related to the sale of real estate recorded as other income and expense (after income from continuing operations). Net cash provided by operating activities will include a $10.6 million cash tax refund related to the sale of our ASI business. The Company will release first quarter fiscal 2004 results on July 22, 2003 and will hold a conference call and audio webcast to discuss the results. Information concerning the conference call and webcast will be issued on July 15, 2003. As reported in Troubled Company Reporter's May 22, 2003 edition, Standard & Poor's Ratings Services revised its outlook on Columbus McKinnon Corp., to negative from stable. The revision reflected weaker-than-expected operating results, due to continued soft market demand and the expectation that improvement to the company's credit profile will be limited in the near term. At the same time, Standard & Poor's affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings on the company. At the end of its March 31, 2003, fiscal year the company had approximately $314 million in total debt. COLUMBUS MCKINNON: S&P Assigns B- Rating to $100M Sr. Sec. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to Columbus McKinnon Corp.'s proposed $100 million senior secured note offering due 2010. Proceeds from the note issue will be used to repay all outstanding borrowings under the company's second secured term loan and to repay or repurchase other outstanding indebtedness including its senior credit facility and existing subordinated notes. At the same time Standard & Poor's affirmed its 'B' corporate credit and 'CCC+' subordinated debt ratings on the company. The outlook remains negative. At the March 31, 2003 fiscal year-end, Amherst, N.Y.-based Columbus McKinnon had approximately $323 million of debt outstanding. The company holds leading (No. 1 or No. 2) niche market positions within the material handling, lifting, and positioning products industry. Many of the company's niche segments are highly fragmented and very competitive. Columbus McKinnon continues to be negatively affected by soft end market conditions, which have significantly reduced profitability and cash generation. Management continues to focus on improving profitability and cash generation by rationalizing facilities, reducing overhead, and selling noncore assets. "These initiatives, however, have been unable to fully offset the challenging market conditions," said Standard & Poor's credit analyst Linli Chee. "Ratings could be lowered if operating and financial initiatives fail to offset end-market weakness." CNE GROUP INC: Shoos-Away Eisner LLP as Independent Accountants --------------------------------------------------------------- On June 30, 2003, the Audit Commitee of CNE Group, Inc. authorized the dismissal of Eisner LLP as its independent certified public accountants. Eisner had audited the Company's consolidated financial statements as of and for the year ended December 31, 2002. Eisner's report for the year ended December 31, 2002 contained an explanatory paragraph due to uncertainty regarding the Company's ability to continue as a going concern. CNE Group, Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $4 million, and a total shareholders' equity deficit of about $4 million. CNE Group (formerly CareerEngine Network) may just hook you up with that dream job. The company operates a network of six portal career Web sites -- ITClassifieds.com, FinancialPositions.com, EngineeringClassifieds.com -- that allow employers to post job openings and allow job seekers to post resumes. It also develops and manages career sites for clients. This is the latest in a series of incarnations for CNE Group, which operated in merchant banking and real estate as the Helmstar Group and in bond dealing as the Matthews & Wright Group. Chairman and president George Benoit owns about 29% of the company, which was forced to relocate from its World Trade Center headquarters following the 2001 terrorist attack. CONSOLIDATED FREIGHTWAYS: Selling Mansfield Facility via Auction ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Mansfield distribution facility located at 515 N. Lexington Springmill for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Mansfield property is a 30-door cross-dock distribution facility situated on 9.86 acres and has been closed to operations since September 3, 2002, when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 12 CF employees formerly worked at the Mansfield terminal. A contract price of $1,500,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Puts Rutland Facility on Auction Block ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Rutland 7distribution facility located at 7 Randbury Rd., for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Rutland property is an 11-door cross-dock distribution facility situated on 5.0 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Eight CF employees formerly worked at the Rutland terminal. A contract price of $235,100 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Auctioning-Off Topeka Prop. On July 17 ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Topeka distribution facility located at 2404 Grantville Rd. for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Topeka property is a 10-door cross-dock distribution facility situated on 3.5 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Sixteen CF employees formerly worked at the Topeka terminal. A contract price of $245,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Carlisle Facility via Auction --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Carlisle distribution facility located at 1 Carolina Way for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Carlisle property is a 305-door cross-dock distribution facility situated on 59 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 759 CF employees formerly worked at the Carlisle terminal. A contract price of $5,800,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Michigan Properties on July 17 ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Lansing and Saginaw properties individually for sale to the highest bidders, through an open auction process scheduled for July 17, 2003. The Lansing terminal located at 6726 Millett Highway property is a 21-door cross-dock distribution facility situated on 5.3 acres. A contract price of $535,000 has been established for the CF property, where 24 CF employees formerly worked. The Saginaw property encompasses 2.52 acres located at 2110 Midland Road. The land for sale has an established contract price $77,500. These CF properties have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Lincoln Distribution Facility --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Lincoln distribution facility located at 2827 North 20th Street for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Lincoln property is a 13-door cross-dock distribution facility situated on 1.91 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 15 CF employees formerly worked at the Lincoln terminal. A contract price of $220,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Puts Fairbanks Prop. on Auction Block --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Fairbanks distribution facility located at 2750 Peger Rd. for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Fairbanks property is an 11-door cross-dock distribution facility situated on 4.78 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. A contract price of $340,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Iowa Distribution Facilities -------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Burlington, Cedar Rapids and Des Moines terminals individually for sale to the highest bidders, through an open auction process scheduled for July 17, 2003. The Burlington terminal is a 16-door cross-dock distribution facility located at 2314 West Mt. Pleasant St. and is situated on 5.0 acres. A contract price of $135,000 has been established for the property. Five CF employees formerly worked at the Burlington terminal. The Cedar Rapids terminal is a 41-door cross-dock facility located at 4850 J. Street, S.W. and is situated on 3.96 acres, where 21 CF employees formerly worked. A contact price of $450,000 has been established. A contract price of $400,000 has been set for the Des Moines property, a 27-door terminal which occupies 4.31 acres located at 1909 East 17th Street, where 30 employees formerly worked. These CF terminals have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Wisconsin Facility Up on Auction Block ---------------------------------------------------------------- As part of the largest real estate sale in transportation history - 220 total properties with an appraised value over $400 million - Consolidated Freightways is placing its Milwaukee and Madison terminals individually for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Milwaukee property is a 152-door cross-dock distribution facility located at 401 West Layton Avenue and is situated on 28.40 acres. 230 CF employees formerly worked at the terminal. A contract price of $3,950,000 has been established for the Milwaukee facility. The Madison terminal is located at 401 North Third Street and is a 32-door cross-dock distribution facility situated on 2.64 acres, where 49 CF employees formerly worked. A contract price of $660,000 has been established for the property. These CF terminals have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Virginia Facilities on July 17 ---------------------------------------------------------------- As part of the largest real estate sale in transportation history - 220 total properties with an appraised value over $400 million - Consolidated Freightways is placing its Virginia distribution facilities individually for sale to the highest bidders, through an open auction process scheduled for July 17, 2003. CF's property in Richmond is located at 1009 Holly Springs Ave. and is a 20-door cross-dock distribution facility situated on 3.5 acres, where 102 employees formerly worked. A contract price of $150,000 has been established for the CF property. The company's Roanoke property is a 14-door terminal situated on 2.0 acres at 1915 Plantation Road N.E. Forty-two CF employees formerly worked at the Roanoke terminal. A contract price of $265,000 has been established for the facility. The terminals have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Providence Prop. via Auction -------------------------------------------------------------- As part of the largest real estate sale in transportation history - 220 total properties with an appraised value over $400 million - Consolidated Freightways is placing its Providence distribution facility located at 155 Amaral Street on sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Providence property is a 31-door cross-dock distribution facility situated on 4.95 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 50 CF employees formerly worked at the Providence terminal. A contract price of $645,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Auctioning Off Reno Distribution Prop. ---------------------------------------------------------------- As part of the largest real estate sale in transportation history - 220 total properties with an appraised value over $400 million - Consolidated Freightways is placing its Reno distribution facility located at 1650 Kleppe Lane for sale to the highest bidder, through an open auction process scheduled for July 17, 2003. The Reno property is a 33-door cross-dock distribution facility situated on 10.0 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. 105 CF employees formerly worked at the Reno terminal. A contract price of $2,100,000 has been established for the CF property. Interested parties who would like to participate in the July 17 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 100 CF properties throughout the U.S. have been sold for $218 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.comto Transportation Property Company at (800) 440-5155. CORTELCO SYSTEMS: Hires Horwath Velez & Co. to Replace Deloitte --------------------------------------------------------------- On June 30, 2003, upon the recommendation of the Audit Committee of the Board of Directors of Cortelco Systems Puerto Rico, Inc., the Board of Directors decided to no longer engage Deloitte & Touche LLP as the Company's independent auditor, and engaged Horwath Velez & Co.PSC to serve as the Company's independent auditor for the fiscal year ending July 31, 2003. Deloitte's reports on the Company's financial statements for each of the fiscal years ended July 31, 2001 and 2002, included uncertainty paragraphs as to the Company's ability to continue as a going concern. In addition, Deloitte & Touche's report of the Company's financial statements for the year ended July 31, 2002 also included an explanatory paragraph as to the spin-off of the Company from eOn effective July 31, 2002. . CSPR, a Puerto Rico corporation, was a wholly-owned subsidiary of eOn Communications Corporation through July 30, 2002. Effective July 31, 2002, CSPR was spun-off from eOn to the eOn stockholders. Each holder of eOn common stock received one share of CSPR common stock for every ten shares of eOn common stock held as of July 22, 2002, which was the record date of the distribution. After such spin-off, CSPR became an independent entity headquartered in San Juan, Puerto Rico. CSPR's operations include the sale of cellular telephones and cellular airtime and of integrated communications and data equipment in Puerto Rico. CROWN CASTLE: Will Publish Second-Quarter Results on July 31 ------------------------------------------------------------ Crown Castle International Corp., (NYSE: CCI) plans to release second quarter 2003 results on Thursday, July 31, 2003 after the market closes. In conjunction with the release, Crown Castle has scheduled a conference call, which will be broadcast live over the Internet, for Friday, August 1, 2003 at 9:30 a.m. eastern time. What: Crown Castle Second Quarter Earnings Conference Call When: Friday, August 1, 2003 - 9:30 a.m. eastern time How: Live via phone by dialing 303-262-2127 and asking for the Crown Castle call at least 10 minutes prior to the start time, or live over the Internet by logging on to the web at the address below Where: http://www.crowncastle.com A telephonic replay of the conference call will be available through August 8, 2003 and may be accessed by calling 303-590-3000 using passcode 544827. An audio archive will also be available on the company's Web site at http://www.crowncastle.comshortly after the call and will be accessible for approximately 90 days. For more information, please contact Karen Roan at DRG&E at 713-529- 6600 or email kroan@drg-e.com Crown Castle International Corp. (S&P/B-/Negative) engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 United States markets, to more than 95 percent of the UK population and to more than 92 percent of the Australian population. Crown Castle owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle, visit: http://www.crowncastle.com CYTO PULSE: Gets Nod for Second Cash Collateral Use Extension ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland gave its approval to Cyto Pulse Sciences, Inc.'s request to use Long Meadow, LLC's Cash Collateral to finance is ongoing operations in this chapter 11 case. The first Cash Collateral Agreement expired on June 30, 2003. A Second Cash Collateral Agreement gives the Debtor continued access to its lenders' cash collateral through August 31, 2003. Long Meadow LLC is a prepetition secured creditor, owed $50,000 as of the Petition Date. Without the use of cash collateral to meet the operating expenses outlined on the Budget, the Debtor would be unable to operate it business and forced to liquidate. The Debtor will restrict use of the Lenders' Cash Collateral in accordance with a Budget projecting: July August ---- ------ Cash In 115,430 77,470 Cash Out Labor 24,221 24,221 Direct Expenses 65,569 36,867 Indirect Expenses 15,210 15,210 Net 10,430 1,172 Checking Begin 6,513 16,943 Checking End 16,943 18,116 Cyto Pulse Sciences, Inc., headquartered in Columbia, Maryland is in the business of inventing, developing and manufacturing medical equipment and devices for laboratory applications. The Company filed for chapter 11 protection on June 12, 2003 (Bankr. Md. Case No. 03-59544). Alan M. Grochal, Esq., and Stephen M. Goldberg, Esq., at Tydings and Rosenberg represent the Debtor in its restructuring efforts. As of June 30, 2002, the company listed $1,913,305 in assets and $19,469,309 in debts. DEAN FOODS: Fitch Affirms Low-B Credit Facility & Senior Notes -------------------------------------------------------------- Fitch Ratings affirmed Dean Foods Company's 'BB+' secured credit facility rating and its 'BB-' senior unsecured notes. Fitch also withdrew its rating on its trust convertible preferred securities. The Rating Outlook is Stable. This rating action affects approximately $2.5 billion of DF's debt. DF called its $600 million convertible trusts preferred securities in three tranches, beginning April 17, 2003. Substantially all was converted to equity by June 24, 2003. As a result of the conversion, annual fixed charges will be reduced by approximately $33.6 million and DF's adjusted debt levels including the preferred securities will be lower. While the conversion has resulted in the immediate improvement of credit statistics, Fitch expects the benefit to be partially off set by debt financed acquisitions. On June 30, 2003, DF entered into a definitive agreement to acquire the 87% equity interest in of Horizon Organic Holdings Inc. it does not currently own for $256 million, including the assumption of approximately $40 million in debt or for approximately 24 times EBITDA. HCOW's product line includes organic milk and dairy products, as well as organic juices, pudding, fruit gels and eggs sold in the U.S., as well as organic milk, yogurt and butter sold under the Rachel's Organic brand in the U.K. HCOW's cash flow is expected to increase as its products are included in DF's distribution and operating systems. The transaction is expected to close during the fourth quarter of 2003, subject to HCOW shareholder and regulatory approval. In addition, DF entered into an agreement to acquire Kohler Mix Specialties, a supplier of organic milk, soy milk, ice cream mixes and coffee creamers on June 5, 2003. This acquisition, which is expected to be financed in cash, will expand DF's penetration in the food service channel and provide the company with additional needed capacity. The Kohler acquisition is dependant upon execution of a definitive agreement, completion of due diligence, approval by both company's Board of Directors and regulatory approval. The ratings consider DF's leading market share in the fluid milk industry (of approximately 35%), its national refrigerated distribution system, ownership of the leading brand of refrigerated soymilk and important licensing agreements for other key brands. In addition, the company's management team has a solid track record of effectively integrating acquisitions and achieving cost savings, completing over 44 in the last 10 years. DF has also been successful with new product innovations including Hershey's milk shakes, SunSoy, and various flavors of Silk. DF has expanded its product distribution through relationships with key food service establishments including Starbucks. These positives are weighted against high leverage due to acquisitions, the expectation of continued periodic increases in leverage resulting from further debt financed acquisitions and relatively low operating margins inherent to the dairy business. For the latest 12 months ended March, 31 2003, pro-forma for the acquisitions and redemption of the convertible preferred securities, total debt including preferred securities to-EBITDA was 3.7x as compared to 4.0x excluding these transactions and EBITDA-to-interest incurred was 3.9x and 3.7x, respectively. Continued improvement in credit metrics may lead to positive rating actions. Dean Foods Company is the largest processor of milk and the third largest producer of ice cream in the United States. In addition, DF is the leading producer, distributor and marketer of value-added dairy and non-dairy products and the largest processor of private label pickles in the United States. DF also has several joint ventures and sells products under partnerships and licensed brands such as Borden, Land O' Lakes, Hershey's, Folgers Jakada, and Pet. DF has operations in 39 states, Spain, and the U.K. DELTA AIR LINES: S&P Affirms BB- Corporate Credit Rating -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on Delta Air Lines Inc. (BB-/Negative/--) and removed them from CreditWatch, where they were placed on March 18, 2003. The ratings were lowered to current levels on March 28. The outlook is negative. "The ratings on Delta, the third-largest airline in the world, reflect financial damage from substantial losses over the past two years and a heavy debt and lease burden, but benefit from a solid market position in the U.S. domestic and trans-Atlantic markets and the work rule flexibility and productivity made possible by a mostly nonunion work force," said Standard & Poor's credit analyst Philip Baggaley. "A gradually improving airline environment, substantial cost-cutting initiatives, and adequate liquidity should enable the company to improve its credit profile over the next several years," the credit analyst continued. Delta, like other large airlines, has announced capacity cuts and expense reductions in response to the adverse revenue outlook, most recently a program intended to lower cost per available seat mile 15% by the end of 2005. It is in the early stages of discussions with its pilots, who have agreed to consider concessions to reduce labor costs. Other employees are not unionized, so the company has greater flexibility to change compensation and has revised the pension plans of noncontract employees to narrow a substantial pension-funding gap. Liquidity remains adequate, with unrestricted cash of $1.9 billion at March 31, 2003, and subsequent receipt of $400 million from the federal government to refund security expenditures and $280 million from sale of Delta's interest in the WorldSpan global distribution system. Ratings could be lowered if the nascent revenue recovery in the U.S. airline industry falters, causing renewed substantial losses. DIRECTV LATIN AMERICA: Court Resets Claims Bar Date to Sept. 2 -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware, overseeing DirecTV Latin America, LLC, amends its Bar Date Order to reset the general claims bar date to September 2, 2003 at 4:00 p.m. As previously reported, based on these proposed procedures, the Bar Dates will give all creditors ample opportunity to file proofs of claims: A. Each person or entity that asserts a "claim" against DirecTV that arose prepetition must file an original, written proof of claim on or before the applicable Bar Dates and in accordance with the Bar Date Order; B. All Proofs of Claims must be filed with Bankruptcy Services, LLC, which has been authorized by the Court to serve as DirecTV's official Claims Agent; C. These persons or entities are not required to file a proof of claim on or before the applicable Bar Dates: -- any person or entity that already has properly filed, with the Clerk of the U.S. Bankruptcy Court for the District of Delaware a proof of claim against Delaware utilizing a claim form, which substantially conforms to Official Form No. 10; -- any person or entity having a claim under Sections 503(b) or 507(a) of the Bankruptcy Code as an administrative expense of DirecTV's case; -- any person or entity whose claim has been paid by DirecTV in full; -- any person or entity whose claim is listed on the Schedules, whose claim is not described as disputed, contingent or unliquidated, and whose claim does not dispute the amount or nature of the claim, as set forth in the Schedules; -- any person or entity holding a claim that has been allowed by an order of the Court entered on or before the General Bar Date or the Governmental Bar Date, as applicable; -- any DirecTV employee whose claim arises under DirecTV's workers' compensation policies and programs; or -- any person or entity that is a party to an executory contract or unexpired lease with DirecTV that is not rejected pursuant to a Court Order dated on or before the Court enters the Bar Date Order; D. Any person or entity that holds a claim arising from the rejection of an executory contract or unexpired lease as to which the order authorizing