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/raid1/www/Hosts/bankrupt/TCR_Public/030901.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 01, 2003, Vol. 7, No. 172 Headlines ABN AMRO: Fitch Rates Ser. 2003-10 Class B-3 & B-4 Notes at BB/B ACP HOLDING: Seeking Court OK to Pay Vendors' Prepetition Claims ACTERNA CORP: Court Approves Solicitation & Tabulation Protocol ACTERNA CORP: Selling Itronix Unit to Golden Gate Capital AFC ENTERPRISES: Moody's Downgrades Bank Loan Rating to B1 AHOLD: Nominates Peter Wakkie as Chief Corp. Governance Counsel AIR CANADA: Financial Creditors Request Separate Representation ALLIS-CHALMERS: 85% of Shareholders Ratify Proposed Transactions AM COMMUNICATIONS: Case Summary & Largest Unsecured Creditors AMERICAN SKIING: Names F. Scott Pierpont to Head Canyons Resort APOGENT TECHNOLOGIES: Moody's Withdraws Ba1 Bank Credit Rating APOGENT TECHNOLOGIES: Closes Sale of Unit to Inverness for $13MM APOGENT TECH.: Inverness Confirms Acquisition of Applied Biotech APPLIED DIGITAL: Daniel Penni Inks Share Sale Plan to Cure Debt ARVINMERITOR INC: Extends Dana Corp. Tender Offer to October 2 ASANTE TECHNOLOGIES: Red Ink Continues to Flow in Third Quarter ATCHISON CASTING: Blackwell Sanders Retained as Special Counsel BALDWIN TECHNOLOGY: Secures $20M Credit Facility from Maple Bank BEAR STEARNS: S&P Takes Rating Actions on Series 2003-PWR2 Notes BETHLEHEM STEEL: Disclosure Statement Hearing Set for Sept. 10 BETTER MINERALS: Moody's Withdraws B3 Rating for Sr. Sec. Loans BRIGHTPOINT: S&P Ups Credit Rating over Continued Profitability BURLINGTON INDUSTRIES: Judge Newsome Okays Disclosure Statement BURLINGTON IND: All Creditors' Ballots Due by October 10, 2003 CHYPS CBO: S&P Further Junks Note Ratings on Classes A-2A & A-2B COOK AND SONS: Files for Bankruptcy Protection in E.D. Kentucky COOK AND SONS: Chapter 11 Case Summary & 40 Largest Creditors CWMBS INC: Fitch Assigns Ratings to Various Series 2003-39 Notes CWMBS INC: Two Series 2003-44 Notes Assigned Low-B Level Ratings DANA CORP: Board Calls ArvinMeritor Tender Offer "Inadequate" DEAN FOODS: Will Webcast Investor Presentation on Wednesday DELTA AIR LINES: Extends Exchange Offer for 6.65% & 7.70% Notes DOLLAR GENERAL: Names Lawrence V. Jackson President and COO EGAIN COMMUNICATIONS: June Working Capital Deficit Tops $172K ENRON: Unit Wins Case vs Sierra Pacific re Terminated Contracts EXIDE TECHNOLOGIES: Judge Carey Approves Disclosure Statement GENUITY INC: Wants SDNY Court to Disallow Scores of Claims GEO SPECIALTY: Obtains Amendment to Senior Credit Agreement GOODYEAR TIRE: Furloughing Staff at NAT Manufacturing Locations GOODYEAR TIRE: Brings-In Thomas A. Connell as VP and Controller HEALTHSOUTH CORP: Payment Blockage of Past Due Interests Waived HIGHWAY ONE OWEB: Ex-Accountant Raises Going Concern Uncertainty INTEGRATED HEALTH: Assigns Ventas Allowed Claims to TRS LLC IVACO INC: Disappointing Q2 Results Shows $2.3M Operating Loss JOHNSONDIVERSEY: Moody's Assigns B3 Rating to Sr. Discount Notes KINDERCARE LEARNING: FY 2003 Revenues Increase by 3.8% to 850MM KMART CORP: Second Quarter 2003 Net Loss Tops $293 Million LEAP WIRELESS: Gets Clearance to Pay More Critical Trade Claims LTV: Copperweld's Disclosure Statement Hearing Set for Sept. 9 MASSEY: Don Blankenship to Present at Lehman Bros. Conference MCMORAN EXPLORATION: Declares Quarterly Preferred Cash Dividend MINEGEM INC: Commences Share Offering to Pay Debt Obligations MIRANT: Turns to Paul Hastings for Post-Petition Legal Advice MIRANT: Wants to Walk Away from Pepco Power Purchase Agreement MIRANT CORP: Reports $28MM First-Quarter 2003 Net Loss NAVIDEC INC: Enters into Agreement with LenderLive Network, Inc. NEFF CORP: S&P Upgrades Corporate Credit Rating to B- from CCC NMF CANADA: Heroux-Devtek Offers to Acquire Assets for $34 Mill. NORTHWEST AIRLINES: PACE Int'l Files Counter Suit vs. Pinnacle NUEVO ENERGY: Closes Sale of Orcutt Hill Field for $13 Million OUTSOURCING SOLUTIONS: Moody's Withdraws Junk Ratings PETRO STOPPING: S&P Keeps Watch on B Rating over High Leverage PILLOWTEX: Gets Go-Ahead to Honor Prepetition Shipment Claims PILLOWTEX CORP: Charlotteans Embrace Laid-Off Pillowtex Workers PLAINTREE SYSTEMS: Needs New Financing to Continue Operations PROMAX ENERGY: June 30 Working Capital Deficit Tops $83 Million PROTARGA: Employing Barnes Richardson as Special Customs Counsel RESIDENTIAL ACCREDIT: Fitch Rates Class B-1, B-2 Certs. at BB/B RICA FOODS INC: Gets Conditional Waiver of Loan Covenant Breach SCORES HOLDING: Second Quarter Results Show Improved Performance SIEBEL SYSTEMS: Intends to Redeem 5-1/2% Convertible Sub. Notes SPACEHAB INC: Credit Suisse Discloses 15.5% Equity Stake SPECTRUM PHARMA: Second Quarter Net Loss Narrows to $1.6 Million STARWOOD HOTELS: Files Proxy Statement re Westin Partnership SYMBIAT: Fails to File Financial Reports Due to Inadequate Funds TENFOLD CORP: Rand Technology Purchases Deployment License TSI TELECOM: Negative Outlook Reflects Low Free Cash Flow Level TWINLAB CORP: Begins Negotiations to Sell Assets to IdeaSphere UAL CORP: Moody's Lowers Selected Equipment Trust Certificates UNITED AIRLINES: Strikes Marketing Alliance with Air China US AIRWAYS: Goldman Sachs Agrees to Join in Private Placement WEIRTON STEEL: Court Fixes October 20, 2003 Claims Bar Date WILLIAMS: Completes Sale of Utah Oil and Gas Assets for $48MM WORLDCOM INC: Court Clears EDS Contract Waiver Letter WORLDCOM INC: Mitch Marcus Applauds Oklahoma AG Action vs. MCI W.R. GRACE: Secures Okay for Voluntary Trust Fund Contributions * Bush's Steel Program is Preserving Over 1.1MM American Jobs * New Rules for Reducing Tax Attributes in a Consolidated Group * BOND PRICING: For the week of September 1 - 5, 2003 ********* ABN AMRO: Fitch Rates Ser. 2003-10 Class B-3 & B-4 Notes at BB/B ---------------------------------------------------------------- ABN AMRO Mortgage Corporation's multi-class mortgage pass-through certificates, series 2003-10, are rated by Fitch Ratings as follows: -- $198,949,651 classes A-1, A-2, A-P, A-X and R 'AAA'; -- $1,208,808 class M 'AA'; -- $402,936 class B-1 'A'; -- $302,202 class B-2 'BBB'; -- $201,468 class B-3 'BB'; -- $201,468 class B-4 'B'. The 'AAA' rating on the class A senior certificates reflects the 1.25% subordination provided by the 0.60% class M, 0.20% class B- 1, 0.15% class B-2, 0.10% privately offered class B-3, 0.10% privately offered class B-4 and 0.10% privately offered class B-5. Fitch believes the amount of credit enhancement will be sufficient to cover credit losses, including limited bankruptcy, fraud and special hazard losses. The ratings also reflect the high quality of the underlying collateral originated by ABN AMRO Mortgage Group, Inc., the integrity of the legal and financial structures and the servicing capabilities of AAMG (rated 'RPS2+' by Fitch). The mortgage pool consists of one group of recently originated, 15-year fixed-rate mortgage loans secured by one- to four-family residential properties. The mortgage loans have an aggregate principal balance of $201.4 million as of Aug. 1, 2003, (the cut- off date) and a weighted average remaining term to maturity of 178 months. The weighted average original loan-to-value ratio of the pool is approximately 58.46%; approximately 0.89% of the mortgage loans have an OLTV greater than 80%. The weighted average coupon of the mortgage loans is 4.988%. The weighted average FICO score is 745. The states that represent the largest geographic concentration are California (38.40%) and Illinois (5.16%). All other states represent less than 5% of the outstanding balance of the pool. None of the mortgage loans are "high cost" loans as defined under any local, state or federal laws. For additional information on AAMG originated all of the loans. JPMorgan Chase Bank will serve as trustee. AMAC, a special purpose corporation, deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, election will be made to treat the trust as a real estate mortgage investment conduit. ACP HOLDING: Seeking Court OK to Pay Vendors' Prepetition Claims ---------------------------------------------------------------- ACP Holding Company and its debtor-affiliates are asking for authority from the U.S. Bankruptcy Court for the District of Delaware to pay certain prepetition claims of essential trade creditors in the ordinary course of their business. The Debtors purchase a variety of goods and services from domestic and foreign vendors who are unaffiliated with the Debtors. If the Debtors were to lose the relationships with these Essential Trade Creditors, their ability to generate future revenue would suffer. The Debtors' obligations to these Essential Trade Creditors include, among other things, obligations owed to suppliers of finished goods sold into retail markets, and suppliers of raw materials or components used to produce finished goods sold into retail or builder trade channels. The Debtors submit that the loss of the essential trade creditors could cause future revenues or profits of the Debtors to suffer. Because the Essential Trade Creditors provide their goods to the Debtors at favorable costs and on beneficial payment terms, replacing them would likely result in higher costs for the Debtors in terms of cost of goods purchased and the cost of funds used to purchase such goods. If the Debtors can benefit from maintaining lower costs of goods purchased during the postpetition period, it is prudent for the Debtors to pay selected Essential Trade Creditors some of their prepetition claims, provided that such vendors continue to sell their goods at the same competitive prices and on at least as favorable terms postpetition as were in effect during the prepetition period. The selected Essential Trade Creditors are: A) Suppliers of Raw Materials The Debtors use various raw materials to produce their products. In order to maintain certain quality levels, the Debtors require various grades of each raw material and large quantities of certain materials. Alternate sourcing is not practically available for certain of these products, and where available, would result in significant initial expenditures and lengthy delays because such materials are not easily obtained, especially in the quantities demanded by the Debtors. B) Suppliers of Parts, Components and Services The Debtors rely on various machines and equipment to manufacture its products and certain service providers who help maintain the machines and equipment. The Debtors need replacement parts or service on the machines and equipment. Without such support, the Debtors would be unable to operate the machines and equipment. Replacement parts or components are difficult to obtain outside the Debtors' current suppliers because the parts are highly specialized C) Suppliers of Essential Services The Debtors rely on certain service providers who contribute to create products to comply with a customer's requirements. The Debtors' products go through rigorous testing by the Debtors' customers, and various customers dictate requirements for these parts, including specific finishing, heat treating, and painting. The Debtors outsource some of these services to various vendors who meet the customers' requirements. Without these additional services, the parts would be useless to customers. For the Debtors to continue their operations and remain competitive in the marketplace, these critical prepetition obligations must be paid to certain creditors. Consequently, the Debtors ask for the Court's authority to pay the Essential Trade Creditors prepetition claims up to an aggregate amount of $8,100,000. Neenah Foundry Company, the operating subsidiary of ACP Holding Company is headquartered in Neenah, Wisconsin. The Company is in the business of gray & ductile iron foundries, metal machining to specifications and steel forging. The Company filed for chapter 11 protection on August 5, 2003 (Bankr. Del. Case No. 03-12414). Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl Young Jones & Weintraub P.C., and James H.M. Sprayregen, P.C., Esq., and James W. Kapp III, Esq., at Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $494,046,000 in total assets and $580,280,000 in total debts. ACTERNA CORP: Court Approves Solicitation & Tabulation Protocol --------------------------------------------------------------- With the Court's blessing, the Acterna Corp. Debtors have started sending packages to solicit plan acceptances from their creditors. For voting purposes, the Court has set August 26, 2003 as the record date to determine claimants and interest holders that are entitled to cast a vote to accept or reject the Plan. Creditors entitled to vote are required to deliver their ballots by mail, hand delivery or overnight courier no later than 4:00 p.m. Eastern Time on September 22, 2003 to Acterna's voting agent, Bankruptcy Services LLC. Voting creditors will receive a solicitation package containing, among others, a copy of the Disclosure Statement and Reorganization Plan, appropriate ballot forms, notice of the Confirmation Hearing and further instructions with respect to the submission of ballot forms. Non-voting creditors will receive a notice of non-voting status instead of a ballot. Pursuant to the Plan, holders of Class C Senior Lender Claims, Class D General Unsecured Claims, Class E Convertible Notes Claims and Class F Subordinated Notes Claims are impaired and entitled to cast a vote. Class H Securities Litigation Claims and Class I Equity Interests are impaired and will not receive any distributions. Classes H and I creditors will no longer be required to vote -- they are deemed to reject the Plan. Priority Non-Tax Claims in Class A, Other Secured Claims in Class B and Intercompany Claims in Class G are unimpaired. Creditors under these Classes are presumed to have accepted the Plan. Hence, the solicitation of acceptances is no longer required. The Court also approves a set of guidelines to govern the solicitation and tabulation of votes: (a) A Class E or F creditor that has claims in more than one subclass within that class will be permitted to cast one Ballot which will be deemed to be a vote in each subclass of that class; (b) Any Ballot which is otherwise properly completed, executed and timely returned to Bankruptcy Services that does not indicate an acceptance or rejection of the Plan will not be counted; (c) Any Ballot which is returned to Bankruptcy Services indicating acceptance or rejection of the Plan but which is unsigned will not be counted; (d) Whenever a creditor casts more than one Ballot voting the same claim before the Voting Deadline, only the last Ballot timely received by Bankruptcy Services will be counted; (e) If a creditor casts simultaneous duplicative Ballots voted inconsistently, then these Ballots will count as one vote accepting the Plan; (f) Each creditor will be deemed to have voted the full amount of its claim. A creditor holding an unliquidated or contingent claim will be deemed to have voted in the amount of $1; (g) Creditors will not split their vote within a class. Each creditor will vote all of its claim within a particular class either to accept or reject the Plan; (h) Any Ballots that partially reject and partially accept the Plan will not be counted; and (i) Any Ballot received by Bankruptcy Services by telecopier, facsimile or other electronic communication will not be counted. The hearing on the confirmation of the Plan is scheduled for September 25, 2003. Any objection to the confirmation of the Plan must be filed with the Clerk of the Bankruptcy Court, together with a proof of service, no later than 4:00 p.m. on September 15, 2003. Objections must be served to: (1) the Debtors: Acterna Corporation 12410 Milestone Center Drive Germantown, Maryland 20876-7100 Attention: Richard H. Goshorn, Esq. Corporate Vice President, General Counsel and Secretary (2) the Debtors' attorneys: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Paul M. Basta, Esq. (3) the United States Trustee United States Trustee for the Southern District of New York 33 Whitehall Street, 21st Floor New York, New York 10004 Attention: Hollie T. Elkins, Esq. Assistant U.S. Trustee (4) the attorneys for the Unsecured Creditors' Committee: Blank Rome LLP The Chrystler Building 405 Lexington Avenue New York, New York 10174 Attention: Andrew B. Eckstein, Esq. (5) the attorneys' JPMorgan Chase Bank Simpson Thatcher & Barlett LLP 425 Lexington Avenue New York, New York 10017 Attention: Peter V. Pantaleo, Esq. The Debtors will publish the Confirmation Hearing Notice once in the national edition of The Wall Street Journal and the International Herald Tribune not less than 25 calendar days before the Confirmation Hearing. Any objection to confirmation of the Plan must be in writing and: (a) must state the name and address of the objecting party and the amount of its claims or the nature of its interest; and (b) must state, with particularity, the nature of its objection. Any confirmation objection not filed and served as set forth will be deemed waived and may not be considered by the Court. (Acterna Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) ACTERNA CORP: Selling Itronix Unit to Golden Gate Capital --------------------------------------------------------- Itronix Corporation, a world-class developer of wireless, rugged mobile computing systems announced that its parent company, Acterna Corporation, has entered into an agreement to sell Itronix, one of Acterna's subsidiaries, to Golden Gate Capital, a $700 million private equity firm dedicated to partnering with world-class management teams to invest in change-intensive, growth businesses. The agreement between Acterna and Golden Gate Capital is being conducted pursuant to section 363 of the U.S. Bankruptcy Code. This process is subject to bankruptcy court approval and requires Acterna to entertain competitive bids for Itronix. During this process, Itronix will conduct business as usual and will remain fully focused on delivering the highest quality of service and products to its growing customer base. "We are thrilled about this opportunity for a number of reasons -- First, the partnership with Golden Gate Capital will enable Itronix to align itself with a world-class financial partner that is well capitalized and ideally suited to support our growth objectives. Second, Itronix would emerge as a well capitalized private company with great customers, best in class products and an outstanding team of people at the management level and throughout the organization. We will be solely focused on enhancing our role as a leading provider of wireless, rugged mobile computing solutions and providing the best products and services for our customers," said Tom Turner, president and CEO of Itronix. "We believe that the opportunity to partner with Golden Gate Capital will provide significant value to all Itronix stakeholders and look forward to completing the purchase transaction in the coming weeks." Golden Gate Capital -- http://www.goldengatecap.com-- is a San Francisco-based private equity investment firm with approximately $700 million of capital under management. Golden Gate is dedicated to partnering with world-class management teams to invest in change-intensive, growth businesses. They target investments of up to $100 million in situations where there is a demonstrable opportunity to significantly enhance a company's value. The principals of Golden Gate have a long and successful history of investing with management partners across a wide range of industries and transaction types. Itronix is a world-class developer of wireless, rugged computing solutions for mobile workers, which distinguishes itself in the market through its superior implementation capabilities and supporting services. Itronix has a full range of wireless field computing systems, from handhelds, to laptops to tablet PCs, in addition to providing award winning iCare Implementation Services that range from project planning and management to first line help desk support. Itronix serves mobile workers in markets such as commercial field services, telecommunications, utilities, government, public safety and meter reading. Itronix is a subsidiary of Acterna Corp., a Germantown, Maryland-based global communications equipment provider focused on leading-edge communications technology solutions. Itronix's worldwide headquarters are in Spokane, Washington. The corporation's European operations, Itronix Ltd., are located in Coventry, U.K. Additional information is available on Itronix's Web site at http://www.itronix.com AFC ENTERPRISES: Moody's Downgrades Bank Loan Rating to B1 ---------------------------------------------------------- Moody's Investors Service lowered all ratings of AFC Enterprises: * $275 million secured credit facility rating to B1 from Ba2, * Senior implied rating to B1 from Ba2, and the * Long-term issuer rating to B2 from Ba3. With approximately $275 million of debt affected, all ratings remain under review for possible further downgrade. Moody's reports that factors prompting the downgrade include (1) unease that the company's future financial strength and operating cash flow will materially fall below our previous expectations due to operational pressures that have confronted the entire quick service restaurant industry since the second half of 2002 and (2) uncertainty regarding timely and benign reporting of financial results for Fiscal 2002 and restating of results for 2001 and 2000. The amendment to the credit agreement dated August 22, 2003 provides AFC an extension until October 31, 2003 to file its 2002 annual report on Form 10-K and until December 1, 2003 to file its quarterly reports for the 1st, 2nd, and 3rd Quarters of 2003 on Form 10-Q. The company anticipates that it will be able to file these financial statements before the new deadlines. As part of the review, Moody's will consider reasonably probable future prospects for the company in view of the restated history of cash flow and profitability. Accordingly, Moody's also will evaluate current sales and profitability trends for AFC given Moody's belief that operating results likely have softened since the second half of 2002 together with the rest of the restaurant industry. AFC Enterprises, Inc, headquartered in Atlanta, Georgia, operated or franchised 1,744 Popeyes Chicken and Biscuit Restaurants, 1,518 Church's Chicken restaurants, and 614 Cinnabon cinnamon roll bakeries as of May 18, 2003. AHOLD: Nominates Peter Wakkie as Chief Corp. Governance Counsel --------------------------------------------------------------- The Ahold (NYSE:AHO) Supervisory Board announced its proposal to nominate Mr. Peter Wakkie as Chief Corporate Governance Counsel and member of the Corporate Executive Board. He will assume his position at Ahold starting October 15, 2003. Wakkie will supervise the legal discipline within Ahold worldwide. He will supervise the legal aspects of organizational transactions and the preparations of legal reports and statements. Wakkie will also play a leading role in the process of improving corporate governance throughout the company. In this he will be responsible for reviewing internal governance, policies and practices for legal compliance as well as conformance to ethical and social standards. Additionally, he will be tasked with developing and implementing initiatives on corporate social responsibility. Moreover, he will be responsible for all operating policies together with the other members of the Corporate Executive Board. Wakkie (55) joined leading Dutch legal firm De Brauw Blackstone Westbroek in 1972, specializing in mergers and acquisitions and corporate litigation. He became partner at the firm in 1979 and was managing partner from 1997 until 2001. Between 1978 and 1982 he served as resident partner of De Brauw Blackstone Westbroek in New York. Acting CEO Anders Moberg commented on the nomination: "The board is very pleased that Peter, as a leading expert in the Netherlands on corporate governance, has decided to join Ahold. He has a long- standing reputation as a talented negotiator and highly competent legal corporate advisor both within the legal profession and in the retail industry. We are confident that Peter will make an important contribution toward ensuring solid corporate governance throughout the organization." The Ahold Corporate Executive Board will comprise the following members once Wakkie joins the company: Anders Moberg, Acting President & CEO; Hannu Ryopponen, Acting CFO; Dudley Eustace, interim CFO; Bill Grize, Jan Andreae, Theo de Raad and Peter Wakkie. Chairman Jaap de Keijzer of De Brauw Blackstone Westbroek commented that he respects Wakkie's decision to join Ahold. "It is a wonderful challenge for Peter and an excellent choice by Ahold. He is not only a gifted lawyer but a charming and honest man with his heart in the right place. Peter worked at De Brauw for 31 years, 4 of which he served as chairman. He has contributed a lot to the company and his colleagues will miss him." * * * As previously reported, Standard & Poor's Ratings Services lowered its long-term corporate credit rating on Netherlands-based food retailer and food service distributor Ahold Koninklijke N.V. to 'BB-' from 'BB+', following the announcement by the group that accounting irregularities at its U.S. Foodservice arm were materially larger than expected. In addition, the senior unsecured debt ratings on Ahold were lowered to 'B+' from 'BB+', reflecting structural subordination. At the same time, Standard & Poor's affirmed its 'B' short-term rating on the group. AIR CANADA: Financial Creditors Request Separate Representation --------------------------------------------------------------- An ad hoc committee of holders of Air Canada bonds and bank debts seeks separate representation in the Applicants' CCAA cases. The group wants ensure that the interests of senior financial creditors are fairly and adequately represented in the restructuring process. The Financial Creditors' Committee is concerned that Air Canada has been entering into a number of agreements which will shape creditor recovery later on. Decisions are being made which will be difficult to reverse and may have material adverse impact to the senior financial creditors' interest. The Committee is also wary of Air Canada's intent to structure a recovery plan that will convert a large portion of senior bank and bond debt into equity. If realized, the senior financial creditors will become the substantial "owners" in the new Air Canada. Based on the Applicants' 2002 annual report, as at December 31, 2002, bank and senior bond debt totaled $2,900,000,000 or, about 30% of the total liabilities. Of the amount, $1,800,000,000 is comprised of senior bond debt. Retail bondholders hold 25% of senior bond debt. They also hold 80% of the Canadian dollar denominated senior bonds. The Financial Creditors' Committee represents the interest of financial creditors beneficially holding in excess of $800,000,000 of senior Air Canada obligations. Accordingly, the Financial Creditors' Committee holds a critical stake in the Applicants' restructuring. The Committee has retained National Bank Financial Inc. as its financial advisor and Goodman and Carr LLP as its legal advisor. Over the past 3 months the Financial Creditors' Committee has been involved in discussions with Air Canada to obtain recognition from the Applicants as stakeholder group. The Committee also endeavored to gain access to Air Canada's data room and other non-public information and to consult Air Canada and Ernst & Young, the Applicants' monitor, concerning the administration of the restructuring proceedings and the negotiation and formulation of the Plan of Arrangement. Unfortunately, Air Canada has refused to deal with the Financial Creditors' Committee. Air Canada also denied access to critical information necessary to safeguard the senior financial creditors' interest. Air Canada proposed that three members of the Financial Creditors' Committee join the Ad Hoc Committee of Unsecured Creditors. But as a condition, Air Canada required the invitees to enter into appropriate agreements restricting trading in securities without prior written consent from Ernst & Young or the Court as well as agreements protecting confidential information. The invitees must also hold at least $500,000,000 in interest against the Applicants. Air Canada also suggested that the Financial Creditors' Committee engage in meaningful discussions with the Unsecured Creditors' Committee to see if the two committees could be merged. The Financial Creditors' Committee does not believe that it was reasonable for Air Canada to require the invitees to restrict themselves before their financial and legal advisors were provided access to non-public information. No such condition exists with respect to the Unsecured Creditors' Committee. Nevertheless, the invitees commenced discussions with Air Canada in July 2003. On July 29, 2003, Air Canada advised that it was not prepared to allow the invitees to have independent financial or legal advisors. It will recognize only one committee that is representative of its creditor constituencies. Air Canada indicated that the invitees would have to be content with the information provided through KPMG Inc., the Unsecured Creditors' financial advisors. The Monitor also believes that one representative creditors' committee is appropriate given that all of the Applicants' debt is unsecured. Murray A. McDonald, President of Ernst & Young, explains that multiple committees representing creditor claims that rank pari passu will place an unnecessary burden on the Applicants, will absorb too many of the Applicants' resources, and most likely delay the negotiation and implementation of a Plan. The invitees advised Air Canada that its proposal is unacceptable. While Air Canada may wish to homogenize all creditors, the Financial Creditors' Committee believes that it stands a different position relative to trade creditors like Air Bus North American Holdings Inc., Cara Food Operations Limited, Deutsche Lufthansa S.A., Greater Toronto Airport Authority, IBM Canada Ltd. and Rolls Royce North America Inc. and subordinated creditors like Sumitomo. Because of this different position, the invitees should be entitled to independent financial and legal advice. The Financial Creditors' Committee will only participate in the restructuring, through the vehicle of the Unsecured Creditors' Committee, on these terms: -- Senior financial creditors who are members of the Financial Creditors' Committee will be given five voting seats on the Unsecured Creditors' Committee, not three; -- The financial threshold of the invitees to join the Unsecured Creditors' Committee would be $25,000,000 in debt; -- National Bank and Goodman will be granted full and complete access to the same information provided to KPMG and Macleod Dixon, the Unsecured Creditors' Committee's legal advisor. National Bank and Goodman must also be given opportunity to participate in the restructuring process to the same extent as is being offered to KPMG; and -- Air Canada will not burden National Bank's and Goodman's fees and