the rejection is dated after the Bar Date Order must file a proof of claim on or before the date the Court may fix in the applicable order authorizing the rejection of that contract or lease; E. Persons holding claims against any of DirecTV's Local Operating Companies should not file a proof of claim in this Case on account of that claim; F. Each proof of claim must: -- be written in English; -- be denominated in lawful U.S. currency; -- conform substantially with Official Form No. 10; and -- be signed by the claimant or its authorized agent; G. Any holder of a claim against DirecTV who is required but failed to file a proof of claim in accordance with the Bar Date Order will be forever barred, estopped and enjoined from asserting a claim against DirecTV and DirecTV and its property will be forever discharged from any and all indebtedness or liability with respect to the claim; H. Any claimant who failed to file a proof of claim is prohibited from voting with respect to any plan of reorganization or from participating in any distribution in this Chapter 11 case on account of that claim; I. DirecTV will mail a notice of the Bar Date Order to: -- the U.S. Trustee, -- the Committee's counsel, -- all known claim holders listed on the Schedules at the addresses stated therein; -- all known holders of equity interests in DirecTV listed on the Schedules; -- all DirecTV employees; -- all Counterparties to DirecTV's executory contracts and unexpired leases; -- all persons or entities with whom DirecTV has transacted business in the last 18 months; -- the District Director for Internal Revenue for the District of Delaware; -- counsel for DirecTV's postpetition lender; -- the U.S. Attorney for the District of Delaware; and -- all parties who have filed notices of appearances pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure; J. The Bar Date Notice will be published at least 20 days prior to the General Bar Date once in each of: -- The Wall Street Journal, -- The New York Times, -- The Miami Herald, and -- American Economica. (DirecTV Latin America Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Pushing for Approval of Five Settlement Agreements -------------------------------------------------------------- Pursuant to Rule 9019(a) of the Federal Rules of Bankruptcy Procedure, Enron Corporation and its debtor-affiliates ask the Court to approve five settlement agreements they entered into separately with Custom Companies, Inc., Total Gas & Electric, Inc., Southline Metal Products Company, LeNorman Partners, LLC, and North Atlantic Steel Company, Inc. Edward A. Smith, Esq., at Cadwalader, Wickersham & Taft, in New York, relates that: (a) Enron Freight Markets Corp. and Custom Companies were parties to certain prepetition agreements pursuant to which certain invoices were issued. Although the Agreements expired as of the Petition Date, there remain certain amounts outstanding with respect to the Invoices; (b) Enron North America Corporation and Total Gas & Electric were parties to certain prepetition agreements with respect to physical gas. Although the agreements expired as of the Petition Date, there remain certain amounts outstanding; (c) ENA and Southline Metal were parties to certain prepetition physical steel agreements. Although the Contracts expired as of the Petition Date, there remain certain amounts outstanding; (d) ENA and LeNorman were parties to certain prepetition financially settled commodity option agreement dated March 28, 2001. Although the Contract expired on March 31, 2003, there remain certain amounts outstanding; and (e) ENA and North Atlantic Steel were parties to certain prepetition agreements for the physical sale of cold and hot rolled steel coils. Although the Contracts have expired, there remain certain amounts outstanding with respect to the Invoices issues. After discussions between the Parties, they have agreed to enter into separate Settlement Agreements wherein: (a) Custom Companies will pay $87,530 to EFMC; (b) Total Gas will pay $1,000,000 to ENA; (c) Southline Metal will pay $205,450 to ENA; (d) LeNorman will pay $960,972 to ENA; (e) North Atlantic Steel will pay $36,059 to ENA; and (f) the Parties will exchange mutual releases of claims related to the Contracts. Mr. Smith contends that the Settlement Agreements are warranted because: (a) they will result in a substantial payment to the Debtors' estates; and (b) they will avoid future disputes and litigations concerning the Contracts as the parties will release one another from claims relating to the Contracts. (Enron Bankruptcy News, Issue No. 72; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENVOY COMMS: Sets Special Shareholders' Meeting for August 14 ------------------------------------------------------------- Envoy Communications Group Inc. (NASDAQ: ECGI; TSX: ECG), will hold a Special Meeting of Shareholders on Thursday August 14th, 2003 at 11:00 am at 300 Bayview Avenue, Toronto, Ontario, for all shareholders of record as of July 14th, 2003. Envoy Communications Group (NASDAQ: ECGI/TSX:ECG) is an international consumer and retail branding company with offices throughout North America and Europe. For more information on Envoy, visit http://www.envoy.to * * * Financial Condition and Liquidity In its Form 10-Q filed on August 30, 2002, the Company reported: "As at June 30, 2002 and September 30, 2001, the Company was not in compliance with its covenant calculations under the terms of its revolving credit facility in respect to 12 month earnings before interest, taxes, deprecation and amortization. The lenders have the right to demand repayment of the outstanding borrowings. Additional borrowings under the facility are subject to the approval of the lenders. The Company is continuing to have discussions with its lenders regarding amendments to the terms of the facility. "The Company is considering all of the options available to it to finance the amounts owing under the restructuring plans and expected cash flow shortfalls in the next three months (or other operating obligations). These options include additional debt or equity financing under private placements, renegotiating its bank facilities and the sale of some of its businesses. In addition, management has made every effort to negotiate the restructuring charges in such a way as to minimize short-term cash requirements. "The ability of the Company to continue as a going concern and to realize the carrying value of its assets and discharge its liabilities when due is dependent on the continued support of its lenders and/or successful completion of the actions discussed above. "During fiscal 2001, the Company established an extendable revolving line of credit under which it can borrow funds in either Canadian dollars, U.S. dollars or U.K. pounds sterling, provided the aggregate borrowings do not exceed $40.0 million Canadian. Advances under the line of credit can be used for general purposes (to a maximum of $2.0 million) and for financing acquisitions that have been approved by the lenders. As at June 30, 2002, approximately $9.8 million had been borrowed under the facility, none of which was used for general corporate purposes. "As at June 30, 2002 the Company had a working capital deficit of $5.4 million compared with a working capital deficit of $430,000 at September 30, 2001. This working capital deficiency arises due to the fact that the borrowings under the bank credit facility must be classified as a current liability as a result of the Company not being in compliance with its covenant calculations. The decrease in working capital in this period was primarily the result of the operating loss during the period. "During the third quarter, the Company negotiated new repayment terms for the Promissory Note due June 30, 2002. The Promissory Note is to be repaid in five monthly installments commencing July 1, 2002 with interest on the principal balance charged at 8%. "On April 29, 2002, the Company issued $1.8 million in convertible debentures. The net proceeds from the sale of the debentures were used for general working capital purposes to support the Company's restructuring activities." EXIDE: Court Clears Skadden Arps' Engagement as Special Counsel --------------------------------------------------------------- Exide Technologies and its debtor-affiliates obtained the Court's authority to employ Skadden, Arps, Slate, Meager & Flom LLP as their special litigation counsel with respect to a lawsuit filed in the Court of Chancery of the State of Delaware in and for New Castle County, styled, State of Wisconsin Investment Board, et al. v. Exide Technologies, C.A. No. 20255-NC. The Chancery Court Litigation is proceeding on an expedited basis. The Chancery Court Litigation was filed on April 11, 2003. On April 23, the plaintiffs served Exide with document requests, interrogatories, and requests for admissions. On May 5, Exide answered the complaint. Trial was initially scheduled for May 27, but was subsequently postponed until June 25. In accordance with Section 330(a) of the Bankruptcy Code, compensation will be payable to Skadden Arps on an hourly basis, plus reimbursement of actual, necessary expenses and other charges incurred. The principal attorneys in charge of supervising Skadden Arps' engagement by the Debtors and their current standard hourly rates are: Robert B. Pincus Partner $710 Edward P. Welch Partner 685 Edward B. Micheletti Associate 395 Seth M. Beausang Associate 290 T. Victor Clark Associate 265 (Exide Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) FLEMING COMPANIES: Inks Definitive Asset Purchase Pact with C&S --------------------------------------------------------------- Fleming Companies, Inc. and C&S Wholesale Grocers, Inc. have signed a definitive asset purchase agreement to sell Fleming's wholesale grocery business to C&S. The agreement includes substantially all of the assets of the Fleming wholesale grocery business, other than accounts receivable and certain other assets. The estimated purchase price is expected to be $400 million. The definitive asset purchase agreement is subject to, among other things, satisfactory completion of due diligence, C&S obtaining financing and U.S. Bankruptcy Court approval. Fleming intends to file the asset purchase agreement with the U.S. Bankruptcy Court in Delaware. Pete Willmott, Interim President and Chief Executive Officer, said, "We committed to identify a long-term solution for our grocery wholesale customer, associate, and creditor constituents. We are pleased to have begun operating under the recently signed supply arrangement with C&S and to have executed the asset purchase agreement. We view these as significant steps in delivering on our commitment." Fleming has filed a motion with the U.S. Bankruptcy Court to establish the procedures for the sale of Fleming's grocery wholesale operations. The motion seeks approval of the sale process at a hearing scheduled for July 17, 2003. The sale procedure includes the process for other possible bidders to submit offers to purchase all or part of Fleming's grocery wholesale business, which would be due by July 28, with an auction to follow on July 31. The final sale hearing would be held August 4 and the closing date for the sale would be expected shortly thereafter. Fleming's Core-Mark convenience business, which operates as a separate entity, is not affected by this action. The company maintains its focus on supporting the Core-Mark operation and has made substantial progress in restoring service levels of its convenience distribution business. Fleming (OTC Bulletin Board: FLMIQ) is a supplier of consumer package goods to independent supermarkets, convenience-oriented retailers and other retail formats around the country. To learn more about Fleming, visit the company's Web site at http://www.fleming.com Fleming and its operating subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code on April 1, 2003. The filings were made in the U.S. Bankruptcy Court in Wilmington, Delaware. Fleming's court filings are available via the court's Web site at http://www.deb.uscourts.gov FLEMING COMPANIES: Lease Decision Period Extended Until Sept. 30 ---------------------------------------------------------------- HODA LLC leases these premises to Fleming Companies, Inc., and its debtor-affiliates: a. TX-340 8282 Spring Valley Road, Dallas, Texas; b. TX-341 5401 Park Springs Blvd., Arlington, Texas; and c. TX-342 9920 White Settlement Road, Ft. Worth, Texas The store at 8282 Spring Valley Road, Dallas, Texas is currently closed and, except for a few fixtures, the Debtors have vacated the premises. At this time, Jack D. Mattey, Esq., at Ferry, Joseph & Pearce, P.A., in Wilmington, Delaware, tells the Court that HODA has a contract to sell the Spring Valley property. The contract to sell the Spring Valley property is subject to and contingent on the immediate rejection of the lease. Based on the current economic conditions in the Dallas area, HODA believes that it will be very difficult to find another similar buyer for the property. Mr. Mattey relates that the current contract that requires HODA to sell the Spring Valley property provides a rare opportunity to avoid a significant loss, which would otherwise occur if the Debtors reject the lease. Granting the Debtors an extension of time with respect to the Spring Valley store lease may unfairly prejudice HODA's rights with respect to this property and cause it irreparable harm, Mr. Mattey states. Consequently, HODA wants the Debtors to immediately reject the Spring Valley store lease. Mr. Mattey advises the Court that HODA takes no position at this time regarding the assumption, assignment or rejection, or the granting of an extension of time to assume, assign or reject its other two leases with the Debtors so long as the Debtors and their tenants comply with the terms of the leases. Regency Doesn't Like It Either Regency Center LP asserts that the Debtors have had more than enough time and opportunity during the nearly three months in their cases to determine whether to assume or assign its lease. Regency explains that the Debtors are no longer supplying the premises with goods for sale. Regency leased to the Debtors the premises at Pasco Village Shopping Center in Scottsdale, Arizona. Debtor ABCO Food Group Inc., in turn, subleased the premises to R.S. Dale Corporation, which operates a retail grocery store at the premises under the trade name IGA. Regency reports that IGA customers and employees are leaving in droves and the store is likely to go dark very shortly. In addition, based on the Debtors decision to withdraw from the retail supermarket business and minimize their wholesale business in Arizona, it appears clear that the Debtors will not be reorganizing around the Pasco Village premises. Under these circumstances, Regency contends that the Debtors should not be permitted to extend the time to determine whether to assume or reject the lease. * * * After due deliberation, Judge Walrath extends the Debtors' time to decide on their leases through and including September 30, 2003, except with respect to the HODA and Regency leases. This is without prejudice to the Debtors' rights to request further extensions. Judge Walrath will hold another hearing to consider HODA's and Regency's objections on July 17, 2003. (Fleming Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) FOCAL COMMS: Emerges from Chapter 11 Reorganization Proceedings --------------------------------------------------------------- Focal Communications Corporation announced that its financial restructuring is complete and that it has emerged from Chapter 11 protection. The Company's Second Amended Joint Plan of Reorganization was approved June 19, 2003, by the Federal Bankruptcy Court, becoming effective only six months after the initial plan was filed. Kathleen Perone, Focal's President and Chief Executive Officer, said, "The Company's performance during our Chapter 11 proceedings was impressive, and for this we thank our employees, creditors, vendors, and especially our customers who stayed with us and, in many cases, grew their business with Focal during the six months since we filed. With the reorganization complete, we intend to continue to grow our customer base and revenue per customer, as well as improve operational efficiencies." Focal said its strategy for future success includes increasing revenue per line, not just the total number of lines in service. The Company's objective is to increase the efficiency of the network and improve gross margins through expanded product penetration into the existing customer base. Layering additional services such as long distance, toll free, and conference calling onto customers' existing connections enables Focal to meet customers' diverse communications needs in a capital efficient manner, the Company said. "Our outlook is upbeat, and our prognosis healthy," Perone commented. "At the end of the day, we are measured in the marketplace by the reliability of our network and the quality of service we provide. The support we have received from our customers demonstrates how well we have delivered on these two metrics. We intend to continue leveraging these competencies as we move forward and grow as a profitable business." The Company said it reported positive EBITDA results of $7.3 million in the first quarter 2003. Focal Communications Corporation is a national telecommunications provider serving enterprises, carriers and resellers with dedicated local sales and support, a robust national network, and innovative voice and data solutions in 23 U.S. markets. FOSTER WHEELER: S&P Sees Diminishing Liquidity & Junks Rating ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Foster Wheeler Ltd., to 'CCC-' from 'B' and removed the rating from CreditWatch, where it was placed on May 30, 2003. Other ratings were also lowered. At March 28, 2003, Perryville, New Jersey-based Foster Wheeler had approximately $1.2 billion of debt securities outstanding. The outlook is negative. "We expect that Foster Wheeler's modest domestic liquidity will further diminish in the next few quarters because construction activities will use working capital at a faster pace than new awards will provide cash sources," said Standard & Poor's credit analyst Joel Levington. "Diminishing liquidity, within the context of an onerous debt burden, weak end-market fundamentals, virtually no access to the capital markets, rising asbestos claims, and a significantly underfunded pension may force the company to pursue a financial restructuring or file for bankruptcy protection." Foster Wheeler's current management has taken several steps to implement more rigorous controls, has reduced overhead costs, and has written down more than $1 billion of assets in the past five quarters. Still, changing a global corporate culture amid weak market fundamentals has proven quite challenging. The company's backlog is not expected to grow in the next few quarters, the negative working capital position on the projects that have created these liabilities will start to reverse as construction activities begin, which will further deplete Foster Wheeler's cash balances. With the majority of the firm's cash located oversees, only a portion of which can be easily repatriated, and a meaningful amount of construction-related liabilities tied to domestic projects, the company may soon find itself in a liquidity crunch. Ratings could be lowered shortly should the company pursue a financial restructuring to help alleviate its distressed financial position. FOSTER WHEELER: Says S&P's Rating Won't Trigger Loan Defaults ------------------------------------------------------------- Foster Wheeler Ltd. (NYSE: FWC) announced that the change of Standard & Poor's rating on the company's corporate credit to 'CCC-' from 'B' does not trigger any defaults under Foster Wheeler's existing credit facility and the company will continue to conduct its business as usual. "We remain focused on managing liquidity, reducing debt and improving the company's balance sheet," said Ken Hiltz, Chief Financial Officer of Foster Wheeler. "We are well aware of the issues cited by S&P and are working aggressively to complete our restructuring in early 2004, if not sooner. We believe that our current liquidity is adequate and while liquidity will become more challenging in the fourth quarter, we have plans in place and believe we are taking appropriate steps to deal with our liquidity issues going forward." Mr. Hiltz added, "Contrary to the information contained in the S&P release, Foster Wheeler continues to have access to its domestic revolving credit facility. Additionally, our foreign business units are stand-alone operations with access to their own credit facilities. They have adequate liquidity and capital to continue to operate without support from the parent company or our operations in North America. During the past 18 months, we have made significant progress in restructuring the company's operations. We still have work to do and believe we are taking the appropriate actions to position Foster Wheeler for a return to profitable growth and financial health." Foster Wheeler Ltd. is a global company offering, through its subsidiaries, a broad range of design, engineering, construction, manufacturing, project development and management, research, plant operation and environmental services. The corporation is based in Hamilton, Bermuda, and its operational headquarters are in Clinton, N.J. For more information about Foster Wheeler, visit its site at http://www.fwc.com GENTEK: Wins Blessing to Pay Exit Financing Due Diligence Fees -------------------------------------------------------------- GenTek, Inc. and Noma Company obtained the Court's permission to pay up to $750,000 in due diligence expenses to be incurred by certain prospective lenders in developing and issuing a commitment for a potential exit facility. The Debtors and their financial advisor, Lazard Freres & Co. LLC, have solicited proposals from prospective lenders for potential exit financing facilities to ensure the most cost-effective means of raising funds for the Debtors' emergence from Chapter 11. To date, the Debtors have received exit facility proposals from five prospective lenders. Each of the Exit Facility Proposals: (a) are conditioned on the lender's performance of further due diligence; and (b) contain a provision, which requires the Debtors to reimburse the lender for certain amounts expended. After reviewing the proposals, the Debtors intend to continue further negotiations with the two lenders that submit the most favorable proposals. Based on their review of the Exit Facility Proposals, the Debtors estimate that costs on account of due diligence expenses should not exceed $750,000. (GenTek Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) HORNBECK OFFSHORE: Ratings Affirmed Following Asset Acquisition --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings on oil and gas services company Hornbeck Offshore Services Inc.