expenses. Unlike American bankruptcy law, the CCAA does not contain provisions regarding the creation of a creditors' committee or committees. However, arising from the flexibility of the CCAA, creditors' committees have been created and recognized by the CCAA court, in appropriate circumstances, to protect creditor interest and facilitate the restructuring process. (Air Canada Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) ALLIS-CHALMERS: 85% of Shareholders Ratify Proposed Transactions ---------------------------------------------------------------- Notice is being given stockholders of record of Allis-Chalmers Corporation as of July 28, 2003 that a Written Consent in Lieu of an Annual Meeting of Stockholders has been executed with an effective date of September 26, 2003. Holders of 85% of the Company's common stock and 100% of the Company's Series A 10% Cumulative Convertible Preferred Stock have executed the written consent (1) electing directors of the Company, (2) approving a reverse stock split, (3) approving an amendment to the terms of the Company's outstanding Series A 10% Cumulative Convertible Preferred Stock, (4) approving the Company's 2003 Incentive Stock Plan and (5) ratifying the reappointment of Gordon, Hughes & Banks, LLP as the Company's independent accountants for fiscal 2003. The Company has indicated that its Board of Directors believes it would not be in the best interest of the Company and its stockholders to incur the costs of holding an annual meeting or of soliciting proxies or consents from additional stockholders in connection with these actions. Based on the foregoing, the Board of Directors has determined not to call an Annual Meeting of Stockholders, and none will be held this year. Stockholders of record of the Company's common stock and Series A 10% Cumulative Convertible Preferred Stock at the close of business on July 28, 2003 will receive this Notice of Consent in Lieu of Annual Meeting of Stockholders. Allis-Chalmers Corp.'s March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $12 million. The Company's total shareholders' equity further dwindled to about $826,000 due to accumulated deficit of about $9 million. AM COMMUNICATIONS: Case Summary & Largest Unsecured Creditors ------------------------------------------------------------- Lead Debtor: AM Communications, Inc. 1900 AM Drive Quakertown, Pennsylvania 18951 Bankruptcy Case No.: 03-12689 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- AM Broadband Services, Inc. 03-12691 SRS Communications Corporation 03-12692 AMC Services, Inc. 03-12693 AM Training Services, Inc. 03-12695 AM Nex-Link Communications, Inc. 03-12696 Type of Business: The affiliated companies provide services to the television, cable and wireless industry, their services include installation and maintenance of television lines and wireless systems in the Northeastern and Southeastern parts of the U.S. Chapter 11 Petition Date: August 28, 2003 Court: District of Delaware Judge: Peter J. Walsh Debtors' Counsel: Steven M. Yoder, ESq. Neil B. Glassman, Esq. Christopher A. Ward, Esq. The Bayard Firm 222 Delaware Avenue Suite 900 Wilmington, DE 19899 Tel: 302 655-5000 Fax: 302-658-6395 -and- Robert W. Jones, Esq. H. Jefferson LeForce, Esq. Brent R. Mellwain, Esq. Patton Boggs LLP 2001 Ross Avenue Suite 3000 Dallas, TX 75012 Tel: 214-758-1500 Total Assets: $29,886,155 Total Debts: $25,641,048 A. AM Communications' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ First Insurance Funding Corp. $1,461,146 450 Skokie Blvd., Suite 1000 PO Box 3306 Northbrook, IL 60065 Tel: 800-837-3707 Fax: 847-374-3010 Nest Technologies, Inc. $1,243,048 4511 Singer Court Suite 201 Chantilly, VA 20151 Tel: 703-658-1133 Fax: 703-803-8319 Nestronix, Inc. $427,442 4511 Singer Court Suite 201 Chantilly, VA 20151 Tel: 703-658-1133 Fax: 703-803-8319 Sun Fibre Optics Pvt. Ltd. $426,493 Plot No. 37 CSEZ Kakkanad, Cochin Kerala, India KL682 030 Tel: 91-484-3205 Fax: 91-484-3204 Investec $171,250 Archer & Greiner $77,532 Avnet Electronics $78,381 Grant Thornton LLP $46,569 Quakertown Community $67,901 RSA Security $49,000 Verisign, Inc. $54,400 Circle International Freight $22,017 C&C Jetronic, Inc. $21,396 Dell USA, LP $26,475 Preferred Exhibitor Service, Inc. $19,365 American Express $18,070 Nest Europe $15,988 Future Electronics $14,831 Inductors, Inc. $14,654 M-Tron Components, Inc. $12,118 B. AM Broadband Services' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Nest Technologies $565,947 4511 Singer Court Suite 201 Chantilly, VA 20151 Tel: 706-653-1100 Fax: 703-803-8319 Hub Properties $33,796 Dell USA, LP #2 $22,750 Archer & Greiner $26,789 Broadband Instal $24,405 Enterprise Fleet $17,202 Q1 Exchange LLC $10,390 REIT Management $7,114 Lucent Technologies $6,279 Hampton Inn $4,664 PTG Cable $4,597 Hall's Body Shop $4,592 Citibusiness $3,533 Nextel $3,467 Holiday Inn Express $3,439 Statewide Newspapers $2,812 Jones $2,718 Office Depot $2,693 Home Depot $2,653 C. SRS Communications Corporation's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Enterprise Fleet $51,512 Q1 Exchange LLC $21,297 Verizon Wireless $28,651 Royal Sunallianc $27,824 GE Capital - Fleet $21,919 GMAC $18,881 Broadband Instal $17,052 Chase Automotive $14,232 Patricia Goode $14,000 Chrysler Finance $13,429 575 Union Street $12,981 Trilithic, Inc. $9,646 Office Team $7,354 Kuklica $5,832 Unicom Broadband $5,747 Northeastern $4,916 Applied Instrument $4,407 Vanderbilt $4,400 Nextel Communications $3,740 Nextel Communications $3,582 D. AMC Services' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ L&D Communications $72,893 Taxation & Revenue $52,657 T&E Underground $43,474 Danilo Cable $40,857 JLB Communications $31,266 Pyramid Capital Leasing $27,508 Leasing Technology $27,197 Blackberry Enterprises $26,630 American Express $23,356 Global Fiber $21,453 Titan Communications $20,737 Communications Moreno $19,523 Tucker Construction $18,017 Amplified Communications $17,750 Pyramid Capital Leasing $16,276 Chaparral Cable $14,802 McCormick Center LLC $14,783 Cable Pro Co. $14,496 Industrial Cable $12,327 United Health Care $11,714 E. AM Nex-Link Communications' 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ HG Communication $68,489 DraftPros Inc. $13,384 US Broadband $12,000 Tropical Communications, Inc. $10,908 PDC Cable Group $7,794 Hector A. Funes $4,085 Jose Mendoza $3,035 Light Link $2,835 Diablo Telecom $2,500 J-2 Communications $2,500 Shiflett Enterprises, Inc. $2,361 Fiber Express $1,230 DSA $1,131 Digital Broadband Design, Inc. $1,118 Opterna, Inc. $539 TVC Communications $499 Ford Motor Credit $388 Mike Symons $355 T-Square $216 Walters Wholesale Electric Co. $157 AMERICAN SKIING: Names F. Scott Pierpont to Head Canyons Resort --------------------------------------------------------------- American Skiing Company (OTC: AESK) has named F. Scott Pierpont President and Managing Director of The Canyons Resort in Park City, Utah. Mr. Pierpont has been interim Managing Director of the resort since August 2002. The Company further reported a number of strategic management changes at the resort. Mr. Pierpont has extensive resort management and operating experience with more than 28 years in the ski industry. Pierpont relocated to The Canyons in January 2002, serving as Vice President of Operations until his promotion in August 2002. Prior to this, Pierpont served as the Managing Director of American Skiing Company's Mount Snow, Vermont ski resort. He has also held a senior position at Bear Mountain in California. "I am pleased that Scott will continue his leadership role at The Canyons and remain an integral part of our senior management team," said CEO B.J. Fair. "Scott has done an exceptional job since taking over as interim Managing Director a little over a year ago, with the resort posting record skier visits during the 2002/2003 ski season. I am confident that under his guidance and leadership, The Canyons will continue to grow and solidify its reputation for providing an unmatched level of customer service and a quality guest experience." Pierpont has made a number of strategic management changes at The Canyons during the last year. Heather LaPerle has been named Brand Manager and Monica Pette has assumed the role of Vice President of Human Resources. Tim Vetter has assumed the role of Vice President of Community Affairs while Tim Hagan has been promoted to Vice President of Mountain Operations after more than 20 years of service as Patrol Director. In addition, John Nadalin has been named the resort's Chief Financial Officer rounding out the senior management team. Headquartered in Park City, Utah, American Skiing Company (S&P, CCC Corporate Credit Rating, Negative) is one of the largest operators of alpine ski, snowboard and golf resorts in the United States. Its resorts include Killington and Mount Snow in Vermont; Sunday River and Sugarloaf/USA in Maine; Attitash Bear Peak in New Hampshire; Steamboat in Colorado; and The Canyons in Utah. More information is available on the Company's Web site, http://www.peaks.com APOGENT TECHNOLOGIES: Moody's Withdraws Ba1 Bank Credit Rating -------------------------------------------------------------- Moody's Investors Service withdrew the Ba1 rating of Portsmouth, New Hampshire-based Apogent Technologies, Inc.'s $500 million bank credit facility maturing December 2005. In July 2003, Apogent replaced this facility with a new five-year $500 million bank credit facility maturing in 2008. The new bank credit facility maturing in 2008 is not rated. The remaining ratings of Apogent are unchanged: - Ba1 senior implied - Ba1 issuer rating - Ba1 senior unsecured notes of $325 million due 2011 - Ba1 senior unsecured convertible notes of $300 million due 2021 - Ba2 senior subordinated notes of $250 million due 2013 Apogent Technologies manufactures and markets laboratory and life science products used in healthcare diagnostics and scientific research. APOGENT TECHNOLOGIES: Closes Sale of Unit to Inverness for $13MM ---------------------------------------------------------------- Apogent Technologies Inc. (NYSE: AOT), a leading manufacturer of clinical diagnostic and life science research products, closed the sale of Applied Biotech, Inc. on August 27, 2003 to Inverness Medical Innovations, Inc. (AMEX: IMA). Applied Biotech, located in San Diego, manufactures rapid diagnostic tests used in