(B+\Stable\--) following its announced acquisition of five offshore supply vessels for $45 million. The outlook remains stable. Mandeville, Louisiana-based Hornbeck is expected to have about $214 million of debt at the close of the transaction. "The transaction was funded with $39 million cash and $6 million of Hornbeck privately issued common stock," noted Standard & Poor's credit analyst Paul B. Harvey. "At the close of the transaction, Hornbeck's credit facility borrowing base expanded to $50 million, from which the $39 million was drawn," he continued. Also post-acquisition, Hornbeck received cash payments or irrevocable, unconditional, binding subscriptions for $30 million in common stock to partly defray acquisition-related costs and other future needs. Liquidity should improve during the remainder of 2003 and 2004 as Hornbeck uses free cash flow to repay bank debt, with no additional OSV new vessel programs expected. However, Hornbeck's liquidity could weaken if Gulf of Mexico industry conditions continue to decline, especially in 2004, forcing Hornbeck to rely on weakening day rates in the spot market and diminished free cash flow for debt repayment. The stable outlook reflects Hornbeck's limited, near-term need for external financing and adequate liquidity to fund construction commitments and debt service. No positive rating actions are likely until Hornbeck reduces its contract renewal risk and further ameliorates its high debt leverage. (Conversely, a failure to enter into new long-term contracts during the next 12 months could pressure the ratings.) If Hornbeck finds contract work at favorable rates for its new vessels during 2003 and 2004, and can deleverage through either an IPO or other means, a positive outlook revision or ratings upgrade could occur. ICIFC: Fitch Drops Series 1997-2 Class B5 Rating Down to D ---------------------------------------------------------- Fitch Ratings downgrades one class and affirms five classes from ICIFC (Impac) Secured Assets Corp. mortgage pass-through certificates, series 1997-2: ICIFC (Impac) Secured Assets Corp. mortgage pass-through certificates, series 1997-2: -- Class AI & AII affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'AAA'; -- Class B4 affirmed at 'BB+'; -- Class B5 downgraded to 'D' from 'CCC'. These actions are taken due to the high delinquencies in relation to the applicable credit support levels as of the June 25, 2003 distribution. IMPERIAL PLASTECH: A.G. Petzetakis Acquires Debt from Laurentian ---------------------------------------------------------------- Imperial PlasTech Inc. (TSX: IPQ) announced that A.G. Petzetakis SA, a significant shareholder of Imperial PlasTech, completed the acquisition of all the indebtedness of Imperial PlasTech and its subsidiaries owed to Laurentian Bank of Canada, the creditor that moved to commence the Interim Receivership proceedings against Imperial PlasTech and its subsidiaries. A.G. Petzetakis purchased the indebtedness, together with all related security therefore, for approximately $3.1 million, being the total indebtedness of Imperial PlasTech to Laurentian Bank of Canada, plus the bank's costs and expenses. On June 19, 2003, A.G. Petzetakis entered into an agreement to purchase all of the indebtedness of Imperial PlasTech and its subsidiaries owed to Laurentian Bank of Canada. As part of the loan purchase transaction, A.G. Petzetakis elected to proceed with a restructuring of Imperial PlasTech and its subsidiaries and, accordingly, the Interim Receiver filed, on behalf of Imperial PlasTech and its subsidiaries, for protection from creditors under the Companies' Creditors Arrangement Act on June 3, 2003. The CCAA process is anticipated to enable Imperial PlasTech to restructure its balance sheet and costs to complete the reorganization of its plastic manufacturing business. With the completion of the acquisition, the Interim Receiver was discharged, except with respect to the sale of certain property of Imperial PlasTech and its subsidiaries. As a result of the CCAA order, Imperial PlasTech is being directed by a Board comprised of Messrs. Peter J. Perley, Mark Weigel and William Thomson, with Mr. Perley being the Chairman of the Board, and being restructured by Mr. Perley, as Chief Restructuring Officer, in conjunction with the Board. Following discussions with the Toronto Stock Exchange, Imperial PlasTech has been advised that trading in the common shares of Imperial PlasTech on the TSX will be reinstated at the opening of trading on July 9, 2003. Imperial PlasTech and its subsidiaries are a diversified plastics manufacturer, supplying a number of markets and customers in the residential, construction, industrial, oil and gas and telecommunications and cable TV markets. Currently operating out of facilities in Edmonton Alberta and Atlanta Georgia, Imperial PlasTech intends to focus on the growth of its core businesses while assessing any non-core businesses. For more information, please access the Imperial PlasTech's Web site at http://www.implas.com ISTAR FINANCIAL: Commences 7-7/8% Preferred Share Offering ---------------------------------------------------------- iStar Financial Inc., (NYSE: SFI) has commenced an underwritten public offering of 5,600,000 shares of its 7-7/8% Series E Cumulative Redeemable Preferred Stock. Each share of Series E Preferred Stock will have a liquidation preference of $25.00 per share. The offering is being managed by Bear, Stearns & Co. Inc. The Series E Preferred Stock is being sold in exchange for 2,800,000 shares of iStar Financial's 9.5% Series A Cumulative Redeemable Preferred Stock, having a liquidation preference of $50.00 per share. iStar Financial will not receive any cash proceeds from the offering. iStar Financial (S&P/BB+/Positive) is the leading publicly traded finance company focused on the commercial real estate industry. The Company provides custom-tailored financing to high-end private and corporate owners of real estate nationwide, including senior and junior mortgage debt, senior, mezzanine and subordinated corporate capital, and corporate net lease financing. The Company, which is taxed as a real estate investment trust, seeks to deliver a strong dividend and superior risk-adjusted returns on equity to shareholders by providing innovative and value-added financing solutions to its customers. Additional information on iStar Financial is available on the Company's Web site at http://www.istarfinancial.com KAISER ALUMINUM: Sues Pechiney World Citing Breach of Contract -------------------------------------------------------------- Pechiney World Trade USA's failure to deliver critical materials prompted Kaiser Aluminum Corporation and its debtor-affiliates to file an adversary complaint for breach of contract. The Debtors relied on Pechiney to provide key raw materials used in the production of aluminum products. When Pechiney failed to deliver, the Debtors were forced to cover the raw materials with other more expensive sources. Pechiney is a division and trading arm of the French aluminum conglomerate, Pechiney Group. Pechiney is a dealer and distributor of aluminum products, which it obtains from its parent company, affiliates and independent sources. In the fall of 2000, the Debtors determined to stop production at its raw aluminum producing facilities. To meet its continued needs for that form of aluminum, the Debtors contacted Pechiney in November 2000. Accordingly, the parties entered into a supply contract. Under the agreement, Pechiney supplies the Debtors with aluminum of "North American Origin" priced at the MWTP average for the contractual month of delivery. Pechiney promised to deliver to the Debtors its declared monthly volume of aluminum up to 2,500 metric tons, shipped to certain destinations beginning in January 2001 and ending in December 2001. As part of the contract, the Debtors faxed and e-mailed several orders to Pechiney, including orders dated November 30, 2000, December 15, 2000, and January 15, 2001. In these orders, the Debtors specifically stated that a General Terms and Conditions of Purchase of Kaiser would govern the agreement between the parties. The contract was acknowledged by the parties' subsequent conduct, including Pechiney's delivery of aluminum to the Debtors and their payment for Pechiney's shipments. During the latter part of November 2000, the Debtors became concerned that an aluminum plant in Columbia Falls, Montana -- from which Pechiney planned to obtain aluminum to fulfill its contractual obligations -- might be decreasing production. By doing so, the plant in Columbia Falls could reduce its use of electricity and sell its unused electricity on the open market. At the time, the market for electricity in the Western United States was turbulent. The risk that the Columbia Falls plant would reduce its production was known and foreseeable to Pechiney before it contracted with the Debtors. In fact, the Columbia Falls plant had reduced its production levels in September 2000 in order to return electricity to the open market. The Debtors spoke with Pechiney personnel about the potential for decreased production from the Columbia Falls plant. The Pechiney personnel assured the Debtors that Pechiney would fulfill the contract and would not contend that any power crisis in California excused Pechiney's performance under the agreement. Throughout the contract period, the Debtors informed Pechiney that while they understood that aluminum would be supplied from the Columbia Falls plant, there was nothing unique about aluminum from that plant. The Debtors expected that Pechiney would fulfill the terms of the agreement regardless of the source as long as the metal met their specifications. In January 2001, the Columbia Falls plant announced that it was ending production. The Debtors immediately sought assurances from Pechiney that it would continue to fulfill its continued obligations to supply aluminum. The Debtors informed Pechiney that a voluntary decision by a supplier to curtail production did not excuse its contractual obligations. Pechiney supplied aluminum through March 2001 from existing inventory. After March 2001, however, Pechiney declined to supply the Debtors with aluminum at contract price. Pechiney claimed that the economic decision by its supplier to curtail production at its Columbia Falls plant constituted a force majeure event. Accordingly, the Debtors sought to cover their aluminum needs from other sources. While they were able to cover in the open market, they were required to do so at an increased cost that exceeded $1,000,000. Pechiney, the Debtors observe, is seeking to excuse its failure to perform by pointing to a supplier's foreseeable, economic decision to curtail production. But this excuse cannot shield Pechiney from liability. The Debtors demand more than $1,000,000 in judgment from Pechiney for the damages they incurred plus interest and the cost of the suit. (Kaiser Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) KMART CORP: Seeks Entry of Final Decree Closing 16 Unit's Cases --------------------------------------------------------------- Kmart Corporation and its debtor-affiliates ask the Court to issue a final decree pursuant to Section 350(a) of the Bankruptcy Code and Rule 3022 of the Federal Rules of Bankruptcy Procedure closing 16 cases for debtors that ceased to have a separate corporate existence pursuant to the restructuring transactions under Kmart's confirmed reorganization plan: 1. Big Beaver of Caguas Development Corporation, 2. Big Beaver of Caguas Development Corporation II, 3. Big Beaver of Carolina Development Corporation, 4. Builders Square Inc., 5. ILJ Inc., 6. JAF Inc., 7. Kmart CMBS Financing Inc., 8. Kmart Financing I, 9. Kmart Holdings Inc., 10. Kmart Michigan Property Services LLC, 11. Kmart of Amsterdam NY Distribution Center Inc., 12. Kmart Pharmacies of Minnesota Inc., 13. Kmart Pharmacies Inc., 14. PMB Inc., 15. Sourcing and Technical Services Inc., and 16. Troy CMBS Property LLC John Wm. Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, explains that these 16 estates have been fully administered pursuant to the Plan. All of the assets, if any, of these entities have been merged into the surviving Reorganized Debtors. According to Mr. Butler, these Debtors no longer have any corporate existence and all claims, if any, against them are deemed by the Plan to be against a single, substantively consolidated estate. Mr. Butler notes that all responsibilities for administering the Plan, resolving claims and making distributions to creditors lie with the surviving Reorganized Debtors and the Kmart Creditor Trust. Hence, it is appropriate to close these cases at this time. (Kmart Bankruptcy News, Issue No. 59; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEVEL 3 COMMS: Completes 2.875% Convertible Senior Note Offering ---------------------------------------------------------------- Level 3 Communications, Inc. (Nasdaq: LVLT) has completed the offering of $373.75 million aggregate principal amount of its 2.875% Convertible Senior Notes due 2010 in an underwritten public offering. The final offering amount included the exercise by the underwriters of their option to purchase up to an additional $48.75 million aggregate principal amount of the notes solely to cover over-allotments. Level 3 intends to use the net proceeds for working capital, capital expenditures and other general corporate purposes, including new product development, debt repurchases and acquisitions. The Convertible Senior Notes are convertible into shares of the company's common stock at a conversion price of $7.18 per share. The offering was underwritten by Citigroup, Credit Suisse First Boston, JPMorgan, Merrill Lynch & Co. and Morgan Stanley. Citigroup acted as the sole book running manager for the offering. A registration statement relating to the Convertible Senior Notes has been declared effective by the Securities and Exchange Commission. Offers and sales of the Convertible Senior Notes may be made only by the related prospectus and prospectus supplement, which may be obtained from Citigroup Global Markets Inc., 390 Greenwich Street, New York, N.Y., 10013. Level 3 (Nasdaq: LVLT) is an international communications and information services company. The company operates one of the largest Internet backbones in the world, is one of the largest providers of wholesale dial-up service to ISPs in North America and is the primary provider of Internet connectivity for millions of broadband subscribers, through its cable and DSL partners. The company offers a wide range of communications services over its broadband fiber optic network including Internet Protocol services, broadband transport, colocation services, Genuity managed services, and patented Softswitch-based managed modem and voice services. Its Web address is http://www.Level3.com The company offers information services through its subsidiaries, (i)Structure and Software Spectrum. For additional information, visit their respective Web sites at http://www.softwarespectrum.comand http://www.i-structure.com As reported in Troubled Company Reporter's July 3, 2003 edition, Standard & Poor's Ratings Services assigned its 'CC' rating to Level 3 Communications Inc.'s proposed shelf drawdown of $250 million convertible senior notes due 2010. All ratings on the company are affirmed. The outlook is negative. Although cash proceeds improve Level 3's liquidity, Standard & Poor's is still concerned about the company's ability to withstand prolonged industry weakness, and risk from its acquisition strategy. LEVI STRAUSS: Fitch Cuts Unsec. Debt & Facility Ratings to BB-/B ---------------------------------------------------------------- Levi Strauss & Co.'s secured bank facility rating is lowered to 'BB-' from 'BB' and its senior unsecured debt rating is lowered to 'B' from 'B+' by Fitch Ratings. As of May 25, 2003, Levi had about $1.7 billion in senior unsecured debt and $368 million in bank debt outstanding. The Rating Outlook is Negative, reflecting the continued challenges Levi faces in stimulating top-line sales growth and maintaining operating margins. The rating action reflects Levi's revised sales and earnings outlook for 2003, which anticipate softer, sales coupled with higher debt levels. As a result, credit measures will weaken from year-end 2002 levels. Also considered is the weak retail environment, which shows no signs of easing. These factors are weighed against Levi's solid brands with leading market positions as well as the geographic diversity of its revenue base and sufficient cash flow generation to meet capital needs. In connection with its second quarter earnings release, Levi announced that sales for fiscal 2003 are now expected to be flat, whereas sales had previously been expected to grow 2-5%. Softer sales are attributed to weak retail consumer spending. In particular, the department store channel, Levi's primary distribution channel, has been persistently weak in 2003 as consumers diversify their shopping patterns to include other channels. While operating margins are expected to be maintained in the range of 8-10%, the sales decline will result in operating profit being down. In addition, though debt levels were anticipated to rise, in part due to Levi's entry into the mass channel with its Levi Strauss Signature brand, the earnings shortfall and higher inventory levels from the weak retail environment are leading to a greater than originally expected increase in debt at year-end. As a result, credit protection measures at fiscal year-end 2003 are expected to weaken considerably from fiscal 2002 levels where leverage was reported at 3.6 times and coverage at 2.7x. Due to these changes, Levi also amended its bank credit facility to provide easier covenant levels. Though market share has slipped over the last few years, the Levi's brand remains one of the most well-recognized brand names in the world and its products continue to hold leading positions in most markets. Denim products account for the majority of Levi's sales, however, the company's Dockers brand, which accounted for about 25% of revenues, holds the number one market position for khaki pants in the U.S. In addition, Levi continues to introduce more innovative product, such as Type 1 jeans, but the ability of the company to differentiate itself from its competition with an ongoing line of more fashionable products and an updated image remains key to its future success. With products sold in about 100 countries worldwide, Levi also benefits from the geographic diversification of its revenue base. LTV CORP: Brings-In Professional Solutions as Tax Accountants ------------------------------------------------------------- The LTV Corporation and its debtor-affiliates ask Judge Bodoh for permission to employ Professional Solutions LLC as tax accountants in these estates, nunc pro tunc to January 15, 2003. Shana F. Klein, Esq., at Jones Day in Cleveland, says that the Debtors do not have the internal resources necessary to prepare and process annual income tax, franchise tax, and other tax returns required by applicable federal, state and local tax laws and regulations, and to perform the work which is incidental to the preparation and processing of these returns. As a result, the Debtors traditionally have used outside accounting firms to provide these services. Ms. Klein reminds Judge Bodoh that he previously approved the employment of Jefferson Wells International, Inc., as these estates' tax accountants. Ms. Klein says that the employment of Jefferson Wells "was concluded" without offering any further details. Accordingly, the Debtors do not have any professionals to perform these services at this time. Regarding the lengthy delay in presenting this application for employment, Ms. Klein explains that PSLLC began performing tax services for LTV Steel in January 2003. On February 3, 2003, Jefferson Wells filed a complaint in the Cuyahoga County Court of Common Please requesting that the Court restrain and enjoin PSLLC from using confidential information and trade secrets obtained while the PSLLC personnel were employed by Jefferson Wells. On February 7, 2003, the Court of Common Pleas signed an order granting Jefferson Wells' request for a temporary restraining order, but providing that PSLLC could continue providing services to LTV Steel. On April 30, 2003, a consent decree and agreed dismissal was entered. Accordingly, although PSLLC was performing tax services to the Debtors since January 15, 2003, LTV Steel was restrained from employing PSLLC until the PSLLC litigation was finally resolved. The Services The Debtors anticipate that PSLLC will provide these tax services: (a) Load trial balances into applicable computer software; (b) Prepare state apportionment information and enter that information into the software; (c) Prepare federal, state, local and foreign income and franchise tax returns, extensions, estimates and related work papers and documentation; (d) Process tax returns; (e) Perform account analysis and reconciliation for the appropriate tax treatment; and (f) Assist with other work relating to the tax returns, tax audits or other analysis as the Debtors may request from time to time. Compensation Subject to the Court's approval and under the terms and conditions of the engagement letter, PSLLC intends to charge a flat hourly rate for each professional, depending on the level of experience required for the applicable tasks. The specific professional levels and hourly billing rates are: Staff Tax Compliance Professional $ 54.00 Senior Tax Compliance Professional 64.00 Senior Tax and Accounting Specialist 69.00 The PSLLC professionals will not work in excess of 40 hours in one workweek without the prior, written authorization of LTV Steel. PSLLC Professionals' time will be billed at these rates for each hour up to and including 40 hours worked in one workweek. For all hours worked in excess if 40 hours in one workweek, these rates will apply: Staff Tax Compliance Professional $ 71.00 Senior Tax Compliance Professional 86.00 Senior Tax and Accounting Specialist 94.50 Under the terms of the engagement letter, the Debtors or PSLLC may terminate PSLLC's engagement at any time. Upon termination, however, the Debtors will remain obligated to pay any accrued fees and expenses as of the effective date of the termination. Any dispute between the Debtors and PSLLC must be brought in this Bankruptcy Court or, if the reference to the Bankruptcy Court is withdrawn, the District Court for the Northern District of Ohio. If the Bankruptcy Court or the District Court does not retain jurisdiction, any controversy will be resolved by arbitration under the commercial arbitration rules of the American Arbitration Association. The Debtors made no payments to PSLLC during the year immediately preceding the Petition Date. Post-petition, PSLLC billed LTV Steel: (a) $5,906.40 for work in January 2003; (b) $24,824.00 for work in February 22003; (c) $46,037.82 for work performed in March 2003; and (d) $48,248.44 for work performed in April 2003. As of May 16, 2003, LTV Steel has paid the January and February bills in their entirety, and has paid $36,830.26 of the March bill, and $38,598.75 (or 80%) of the April bill. David M. Hill, Managing Member of PSLLC, avers to Judge Bodoh that PSLLC is not and has not been employed by any entity, other than the Debtors, in matters related to these chapter 11 cases. From time to time, PSLLC might in the future perform services for interested parties in these cases, but unrelated to the matters for which PSLLC is to be employed. Undeterred by the delay in the presentation of this application, Judge Bodoh grants it. (LTV Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 609/392-00900) MAGELLAN HEALTH: Court Clears Proposed Info Blocking Procedures --------------------------------------------------------------- The Official Committee of Unsecured Creditors, appointed in the chapter 11 cases of Magellan Health Services, Inc. and debtor- affiliates, sought and obtained Court approval of information blocking procedures that will allow institutional creditors' committee members to continue trading in Magellan securities while serving on the Committee. Specifically, Judge Beatty rules that those Committee members who are engaged in the trading of Securities for others or for their own accounts as a regular part of their business will not violate their fiduciary duties as Committee members by trading in Magellan's Securities during the pendency of these Chapter 11 cases, provided that any Securities Trading Committee Member carrying out the trades establishes, effectively implements, and adheres to Screening Wall and other information-blocking policies and procedures approved by the Office of the United States Trustee and the Court. Michael S. Stamer, Esq. at Akin Gump Strauss Hauer & Feld LLP, in New York, emphasizes that these procedures will not have any impact on, or prohibit, curtail or restrict, the trading practices of a Committee member's affiliates. Mr. Stamer relates that the term "Screening Wall" refers to a procedure established by an institution to isolate its trading activities from its activities as a member of an official committee of unsecured creditors in a Chapter 11 case. A Screening Wall includes, among other things, such features as the employment of different personnel to perform certain functions, physical separation of the office and file space, procedures for locking committee-related files, separate telephone and facsimile lines for certain functions, and special procedures for the delivery and posting of telephone messages. These procedures prevent the Securities Trading Committee Member's trading personnel from use or misuse of non-public information obtained by the Securities Trading Committee Member's personnel engaged in Committee-related activities and also precludes Committee Personnel from receiving inappropriate information regarding such Securities Trading Committee Member's trading in Securities in advance of such trades. Although the Committee members owe fiduciary duties to the creditors of these estates, Mr. Stamer tells the Court that the Securities Trading Committee Members also may have fiduciary duties to maximize returns to their clients through trading securities. Thus, if a Securities Trading Committee