the detection of pregnancy, drugs of abuse, and infectious diseases. In exchange for the business, Apogent received $13,400,000 and 692,506 shares of Inverness common stock, which Inverness has agreed to register for resale. Apogent also received, for itself as well as its customers, a release from Inverness of any patent infringement claims of Inverness (whether or not asserted) relating to pre-closing sales of Apogent products. In addition to the purchase and sale of Applied Biotech, subsidiaries of Inverness and Apogent have entered into various ongoing commercial transaction relationships. According to Frank H. Jellinek, Jr., Apogent's President and Chief Executive Officer, "We are pleased with the sale of ABI to Inverness, and we look forward to working together in the future." Apogent (S&P, BB+ Senior Subordinated Debt Rating, Stable) is a diversified worldwide leader in the design, manufacture, and sale of value-added laboratory and life science products essential for healthcare diagnostics and scientific research. Apogent's companies are divided into two business segments for financial reporting purposes: Clinical Group and Research Group. APOGENT TECH.: Inverness Confirms Acquisition of Applied Biotech ---------------------------------------------------------------- Inverness Medical Innovations, Inc. (Amex: IMA), a leading provider of consumer healthcare and professional diagnostics products, and developer of advanced medical devices, has acquired Applied Biotech, Inc. from Apogent Technologies, Inc. (NYSE: AOT). Applied Biotech, located in San Diego, California, is a developer, manufacturer and distributor of rapid diagnostic products in the areas of women's health, infectious disease and drugs of abuse testing. In exchange for all of the stock of Applied Biotech, Inverness paid Apogent 692,506 shares of Inverness common stock and $13,400,000 in cash. The Inverness shares were issued in a private placement, and Inverness has agreed to register the shares for resale after the closing. Inverness financed the cash portion of purchase price by amending and restating its current senior credit facilities, lead by GE Healthcare Financial Services, whereby the aggregate amount of the senior credit facilities was increased to $70 million from $55 million. Merrill Lynch Capital, a division of Merrill Lynch Business Financial Services Inc., provided the additional funding. Inverness was advised in the current transaction by Covington Associates, LLC of Boston, Massachusetts. For more information about Inverness Medical Innovations, visit its Web site at http://www.invernessmedical.com Inverness Medical Innovations is a leading provider of women's health and other consumer and point-of-care health products and developer of advanced technologies for both the consumer and professional diagnostic marketplaces. Inverness is presently exploring new opportunities for its proprietary electrochemical and other technologies in a variety of consumer oriented applications including immuno-diagnostics with a focus on women's health and cardiology. Inverness is headquartered in Waltham, Massachusetts. Apogent (S&P, BB+ Senior Subordinated Debt Rating, Stable) is a diversified worldwide leader in the design, manufacture, and sale of value-added laboratory and life science products essential for healthcare diagnostics and scientific research. Apogent's companies are divided into two business segments for financial reporting purposes: Clinical Group and Research Group. APPLIED DIGITAL: Daniel Penni Inks Share Sale Plan to Cure Debt --------------------------------------------------------------- Daniel E. Penni, a director of Applied Digital Solutions, Inc. is indebted to the Company under a promissory note dated March 23, 1999, in the principal amount of $450,000. Currently, $420,000 is outstanding under the Note. The Company and Mr. Penni have agreed that he will orderly sell shares of the Company's common stock owned by him, at a minimum price of $0.50 per share, for the purpose of repaying his indebtedness to the Company under the Note. To effect the orderly sale of shares of stock owned by him while avoiding conflicts of interest or the appearance of any such conflict that might arise from his position with the Company, Mr. Penni entered into a written Stock Sale Plan, effective August 11, 2003, with Robert W. Baird & Co. (the Broker). Under the terms of the Plan, the Broker is authorized to effect a sale, commencing September 1, 2003, of 50,000 shares of the Company's common stock, at a price per share of $0.50 per share or greater, on the first trading day of each month. The Plan shall terminate upon the sale of an aggregate of 600,000 shares of the Company's common stock or upon the death of Mr. Penni whichever is the earliest to occur. Mr. Penni has the right to terminate the Plan at any time by providing written notice of termination prior to the requested date of termination. The Plan is intended to qualify under the Exchange Act Rule 10b5-1. Under the terms of the Plan, Mr. Penni has agreed to remit the net proceeds (net of broker commissions, fees, applicable income taxes and other charges, if any) realized for each Planned Transaction to the Company until such time as Mr. Penni's obligations under the Note are repaid in full. * * * As reported in Troubled Company Reporter's June 9, 2003 edition, Applied Digital Solutions signed Securities Purchase Agreements to sell an additional 12.5 million previously registered shares to the same investors who have already agreed to purchase 37.5 million shares as announced on May 9, 2003, and May 23, 2003. The Company said it will use the proceeds from this sale towards the satisfaction of its debt obligation to its senior lender, IBM Credit LLC. Under the Forbearance Agreement with IBM Credit (announced on March 27, 2003), the Company has the right to purchase all of its debt of approximately $95 million (including accrued interest) with a payment of $30 million by June 30, 2003, subject to continued compliance with the terms of the Forbearance Agreement. If this payment is made on or before June 30, 2003, Applied Digital would satisfy its full obligation to IBM Credit. As of this date, the Company is in compliance with all terms of the Forbearance Agreement. Applied Digital Solutions is an advanced technology development company that focuses on a range of life-enhancing, personal safeguard technologies, early warning alert systems, miniaturized power sources and security monitoring systems combined with the comprehensive data management services required to support them. Through its Advanced Technology Group, the Company specializes in security-related data collection, value-added data intelligence and complex data delivery systems for a wide variety of end users including commercial operations, government agencies and consumers. Applied Digital Solutions is the beneficial owner of a majority position in Digital Angel Corporation (AMEX: DOC). For more information, visit the Company's Web site at http://www.adsx.com ARVINMERITOR INC: Extends Dana Corp. Tender Offer to October 2 -------------------------------------------------------------- ArvinMeritor, Inc. (NYSE: ARM) has extended its $15.00 net per share offer for all of the outstanding common shares of Dana Corporation's (NYSE: DCN) common stock until 5:00 p.m. Eastern Daylight Time (EDT), on Oct. 2, 2003, unless further extended. The offer was previously scheduled to expire at 5:00 p.m. EDT, on Aug. 28, 2003. At that time, Dana shareowners had tendered and not withdrawn approximately 2,543,879 shares pursuant to ArvinMeritor's tender offer. ArvinMeritor's offer represents a premium of 56 percent over Dana's closing stock price on June 3, 2003, the last trading day before ArvinMeritor submitted its first proposal to Dana in writing, a premium of 39 percent over Dana's average closing stock price for the 30 trading days before ArvinMeritor publicly announced its intention to commence a tender offer, and a premium of 25 percent over Dana's closing stock price on July 7, 2003, the last trading day before ArvinMeritor publicly announced its intention to commence a tender offer. ArvinMeritor, Inc. is a premier $7-billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. In addition, ArvinMeritor is a leader in coil coating applications. The company is headquartered in Troy, MI, and employs 32,000 people at more than 150 manufacturing facilities in 27 countries. ArvinMeritor's common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: http://www.ArvinMeritor.com The solicitation and offer to purchase is made only pursuant to the Offer to Purchase and related materials that ArvinMeritor and Delta Acquisition Corp. filed with the Securities and Exchange Commission on July 9, 2003. Investors and security holders are advised to read such documents because they include important information. Investors and security holders may obtain a free copy of such documents at the SEC's Web site at http://www.sec.gov from ArvinMeritor at 2135 W. Maple Road, Troy, MI 48084, Attn: Investor Relations, or by contacting Mackenzie Partners, Inc. at (212) 929-5500 collect or at (800) 322-2885 toll-free or by email at proxy@mackenziepartners.com ArvinMeritor, Inc. (S&P, BB+ Corporate Credit & Senior Unsecured Debt Ratings, Negative) is a premier $7-billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. In addition, ArvinMeritor is a leader in coil coating applications. The company is headquartered in Troy, Mich., and employs 32,000 people at more than 150 manufacturing facilities in 27 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: http://www.arvinmeritor.com ASANTE TECHNOLOGIES: Red Ink Continues to Flow in Third Quarter --------------------------------------------------------------- Asante Technologies, Inc. (OTC BB: ASNT) announced results for the third quarter of fiscal 2003. The Company reported revenues of $2.8 million for the quarter ended June 28, 2003, compared to revenues of $2.6 million in the recently completed second quarter of fiscal 2003. The Company posted a net loss of $0.5 million. The results showed an improvement over the prior quarter due to increased revenues, and cost-cutting measures that included a reduction in personnel. At the same time, the Company's inventory in the channel decreased by approximately $0.3 million. Sales totaled $9.2 million for the first nine months of fiscal 2003. The Company reported a net loss for the first nine months of fiscal 2003 of $1.6 million. The Company experienced increased interest in its IntraCore managed system products, and has seen strong interest from Value Added Resellers, and System Integrators from its new Gold and Silver VAR Program, a program which was designed to attract additional premier VARs. This new program sets specific technical and volume goals for participating VARs and requires them to have certain levels of technical expertise in the Company's products. It then rewards the VARs by offering certain discounts and incentives for this commitment and achievement of revenue goals. In addition, the Company made moves to improve its channel for its managed systems products, and reduce its cost structure. By the end of the quarter, the Company moved closer to its goal of reducing operating costs to a lower break-even point, a target the Company would like to achieve in the next several months. These reductions involved internal restructuring, a reduction in personnel and payroll related costs, soliciting competitive bids to reduce the Company's audit costs, and reducing overhead costs. "While the general market is still soft, I am pleased with the progress we made in the third quarter to stabilize revenue and improve awareness of the Company's IntraCore managed product offerings. Already we have begun to see improved interest for many of the Company's managed products," stated Wilson Wong, Asante's Chairman, President and CEO. "The fourth quarter is historically a stronger quarter due to the buying habits of educational institutions and we hope to achieve further improvements in revenue. Additionally, the measures the Company has taken will help ensure a more agile Company and allow us to pursue significant business opportunities." Asante is a leading supplier of network connectivity products for Macs and PCs. The Company's FriendlyNET(R) products simplify networking and provide Internet access for small offices/home offices and education (K-12 and universities). The Company's IntraCore products support multi-service applications for large enterprises. For additional information telephone (408) 435-8388 or visit Asante's Worldwide Web address at: http://www.asante.com Asante's March 29, 2003 balance sheet shows a working capital deficit of close to $1 million, and a total shareholders' equity deficit of about $430,000. ATCHISON CASTING: Blackwell Sanders Retained as Special Counsel --------------------------------------------------------------- Atchison Casting Corporation and its debtor-affiliates are asking for permission from the U.S. Bankruptcy Court for the Western District of Missouri to employ Blackwell Sanders Peper Martin LLP as special counsel. Jeffrey T. Haughey, Esq., a partner in Blackwell Sanders, reports that the Firm provided significant legal representation to Debtors prior to the filing of these cases. In the past year, this representation focused on matters related to: a. asset divestiture; b. import/export; c. securities; d. labor and employment; e. environmental; f. litigation; and g. general corporate and finance matters. While restructuring in chapter 11, the Debtors seek to employ and retain Blackwell Sanders as their special counsel pursuant to Section 327(e) of the Bankruptcy Code to generally continue assisting them in connection with various corporate, litigation and other related services. The Debtors submit that representation by Blackwell Sanders is critical to their reorganization success because the Firm is uniquely situated to advise and assist the Debtors with respect to their general legal affairs. Blackwell Sanders' professional hourly rates are: Partners $240 to $390 per hour Associates $145 to $230 per hour Paralegals/Assts. $95 to $135 per hour Document Clerks $50 to $80 per hour Atchison Casting Corporation, headquartered in St. Joseph, Missouri, together with its affiliates, produce iron, steel and non-ferrous castings and machining for a wide variety of equipment, capital goods and consumer markets. The Company filed for chapter 11 protection on August 4, 2003 (Bankr. W.D. MO. Case No. 03-50965). Mark G. Stingley, Esq., and Cassandra L. Writz, Esq., at Bryan Cave LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $136,750,000 in total assets and $96,846,000 in total debts. BALDWIN TECHNOLOGY: Secures $20M Credit Facility from Maple Bank ---------------------------------------------------------------- On August 18, 2003, Baldwin Technology Company, Inc. and certain of its subsidiaries, entered into a $20,000,000 Credit Agreement with Maple Bank GmbH, which if not terminated by the Lender on August 15, 2004 or by the Company by payment in full, shall terminate in its entirety on August 15, 2005. The credit facility is collateralized by substantially all of the accounts and notes receivable of the Company and a portion of the Company's inventory. Borrowings under the credit facility are subject to a borrowing base and bear interest at a rate equal to the three-month Eurodollar rate (as defined in the Credit Agreement) plus (i) 10% for loans denominated in U.S. Dollars or (ii) 11.5% for loans denominated in Euros. The interest rate will be reduced by 0.50% or whole increments thereof for each whole increment of Disclosed EBITDA (as defined in the Credit Agreement) that equals or exceeds $1,250,000 for any fiscal quarter commencing with the quarter ending December 31, 2003. In no event however, may the interest rate be less than 10.5% per annum. The initial borrowings under the credit facility amounted to $18,874,000, of which the Company utilized $16,243,000 to retire its previously existing debt with Fleet National Bank and Wachovia Bank National Association. Baldwin Technology Company, Inc. and its subsidiaries are engaged primarily in the development, manufacture and sale of controls and accessories equipment for the printing industry. The Company has experienced operating losses, negative cash flows and debt covenant violations over the past two fiscal years. As more fully discussed in these notes to the consolidated financial statements, the Company has embarked on restructuring plans and undertaken other actions aimed at improving the Company's competitiveness, operating results and cash flow. These actions have included the sale of certain non-core operating units, the consolidation of manufacturing facilities and headcount reductions reflecting weak market conditions. As a result of these actions, combined with the renegotiation of certain of the Company's debt obligations, management believes that the Company's cash flows from operations, along with available bank lines of credit and alternative sources of borrowing are sufficient to finance its working capital and other capital requirements for the near and long-term future. Management further believes that alternative sources of financing are available to finance the existing facilities beyond July 1, 2003, which the Company is currently pursuing. The Company did not meet a minimum operating income covenant or a tangible net worth covenant for the quarter ended March 31, 2003; accordingly, amounts outstanding under certain loan obligations have become payable on demand. The Banks have granted a waiver of these covenant violations for the quarter ended March 31, 2003. If the Company does not obtain alternative financing prior to the July 1, 2003 maturity date, management will be required to take additional actions. These actions may include reducing operating expenses or selling assets in an effort to meet liquidity needs. There can be no assurances, however, that such actions will be sufficient to meet liquidity needs in the event a demand for immediate payment is made by the lenders. The Company's unaudited consolidated financial statements include the accounts of Baldwin and its subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in compliance with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. These financial statements reflect all adjustments, which are in the opinion of management, necessary to present a fair statement of the results for the interim periods. These financial statements should be read in conjunction with the consolidated financial statements and related notes included in the Company's latest Annual Report on Form 10-K for the fiscal year ended June 30, 2002. Operating results for the three and nine months ended March 31, 2003 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 2003. All significant intercompany transactions have been eliminated in consolidation. BEAR STEARNS: S&P Takes Rating Actions on Series 2003-PWR2 Notes ---------------------------------------------------------------- Standard & Poor's Rating Services assigned its preliminary ratings to Bear Stearns Commercial Mortgage Securities Trust 2003-PWR2's $1.1 billion commercial mortgage pass-through certificates series 2003-PWR2. This presale report is based on information as of Aug. 28, 2003. The ratings shown are preliminary. This report does not constitute a recommendation to buy, hold, or sell securities. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property-type diversity of the loans. Classes A-1, A-2, B, C, and D are being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.72x, a beginning loan-to-value of 80.8%, and an ending LTV of 61.9%. PRELIMINARY RATINGS ASSIGNED Bear Stearns Commercial Mortgage Securities Trust 2003-PWR2 Commercial mortgage pass-thru certs series 2003-PWR2 Class Rating Amount ($) A-1* AAA 309,500,000 A-2* AAA 613,286,000 B* AA 26,670,000 C* A 28,004,000 D* A- 9,334,000 E BBB+ 12,000,000 F BBB 10,670,000 G BBB- 9,335,000 H BB+ 13,335,000 J BB 5,334,000 K BB- 5,334,000 L B+ 4,000,000 M B 5,334,000 N B- 2,667,000 P N.R. 12,002,323 X-1-I AAA 1,066,805,323 X-2-II AAA 1,026,990,000 * Classes A-1 through D are offered publicly. Interest-only class. BETHLEHEM STEEL: Disclosure Statement Hearing Set for Sept. 10 -------------------------------------------------------------- As previously reported, Bethlehem Steel Corporation and its debtor-affiliates filed their Plan of Liquidation and Disclosure Statement on July 29, 2003. Pursuant to Section 1125 of the Bankruptcy Code, a plan proponent must provide holders of impaired claims with "adequate information" regarding a debtor's proposed Chapter 11 plan. Section 1125(a)(1) further provides that: "[A]dequate information" means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan. . . ." Thus, a disclosure statement must, as a whole, provide information that is "reasonably practicable" to permit an "informed judgment" by impaired creditors entitled to vote on the plan. George A. Davis, Esq., at Weil, Gotshal & Manges, LLP, in New York, asserts that the Debtors' Disclosure Statement fully provides "adequate information" on applicable subject matters, including, but not limited to, a discussion of: (a) the Plan; (b) certain events preceding the Debtors' Chapter 11 cases; (c) the operation of the Debtors' businesses and the sale of their assets during the course of these Chapter 11 cases, (d) the indebtedness of the Debtors; (e) risk factors affecting the Plan; (f) the administration of the Debtors' estates following confirmation of the Plan; and (g) the tax consequences of the Plan. Accordingly, Judge Lifland will convene a hearing on September 10, 2003, at 10:00 a.m. to consider the entry of an order: -- finding that the Disclosure Statement contains "adequate information" within the meaning of Section 1125 of the Bankruptcy Code to enable the Debtors' creditors, who are entitled to vote, to make an informed decision on whether to accept or reject the Plan of Reorganization; and -- approving the Disclosure Statement. (Bethlehem Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) BETTER MINERALS: Moody's Withdraws B3 Rating for Sr. Sec. Loans --------------------------------------------------------------- With approximately $108 million of debt securities affected, Moody's Investors Service withdrew its B3 ratings for Berkeley Springs, West Virginia-based Better Minerals & Aggregates Company's guaranteed senior secured term loan A, due 2005, and guaranteed senior secured term loan B, due 2007. The two tranches of the term loans were recently retired using net proceeds from the company's sale of its aggregates business, for which it received cash consideration of $158 million before fees and expenses. BRIGHTPOINT: S&P Ups Credit Rating over Continued Profitability --------------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on Indianapolis, Indiana-based Brightpoint Inc. to 'B+' from 'B'. The upgrade reflects Standard & Poor's expectation of continued revenue growth and consistent profitability. The outlook is stable. Total debt outstanding is about $13 million. "The rating on Brightpoint reflects the company's moderate, but stable, profitability and narrow product base. These factors are partly offset by the company's good market position and strengthened balance sheet," said Standard & Poor's credit analyst Martha Toll-Reed. Brightpoint is a leading distributor and provider of value-added logistics services in the fragmented and highly competitive wireless communications products distribution market. Strong growth in Brightpoint's Asia-Pacific market segment has driven a return to growth in each the past three quarters, despite increased market saturation for wireless handsets and economic weakness in the U.S. The company reported revenues of $720 million for the six months ended June 2003, up 20% from the prior-year period. Net income was $1.5 million for the six months ended June 2003, compared with a loss of $53.2 million in the prior-year period. Although revenue growth is likely to vary significantly by geography, profitability in fiscal 2003 is expected to continue to benefit from cost- reduction actions. In addition, the company completed the repurchase of the zero-coupon convertible notes due 2018 in June 2003. As a result, Brightpoint has improved its capital structure and financial flexibility. Brightpoint has a $70 million U.S. revolving credit facility with a borrowing base that matures in October 2004. As of June 30, 2003, there were no amounts outstanding under this facility. The company had global borrowing availability of about $44 million as of June 30, 2003, and long-term lines of credit outstanding of $13 million. There are no additional near-term debt maturities. With cash balances of $61.3 million as of June 2003, Brightpoint has adequate liquidity and access to capital. BURLINGTON INDUSTRIES: Judge Newsome Okays Disclosure Statement --------------------------------------------------------------- John D. Englar, Senior Vice President of Burlington Industries, Inc., reports that the Debtors revised their First Amended Joint Plan of Reorganization to reflect these modifications: Voting Procedures and Requirements A. Pursuant to Section 502 of the Bankruptcy Code and Rule 3018 of the Federal Rules of Bankruptcy Procedure and by a Bankruptcy Court Order, certain vote tabulation rules have been approved that temporarily allow or disallow certain Claims for voting purposes only; B. To be counted, the Ballot must be actually received by 4:30 p.m., Eastern Time, on October 10, 2003; C. If a Ballot partially rejects and partially accepts the Plan, the Ballot will be identified by the Voting Agent, and, to the extent the votes are statistically significant, the Bankruptcy Court will determine whether to count the Ballots on or before the Confirmation Hearing; D. If any of the Classes of Holders of Impaired Claims vote to reject the Plan: (1) the Debtors may seek to satisfy the requirements for confirmation of the Plan under the cramdown provisions of Section 1129(b) of the Bankruptcy Code and, if required, may amend the Plan to confirm to the standards of the section, or (2) the Plan may be modified or withdrawn with respect to a particular debtor, without affecting the Plan as to other Debtors, or in its entirety; and E. Holders of Unsecured Claims in amounts greater than $1,500 that wish for the Claims to be treated in Class 5 Convenience Claims must indicate that election on the Ballot. Confirmation Hearing The Confirmation Hearing is scheduled for October 30, 2003 at 2:00 p.m. Eastern Time before Judge Newsome. The Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court without further notice, except for the announcement of the adjourned date made at the Confirmation Hearing. * * * Judge Newsome finds that the First Amended Disclosure Statement with its revisions contains adequate information for creditors to make an informed decision on the plan. Accordingly, the Court approves the First Amended Disclosure Statement for distribution. The Debtors are authorized to make non-substantive modifications to the Disclosure Statement prior to its dissemination. (Burlington Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON IND: All Creditors' Ballots Due by October 10, 2003 -------------------------------------------------------------- The Bankruptcy Court has approved the Company's disclosure statement setting forth the terms of its Plan of Reorganization and other information relating to its proposed emergence from Chapter 11 as well as proposed procedures for soliciting votes to accept the Plan. These documents will be sent to the Company's creditor constituencies on or before September 12, 2003 for review and approval. Under the Court's ruling the creditors have until October 10, 2003 to review these documents and approve or object to the Plan. A confirmation hearing has been set for October 30, 2003 for the Court to consider confirmation of the Plan. If the Plan is confirmed, the Company currently expects to emerge from bankruptcy promptly following the entry of the confirmation order. As previously announced, the Company's Plan of Reorganization includes the purchase of Burlington Industries by WL Ross & Co. for $614 million, subject to adjustments, with a concurrent sale of Burlington's Lees carpet business to Mohawk Industries Inc. With operations in the United States, Mexico and India and a global manufacturing and product development network based in Hong Kong, Burlington Industries (OTC Bulletin Board: BRLG) is one of the world's most diversified marketers and manufacturers of softgoods for apparel and interior furnishings. CHYPS CBO: S&P Further Junks Note Ratings on Classes A-2A & A-2B ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on the class A-2A and A-2B notes issued by CHYPS CBO 1997-1, an arbitrage high-yield CBO transaction originated in 1997, and removed them from CreditWatch with negative implications, where they were placed July 11, 2003. The ratings on the class A-2A and A-2B notes were previously lowered to 'CCC-' from 'BB-' and 'BB-r,' respectively, June 24, 2002. On the same date, the rating on the A-3 notes was lowered to 'CC' from 'CCC-' and the 'AAA' rating on the A-1 notes was affirmed. The latter rating was eventually withdrawn, following the complete redemption of the class A-1 notes in July 2002. The current downgrades reflect new asset defaults and further deterioration in the credit quality of the assets in the collateral pool since the last rating action. According to the most recent trustee report (Aug. 4, 2003), cumulative defaults added up to $160.8 million versus $139.5 million at the time of the last rating action. Standard & Poor's also noted that $104.6 million, or 60.4% of the assets in the collateral pool, now come from obligors rated 'CCC+' or lower. Meanwhile, cumulative losses on account of credit risk sales increased to $34.3 million from $29.4 million when the ratings were last revised. Mounting defaults and credit risk losses have caused the transaction's overcollateralization ratios to drop continuously since late 2000. According to the most recent monthly report, the class A ratio was 78.91%, compared to 89.35% at the time of the last rating action, and well below the minimum requirement of 118%. At the same time, the class B ratio was 64.68%, in contrast with a value of 75.28% at the time of the last rating action, and below its 104% benchmark. CHYPS CBO 1997-1 Ltd. triggered a technical event of default in mid-2001 as a result of the failure of the overcollateralization ratios to equal or exceed 90% of their minimum requirements. This precluded the portfolio manager from buying or selling any assets, but this ability was restored with regard to defaulted and credit risk assets by a May 2002 amendment to the indenture. Standard & Poor's will monitor the results of new cash flow runs generated for CHYPS CBO 1997-1 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still maintaining their ability to honor all interest and principal payments on the