Member is barred from trading in Magellan's Securities during the pendency of these bankruptcy cases because of its duties to other creditors, it may risk the loss of a beneficial investment opportunity for itself and its clients and, moreover, may breach its fiduciary duty to its clients. Alternatively, if a Securities Trading Committee Member resigns from the Committee, its interests may be compromised by virtue of taking a less active role in the reorganization process. Securities Trading Committee Members should not be forced to choose between serving on the Committee and risking the loss of beneficial investment opportunities or the non-service on the Committee and possibly compromising its responsibilities by taking a less active role in the reorganization process. Mr. Stamer states that any Committee member that wishes to trade in Magellan's Securities will file with the Bankruptcy Court a Screening Wall Declaration by each individual performing Committee-related activities in these Chapter 11 cases. That declaration or affidavit will state that the individual will comply with the Court-approved information blocking procedures. (Magellan Bankruptcy News, Issue No. 10: Bankruptcy Creditors' Service, Inc., 609/392-0900) MEGO FINANCIAL: Files for Chapter 11 Reorganization in Nevada ------------------------------------------------------------- Mego Financial Corp. (Pink Sheets:LESR), doing business as Leisure Industries Corporation of America and its subsidiaries Leisure Homes Corporation, Leisure Services Corporation, Leisure Resorts Corporation and Atlantic Development Corporation, filed a voluntary petition to reorganize under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Nevada. Leisure Industries said the filing was made as the prospect of obtaining long-term financing lessened significantly, as well as the challenges from loan defaults in the recent past. The company also said that it expects to present its plan for Debtor in Possession financing to the court by the end of the week. Steven D. Stern, executive vice president, Ballard Communications and chief spokesperson for Leisure Industries, said, "After reviewing all available options, management concluded that a filing was necessary to preserve the assets and values of Leisure Industries' operations and to protect the interest of its key constituencies, namely our employees, suppliers, customers, and creditors. "In Chapter 11, Leisure Industries and its subsidiaries expect to continue operating as the 'debtor in possession,'" added Stern. "As far as the company's customers are concerned, we will continue to provide them with world-class timeshare facilities and associated services delivered without interruption and on schedule. Moreover, we have worked at maintaining close relationships with our vendors and we expect continued support from this group as we move forward in the days and months ahead," he said, adding that "our employees should notice little or no difference in their jobs as we move through this challenging period." Leisure Industries is a full-service, vertically integrated vacation solutions provider specializing in travel and tourism packages, the development and operation of vacation ownership resorts, marketing land for use as vacation home sites, and providing consumer financing to purchasers of vacation ownership interests and land parcels through its wholly owned subsidiary, Leisure Homes Corporation. Leisure Industries is headquartered in Las Vegas, Nevada, and has properties in Arizona, California, Nevada, New Jersey, Colorado, Florida and Hawaii. For more information on the Leisure Industries family of companies, visit http://www.leisureindustries.com MEGO FINANCIAL: Case Summary & Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Mego Financial Corp. 2280 Corporate Circle Henderson, Nevada 89074 dba Leisure Industries Of America Bankruptcy Case No.: 03-52300 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Leisure Homes Corporation 03-52301 Leisure Resorts Corporation 03-52302 Leisure Services Corporation 03-52303 Atlantic Development Corporation 03-52304 Type of Business: Vacation time share resorts sales and management Chapter 11 Petition Date: July 9, 2003 Court: District of Nevada (Reno) Judge: Gregg W. Zive Debtors' Counsel: Stephen R Harris, Esq. Belding, Harris & Petroni, Ltd. 417 W Plumb Lane Reno, NV 89509 Tel: (775) 786-7600 Total Assets: Total Debts: ------------- ------------ Mego Financial Corp. $455,179 $39,319,861 Estimated Assets: Estimated Debts: ----------------- ---------------- Leisure Homes Corp. More than $100MM More than $100MM Leisure Resorts Corp. $1MM to $10MM $1MM to $10MM Leisure Services Corp. $0 to $50,000 $1MM to $10MM Atlantic Development $0 to $50,000 $10MM to $50MM A. Leisure Homes Corp.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Sovereign Bank Interest Rate Swaps $6,500,000 16 Westminster Street Providence, RI 02903 Attn: John Bear Las Vegas, NV 89121 Tel: 401-752-1020 Concord Servicing Corp. Goods/Services $506,734 6560 North Scottsdale Road Suite G100 Paradise Valley, AZ 852 Grand Flamingo Suites Promissory Note $500,000 Owners Association 2080 Corporate Circle Henderson, NV 89074 Attn: M.G. Jones Tel: 702-992-3649 Mastercorp, Inc. Goods/Services $361,728 3505 N. Main Street PO Box 4027 Crossville, TN 89074 Las Vegas, NV 89109 Tel: 702-699-7531 Grand Flamingo Plaza Promissory Note $361,728 Owners Association 2080 Corp. Circle Henderson, NV 89074 Attn: M.G. Jones Tel: 702-992-3649 Plaza Construction Corp. Professional Fees $299,324 260 Madison Avenue New York, NY 10016 Sierra Health & Life Goods/Services $254,742 Insurance PO Box 15645 Las Vegas, NV 89114-564 American International Cos. Goods/Services $248,801 Greenberg Traurig Goods/Services $218,725 TA/Western LLC Goods/Services $214,276 The Rouse Company - Fashion Goods/Services $213,762 Show Mall Suites at Steamboat Owners Promissory Note $200,000 Assoc. Sahara Hotel & Casino Goods/Services $162,000 First Insurance Funding Goods/Services $153,546 Corp. American Georgian Services Goods/Services $141,970 Inc. White Sands Waikiki Resort Goods/Services $130,000 Club Owners Association Hilltop Resort Owners Goods/Services $125,000 Assoc. Textron Financial Corp. Goods/Services $120,589 National Food Services Goods/Services $114,309 Best Bet Goods/Services $108,300 B. Leisure Resorts Corp.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Coca Cola Bottling Co. - Goods/Services $19,482 Colorado Young Electric Sign Co. Goods/Services $5,250 Timeshare Ware Goods/Services $5,124 Chandler Signs, L.P. Goods/Services $4,830 Monarch Promotions Goods/Services $4,160 Total Identity Group Goods/Services $3,485 Friendly Ford, Inc. Goods/Services $3,189 AT&T Wireless, Inc. Goods/Services $3,099 Textron Fin'l Corp. Goods/Services $2,700 The Cawley Company Goods/Services $2,590 Fleming Convenience Goods/Services $2,152 XO Comms Goods/Services $2,147 American Resort Dev't Goods/Services $1,935 United Parcel Service Goods/Services $1,560 South Jersey Awning & Signs Goods/Services $1,280 The Hertz Corp. Goods/Services $980 Office Depot Goods/Services $783 M&F Enterprises, Inc. Goods/Services $758 Broadwing Comms, Inc. Goods/Services $525 Glass Systems Goods/Services $363 C. Leisure Services Corp.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mastercorp, Inc. Goods/Services $1,085,184 3505 N. Market Street PO Box 4027 Crossville, TN 38557 Textron Financial Corp. Promissory Note $986,674 40 Westminster Street Providence, RI 2940 Jozac Business Center, LLC Lease Agreement $1,666,959 351 Rolling Oaks Drive Suite #103 Thousand Oaks, CA 91361 First American Title Goods/Services $670,662 Insurance 1160 N. Town Center Drive Suite 100 Las Vegas, NV 89144 Providian Bancorp Services Lease $661,975 1333 Broadway St., 5th Fl Oakland, CA 94612 I.C.E. Gallery Goods/Services $587,744 13450 N. Black Canyon Highway Suite 280 Phoenix, AZ 85029 Ungaretti & Harris Legal Services $539,109 3500 Three First Nat'l Plaza Chicago, IL 60602-4283 Concord Servicing Corp. $482,931 6560 North Scottsdale Road, Suite G100 Paradise Valley, AZ 85253 American Express Goods/Services $469,935 Attn: RPC 300 South Riverside Plaza 9th Floor South Chicago, IL 60606 American Resort Dev't Goods/Services $421,830 1201 15th Street NW Suite 400 Washington, DC 20005 Plaza Construction Corp. Professional Fees $415,728 260 Madison Avenue New York, NY 10016 Holland & Knight Legal Services $402,170 PO Box 32092 Lakeland, FL 33802-2092 Hartford Life & Accident Goods/Services $342,325 PO Box 31000 Honolulu, HI 96849-5233 Nevada Power Company Goods/Services $331,532 2225 Civic Center Drive 8am - 5pm (M-F) PO Box 30086 Reno, NV 89520-3086 Touch Screen Centers Goods/Services $290,000 9609 Aero Drive Suite 2000 San Diego, CA 92123 American Georgian Services Goods/Services $283,940 Inc. 909 Penfield St. #A Kissimme, FL 34742 Adp/ics Goods/Services $283,116 PO Box 23487 Newark, NJ 7189 TA/Western LLC Goods/Services $269,947 Jones Lang Lasalle Mgt. 135 S. Lasalle St. Dept. 3354 Chicago, IL 60674-3354 Clark County Sanitation Goods/Services $266,313 Dist. PO Box 98526 Las Vegas, NV 89193-852 Ecolab Institutional Goods/Services $257,092 PO Box 6007 Grand Forks, ND 58206-6007 D. Atlantic Development Corp.'s 3 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Mathun Fund, LLC Promissory Note $6,288,000 1819 E. Southern Ave., Suite D10 Mesa, AZ 85204 Doerge Collateralized Promissory Note $4,232,000 Bridge Fund 30 S. Wacker #2112 Chicago, IL 60606 Troon and Co. Promissory Note $3,506,000 MERRILL LYNCH: Fitch Affirms Class B-4 Notes' Rating at BB ---------------------------------------------------------- Fitch Ratings has taken rating actions on the following Merrill Lynch Mortgage Investors, Inc., mortgage pass-through certificates: Merrill Lynch Mortgage Investors, Inc., mortgage pass-through certificates, series 1999-2 -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A+'; -- Class B-3 upgraded to 'A' from 'BBB'; -- Class B-4 affirmed at 'BB'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. MOSAIC GROUP: JLL Completes Purchase of Sales Solutions Assets -------------------------------------------------------------- JLL Partners, a leading private equity firm, successfully closed its C$105 million purchase of Mosaic Sales Solutions Corporation through a Section 363 bankruptcy sales process from Mosaic Group, Inc., a Toronto Canada-based provider of marketing services. Mosaic Group, Inc. filed for protection under the Companies' Creditors Arrangement Act and Chapter 11 of the U.S. Bankruptcy Code in December 2002. Mosaic Sales Solutions provides outsourced direct customer sales, merchandising, training and data collection solutions in North America at retail for global, world class brands such as Procter & Gamble, Microsoft, American express, MBNA, Best Buy, AT&T Wireless, Nike, Epson and Labatt Breweries. Paul S. Levy, founder of JLL Partners, Inc. said, "In keeping with one of the objectives of our Fund IV, Mosaic Group Inc.'s bankruptcy proceedings offered us the opportunity to purchase a well-managed company with strong long-term growth prospects at an attractive valuation. The outsourced selling market is growing significantly as companies continue to focus on their core competencies and outsource non-core functions to third parties. Mosaic Sales Solutions has the scale to build necessary systems, technology and infrastructure to profitably provide unique marketing solutions that substantially outperform clients' internal resources and they do it better, faster and more cost effectively than what most companies can do on their own." Brian Meagher, Chief Executive Officer, Mosaic Sales Solutions said, "JLL's track record of successfully growing companies by investing time and expertise as well as capital, is a positive step towards us expanding our North American leading position as a trusted partner for our clients, As well, their commitment to partner with management and fund the purchase entirely with equity provides the stability to allow us to continue to invest against best-in-class solutions." Bill Lee, Senior Vice President Mosaic Sales Solution said, "JLL's investment approach and industry insight, in combination with their support of management's leadership, fuels Mosaic's continued strategy of providing unique sales solutions for our clients to win at retail." NATIONAL CENTURY: Gibbs & Bruns' Engagement Drawing Fire -------------------------------------------------------- Dean Wyman, Esq., Senior Trial Attorney, in Cleveland, Ohio, refers Section 327(e) of the Bankruptcy Code, which permits the retention of special counsel who does not represent an interest adverse to the subject matter of their retention. Mr. Wyman points out that Gibbs & Bruns has an adverse interest if it asserts any interest that may lessen the value of the estate. Hence, Mr. Wyman contends that Gibbs & Bruns' employment by National Century Financial Enterprises, Inc. and debtor-affiliates is objectionable as: A. Gibbs & Bruns Will Not Act Solely On Behalf of the Estates Gibbs & Bruns serves as counsel to many noteholders. These noteholders and the estates may have claims against third- parties. The proposed agreement suggests that Gibbs & Bruns may have to take positions that are in the best interest of all of the noteholders even if these positions are not in the best interest of the estates. "This indicates that Gibbs & Bruns is not able to act as a vigorous advocate for the Estates. Rather, Gibbs & Bruns seeks to place the estates into a group of clients, all of whom it hopes to represent. The estates deserve single-minded counsel, not counsel that represents potentially competing claimants," Mr. Wyman notes. B. The Noteholders Have Adverse Interests Mr. Wyman explains that the Noteholders' interests are adverse because Gibbs & Bruns will be called upon to make decisions based upon its legal judgment. Each of these decisions is tainted since Gibbs & Bruns will be representing both the noteholders and the estates. A decision to take legal action in one way may assist the noteholders but also harm the estates. "The better solution is for the Debtors to retain special counsel that is independent," Mr. Wyman emphasizes. Furthermore, many lawsuits are resolved through settlement. In settlement negotiations, agreements may be proposed that benefit one group of clients at the expense of other clients. Gibbs & Bruns cannot be an advocate for the estates in any negotiations because it also has to an obligation to seek a maximum recovery for the noteholders. Hence, Gibbs & Bruns is not independent and should not be permitted to represent both the noteholders and the estates. It is also possible that the litigation expenses incurred could become substantial. Mr. Wyman asserts that Gibbs & Bruns should not be provided unlimited and unrestricted authority to incur expenses. To this end, the Debtors should implement procedures to determine whether specific expenses should be incurred. That procedure would have the benefit of reducing the possibility that litigation expenses will diminish ultimate recoveries to the estates. C. Authority To Pay Local Counsel and Experts The application seeks to vest authority to Gibbs & Bruns to pay fees for experts and local counsel. Fees should only be paid to professionals after they have been retained pursuant to Sections 330 and 331 of the Bankruptcy Code. The proposal is inconsistent with the employment and compensation sections of the Bankruptcy Code. Mr. Wyman insists that this avers the principle that professionals must be employed before they can be paid should be applied in the case at bar. Gibbs & Bruns seeks to be employed under a contingency fees agreement. Yet they also seek authority to pay local counsel out of estate assets. The fees of local counsel, Mr. Wyman notes, may further reduce the ultimate recoveries to the estates. If the fees of local counsel become substantial, then the estates will bear the both the costs of the contingent fee with Gibbs and the legal fees of local counsel. If the litigation is unsuccessful, then the estates will have borne the burden of professional fees of local counsel without a commensurate benefit. Accordingly, the U.S. Trustee for Region 9, Saul Eisen, objects to the Debtors' application to employ Gibbs & Bruns as special litigation counsel. Bank One Objects Bank One N.A., as Indenture Trustee, believes that the Debtors' request to employ Gibbs & Bruns violates the requirements of Section 327 of the Bankruptcy Code, due to the acknowledged fact that Gibbs & Bruns represents interests adverse to the Debtors with respect to the very matters for which the Debtors propose their engagement. G. Christopher Meyer, Esq., at Squire, Sanders & Dempsey, in Cleveland, Ohio, relates that the Application, as well as the respective Engagement Letter, acknowledge and disclose that Gibbs & Bruns already represents or may in the future represent certain holders of the Notes issued by NPF VI and NPF XII for the specific purpose of pursuing claims on behalf of the Individual Noteholders that arise from or relate to the collapse of the Debtors. The Application makes a perfunctory statement that these claims are "distinguished" from those of the Debtors. Specifically, the terms of the proposed engagement acknowledge that future conflicts may arise between the Debtors and the Individual Noteholders, and provide that the conflicts will be resolved, to the detriment of these estates, by the withdrawal of Gibbs & Bruns as the Debtors' counsel. Mr. Meyer cites that in May 2003, Gibbs & Bruns filed suit in Arizona Superior Court on behalf of 184 different plaintiffs, including the City of Chandler, Arizona, 93 Arizona governmental entities and an array of other entities. The Arizona Litigation seeks money damages and related relief on behalf of the 184 Arizona Plaintiffs for losses arising out of the failure and collapse of the Debtors. Apparently, some of the plaintiffs hold NPF VI notes, some hold NPF XII notes, and some hold both. Obviously, all plaintiffs are creditors in these reorganization cases. Mr. Meyers relates that the Debtors fail to specify under which provision of Section 327 of the Bankruptcy Code the Application is being requested. For one, Gibbs & Bruns is referred to as "Special Litigation Counsel," a title which would indicate a retention under the auspices of Section 327(e) of the Bankruptcy Code. On the other hand, the inclusion of an Affidavit of Disinterestedness, as well as the lack of the required existing prepetition relationship between Gibbs & Bruns and the Debtors, suggests that the requested retention is sought under Section 327(a) of the Bankruptcy Code. In any case, it is apparent that, due to the unavoidable "adverse interest" held by Gibbs & Bruns in pursuing claims on behalf of both the Individual Noteholders and the Debtors simultaneously in the same matter, the Application should be rejected. Under either Section 327(a) or 327(e) provision, Mr. Meyers points out, the presence of this adverse interest is a fatal flaw. While Section 327(a) requires the additional element of disinterestedness, both Sections 327(a) and (e) are violated in circumstances where a professional holds an interest adverse to the estate that is related to the matter on which the attorney is to be employed. Thus, Mr. Meyers concludes, regardless of whether the proposed retention is requested pursuant to Section 327(a) or 327(e), the Application must be denied. Gibbs & Bruns holds an interest adverse to the Debtors' estates based on its simultaneous representation of the Individual Noteholders in pursuing claims against the same parties and for the same conduct as those on which it proposes to represent the Debtors. In addition, Gibbs & Bruns is representing the 184 different entities in the Arizona Litigation against the same parties and for the same conduct as those on which it proposes to represent the Debtors. Bankruptcy Courts have articulated these oft-quoted definition: "To 'hold an interest adverse to the estate' means: -- to possess or assert any economic interest that would tend to lessen the value of the bankruptcy estate or that would create either an actual or potential dispute in which the estate is a rival claimant; or -- to possess a predisposition under circumstances that render a bias against the estate." Mr. Meyer asserts that Gibbs & Bruns has undoubtedly failed to satisfy this strict standard. In representing both the Individual Noteholders as well as the Debtors, Gibbs & Bruns would be asserting an economic interest that would give rise to an actual or potential dispute in which the estate is a rival claimant. For example, in pursuing the claims for fraud and misappropriation, the Debtors' estates may be faced with defenses and counterclaims inapplicable to the Individual Noteholders. In this situation, Gibbs & Bruns could not zealously represent the interests of both the Debtors and the Individual Noteholders. Invariably, tension will result between, on the one hand, the provisions in the Engagement Letters requiring Gibbs & Bruns to withdraw from its representation of the Debtors and continue representing the Noteholders in the event of a "disabling conflict," and, on the other hand, the fiduciary duty of loyalty that Gibbs & Bruns will owe to the Debtors. In addition, the estates and the Individual Noteholders may disagree on any number of issues involving litigation strategy, alternative dispute resolution, and the terms of any settlement. For example, Gibbs & Bruns may choose to pursue a litigation strategy on behalf of the Debtors that would generate a quick settlement and recovery with minimal litigation costs, while the Individual Noteholders may prefer an entirely different approach. Mr. Meyer says the most fundamental conflict, however, arises from the fact that the Debtors and the Individual Noteholders are competing for the same pot of money from the same defendants and are essentially "rival claimants." Any efforts by Gibbs & Bruns to pursue a recovery for the Debtors necessarily mean a diminished recovery for the Noteholders, and vice versa. Thus, Bank One asks the Court to deny the Debtors' employment of Gibbs & Bruns. (National Century Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) NEXIA HOLDINGS: Sells Wichita Unit to Diversified Financial ----------------------------------------------------------- Nexia Holdings Inc. (OTCBB: NXIA) announced that on June 30, 2003, it restructured its holdings in certain subsidiaries and sold its interest in Wichita Development Corp. (Pink Sheets: WHDV) to Diversified Financial Resources Corp., (OTCBB: DFRC) in a transaction valued at $2.65 million. The transaction consists of the elimination of approximately $1.5 million in debt from the consolidated balance sheet of NXIA, a $150,000 note and 1,000,000 shares of DFRC stock with a guaranteed liquidation value of not less than $1 million over a period of 24 months. The sale was made in an effort to reduce negative cash flow and further improve the financial condition of NXIA. In an inter-company tax-free transaction, WHDV exchanged its shareholdings in Kearns Development Corp., for the Diversified Holdings I Inc. shareholdings in Salt Lake Development Corp. (DHI, Kearns and SLDC were all subsidiaries of NXIA at the time of the restructuring. See Item 1 Description of Business in the Dec. 31, 2002, NXIA Form 10KSB for a diagram of the corporate structure of NXIA). Subsequent to the inter-company transfers, NXIA sold to DFRC 100% of its shareholdings in WHDV. At the time of the sale of NXIA's shareholdings in WHDV, WHDV's real estate holdings consisted of two office buildings and a building with 18 residential apartments and a ground floor retail space. NXIA sold its shares of WHDV in exchange for a note in the amount of $150,000 and 1,000,000 shares of DFRC's restricted shares of common stock with a guaranteed liquidation value of not less than $1 million. In addition, NXIA will no longer have to consolidate approximately $1.5 million in debt currently on the books of WHDV and SLDC. NXIA's president, Richard Surber, commented, "The sale of WHDV is part of NXIA's plan to further streamline its operations, cut costs and reduce negative cash flow while preserving the upside profit potential from the sale of WHDV's properties. Furthermore, NXIA's consulting subsidiary Hudson Consulting Group Inc. will be retained to assist WHDV in resubmitting its application to become traded on the OTCBB. Hudson is currently assisting DFRC with its plans to build a natural resources company. NXIA may be the beneficiary of significant upside potential through liquidation of its 1,000,000 shares of restricted DFRC's stock over the next 24 months." The gross market value of WHDV's real estate holdings is estimated at $2.5 million with underlying debt of approximately $1.4 million. The real estate was being held at a depreciated cost basis of approximately $1,501,950. The real estate held by WHDV or its subsidiaries includes the following: NXIA headquarters located at 268 West 400 South in Salt Lake City. The building is two stories with 14,347 net rentable square feet of office space. SLDC purchased the property on March 6, 1998, by exercising its option to purchase the property through the payment of $418,762. SLDC financed the purchase price and borrowed an additional sum of $222,489, which is secured by the property. On Dec. 31, 2002, the outstanding debt on the property was $569,410 with monthly payments of $5,934. The estimated market value is approximately $1 million based upon a dated MAI appraisal. SLDC purchased a two-story 18-unit apartment building, located at 2402 Wall Ave. in Ogden, Utah, on July 23, 1998. The property includes an additional 7,500 square feet of commercial space. The total purchase price was $850,000. The balance owed at Dec. 31, 2002, was $590,560. The estimated market value is approximately $900,000 based upon management's opinion. The Trade Center Building: The building was purchased for $540,554 on Aug. 30, 2000. The Trade Center Building, which opened in 1921, is located in the downtown business district of Wichita, Kan., at 120 S. Market St. The building is a 48,500-square-foot, seven- story office building. WHDV holds title to the property subject to a mortgage of $273,173 at Dec. 31, 2002. The taxed assessed value of the building is $600,000. The loans on the Wichita and Salt Lake City properties have been paid current since the filing of Nexia's 10-QSB for the quarter ended March 30, 2003. The Ogden property is currently in default and efforts are being made with the assistance of Hudson to refinance the existing debt. Nexia is currently reviewing the potential of renovating office space in the Wallace-Bennett building where Nexia could relocate its offices within the next 12 months. The Wallace Bennett building is a 30,000-plus-square-foot turn-of-the-century building held by NXIA's majority-owned subsidiary, Wasatch Capital Corp. NXIA is a holding company with operations in real estate and financial consulting sectors. Investors are strongly encouraged not to make an investment which they cannot afford to lose. Additionally, Nexia strongly encourages the public to read the above information in conjunction with its Form 10KSB for Dec. 31, 2002, and 10QSB for March 30, 2003. These disclosures can be viewed at http://www.sec.gov For more information on Nexia Holdings Inc., visit its Web site at http://www.nexiaholdings.com * * * Going Concern Uncertainty In its SEC Form 10-QSB for the quarter ended March 31, 2003, Nexia reported: "The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred cumulative operating losses through March 31, 2003 of $9,413,705 and has a working capital deficit of $3,280,197 at March 31, 2003 all of which raise substantial doubt about the Company's ability to continue as a going concern. "Primarily, revenues have not been sufficient to cover the Company's operating costs. Management's plans to enable the Company to continue as a going concern include the following: - Increasing revenues from rental properties by implementing new marketing programs - Making certain improvements to certain rental properties in order to make them more marketable - Reducing negative cash flows by selling rental properties that do not at least break even - Refinancing high interest rate loans - Increasing consulting revenues by focusing on procuring clients that pay for services rendered in cash or highly liquid securities - Reducing expenses through consolidating or disposing of certain subsidiary companies - Raising additional capital through private placements of the Company's common stock "There can be no assurance that the Company can or will be successful in implementing any of its plans or that they will be successful in enabling the company to continue as a going concern. The Company's consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty." NEXIA HOLDINGS: Diversified Financial Confirms Asset Acquisition ---------------------------------------------------------------- Diversified Financial Resources Corp. (OTCBB: DFRC), announced that on June 30, 2003, it acquired a controlling interest in Wichita Development Corp. (Pink Sheets: WHDV) from Nexia Holdings Inc. (OTCBB: NXIA). NXIA sold DFRC 100% of its shareholdings in WHDV. WHDV's real estate holdings consisted of two office buildings and a building with 18 residential apartments and a ground floor retail space. The buildings have combined square footage of approximately 76,847. DFRC acquired the interest in WHDV from NXIA in exchange for a note in the amount of $150,000 and 1,000,000 shares of DFRC's restricted shares of common stock with a guaranteed liquidation value of $1,000,000. The gross market value of WHDV's real estate holdings is estimated at $2.5 million with underlying debt of approximately $1.5 million. The real estate is being held on the books of WHDV and its subsidiaries at a depreciated cost basis of approximately $1,501,950. The real estate held by WHDV or its subsidiaries includes the following: Office building located at 268 West 400 South in Salt Lake City. The building is two stories with 14,347 net rentable square feet of office space. Salt Lake Development purchased the property on March 6, 1998, by exercising its option to purchase the property through the payment of $418,762. Salt Lake Development financed the purchase price and borrowed an additional sum of $222,489, which is secured by the property. At Dec. 31, 2002, the outstanding debt on the property was $569,410 with monthly payments of $5,934. The estimated market value of this building is believed to be about $1,000,000 based upon an MAI appraisal from 1999. Salt Lake Development purchased a two-story 18-unit apartment building, located at 2402 Wall Ave. in Ogden, Utah, on July 23, 1998. The property includes an additional 7,500 square feet of commercial space. The total purchase price was $850,000. The balance owed at Dec. 31, 2002, was $590,560. The current financing is in default. Management is in the process of refinancing the property at a more favorable rate. The estimated market value is approximately $900,000. The Trade Center Building: The building was purchased for $540,554 on Aug. 30, 2000. The Trade Center Building, which opened in 1921, is located in the downtown business district of Wichita, Kan., at 120 S. Market St. The building is a 48,500-square-foot, seven- story office building. WHDV holds title to the property subject to a mortgage of $273,173 at Dec. 31, 2002. The tax assessed value of the building is $600,000. DFRC's president John Chapman commented, "This transaction is the first in hopefully a series of transactions to come whereby DFRC will begin its efforts to acquire significant real estate holdings. I am also excited to report that DFRC is diligently moving forward with its plans to commence its coal reclamation operations by the end of 2003. We are currently negotiating the purchase of a mining facility in Southern Utah which I anticipate will close by the end of July 2003. In addition, DFRC's offshore financing is successfully proceeding pursuant to 'Regulation S' and DFRC is receiving funds on a regular basis. In sum, DFRC is on track to build a successful mining reclamation and real estate company with significant upside potential for all investors that are in on what I believe to be the ground level." DFRC is currently a holding company with operations in real estate. DFRC is currently embarking upon plans to enter the coal reclamation industry by the close of 2003 through its wholly owned subsidiary MT&C Land & Natural Resources Corp. Investors are strongly encouraged not to make an investment which they cannot afford to lose. Additionally, DFRC strongly encourages the public to read the above information in conjunction with its Form 10KSB for Dec. 31, 2002, and 10QSB for March 30, 2003. These disclosures can be viewed at http://www.sec.gov DFRC's Web site can be viewed at http://www.dfrc.net * * * Going Concern Uncertainty In its SEC Form 10-QSB for the quarter ended March 31, 2003, Nexia reported: "The Company's consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred cumulative operating losses through March 31, 2003 of $9,413,705 and has a working capital deficit of $3,280,197 at March 31, 2003 all of which raise substantial doubt about the Company's ability to continue as a going concern. "Primarily, revenues have not been sufficient to cover the Company's operating costs. Management's plans to enable the Company to continue as a going concern include the following: - Increasing revenues from rental properties by implementing new marketing programs - Making certain improvements to certain rental properties in order to make them more marketable - Reducing negative cash flows by selling rental properties that do not at least break even - Refinancing high interest rate loans - Increasing consulting revenues by focusing on procuring clients that pay for services rendered in cash or highly liquid securities - Reducing expenses through consolidating or disposing of certain subsidiary companies - Raising additional capital through private placements of the Company's common stock "There can be no assurance that the Company can or will be successful in implementing any of its plans or that they will be successful in enabling the company to continue as a going concern. The Company's consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty." OM GROUP: Will Publish Second-Quarter 2003 Results on July 29 ------------------------------------------------------------- OM Group, Inc. (NYSE: OMG) will release second quarter 2003 earnings after the market closes on Tuesday, July 29, 2003. The earnings release will be available at the Company's Web site at http://www.omgi.com The conference call and live audio broadcast on the web will begin at 8:30 a.m. (ET) on Wednesday, July 30, 2003. The Company recommends visiting the web site at least 15 minutes prior to the Webcast to download and install any necessary software. Also, a Webcast audio replay will be available commencing from 12:00pm, July 30th through 12:00pm, August 6th under Webcasts. To access the Webcast simply log on to: www.omgi.com/investorrelations/webcasts.htm OM Group, Inc. through its operating subsidiaries, is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. OMG is a recognized leader in manufacturing products from base and precious metals and managing metals procurement related to these activities. The Company supplies more than 1,700 customers in 50 countries with over 3,000-product offerings. Headquartered in Cleveland, Ohio, OMG operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia. For additional information on OMG, visit the Company's Web site at http://www.omgi.com * * * As reported in Troubled Company Reporter's November 18, 2002, edition, Standard & Poor's lowered its corporate credit rating on metal-based specialty chemical and refined metal products producer OM Group Inc., to 'B+' from 'BB-' based on an expected diminished business profile following management's announcement that it was exploring strategic alternatives for its precious metals operations. Standard & Poor's said its ratings on OM Group remain on CreditWatch with negative implications where they were placed October 31, 2002. Cleveland, Ohio-based OM Group has about $1.2 billion of debt outstanding. ONLINE GAMING: Board Approves Plan to Retire $3 Million of Debts ---------------------------------------------------------------- On June 30, 2003, the Board of Directors of Online Gaming Systems, Ltd., approved a plan whereby it was determined to be in the best interests of the Company to enter into, and did enter into, an agreement to exchange all of its assets with Ahead Investment, Ltd., the Company's sole secured creditor, in satisfaction of $3,000,000.00 of the secured indebtedness. The Company's management investigated various possible alternatives to the above transaction but was without substantial resources to undertake any other alternative. Online Gaming Systems intends to consummate the above sale on or about July 21, 2003 after a vote of its stockholders. Online Gaming Systems, Ltd. develops and markets Internet and private network transaction based products that it only offers to licensed gaming operators inregulated jurisdictions. These products include Internet Casino Extension, a growing suite of casino games, webSports, a sports wagering system, Lotto Magic a lottery system for private, government and fund raising purposes, and Bingo Blast a multi-player system for charity and private organization use. The Company also offers wireless and portable gaming devices through Excel Design. Online Gaming Systems' March 31, 2003 balance sheet shows a working capital deficit of about $7.3 million and a total shareholders' equity deficit of about $7 million. OWOSSO CORP: Commences Trading on OTCBB Effective July 9, 2003 -------------------------------------------------------------- Owosso Corporation's (Nasdaq: OWOS) common stock was delisted from the Nasdaq SmallCap Market effective with the close of business on Tuesday, July 8, 2003. The delisting was a result of the market value of Owosso's publicly held shares falling below $1,000,000. Owosso's common stock commenced trading on Over-the-Counter Bulletin Board with open of business on July 9, 2003. The OTCBB is a regulated quotation service that displays real-time quotes, last sale price, and volume information in over-the-counter equity securities. OTCBB securities are traded by a community of market makers that enter quotes and trade reports through a sophisticated computer network. Investors work through a broker/dealer to trade OTCBB securities. Information regarding the OTC Bulletin Board, including stock quotations, can be found on the Internet at http://www.otcbb.com Owosso's ticker symbol will remain "OWOS" on the OTCBB; however, some Internet quotation services add an "OB" to the end of the symbol for the purpose of providing stock quotes (e.g. OWOS.OB). "While the decision by Nasdaq is disappointing, it was not unexpected, and we do not believe it will impact our current business strategy," said George B. Lemmon, Jr., Owosso's Chairman, Chief Executive Officer and President. "Management's focus has been and continues to be on growing the business at Stature Electric, the company's remaining segment," said Mr. Lemmon. Owosso is a manufacturer of fractional and integral horsepower motors, gear motors, and motor part sets. As reported in Troubled Company Reporter's May 14, 2003 edition, Owosso Corporation reached an agreement in April with its bank group to modify certain financial covenants, under which the company had previously been in technical default, and to forbear from exercising their rights under the company's credit facility. PEGASUS: Fitch Takes Rating Actions on 1999-1 & 2001-1 Notes ------------------------------------------------------------ Fitch Ratings has taken the following rating actions for Pegasus Aviation Lease Securitization, Series 1999-1 (PALS I) and Pegasus Aviation Lease Securitization III, Series 2001-1 (PALS III), as outlined below: PALS I --Class A-1 notes are downgraded to 'BBB' from 'A+' --Class A-2 notes are downgraded to 'BBB' from 'A+' --Class B-1 notes are downgraded to 'B' from 'BBB' --Class C-1 notes are downgraded to 'CCC' from 'B' --Class D-1 notes are downgraded to 'C' from 'CCC' --All classes are removed from Rating Watch Negative PALS III --Class A-1 notes are downgraded to 'A-' from 'AA' --Class A-2 notes are downgraded to 'A-' from 'AA' --Class A-3 notes are downgraded to 'A-' from 'AA' --Class B-1 notes are downgraded to 'BB+' from 'A' --Class B-2 notes are downgraded to 'BB+' from 'A' --Class C-1 notes are downgraded to 'B+' from 'BBB' --Class C-2 notes are downgraded to 'B+' from 'BBB' --Class D-1 notes are downgraded to 'CCC' from 'BB' --All Classes are removed from Rating Watch Negative The downgrades reflect notable drops in 2003 collections to date as well as Fitch's expectation that this trend will likely continue at least through 2004 for both transactions. In the five months ended May 2003, PALS I and PALS III rental collections averaged $3.4 million and $8.3 million, respectively, compared to averages of $4.9 million and $9.1 million in the first 5 months of 2002. The weaker collections at primarily reflect increased nonperforming aircraft and aircraft that have been released at rates well below previous levels. The PALS I nonperforming aircraft include 3 aircraft leased by Air Canada, who has been in bankruptcy since April 2003; 1 aircraft leased to Avianca, who has been in bankruptcy since March 2003, and 2 aircraft without lessees that are being remarketed. The PALS III nonperforming aircraft include 4 aircraft leased by Air Canada. While PALS I lease expirations during the next 18 months are not are not overwhelming (at 18% of the appraised portfolio value at December 2002), the aircraft to be remarketed include certain Boeing aircraft, including 737-200s, that are particularly challenging to re-lease. PALS III lease expirations during the next 18 months are greater than PALS I (about 29%), but are less exposed to illiquid aircraft types. The continued depressed demand for many aircraft types will likely further impair lease rates. Additional market events such as terrorist attacks, airline bankruptcies and or airline liquidations are possible and would exacerbate weak lease rates. In May 2003, PALS I did not have enough cash flow to pay current interest on the class D notes. Because the class D notes do not have liquidity available to fund the cash flow shortfall, interest was not paid in May 2003. Fitch expects that this shortfall may not continue the next 3 months, but is likely to resume thereafter. In addition, Fitch is concerned that cash flows may also be insufficient to pay class C interest on PALS I before yearend 2003 and class D interest on PALS III during the next 18 months. Both classes do however have considerable liquidity available to fund those shortfalls. PALS and PALS III originally issued $667 million of notes in March 1999 and $1,127 million of notes in March 2001, respectively. As of May 2003 PALS has $557.4 million of notes outstanding while PALS III has $1,024 million of notes outstanding. PALS and PALS III are trusts formed to conduct limited activities, including the buying, owning, leasing and selling of commercial jet aircraft. Aircraft servicing, including remarketing and administrative services, is being performed by Pegasus Aviation, a privately held aircraft operating lessor. PEREGRINE SYSTEMS: SEC Drops Request for Financial Penalties ------------------------------------------------------------ Peregrine Systems, Inc. (OTC: PRGNQ), a leading provider of Consolidated Asset and Service Management software, announced that the Securities and Exchange Commission has decided to withdraw its request for monetary penalties and disgorgement in the civil action the SEC filed against the company on June 30. The SEC announced its decision during a scheduled Chapter 11 court hearing in the U.S. Bankruptcy Court in Pittsburgh. The SEC settlement with Peregrine, including the absence of financial penalties, requires approval of the U.S. District Court of Southern California, which is overseeing the SEC's complaint against the company. "We are extremely pleased with the SEC's decision not to seek to impose a fine on the company," said Gary Greenfield, Peregrine's CEO, who joined the company in June 2002. "This is a very positive milestone for the company as we move toward emergence from Chapter 11 this summer. The decision reflects well on our efforts to cooperate fully with the SEC's investigation on behalf of the company and our stakeholders, as well as Peregrine's efforts to preserve equity for current shareholders in the reorganized company." According to Tom McNamara, a partner in the law firm of La Bella & McNamara, which is representing Peregrine in the SEC matter, "This is a significant and positive development for the company. We believe the SEC's decision recognizes the good-faith efforts that Peregrine has made to ensure that current equity holders, as well as equity and note holders who have sold their Peregrine securities, are treated fairly in Peregrine's reorganization plan. The SEC acknowledged that, under the unusual circumstances of this case, a financial penalty would not be necessary." Peregrine earlier this year completed a restatement of financial results for 11 quarters in fiscal years 2002, 2001 and 2000. In addition, its board adopted a Compliance Policy, which among other things called for two new positions: corporate compliance officer and internal auditor. A compliance program is currently being established to develop company-wide, compliance-related processes and procedures under the direction of the new compliance officer. The company also formed a new board earlier this year with four outside directors who have deep technology and governance experience. Peregrine filed a voluntary Chapter 11 petition on Sept. 22, 2002 after accounting irregularities came to light, requiring a restatement of 11 quarters. Founded in 1981, Peregrine Systems develops and sells application software to help large global organizations manage and protect their technology resources. With a heritage of innovation and market leadership in Consolidated Asset and Service Management software, the company's flagship offerings include ServiceCenter(R) and AssetCenter(R), complemented by employee self service, automation and integration capabilities. Headquartered in San Diego, Calif., Peregrine's solutions facilitate the automation of business processes, resulting in increased productivity, reduced costs and accelerated return on investment for its more than 3,500 customers worldwide. PG&E ENERGY: Trading Units' 30-Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: PG & E National Energy Group, Inc. 7600 Wisconsin Avenue Bethesda, Maryland 20814 dba PG & E Diversified Investments, Inc. Bankruptcy Case No.: 03-30459 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- PG & E Energy Trading - Power, L.P. 03-30461 PG & E ET Investments Corporation 03-30462 PG & E Energy Trading Holdings Corporation 03-30463 PG & E Energy Trading - Gas Corporation 03-30464 Energy Trading - Power, ET Investments, Energy Trading Holdings, and Energy Trading - Gas' 30 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ ConocoPhillips Company Trade $10,119,051 1801 Cherokee PO Boc 2197 Houston, TX 77252-2197 Attn: Legal & Confirmations Dept. Tel: 281-293-5838 Fax: 281-293-5329 Duke Energy Trading & Trade $8,591,558 Marketing, LLC ($100,000 cash 5400 Westheimer Court deposit) Houston, TX 77056 Attn: Legal & Confirmations Dept. Tel: 713-627-5400 Fax: 713-627-6188 AEP Energy Services, Inc. Trade $7,009,063 155 West Nationwide Blvd. Suite 500 Columbus, Ohio 43215 Attn: Legal & Confirmations Tel: 614-583-7051 Fax: 614-583-1606 Coral Energy Resources, LP Trade $6,096,695 909 Fannim Suite 700 Houston, TX 77010 Attn: Legal & Confirmations Dept. Tel: 713-767-5400 Fax: 858-320-1570 PJM Interconnection LLC Trade $5,455,281 955 Jefferson Avenue ($19,243,000 cash Valley Forge Corp. Center deposit) Norristown, PA 19403-2497 Tel: 610-666-8800 Fax: 610-666-4281 Liberty Electric Power, Trade $4,329,850 LLC 13880 Dulles Corner Lane Hemdon, VA 20171-4600 Tel: 703-561-6788 Fax: 703-561-7303 Morgan Stanley Capital Trade $3,995,612 Group ($10,508,000 cash 1585 Broadway deposit) New York, NY 10036 Attn: Legal & Confirmations Dept. Tel: 713-830-8868 Calpine Fuels Corp. Trade $3,995,612 Calpine Energy Services, L.P. 700 Louisiana, Suite 2700 Houston, TX 77002 Attn: Legal & Confirmations Dept. Tel: 713-830-8868 Fax: 713-830-8868 Duke Energy Trading and Trade $2,936,448 Marketing 5400 Westheimer Court Houston, TX 77056 Attn: Legal & Confirmations Dept. Tel: 713-627-5400 Fax: 713-989-0267 Exelon Generation Co. Trade $2,908,782 LLC ($5,650,000 cash 2004 Renaissance Blvd. Deposit) King of Prussia, PA 19406 Attn: Legal & Confirmations Dept. Tel: 610-765-6748 Fax: 610-765-7727 Mirant Americas Energy Trade $2,907,406 Marketing ($5,457,719 cash 1155 Perimeter Center West deposit) Suite 130 Atlanta, GA 30338-5416 Attn: Legal & Confirmations Dept. Tel: 678-579-3302 Fax: 678-579-5753 Edison Mission Marketing Trade $2,737,062 & Trading 160 Federal Street Boston, MA 02110 Attn: Legal & Confirmations Dept. Tel: 617-912-5991 Fax: 617-912-5702 Massey Coal Sales Co., Trade $1,800,083 Inc. (850,000 cash PO Box 26765 Richmond, VA 23261 Attn: Legal & Confirmations Dept. Tel: 804-782-1637 Fax: 804-788-1816 Lehman Brothers Trade $1,612,346 70 Hudson Street, 7th Floor Jersey City, NJ 07302 Attn: Legal & Confirmations Dept. Tel: 201-524-4374 Fax: 201-524-2456 Interocean Coal Sales, LDC Trade $1,415,639 530 Beacon Parkway, West Suite 800 Birmingham, AL 35209-3196 Attn: Legal & Confirmations Dept. Tel: 205-945-6386 Fax: 205-945-6378 Commonwealth Coal Trade $1,202,827 Services 5413 Paterson Avenue Suite 200 Richmond, VA 23226 Attn: Legal & Confirmations Dept. Tel: 804-282-9833 Fax: 804-282-9836 Texas Eastern Trade $1,097,785 Transmission Corp. PO Box 201210 Houston, TX 77216-1210 Attn: Legal & Confirmations Dept. Tel: 713-759-4162 Fax: 713-260-1825 J. Aron & Co. Trade $987,000 85 Broad Street New York, NY 10004 Attn: Legal & confirmations Dept. Tel: 212-902-8400 Fax: 212-344-3457 Tennessee Gas Pipeline Trade $934,047 9 Green Way ($3,000,000 cash Houston, TX 77046 deposit) Attn: Legal & Confirmations Dept. Tel: 713-676-5591 Fax: 713-420-5225 Portland General Electric Trade $873,650 Co. 121 S.W. Salmon Street Portland, OR 97204 Attn: Legal & Confirmations Dept. Tel: 503-464-8904 Fax: 503-464-2605 CSL International Inc. Trade $846,585 55 Tozer Road Beverly, Massachusetts 01915 Attn: Legal & Confirmations Dept. Tel: 978-922-1300 Fax: 978-922-1772 TXU Energy Trading Co. Trade $792,865 TXU Portfolio Management Co. LP 1717 Main Street Suite 1900 Dallas, TX 75201-4689 Attn: Legal & Confirmations Dept. Tel: 214-875-9527 Fax: 214-875-9050 El Paso Natural Gas Co. Trade $762,764 PO Box 1492 El Paso, Texas 79978 Attn: Legal & Confirmations Dept. Tel: 713-420-3435 Fax: 713-420-1934 Coral Power, LLC Trade $732,200 909 Fannin, Suite 700 Houston, TX 77010 Attn: Legal & Confirmations Dept. Tel: 713-767-5400 Fax: 713-265-1937 BP Canada Energy Marketing Trade $649,418 Corp. ($1,245,400 cash BP Canada Energy Marketing Corp. deposit) 240 4th Avenue, SW Calgary, Canada T2P 4H4 Attn: Legal & Confirmations Dept. Tel: 403-233-1313 Fax: 403-233-5777 ANR Pipeline Company Trade $626,122 PO Box 78031 ($1,245,400 cash Detroit, MI 48278 deposit) Attn: Legal & Confirmations Dept. Tel: 713-420-6593 Fax: 713-420-4099 Iroquis Gas Transmission Trade $622,556 One Corporate Drive, Suite 600 Shelton, CT 06484 Attn: Legal & Confirmations Dept. Tel: 203-944-7020 Fax: 203-929-9501 Coral Canada U.S. Inc. Trade $617,179 3500,450 - 1st Street S.W. Calgary, Canada T2P 5H1 Attn: Legal & Confirmations Dept. Tel: 403-216-3600 Fax: 403-216-3602 Algonquin Gas Transmission Trade $614,688 Co. 1284 Soldiers Field Road Boston, MA 02135 Attn: Legal & Confirmations Dept. Tel: 617-254-4050 Fax: 617-560-1392 Electric Reliab CNCL of Trade $536,805 TX 7620 Metro Center Drive Austin, TX 78744-1654 Attn: legal & Confirmations Dept. Tel: 512-248-6509 Fax: 512-225-7079 PG&E NATIONAL ENERGY: PG&E Corp. Unfazed by Chapter 11 Filing ------------------------------------------------------------- PG&E Corporation (NYSE: PCG) reported that, as expected, its PG&E National Energy Group, Inc., unit and certain PG&E NEG subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Maryland, Greenbelt Division. As previously disclosed, PG&E Corporation does not expect that the outcome of PG&E NEG's bankruptcy proceedings will have a material adverse effect on the financial condition of PG&E Corporation, which has no material obligations to PG&E NEG. In May 2003, PG&E Corporation stated that the restructuring of PG&E NEG would inevitably be implemented through a Chapter 11 proceeding and that a bankruptcy filing could take place as early as the second quarter of 2003. Although PG&E Corporation worked hard and in good faith for many months to structure an agreement that would allow PG&E Corporation to retain ownership of PG&E NEG for the benefit of the Corporation's shareholders, those efforts were ultimately unable to produce a consensus among creditors. The Plan of Reorganization filed by PG&E NEG provides that PG&E Corporation will have no equity interest in PG&E NEG or any of its subsidiaries after its Chapter 11 reorganization plan is implemented. The entities that filed for Chapter 11 reorganization are: -- PG&E National Energy Group, Inc.; -- PG&E Energy Trading Holdings Corporation; -- PG&E Energy Trading - Gas Corporation; -- PG&E Energy Trading - Power Corporation; -- PG&E ET Investments Corporation; and -- USGen New England, Inc. Other PG&E NEG subsidiaries, including PG&E Gas Transmission Northwest and numerous independent electric producers, are not filing for Chapter 11 reorganization. It is expected that day-to- day operations at these affiliates will be largely unaffected by today's Chapter 11 filings. PG&E Corporation has no equity infusion agreements, material contingent liabilities, or tax-sharing agreement with PG&E NEG. The Corporation also does not expect the outcome of PG&E NEG's bankruptcy to have any effect on its utility subsidiary, Pacific Gas and Electric Company, or the utility's reorganization plan and proposed settlement agreement to end its Chapter 11 bankruptcy. "[Tues]day's Chapter 11 filings are the next step forward for PG&E NEG and its creditors, and they advance the Corporation's goal of resolving uncertainties we have been managing since the onset of the energy crisis," said Robert D. Glynn, Jr., Chairman, CEO and President of PG&E Corporation. "Moving forward, PG&E Corporation will continue to focus on several critical objectives, including implementing the proposed settlement agreement to end the utility's Chapter 11 case, maximizing the value of our utility operations, and strengthening our balance sheet." PG&E NAT'L ENERGY: S&P Drops Credit Rating to D over Bankruptcy --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on two of PG&E National Energy Group Inc.'s subsidiaries, PG&E Energy Trading Holdings and USGen New England Inc., to 'D' from 'C' and removed the ratings from CreditWatch. "We lowered the ratings on ETH and USGenNE and removed the ratings from CreditWatch, following NEG's announcement today that it has voluntarily filed petitions for protection under Chapter 11 of the federal bankruptcy code," said Standard & Poor's credit analyst Arleen Spangler. At the same time, Standard & Poor's lowered its corporate credit ratings on another NEG subsidiary, PG&E Gas Transmission Northwest, to 'CC' from 'CCC' and removed the rating from CreditWatch. The outlook is negative. GTN's rating was lowered to reflect a differential between a rating on a ring-fenced entity and its ultimate parent; in this case, NEG. While GTN benefits from the legal protection of various structural enhancements that allow Standard & Poor's to rate it primarily on its own merits, it guarantees several obligations of its energy trading affiliate, which, if demanded may be difficult to fund and may result in GTN seeking protection from its creditors. The ratings on Indiantown Cogeneration Funding Corp. and Selkirk Cogen Funding Corp. are not affected by the rating action on NEG because these project financings are structured as bankruptcy- remote entities and are not 100% owned by NEG. Therefore, the incentives to consolidate them in a bankruptcy of NEG is low. PHASE2MEDIA: Delaware Court Confirms Chapter 11 Reorg. Plan ----------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York confirmed Phase2Media, Inc.'s Plan of Reorganization after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) the Plan does not contain any rate changes subject to any governmental regulatory commissions; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Plan provides for the continuation of all retiree benefits in compliance with 11 U.S.C. Sec. 1114. Any executory contracts or unexpired leases, which have not expired by their own terms shall be deemed rejected by the Debtors on the Effective Date. All executory contracts and unexpired leases listed in the Schedule of Assumed and Assumed and Assigned Executory Contracts and Unexpired Leases, shall be deemed assumed by the Debtors on the Effective Date. Phase2Media, Inc., an online advertising, sales and marketing company, filed for Chapter 11 protection on July 18, 2001, (Bankr. S.D.N.Y. Case No. 01-14020). Harold D. Jones, Esq., at Jaspan Schlesinger Hoffman, LLP, represents the Debtor in its restructuring effort. When the Company filed for protection from its creditors, it listed $18,057,000 in assets and $19,672,000 in debts. POLAROID CORP: Wants More Time to Move Actions to Delaware Court ---------------------------------------------------------------- Pursuant to Section 1452 of the Judicial Procedures Code and Rules 9006 and 9027 of the Federal Rules of Bankruptcy Procedure, Polaroid Corporation and its debtor-affiliates ask the Court to extend their time to remove pending proceedings to the later to occur of: (i) November 30, 2003; or (ii) 30 days after entry of an order terminating the automatic stay with respect to any particular action sought to be remove. Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, says the Debtors require additional time to determine which of the state court actions, if any, they will remove. Mr. Galardi relates that the Debtors are parties to a number of different judicial and administrative proceedings currently pending in various courts or administrative agencies throughout the country. The Actions involve a wide variety of claims, some of which are extremely complex. The Actions consist of all forms of environmental, commercial, employment-related, product liability, trademark and patent litigation. Because of the number of Actions involved and the wide variety of claims, the Debtors require additional time to determine the Actions to be removed and transferred to the district. Mr. Galardi asserts that the requested extension is warranted and should be granted because: (a) it will afford the Debtors a sufficient opportunity to make fully informed decisions concerning the possible removal of the Actions that will protect their valuable right to adjudicate lawsuits if the circumstances warrant removal; (b) the Debtors made significant achievements to date, including the consummation of the sale of substantially all of the Debtors' assets, and the recent filing of the Second Amended Plan; (c) the Debtors' adversaries will not be prejudiced by an extension because the adversaries may not prosecute the Actions absent relief from the automatic stay; and (d) if the extension is granted, nothing will prevent any party to a proceeding that the Debtors seek to remove from pursuing a remand. (Polaroid Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) PRIME RETAIL: Enters Pact to Sell Assets to Lightstone Group ------------------------------------------------------------ Prime Retail, Inc. (OTC Bulletin Board: PMRE, PMREP, PMREO) and The Lightstone Group, LLC, a New Jersey-based real estate company, announced that an affiliate of Lightstone has agreed to acquire the Company. The Acquisition will be effected in accordance with the terms of a merger agreement entered into today between Prime Outlets Acquisition Company, LLC, a Delaware limited liability company which is an affiliate of Lightstone, and the Company, which provides for the Company to be merged with and into the Buyer. The transaction, which will result in aggregate consideration of $115 million payable to the Company's shareholders and unit holders, has a total value of approximately $638 million, including $523 million of debt expected to be assumed by the Buyer. Under the terms of the agreement, each holder of the Company Series A preferred stock will receive cash in the amount of $16.25 per share, each holder of the Company Series B preferred stock will receive cash in the amount of $8.66 per share, and each holder of the Company common stock will receive cash in the amount of $0.18 per share. The board of directors of the Company, as well as a special committee comprised of disinterested members of the board of directors, have approved the Acquisition and the Merger Agreement and recommended that the shareholders vote in favor of the resolutions to be proposed at a special meeting of the Company's shareholders. Because the Company's charter does not address the allocation of consideration among the Company's various classes of capital stock in the Acquisition, such allocation was recommended by the special committee and approved by the board of directors. Houlihan Lokey Howard & Zukin Capital acted as financial advisor to the special committee and Houlihan Lokey Howard & Zukin Financial Advisors, Inc., an affiliate of Houlihan Lokey Howard & Zukin Capital, has provided an opinion to the special committee and the Company's board of directors that the consideration to be received by each of the classes of the Company's stock, considered independently, is fair to such respective classes, from a financial point of view. Closing of the Merger Agreement is subject to a number of conditions including the approval of the Acquisition and the Merger Agreement by the holders of at least 66-2/3% of both the Series A preferred and the Series B preferred, each voting separately as a class, and the approval of the holders of a majority of the common stock of the Company voting to both amend the charter of the Company and approve the transaction, as well as other customary consents and approvals. The Acquisition is expected to be completed during the third or fourth quarter of 2003. Formal documentation relating to the Acquisition and the Merger Agreement will be sent to the shareholders and limited partners of the Company. This documentation will include notices of the special meeting and details of the Acquisition and the Merger Agreement and related matters. Concurrent with the consummation of the Acquisition, the agreement of limited partnership of Prime Retail, L.P., the operating partnership through which the Company conducts substantially all of its business, will be amended and restated pursuant to which holders of common units in the Operating Partnership (other than common units held by the Company) will have the opportunity to exchange all, but not less than all, of their units for a like number of preferred units in the Operating Partnership. Each holder of Preferred Units will be entitled to require the Operating Partnership to redeem all of such holder's Preferred Units for an amount per unit equal to $0.18 (the consideration paid for a share of common stock of the Company in the Acquisition) plus accrued and unpaid distributions at the rate of 6% per annum. In addition, the Amended Partnership Agreement contains certain tax related provisions that, subject to certain exceptions, will benefit holders of Preferred Units for a period of seven years including restrictions on the sale of properties and requirements to allocate debt in a certain manner. The Company has agreed to pay the Buyer a termination fee of $4.5 million, plus expenses of up to $1.5 million, if the Acquisition is not completed under certain circumstances, including the Company's election to pursue an alternative transaction. In certain other circumstances in which the Acquisition has not been completed, including the failure to obtain the shareholder approval of the Acquisition, a termination fee will not be payable but the Company has agreed to reimburse the Buyer for its expenses up to $3.5 million. Commenting on the transaction, Glenn Reschke, chairman and chief executive officer of Prime Retail, stated, "We believe the proposed transaction will be beneficial to all of the various constituents associated with our Company. For the three classes of our shareholders, it offers an opportunity to realize cash values that are well above the current market price for our securities in that the offer represents a premium of 66%, 57% and 42%, respectively, over the average closing price of $9.79 for the Series A preferred, $5.53 for the Series B preferred, and $0.127 for the common stock for the month of June, 2003. For our tenants, the relationship with a well-capitalized real estate organization such as The Lightstone Group will provide us with the access to capital we need to finish the rehab of our centers and refine and expand our marketing efforts aimed at improving sales. For our employees, the Buyer's commitment to maintain the Company's headquarters in Baltimore will be good news to the over 90 employees based here." "The merger with Prime Retail will provide a solid platform for Lightstone to further expand its real estate holdings into the retail arena, an area where I see great opportunity in the future," said David Lichtenstein, president and chief executive officer of The Lightstone Group. "In the past three years, the current management team at Prime Retail has done a good job of financially stabilizing the Company and reducing its considerable debt. However, the Company nonetheless still lacks sufficient capital to reinvest in its assets to grow income and realize its full potential. Our plan is to work with the talented team of professionals that the Company has assembled in Baltimore and provide the financial platform and capital needed to grow and expand the Company into other complementary forms of retail and entertainment. I share the Company's vision to become a dominant owner/operator of retail properties." Howard Amster and Gary Skoien, the two members of the Company's board of directors who were elected by the Company's preferred stockholders and who collectively own, 6% of the Company's Series A preferred stock and 15% of the Company's Series B preferred stock, have recommended approval of the transaction by all the shareholders of the Company. They have also agreed to vote their shares in favor of the Acquisition, unless the recommendation of the Company's board of directors is withdrawn. Prime Retail is a self-administered, self-managed real estate investment trust engaged in the ownership, leasing, marketing and management of outlet centers throughout the United States. Prime Retail currently owns and/or manages 37 outlet centers totaling approximately 10.4 million square feet of GLA. Prime Retail also owns 154,000 square feet of office space. Prime Retail has been an owner, operator and a developer of outlet centers since 1988. For additional information, visit Prime Retail's Web site at http://www.primeretail.com Founded in 1988, The Lightstone Group has become one of the largest, private real estate companies in the industry. The Company owns/manages a diversified portfolio of 15,000 apartments as well as office, industrial and retail properties totaling more than 8.5 million square feet of space in 16 states and Puerto Rico. Headquartered in Lakewood, New Jersey, The Lightstone Group employs over 400 professionals and maintains offices in Maryland, Virginia, California, and New York. The Lightstone Group is currently embarked on an aggressive acquisition and expansion program throughout the United States. For additional information, visit The Lightstone Group's Web site at http://www.lightstonegroup.com * * * Liquidity and Going Concern Uncertainty As reported in Troubled Company Reporter's May 16, 2003 edition, the Company's liquidity depends on cash provided by operations and potential capital raising activities such as funds obtained through borrowings, particularly refinancing of existing debt, and cash generated through asset sales. Although the Company believes that estimated cash flows from operations and potential capital raising activities will be sufficient to satisfy its scheduled debt service and other obligations and sustain its operations for the next year, there can be no assurance that it will be successful in obtaining the required amount of funds for these items or that the terms of the potential capital raising activities, if they should occur, will be as favorable as the Company has experienced in prior periods. During 2003, the Company's first mortgage and expansion loan matures on November 11, 2003. The Mega Deal Loan, which is secured by a 13 property collateral pool, had an outstanding principal balance of approximately $262.9 million as of March 31, 2003 and will require a balloon payment of approximately $260.7 million at maturity. Based on the Company's initial discussions with various prospective lenders, it is currently projecting a potential shortfall with respect to refinancing the Mega Deal Loan. Nevertheless, the Company believes this shortfall may be alleviated through potential asset sales and/or other capital raising activities, including the placement of mezzanine level debt. The Company cautions that its assumptions are based on current market conditions and, therefore, are subject to various risks and uncertainties, including changes in economic conditions, which may adversely impact its ability to refinance the Mega Deal Loan at favorable rates or in a timely and orderly fashion, or which may adversely impact the Company's ability to consummate various asset sales or other capital raising activities. In connection with the completion of the sale of six outlet centers in July 2002, the Company guaranteed to FRIT PRT Bridge Acquisition LLC (i) a 13% return on its approximately $17.2 million of invested capital, and (ii) the full return of its invested capital in FP Investment LLC by December 31, 2003. As of March 31, 2003, the Mandatory Redemption Obligation was approximately $16.4 million. In April 2003, we made an additional payment of approximately $1.1 million with net proceeds from the March 31, 2003 sale of certain excess land which reduced the balance of the remaining Mandatory Redemption Obligation to approximately $15.3 million. Although the Company continues to seek to generate additional liquidity to repay the Mandatory Redemption Obligation through (i) the sale of FRIT's ownership interest in the Bridge Properties and/or (ii) the placement of additional indebtedness on the Bridge Properties, there can be no assurance that it will be able to complete such capital raising activities by December 31, 2003 or that such capital raising activities, if they should occur, will generate sufficient proceeds to repay the Mandatory Redemption Obligation in full. Failure to repay the Mandatory Redemption Obligation by December 31, 2003 would constitute a default, which would enable FRIT to exercise its rights with respect to the collateral pledged as security to the guarantee, including some of the Company's partnership interests in the 13 property collateral pool under the aforementioned Mega Deal Loan. Because the Mandatory Redemption Obligation is secured by some of the Company's partnership interests in the 13 property collateral pool under the Mega Deal Loan, the Company may be required to repay the Mandatory Redemption Obligation before, or in connection with, the refinancing of the Mega Deal Loan. These above listed conditions raise substantial doubt about the Company's ability to continue as a going concern. PSC INC: Successfully Emerges from Chapter 11 Proceeding -------------------------------------------------------- As previously reported, on November 22, 2002 PSC Inc., filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York. The Company emerged from bankruptcy protection after the Bankruptcy Court confirmed the Company's Third Amended Joint Plan of Reorganization on June 19, 2003. The Plan became effective on June 30, 2003. In connection with effectiveness of the Plan, the existing common stock and preferred stock (including restricted common stock issued to employees and directors of the Company and its subsidiaries) and all incentive stock options, non-qualified stock options, and stock appreciation rights granted under any Company- sponsored stock option plans, and any other options, warrants, or rights, contractual or otherwise, if any, to acquire or receive an equity interest in the Company (whether or not arising under or in connection with any employment agreement with the Company or any of its subsidiaries), including, without limitation, any agreements or understandings with employees of the Company and its subsidiaries as to equity enhancements or equity guarantees, authorized as of the Petition Date, have been cancelled and no longer represent any ownership interest in the Company. In partial satisfaction of the claims of certain secured creditors of the Company and its subsidiaries, the Company issued, upon effectiveness of the Plan, 100% of the new common stock of the Company. In connection with the cancellation of all former equity interests as discussed above, the Company will promptly file with the Securities and Exchange Commission a Form 15 to terminate registration of its common stock under Rule 12g-4 of the Securities Exchange Act of 1934, as amended. RATEXCHANGE CORP: Completes Exchange Offer for Convertible Notes ---------------------------------------------------------------- Ratexchange Corporation (AMEX:RTX), the parent company of Merriman Curhan Ford & Co., a securities broker-dealer and investment bank, announced that investors had elected to exchange $2.7 million of convertible notes for Series C convertible preferred stock. "The successful completion of this exchange offer is the final step in the restructuring of our balance sheet and moves us significantly closer to achieving our goal of profitability by the fourth quarter of 2003," stated Jon Merriman, CEO of Ratexchange Corporation. "First, we retired the Forsythe McArthur Associates Inc., convertible note. Then, in April of this year, we completed an oversubscribed $3.0 million private placement financing. Now, with the exchange offer effectively eliminating the majority of the convertible notes outstanding, we have reduced our long-term debt from $8.5 million at the beginning of this year to less than $3 million, significantly lowered our interest expense and put ourselves in a very favorable financial position." Gregory Curhan, CFO of Ratexchange Corporation added, "As a result of our capital restructuring efforts since the beginning of the year, our annualized interest expense and dividends will be reduced by over $725,000. With the financial restructurings largely behind us, not only is our balance sheet in better shape than ever, but our efforts are now exclusively focused on continuing to grow our investment banking and brokerage operations." Transaction Background and Terms In 2001, Ratexchange completed private offerings of convertible notes, in an aggregate principal amount of $3.5 million, due December 31, 2011. The notes yielded interest of 12% per annum and were able to have been converted into shares of Ratexchange's common stock at the election of the holder anytime before their maturity or their redemption or repurchase by Ratexchange. The conversion rate was 2,703 shares of common stock per each $1,000 principal amount of notes. Prior to June 30, 2003, certain investors converted their notes with a principal amount of $350,000 into common stock. In June 2003, the stockholders of Ratexchange approved the offer to exchange the current convertible notes for Series C convertible preferred stock. On June 30, 2003, investors exchanged their notes with a principal amount of $2.7 million for 10,800,000 shares of Series C preferred stock. The Series C convertible preferred stock is convertible on demand of the holder into Ratexchange's common stock at a ratio of 1:1. The holders of the Series C preferred stock will receive an annual dividend at the rate of 3.0% per annum, paid in cash. Merriman Curhan Ford & Co., is a securities broker-dealer and investment bank focused on emerging growth companies and growth- oriented institutional investors. MCF provides sales and trading services primarily to institutions, as well as advisory and investment banking services to corporate clients. MCF's mission is to become a leader in the researching, advising, financing and trading of emerging growth equities. Merriman Curhan Ford & Co., is a subsidiary of Ratexchange Corporation (AMEX: RTX) and is registered with the Securities and Exchange Commission as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. and SIPC. RateXchange Corporation -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $6 million -- is an innovative transaction services firm that combines the strength of traditional voice brokerage with technology-based trading systems to help its clients understand and compete in newly commoditizing marketplaces. SAMUELS JEWELERS: Inks Release with Promissory Note Claimants ------------------------------------------------------------- On May 26, 2003, Harry S. Cohen, Arlene M. Cohen, as the spouse of Harry S. Cohen, Steven D. Singleton and Kelly L. Singleton, as the spouse of Steven D. Singleton, agreed to release Samuels Jewelers, Inc., from all claims against it in respect of the promissory notes the Company had issued to Harry S. Cohen and Steven D. Singleton as part of the Company's acquisition of C & H Rauch, Inc. in November 1999. Harry S. Cohen and Steven D. Singleton had previously filed an action against the Company in the Kentucky Circuit Court of Fayette County, Kentucky seeking the payment of $2,946,075 in respect of such notes. As part of such release, Harry S. Cohen, Arlene M. Cohen, Steven D. Singleton and Kelly L. Singleton, on behalf of themselves and their heirs, legal representatives, agents, successors, assigns, officers, directors, shareholders, employees, attorneys, guarantors, sureties and any person acting on their behalf, released the Company, DDJ Capital Management, LLC, all of DDJ Capital Management, LLC's affiliates and funds and all of their respective officers, directors, employees, agents, attorneys and assigns from any and all injuries, losses, damages, liabilities, defenses, claims, actions, causes of action, suits, debts, promises, demands or agreements of whatever nature or kind, whether known or unknown or asserted or not asserted as part of the suit, that the Plaintiffs have or ever had, or that anyone claiming through or under the Plaintiffs may have or claim to have, against the Released Parties. The Released Parties likewise agreed to a corresponding release of the Plaintiffs. The releases were provided as part of the assignment of the claims of the Plaintiffs to funds that are stockholders of the Company and are affiliated with DDJ Capital Management, LLC. In conjunction with the releases, each of Harry S. Cohen and Steven D. Singleton, as plaintiffs, and the Company, as counterclaimants, dismissed their actions pending in the Kentucky Circuit Court of Fayette Count, Kentucky. Samuels Jewelers (formerly Barry's Jewelers) -- whose March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $27 million -- has tightened up its credit policies and targeted higher-end customers after a couple of trips through bankruptcy. Samuels sells diamond and gemstone jewelry at over 160 stores in 23 states. It operates stores primarily under the Samuels Jewelers and Samuels Diamonds banners and is converting its other stores to those names. Having emerged from Chapter 11 in 1992, the company returned to bankruptcy protection in 1997 before emerging again the following year. Since then Samuels has bought several other chains. DDJ Capital Management owns 49% of the company. SEITEL INC: Reaches Fin'l Restructuring Pact with Ranch Capital --------------------------------------------------------------- Seitel, Inc. (OTC Bulletin Board: SEIE; TORONTO: OSL) has reached an agreement-in-principle with Ranch Capital L.L.C. for a consensual reorganization of the Company's capital structure, including all $255 million outstanding principal amount of Seitel's senior notes, which Ranch Capital previously purchased. Ranch Capital, as the successor to the noteholders that filed the involuntary bankruptcy petitions against the Company and several of its U.S. subsidiaries, has agreed to extend the time to respond to the petition to July 21, 2003, to permit preparation of a proposed plan and related disclosure statement to be filed with the Delaware Bankruptcy Court with respect to the reorganization. Ranch has agreed in principle to fund the proposed plan. The proposed plan would (i) pay in full on agreed terms all of the Company's senior secured debt, which total approximately $12 million; (ii) pay cash equal to approximately 71% of allowed unsecured claims which are owing or are guaranteed by entities that conduct Seitel's principal operations; (iii) pay cash equal to a percentage to be determined but not more than 71% of allowed unsecured claims which are owing or are guaranteed by entities not presently conducting operations or which have no substantial assets; and (iv) subject to the satisfaction of certain conditions, distribute approximately $10.2 million in cash to the holders of equity interests in Seitel. The Company estimates that all allowed unsecured claims in all classes would total approximately $265 million, including the $255 million of senior notes purchased by Ranch Capital. Pursuant to the proposed plan, the existing common stock would be canceled, and upon consummation of the proposed plan, 100% of the new common stock of the Company would be issued to Ranch Capital in consideration for its funding of the proposed plan. Including all of its components, the transactions contemplated by the proposed plan have an aggregate value of approximately $287 million. Under the proposed plan, the Company will reaffirm its existing obligations under previously issued data license agreements with its customers and will continue to honor those licenses during and after the restructuring process. In addition, all ongoing projects for new data acquisition or reprocessing will continue without interruption during the reorganization process, and the Company expects to add new projects in the near term. As previously disclosed, the Company's Canadian subsidiaries are not parties to the bankruptcy proceedings and the proposed plan and the payouts described above do not impact any operations or creditors of Seitel's Canadian subsidiaries. As noted above, the proposed plan provides for payment of approximately $10.2 million in cash to holders of equity interests in Seitel. This distribution, if allocated solely in respect of the existing common stock, would represent $.40 per share. The exact payout per share, if any, depends on the amount, if any, which may become payable pursuant to the class action litigation presently pending against the Company, and is conditioned upon the affirmative vote of shareholders and confirmation of the proposed plan. If the proposed plan were not confirmed or if shareholders were to vote against the proposed plan and it were to be confirmed by the Bankruptcy Court despite their rejection of it, no distribution would be made to existing shareholders. Consummation of the proposed plan is subject to a number of conditions, including confirmation by the Bankruptcy Court not later than 120 days after the filing of the proposed plan, and there can be no assurance that the proposed plan will be confirmed or consummated. SHC INC: Wants to Honor & Pay $3 Mil. Critical Vendors Claims ------------------------------------------------------------- SHC, Inc., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Delaware to pay the prepetition claims of their critical vendors to maintain their prepetition relationships with these creditors. The Debtors relate that they owe their critical vendors up to $3 million. With respect to the payments to Critical Vendors, the Debtors contemplate making prepetition payments solely to those entities that agree to provide postpetition goods and services on terms reasonably acceptable to the Debtors. The Debtors have identified certain Critical Vendors who are absolutely essential to their business operations. Replacing such Critical Vendors may, as a result of market conditions, be disruptive, expensive or impossible for the Debtors, or involve costs that would exceed the amount of the prepetition liability. The Critical Vendors fall into three categories: (a) Special Packaging Vendors Most of the Debtors' golf ball packaging needs are filled by a few vendors who dominate the industry and the ability of the Debtors to provide timely and quality shipments of their products to their customers would be seriously jeopardized if these vendors were to interrupt service. (b) Special Chemical Providers In the course of the production of the Debtors' products, the Debtors utilize certain chemicals, known as core and cover chemicals, that are specifically formulated to be used in connection with the Debtors' patents, trademarks and designs for their products. The specially formulated chemical providers are specially suited or equipped to produce the chemicals in a manner that is consistent with the Debtors' patents, trademarks and designs for their products. The Debtors believe that the inevitable delay and cost that would result if they were forced to replace the existing chemical providers and equip those new providers with the patent, trademark and design information that is necessary for the formulation of the chemicals would be unduly burdensome and may jeopardize the Debtors' business operations. (c) Limited Source Vendors In the course of the production of the Debtors' products, the Debtors depend on certain suppliers for goods that are only obtainable from limited sources. Many of these suppliers provide component materials that are produced based on the Debtors' specific designs, molds, artwork and dyes. The Debtors believe that the inevitable delay and cost that would result if the Debtors were forced to replace the existing suppliers and equip those new suppliers with the Debtors' specifies molds, artwork, dyes and designs would be unduly burdensome and may jeopardize the Debtors' business operations. The Debtors believe that the authorization to make payment to the Critical Vendors and preservation of their relationships with the Critical Vendors is crucial to the continued viability of the Debtors' business and central to the Debtors' efforts to successfully maximize value for their estates and creditors. These services and supplies are simply not readily available in the marketplace and either could not be replaced or the cost to replace would exceed any benefit. If the Critical Vendors refuse to provide necessary services and supplies, even for a short period of time, the Debtors' ability to timely deliver top quality product to their customers will be severely undermined. SHC, Inc., headquartered in Chicopee, Massachusetts is a manufacturer of golf balls and clubs and other sporting goods. The Company filed for chapter 11 protection on June 30, 2003 (Bankr. Del. Case No. 03-12002). Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represents the Debtors in their restructuring efforts. SUN HEALTHCARE: Wants Additional Time to Challenge Claims --------------------------------------------------------- Since the first claims objection was filed, Sun Healthcare Group, Inc., and its debtor-affiliates have systematically categorized and timely objected to a full range of claims. As a result, the Debtors have successfully disallowed and expunged, reduced, re- characterized and liquidated thousands of disputed claims. The Debtors also successfully implemented and completed -- except for "new" claims of which the Debtors became aware long after it mediated the other claims -- a separate Court-approved Alternative Dispute Resolution procedure for personal injury claims. The ADR procedure has resolved the overwhelming majority of personal injury claims. Nonetheless, as the Debtors continue to analyze the claims register and its books and records, the Debtors anticipate the need for filing further omnibus objections to claims, or motions to re-characterize claims, on various bases. The Debtors, therefore, ask Judge Fitzgerald to further extend their Claims Objection Deadline to September 15, 2003. Mark D. Collins, Esq., at Richards, Layton & Finger PA, in Wilmington, Delaware, asserts that an extension of the claims objection deadline is necessary because the Debtors are attempting to reach consensual resolutions with the few remaining claimants. Judge Fitzgerald will convene a hearing at 8:30 a.m. on July 28, 2003 to consider the Debtors' request. Pursuant to Del.Bankr.LR 9006-2, the Debtors' Claims Objection Deadline is automatically extended until the conclusion of that hearing. (Sun Healthcare Bankruptcy News, Issue No. 57; Bankruptcy Creditors' Service, Inc., 609/392-0900) TANDYCRAFTS: Court Confirms Amended Liquidating Chapter 11 Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware confirmed Tandycrafts, Inc.'s Second Amended Chapter 11 Liquidating Plan after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) there is no rate changes provided in the Plan for which a governmental regulatory commission will have jurisdiction over the Debtors; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Debtors are not parties to any retiree benefit plan. Commencing on the Effective Date, the Plan Trustee may use, acquire and dispose of property and compromise or settle any post- Effective Date claims or interests without supervision or approval by the Bankruptcy Court and free of any restrictions of the Bankruptcy Code or Bankruptcy Rules. Title to all of the Assets and Cash of the Debtors and their Estates shall vest in the Tandycrafts Liquidating Trust. Additionally, any executory contracts or unexpired leases, which have not expired by their own terms shall be deemed rejected by the Debtors on the Effective Date. Tandycrafts, a leading manufacturer and marketer of picture frames, mirrors and other wall decor products, filed for chapter 11 protection on May 15, 2001 (Bankr. Del. Case No. 01-1764). When the Company filed for protection from its creditors, it listed assets of $64,559,000 and debts of $56,370,000. THINKPATH INC: Sells IT Staffing Division to Treklogic Inc. ----------------------------------------------------------- Thinkpath Inc. (OTCBB:THTHF) announced the sale of its IT Staffing division to Treklogic Inc. (TKI. CDNX) of Toronto, in consideration of cash, a note, and assumption of all employee liabilities. Tony French, former Executive Vice President of Thinkpath Inc., has joined Treklogic as Vice President of Business Development. This transaction allows Thinkpath to focus all of its resources on building its engineering consulting, design services, and technical publishing business. This is the final step in the restructuring process undertaken last year in order to regain profitability and focus. Engineering is now Thinkpath's core business and through the acquisition of CAD CAM Inc., in 1999, Thinkpath has a 25-year history and track record to build upon. In early 2003, the establishment of engineering services was initiated in Canada and with the move to ABB's automation headquarters in Brampton, the company is positioned for significant growth. Thinkpath Inc., (OTCBB:THTHF) is a global provider of technological solutions and services in engineering knowledge management, including design, drafting, technical publishing, and consulting. Thinkpath enables corporations to reinvent themselves structurally; drive strategies of innovation, speed to market, globalization and focus in new and bold ways. We are experts in the aerospace, automotive, manufacturing and health care industries. Further information about the company, its services and products can be found at http://www.thinkpath.com Thinkpath Inc.'s March 31, 2003 balance sheet shows that its total current liabilities outweighed its total current assets by about $3 million. Going Concern Uncertainty In its SEC Form 10-Q for the quarter ended March 31, 2003, the Company's management issued this statement: "Certain principal conditions and events are prevalent which indicate that there could be substantial doubt about the company's ability to continue as a going concern for a reasonable period of time. These conditions and events include significant operating losses, working capital deficiencies, and violation of certain loan covenants. At March 31, 2003, the Company had a working capital deficiency of $2,929,074, a deficit of $35,621,666 and has suffered recurring losses from operations. "With insufficient working capital from operations, the Company's primary sources of cash are a receivable discount facility with Morrison Financial Services Limited and proceeds from the sale of equity securities. At March 31, 2003, the balance on the receivable discount facility was approximately $1,300,000. The company is currently within margin of its receivable discount facility with Morrison Financial Services Limited based on 75% of qualifying accounts receivable. "During the three months ended March 31, 2003, the company closed $875,000 in convertible debentures pursuant to a financing arrangement entered into on December 5, 2002. The funds were used for various debt settlements and critical payables." TRANSDIGM: Receives Consents in Tender Offer for 10.375% Notes -------------------------------------------------------------- TransDigm Inc., announced that, in connection with its tender offer to purchase any and all of its outstanding 10.375% Senior Subordinated Notes due 2008, it has received the consents required, (a) to eliminate substantially all of the restrictive covenants, certain event of default provisions and certain provisions relating to a merger, consolidation or sale of all or substantially all of its assets, and (b) to amend certain defeasance provisions, currently contained in the indenture governing the Notes, each as described in TransDigm Inc.'s Offer to Purchase dated June 23, 2003. As a result of obtaining the required consents, TransDigm Inc. has executed and delivered a supplemental indenture setting forth the amendments. The supplemental indenture provides that the amendments contained therein will become operative only when validly tendered Notes are purchased pursuant to the Offer to Purchase. TransDigm Inc. commenced the tender offer on June 23, 2003 and the offer will expire at 12:00 midnight, New York City time, on July 21, 2003, unless extended or earlier terminated. Credit Suisse First Boston LLC is acting as dealer manager and solicitation agent in connection with the tender offer and solicitation of consents. The Information Agent is Georgeson Shareholder Communications, and the Depositary is U.S. Bank National Association. Copies of the Offer to Purchase and related materials are available by contacting the Information Agent at (212) 440-9800 or (800) 261-8161. Persons with questions regarding the tender offer and consent solicitation should contact Credit Suisse First Boston LLC's Liability Management Group at either (212) 325-2537 or (800) 820-1653. TransDigm is a leading manufacturer of highly engineered component products for the commercial and military aerospace industries. The company sells its products to commercial OEM and aftermarket customers. TransDigm's major product lines include gear pumps, igniters and ignition systems, electromechanical actuators and controls, NiCad batteries/chargers, engineered connectors, lavatory components, and engineered latches. As reported in Troubled Company Reporter's July 2, 2003 edition, Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on TransDigm Inc., and removed them from CreditWatch where they were placed on March 18, 2003. The outlook is stable. At the same time, Standard & Poor's assigned its 'B+' rating to the company's proposed $440 million secured credit facility and its 'B-' rating to the proposed $300 million senior subordinated notes due 2011 to be sold under Rule 144A with registration rights. TransDigm is being acquired by Warburg Pincus LLC and TransDigm's senior management for a reported $1.1 billion through a leveraged buyout. UNITED AIRLINES: U.S. Bank Seeks Stay Relief to Control Funds ------------------------------------------------------------- U.S. Bank, N.A. serves as Indenture Trustee for the Miami-Dade County Industrial Development Authority. On March 1, 2000, the MDCIDA issued a Miami-Dade County Industrial Development Authority Special Facilities Revenue Bonds Series 2000, for $32,365,000. The proceeds were used to finance the acquisition, construction and improvement of a portion of the Miami Airport. The MDCIDA deposited the proceeds into a Bond Fund and a Project Fund. Instead of providing a loan, the MDCIDA permitted United to take draws from the Project Fund. United was obligated to repay the money drawn from the Project Fund by paying the principal and interest on the Bonds. The Bonds are limited obligations of the MDCIDA and are payable only from the Trust Estate, which is pledged to U.S. Bank as Trustee for the benefit of the Holders. Pursuant to the Indenture, U.S. Bank has a first lien on the Bond Fund. Katherine A. Constantine, Esq., at Dorsey & Whitney, in Minneapolis, emphasizes that United does not have a direct present interest in the Bond Fund, which was established by the issuer, MDCIDA. Ms. Constantine notes that this request is substantially identical to those filed by HSBC Bank USA and SunTrust. On the hearing day for those requests, United agreed on similar orders for the Bondholders that U.S. Bank served as Indenture Trustee for. However, United changed its mind and refused to submit the agreed orders unless U.S. Bank released construction funds it held connected to the indenture of trust and bonds that are completely separate and totally unrelated to the indenture of trust and the Bond Fund at issue here. The money in the Bond Fund is in U.S. Bank's possession and does not constitute property of United's estate. Consequently, the automatic stay does not apply to U.S. Bank's actions on these funds. But out of an abundance of caution, U.S. Bank asks Judge Wedoff to confirm that the exercise of its rights to the Bond Fund is not a violation of the automatic stay. On behalf of the bondholders secured by pledged funds, U.S. Bank wants the stay modified or annulled to permit it to exercise rights and remedies to money deposited in the Bond Fund. (United Airlines Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392- 0900) US MINERAL: Gets Court OK to Retain Ernst & Young as Accountants ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware grants United States Mineral Products Company's (doing business as Isolatek International) permission to employ Ernst & Young LLP as its Accountants, Auditors and Tax Service Providers. The nature and extent of the accounting, auditing and tax services that the Debtor proposes to have Ernst & Young render include: a. recurring audit work related to the expression of an opinion on the consolidated financial statements of the Company for the year ended March 30, 2003; b. audits of the Company's various domestic employee benefit plans for the years ended December 31, 2002 and March 30, 2003; c. rendering tax consulting services; d. rendering accounting assistance, if needed, in connection with reports required by the Court; e. assisting Debtor's legal counsel with the analysis and revision of the Debtor's plan or plans of reorganization; f. consulting with the Debtor's management and legal counsel in connection with other business matters relating to the activities of the Debtor; g. providing expert testimony as required; h. working with accountants and other financial consultants for committees and other creditor groups; i. assisting the Debtor with the preparation of the Schedule of Assets and Liabilities and the Statements of Financial Affairs; j. assisting with such other matters as Debtor's management or legal counsel and Ernst & Young may agree to from time to time. Peter Holloway discloses that Ernst & Young's current hourly rates are: Partners and Principals $550 to $700 per hour Senior Manager $500 to $600 per hour Manager $350 to $500 per hour Senior $250 to $350 per hour Staff $175 to $250 per hour United States Mineral Products Company doing business as Isolatek International, manufactures and sells spray-applied fire resistive material, insulation and acoustical products to the commercial and industrial construction industry in North America, Central America, South America and the Caribbean. The Company filed for chapter 11 bankruptcy protection on June 23, 2001 (Bankr. Del. Case No. 01-2471). Aaron A. Garber, Esq., David M. Fournier, Esq., and David B. Stratton, Esq., at Pepper Hamilton LLP, represent the Debtor in its restructuring efforts. USG CORP: Futures Rep. Wants to Modify CIBC's Engagement Terms -------------------------------------------------------------- Dean M. Trafelet, Esq., the legal representative for future claimants, asks the Court, overseeing USG Corporation's chapter 11 cases, to modify the terms of CIBC World Markets Corporation's retention. The Court previously approved CIBC's retention terms as the Futures Representative's investment banker and financial advisor in November 2002 and subsequently extended them in April 2003. The Futures Representative wants to enlarge the scope of CIBC's retention so that the firm may participate in the valuation process over the next three months. CIBC is expected to provide these additional services to the Futures Representative during the three-month period: (a) analyze and evaluate the Debtors' analysis of their businesses' current value; (b) comment on and critique the Debtors' analysis; (c) analyze and evaluate the analyses that may be propounded by other constituencies; and (d) propose an alternative analysis of the value of the Debtors' businesses. The principal terms of the Amended Letter Agreement are: Term: The Amended Letter Agreement has a term of three months commencing July 1, 2003 and ending on September 30, 2003. Fees: As compensation for the Additional Services, CIBC proposes to charge the Debtors' estates a monthly fees of $145,000 for the three-month period. Upon expiration of this period, the monthly fee shall be reduced to $25,000 in accordance with the Supplemental Retention Letter. (USG Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) VIALINK CO.: Issues $800K of Promissory Notes to Shareholders ------------------------------------------------------------- The viaLink Company has received loan proceeds totaling $800,000 from certain existing stockholders. In exchange, the Company executed promissory notes and issued warrants. For each increment of $10,000 loaned to the Company warrants to purchase 50,000 shares were issued. The notes bear interest at an annual rate of 10% and mature upon the earlier of six months from the issuance date or a triggering event as defined in the notes. The warrants expire 5 years from the date of issuance, and the stock underlying the warrants is currently authorized but not registered. The Company may obtain additional loan proceeds on the same terms and conditions and in that event will similarly report such receipt. In its Form 10-QSB filed for the quarter ended March 31, 2003, viaLink reported: "We provide subscription-based, business-to-business electronic commerce services that enable food industry participants to more efficiently manage their highly complex supply chain information. Our services allow manufacturers, wholesalers, distributors, sales agencies (such as food brokers) and retailers to communicate and synchronize item, pricing and promotion information in a more cost-effective and accessible way than has been possible using traditional electronic and paper-based methods. "Our strategy is to continue our investment in marketing and sales activities, development of our viaLink services and customer support services to facilitate our plan to penetrate the market and build recurring revenues generated from subscriptions to our viaLink services. Consequently, we resemble a development stage company and will face many of the inherent risks and uncertainties that development stage companies face. There can be no assurance, however, that these efforts will be successful. Our failure to successfully execute our strategy would have a material adverse effect on our business, financial condition and results of operations, including our viability as an enterprise. As a result of the high level of expenditures for investment in technology development, implementation, customer support services, and selling and marketing expenses, we expect to incur losses in the foreseeable future periods until such time, if ever, as the recurring revenues from our viaLink services are sufficient to cover the expenses. "Our clients and customers range from small, rapidly growing companies to large corporations in the consumer packaged goods and retail industries and are geographically dispersed throughout the United States. "We reported a substantial loss from operations for the fiscal years ended December 31, 2000, 2001 and 2002, and we expect to incur losses for the fiscal year ending December 31, 2003. The extent of these losses will depend primarily on the amount of revenues generated from implementations of and subscriptions to our viaLink services, which have not yet achieved significant market acceptance or market penetration and the amount of expenses incurred in generating these revenues. In order to achieve market penetration and acceptance we expect to continue our expenditures for development of our viaLink services. These expenses have substantially exceeded our revenues. "Our independent auditors have issued their Independent Auditors' Report on the Company's consolidated financial statements for the fiscal year ended December 31, 2002 with an explanatory paragraph regarding the Company's ability to continue as a going concern. We have generated net losses for the years ended December 31, 2000, 2001 and 2002 and have generated an accumulated deficit of $87.4 million as of March 31, 2003. We have incurred operating losses and negative cash flow in the past and expect to incur operating losses and negative cash flow during 2003. During 2001 and 2002 we began to experience delays in signing small supplier customers which were an important component of our expected implementation revenues. We experienced these delays again in early 2003. The signing of these suppliers is dependent upon the success of our retailer customers' 'community development' activities. We continue to pursue sales efforts with the small suppliers and still believe that they will become subscribers to our services. Due to these delays, we continue to focus our sales efforts on leading customers, particularly retailers, each of which could have a greater incremental effect on increasing subscription revenues. An increase in the number of leading customers is critical to generating positive cash flow from operations and creating sales opportunities through 'community development'. "The delay in generating revenues creates a need for us to obtain additional capital in 2003 in order for us to execute our current business plan successfully. The amount of capital will be dependent upon (a) our services achieving market acceptance, (b) the timing of additional customer signings, (c) our ability to sustain current decreased levels of spending, and/or (d) the amount of, if any, unanticipated expenditures. There can be no assurance as to whether, when or the terms upon which any such capital may be obtained. Any failure to obtain an adequate and timely amount of additional capital on commercially reasonable terms could have a material adverse effect on our business, financial condition and results of operations, including our ability to continue as a going concern." WEIRTON STEEL: Gets Blessing to Hire Ketchum as PR Consultants -------------------------------------------------------------- Weirton Steel Corporation obtained permission from the Court to employ Ketchum, Inc., as its public relations consultant, in accordance with the terms and conditions in an agreement dated April 10, 2003. Ketchum, Inc. is a multi-million dollar integrated marketing communications agency offering advertising, public relations, interactive marketing and research services, with offices and affiliates on six continents. As PR consultant, Ketchum will: (a) work with the Debtor's management to develop and manage a comprehensive communications strategy, (b) provide immediate strategic communications counsel including news releases and other documents to be used in the public domain, (c) assist company spokespersons in communicating effectively with the media and other public offices, (d) provide background and assistance in developing relationships with Weirton-area national media that will lead to improved accuracy of reporting, (e) assist in identifying and contacting key community leaders who can help convey to other influential leaders and the general public the facts of the Chapter 11 process and other significant issues, and (f) assist in communication with other affected audiences, like employees, retirees, organized labor, public officials, and business and trade organizations. Ketchum's standard hourly rates of its professionals are: Director $280 Associate Director 255 Sr. Vice President 255 Vice President 230 VP Sr. Counselor/Editor 230 Vice President/AS 195 Accounting Supervisor 180 Senior Writer 195 Knowledge Manager 165 Information Specialist 120 Media Manager 160 Sup. Creative Svc. 160 Sr. Account Exec. 155 Account Exec. 125 Designer 110 Asst. Account Exec. 110 Account Coordinator 100 The Agreement provides for a $50,000 retainer for Ketchum. (Weirton Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTLAKE CHEMICAL: S&P Assigns BB- Corporate Credit Rating ---------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' corporate credit rating to Westlake Chemical Corporation and its 'B+' rating to the company's proposed $400 million senior unsecured notes due 2011. At the same time, Standard & Poor's assigned its 'BB' rating to the company's proposed $200 million asset-based revolving credit facility and its 'BB' rating to the company's proposed $100 million term loan B facility. The outlook is stable. Proceeds of the debt offerings will be used to refinance outstanding debt. Houston, Texas-based Westlake, with annual sales approaching $1.3 billion and more than $500 million of outstanding debt, manufactures basic chemicals, polymers, vinyls, and fabricated products. "The initial ratings on privately-held Westlake Chemical Corporation reflect the company's below-average business position as a commodity chemical producer and its aggressive financial profile," said Standard & Poor's credit analyst Peter Kelly. Westlake, which holds the U.S. operations of the Chao Group, is a midsize producer of petrochemical products, with market positions in two broad categories. The olefins/polyolefins category includes ethylene (most of which is consumed internally), polyethylene, and styrene. The chlorovinyl category includes polyvinyl chloride, caustic soda, and vinyl chloride monomer (or VCM, a PVC precursor). Polyethylene is the world's most widely used plastic; Westlake is primarily focused on LDPE, in which it is the fourth largest producer in North America. The company is the fifth-largest North American producer of PVC, a low-cost plastic used primarily for construction and housing. A significant portion of Westlake PVC is used internally in a plastics fabrication business, which has good domestic shares in PVC pipe and fence. Competition in the company's business segments is very intense, and based primarily on price. Exposure to commodity chemical cycles is a negative credit attribute, as is the company's concentration in North America. Some diversity of the product line and the divergence of cycles among these businesses can lessen the sometimes volatile swings in profitability and cash flows. Also, the fabricated products business reduces exposure to the PVC market and further diversifies cash flow streams. Westlake's reliance on natural gas liquids and its inability to process naphtha, as many of its competitors do, are negative ratings factors that can affect financial performance. In addition, the company's general exposure to volatile feedstock and energy costs is a risk factor. For example, in the midst of a difficult operating environment in 2001 in which feedstock costs were high, the company's operating margin (before depreciation and amortization) was minimal. Westlake is positioned to benefit from generally favorable supply and demand conditions in VCM, PVC, and PE in the intermediate term, primarily due to limited capacity additions in these businesses. WESTPOINT STEVENS: Wants to Pay Prepetition Sales & Use Taxes ------------------------------------------------------------- John J. Rapisardi, Esq., at Weil Gotshal & Manges LLP, in New York, relates that in connection with the normal operation of their businesses in the ordinary course, WestPoint Stevens Inc., and its debtor-affiliates collect sales and use taxes from their customers on behalf of various state and local taxing authorities for payment to Taxing Authorities. On a periodic basis, typically monthly, the Debtors pay to the Taxing Authorities all previously collected Sales and Use Taxes via funds drawn by checks or by means of electronic fund transfers. The Debtors estimate that Sales and Use Taxes collected but not paid to the Tax Authorities as of the Petition Date total $1,000,000. In addition, prior to the Petition Date, certain Taxing Authorities were sent checks in respect of these obligations that may not have cleared the Debtors' banks or other financial institutions as of the Petition Date. Accordingly, the Debtors sought and obtained authority to pay all prepetition Sales and Use Tax obligations owed to the Taxing Authorities. Pursuant to Section 105(a) of the Bankruptcy Code, the "court may issue any order, process, or judgment that is necessary or appropriate to carry out the provisions of this title." The Debtors submit that the relief requested is necessary and appropriate to carry out the provisions of the Bankruptcy Code. Mr. Rapisardi maintains that Sales and Use Taxes are afforded priority status under Section 507(a)(8) of the Bankruptcy Code and, therefore, must be paid in full before any general unsecured obligations of a Debtor may be satisfied. Accordingly, the relief will not prejudice the rights of general unsecured creditors or other parties-in-interest. To the extent that the Debtors have collected Sales and Use Taxes from their customers, these funds are held in trust by the Debtors for the benefit of the Taxing Authorities and do not constitute property of the Debtors' estates. See, e.g., Begier v. Internal Revenue Service, 496 U.S. 53 (1990); In re Shank, 792 F.2d 829, 830 (9th Cir. 1986) (sales taxes required by state law to be collected by sellers from their customers are "trust fund" taxes); DeChiaro v. New York State Tax Commission, 760 F.2d 432, 433-34 (2d Cir. 1985) (same); In re American Int'l Airways, Inc., 70 B.R. 102, 103 (Bankr E.D. Pa. 1987) (excise and withholding taxes); In re Tap, Inc., 52 B.R. 271, 272 (Bankr. D. Mass. 1985) (withholding taxes). Accordingly, the Bankruptcy Code does not prohibit a debtor from paying these taxes. Moreover, Mr. Rapisardi points out that many state statutes hold officers and directors of collecting entities personally liable for sales and use taxes owed by those entities. To the extent that any Sales and Use Taxes remain unpaid by the Debtors, the Debtors' officers and directors may be subject to lawsuits or criminal prosecution during the pendency of these Chapter 11 cases. Any lawsuit or criminal prosecution would distract the Debtors and their officers and directors from formulating and confirming a Chapter 11 plan, to the detriment of all parties-in- interest in these Chapter 11 cases. Similar relief has been granted by courts in this district. See, e.g., In re Worldcom, et al., Case No. 02-40188 (AJG) (Bankr. S.D.N.Y. 2002); In re Global Crossing LTD., et al., Case No. 02- 13533 (REG) (Bankr. S.D.N.Y. 2002); In re Adelphia Business Solutions, Inc., et al., Case No. 02-11389 (REG) (Bankr. S.D.N.Y. 2002); In re Enron Corp., et al., Case No. 01-16034 (AJG) (Bankr. S.D.N.Y. 2001); In re Sunbeam Corp., Case No. 01-40291 (AJG) (Bankr. S.D.N.Y. 2001). Judge Drain further directs all applicable banks, when requested by the Debtors in their sole discretion, to receive, process, honor, and pay any and all checks drawn on the Debtors' accounts to pay the prepetition Sales and Use Taxes, whether those checks were presented prior to or after the Petition Date, and to make other transfers provided that sufficient funds are available in the applicable accounts to make these payments. The Debtors represent that each of these checks or transfers can be readily identified as relating directly to the authorized payment of prepetition Sales and Use Taxes. The Debtors believe that checks and transfers other than those relating to authorized payments will not be honored inadvertently. (WestPoint Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLCOX & GIBBS: Ch. 7 Trustee Turns to Mainstream for Advice ------------------------------------------------------------- Michael B. Joseph, the Chapter 7 Trustee overseeing the liquidation of Willcox & Gibbs, Inc., and its debtor-affiliates' estates, sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain Mainstream Dispositions, LLC as his advisors and consultants. The Trustee wants to retain Mainstream because of its extensive experience and knowledge of the estates. The Trustee says Mainstream is well qualified to advise and assist in Willcox & Gibbs' chapter 7 cases. Specifically, Mainstream will: (a) travel to, locate and secure the appropriate documents, records, files and electronic media (believed to be located in Georgia, Florida, California and Pennsylvania) relating to the Debtors; (b) review the available appropriate documents, records, files and electronic media of the Debtors and prepare a preliminary summary report identifying by Debtor, the name of vendor/supplier(s), and/or officer/insider(s) to whom an alleged preference or other avoidable payment was made, the date the payment was made and the dollar value associated with the payment; (c) when possible, conduct interviews with former employees of the Debtors to confirm and verify specific data relative to documents, records, files and electronic media regarding alleged preference payments; (d) evaluate and analyze all available information relative to avoidable payments made on behalf of the Debtors and prepare a final summary report identifying the name of vendor/supplier(s), and/or officer/insider(s) to whom an alleged avoidable payment(s) was made, the date the payment was made and the dollar value associated with the payment; (e) prepare individual case files with copies of all supporting documentation on each vendor/supplier(s) and/or officer/insider(s) to whom an alleged avoidable payment(s) was made; (f) coordinate activities and work in a collaborative manner with legal and other entities associated with the avoidance analysis and the estate; and (g) conduct such other inquiries and prepare such other reports as the Trustee may request. Mainstream will charge the Trustee for its services on an hourly basis at a rate of $275 per hour, which includes a staff of up to 3 people. The Estates will pay Mainstream a $24,750 retainer, which will be applied against all amounts owing by the Estates to Mainstream, upon proper application to and approval by the Bankruptcy Court. The Company filed for chapter 11 protection on August 6, 2001 (Bankr. Del. Case No. 01-10031). The case was then converted to Chapter 7 Liquidation on April 9, 2002. When the Company filed for protection from its creditors, it listed $36,393,000 in assets and $29,994,000 in debts. WORLDCOM INC: Asks Court to Approve $2.6M Jamestown Break-Up Fee ---------------------------------------------------------------- Sharon Youdelman, Esq., at Weil Gotshal & Manges LLP, in New York, tells the Court that as the stalking horse bidder for the Pentagon City office complex, Jamestown TSA, L.P., has established a guaranteed return for the Worldcom Debtors' estates and creditors. Even if Jamestown ultimately is not the successful bidder, the Debtors and their estates will have benefited from the higher purchase price established by the improved bid. The Auction Procedures require that competing offers exceed the $133,400,000 Purchase Price by $2,800,000. Thus, the Debtors sought and obtained Court approval of a $2,600,000 Break-Up Fee, representing 1.95% of the Purchase Price, which would be payable by the Debtors to Jamestown in the event an Alternative Transaction prevails at the Auction and the Alternative Transaction is approved and consummated. If an alternative transaction ultimately is approved and consummated, the Break-Up Fee will only be payable after the sale proceeds have been received by the estates and from amounts that are in excess of the Purchase Price. Consequently, there is no diminution in value to the Debtors' estates. "Break-up fees enable a debtor to assure a sale to a contractually committed bidder at a price the debtor believes is fair and reasonable, while providing the debtor with the opportunity of obtaining even greater benefits for the estate through an auction process," Ms. Youdelman explains. (Worldcom Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) * DebtTraders' Real-Time Bond Pricing ------------------------------------- Issuer Coupon Maturity Bid - Ask Weekly change ------ ------ -------- --------- ------------- Federal-Mogul 7.5% due 2004 14.5 - 16.5 0.0 Finova Group 7.5% due 2009 43.5 - 44.5 +0.5 Freeport-McMoran 7.5% due 2006 102.5 - 103.5 0.0 Global Crossing Hldgs 9.5% due 2009 4.5 - 5.0 +0.25 Globalstar 11.375% due 2004 3.0 - 3.5 -0.5 Lucent Technologies 6.45% due 2029 68.25 - 69.25 -0.75 Polaroid Corporation 6.75% due 2002 11.0 - 12.0 0.0 Westpoint Stevens 7.875% due 2005 20.0 - 22.0 0.0 Xerox Corporation 8.0% due 2027 84.0 - 86.0 -1.5 Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***