rated notes. The result of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes remain consistent with the credit enhancement available. RATINGS LOWERED CHYPS CBO 1997-1 Ltd. Rating Balance Class To From ($ mil.) A-2A CC CCC-/Watch Neg 135.77 A-2B CC CCC-/Watch Neg 19.66 COOK AND SONS: Files for Bankruptcy Protection in E.D. Kentucky --------------------------------------------------------------- Earnest Cook and Sons Mining has filed for bankruptcy, almost three years after buying the former Golden Oak Mining Co. out of bankruptcy, according to the Louisville Courier-Journal. The company, a private employer with 400 workers, filed for chapter 11 protection Monday in U.S. Bankruptcy Court in Lexington. The decision came after Cook and Sons was unable to recover financially from the April 30 collapse of a coal silo at the company's Sapphire coal preparation plant at Camp Branch, according to the online newspaper. All mining operations were shut down for five weeks while the plant was being repaired. Company officials released a statement this week that said Cook and Sons and a sister company expect to continue all mining, trucking and processing operations during the reorganization, the Journal-Courier reported. The bankruptcy could become a financial boon for the company if the court allows it to re-negotiate coal- supply contracts to electric utilities, The Mountain Eagle of Whitesburg reported. The newspaper said the bankruptcy could result in new contracts that would boost the price received by up to $5 per ton. (ABI World, Aug. 28, 2003) COOK AND SONS: Chapter 11 Case Summary & 40 Largest Creditors ------------------------------------------------------------- Debtors: Cook and Sons Mining, Inc. Earnest Cook & Sons Mining, Inc. 147 Big Blue Boulevard Whitesburg, KY 41858 Case Nos.: 03-70789 and 03-70790 Chapter 11 Petition Date: August 25, 2003 Court: United States Bankruptcy Court Eastern District of Kentucky Pikeville Division Judge: The Honorable Joseph M. Scott, Jr. Debtors' Counsel: W. Thomas Bunch, Esq. Bunch & Brock 271 West Short Street 805 Security Trust Bldg. P.O. Box 2086 Lexington, Kentucky 40588-2086 Telephone (859) 254-5522 (A) Cook and Sons Mining, Inc. 20-Largest Unsecured Creditors: Creditor Nature of Claim Amount -------- --------------- ------ Kentucky River Coal Corp. 200 West Vine Street, Suite 8-K Lexington, Kentucky 40507 Coal Lease arrearage $1,117,077 Gary Coney 606-439-4518 Joy Mining Machinery P.O. Box 640020 Pittsburgh, PA 15264 parts vendor $363,204 Ron Bartunek 540-679-6186 Austin Sales, Inc. P.O. Box 133 Vansant, VA 24656 unsecured vendor $257,990 Virlo Stiltner 276-597-4449 Don and Marvin Polly 980 Diana Avenue Naples, FL 34103 lease arrearage $238,571 Don Polly 239-261-7897 DBT America - Long Airdox 135 S. Lasalle St Dept. 3871 Chicago, IL 60674-3871 unsecured $194,398 David Hurd 540-994-3807 Anthem Blue Cross/Blue Shield P.O. Box 9001508 Louisville, KY 40290-1508 unsecured $111,147 Jessica Hicks 513-336-3466 AIG Risk Management P.O. Box 24410 Canton, OH 44701 unsecured $83,970 Mike Shiley 216-479-8948 Lee Adams Heirs c/o Michael Lee Adams 3261 Tudor Drive Lexington, KY 40503 lease arrearage $67,910 Mike Adams 859-296-9696 x230 Paintsville Bolt & Mfg PO Box 1742 Paintsville KY 41240 unsecured $64,900 Jimmy Earl, Jr. 606-789-7205 Network Supply 4486 Hwy 15 N Whitesburg KY 41858 $60,197 Phil Davidson 606-633-0505 Perry County Tire Inc PO Box 660 Hazard KY 41702 $55,370 606-436-3146 Zinkan Enterprises 10574 Ravenna Rd Twinsburg OH 44087 $50,933 330-487-1500 Drives & Conveyors P.O. Box 396 Corbin, KY 40702 $48,592 606-528-0500 Electroplate Battery P.O. Box 134 Drift, KY 41619 $46,940 Mike Vanderpool 606-377-2032 Persinger Supply Co PO Box 188 Prichard WV 25555 $46,365 304-486-5401 Industrial Rubber Products P.O. Box 2348 Charleston, WV 25328 $45,962 304-485-6491 Burl and Jacqueline Niece 343 Dean Street Shepherdsville, KY 40165 $36,257 502-955-6575 American Safety Insurance 1845 The Exchange, Suite 200 Atlanta, GA 30339 $35,000 770-916-0156 Banks Heirs 2605 Highway 588 Whitesburg, KY 41858 $34,943 Lewis Heirs 724 Willard Drive Kingsport, TN 47663 Whitesburg KY 41858 $33,997 (B) Earnest Cook & Sons Mining, Inc. 20-Largest Unsecured Creditors: Creditor Nature of Claim Amount -------- --------------- ------ Charles R. Sexton Trucking Company 228 East Main Street P.O. Box 280 Whitesburg, KY 41858 unsecured $31,585 Charles R. Sexton 606-663-1124 Atlas Machine Shop 7000 Global Drive Louisville, KY 40258 unsecured $25,536 Leonard Nett 502-584-7262 Yeary Truck Sales P.O. Box 1858 Middlesboro, KY 40965 unsecured $22,256 Buddy Yeary 606-648-2588 Worldwide Equipment Dept. 1265 P.O. Box 2153 Birmingham, AL 35287 unsecured $13,844 Tim Martin 800-307-4746 Mountain Truck Parts P.O. Box 189 Isom, KY 41834 unsecured $10,864 Codell Gibson 606-633-0263 Quickway Machine Shop 1911 Brookside Lane Kingsport, TN 37660 unsecured $7,922 Mike Templeton 423-245-0138 Appalachian Wireless P.O. Box 14107 Lexington, KY 40512 unsecured $7,177 Delores Prattie 800-438-2355 Double D and G Trucking, Inc. 130 Kate Hollow Road Highway 931 North Whitesburg, KY 41858 unsecured $7,107 Dennis Mullins 606-633-0604 Hurricane Trucking, LLC Attn: Bob Collins 11 Brett Drive Whitesburg, KY 41858 unsecured $6,715 Bob Collins 606-632-9571 Meghan Trucking Company, Inc. Attn: Orville Gene Collins P.O. Box 1541 Whitesburg, KY 41858 unsecured $5,290 Orville Collins 606-633-9509 Perry County Tires P.O. Box 660 Hazard, KY 41702 unsecured $3,348 Greg Conway 606-436-3146 Greg's Garage Junction 7 and Highway 931 Ison, KY 41824 unsecured $2,269 Greg Hall 606-633-9737 Mine Safety & Health Administration P.O. Box 360350 M Pittsburgh, PA 15251-6250 unsecured $1,665 Sandy Barber 606-633-4882 Mica Rae Trucking, Inc. 1103 Highway 7 South Jeremiah, KY 41826 unsecured $1,320 Larry Tolliver 606-633-0920 Dennis Wayne Fleming, CPA P.O. Box 280 Whitesburg, KY 41858 unsecured $400 606-633-8098 Safety Kleen Systems P.O. Box 382066 Pittsburgh, PA 15250-8066 unsecured $105 Mike Downey 800-819-1020 CWMBS INC: Fitch Assigns Ratings to Various Series 2003-39 Notes ---------------------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2003-39 is rated by Fitch Ratings as follows: -- $486,499,374 classes A-1 - A-20, PO and A-R senior certificates 'AAA'; -- $6,500,000 class M 'AA'; -- $2,750,000 class B-1 'A'; -- $1,500,000 class B-2 'BBB'; -- $1,000,000 privately offered class B-3 'BB'; -- $750,000 privately offered class B-4 'B'. The 'AAA' rating on the senior certificates reflects the 2.70% subordination provided by the 1.30% class M, 0.55% class B-1, 0.30% class B-2, 0.20% privately offered class B-3, 0.15% privately offered class B-4 and 0.20% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing; rated 'RPS1' by Fitch), a direct wholly- owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a pool of conventional, fully amortizing, 20- to 30-year fixed-rate mortgage loans, secured by first liens on one- to four-family residential properties. As of the closing date (Aug. 28, 2003), the mortgage pool demonstrates an approximate weighted-average loan-to-value ratio of 67.65%. Approximately 46.44% of the loans were originated under a reduced documentation program. Cash-out refinance loans represent 12.94% of the mortgage pool and second homes 2.92%. The average loan balance is $502,668. The weighted average FICO credit score is approximately 742. The three states that represent the largest portion of mortgage loans are California (63.77%), New York (5.78%) and Virginia (4.51%). The deal is 77.01% funded as of the closing date (Aug. 28, 2003). Fitch ensures that the deposits of subsequent loans conform to representations made by Countrywide Home Loans, Inc. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Approximately 97.94% and 2.06% of the mortgage loans were originated under CHL's standard underwriting guidelines and expanded underwriting guidelines, respectively. Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the standard underwriting guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as a real estate mortgage investment conduit. CWMBS INC: Two Series 2003-44 Notes Assigned Low-B Level Ratings ---------------------------------------------------------------- CWMBS, Inc.'s mortgage pass-through certificates, CHL Mortgage Pass-Through Trust 2003-44 is rated by Fitch Ratings as follows: -- $486,999,999 classes A-1 - A-11, PO and A-R senior certificates 'AAA'; -- $6,500,000 class M 'AA'; -- $2,750,000 class B-1 'A'; -- $1,500,000 class B-2 'BBB'; -- $1,000,000 privately offered class B-3 'BB'; -- $750,000 privately offered class B-4 'B'. The 'AAA' rating on the senior certificates reflects the 2.70% subordination provided by the 1.30% class M, 0.55% class B-1, 0.30% class B-2, 0.20% privately offered class B-3, 0.15% privately offered class B-4 and 0.20% privately offered class B-5 (not rated by Fitch). Classes M, B-1, B-2, B-3 and B-4 are rated 'AA', 'A', 'BBB', 'BB' and 'B', respectively, based on their respective subordination only. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the master servicing capabilities of Countrywide Home Loans Servicing LP (Countrywide Servicing; rated 'RPS1' by Fitch, a direct wholly owned subsidiary of Countrywide Home Loans, Inc. The certificates represent an ownership interest in a pool of conventional, fully amortizing, 20- to 30-year fixed-rate mortgage loans, secured by first liens on one- to four-family residential properties. As of the closing date (Aug. 28, 2003), the mortgage pool demonstrates an approximate weighted-average loan-to-value ratio of 67.95%. Approximately 49.19% of the loans were originated under a reduced documentation program. Cash-out refinance loans represent 14.75% of the mortgage pool and second homes 2.46%. The average loan balance is $505,039. The weighted average FICO credit score is approximately 742. The three states that represent the largest portion of mortgage loans are California (64.75%), Massachusetts (4.35%) and New Jersey (4.04%). The deal is 76.77% funded as of the closing date (Aug. 28, 2003). Fitch ensures that the deposits of subsequent loans conform to representations made by Countrywide Home Loans, Inc. None of the mortgage loans are 'high cost' loans as defined under any local, state or federal laws. Approximately 97.65% and 2.35% of the mortgage loans were originated under CHL's standard underwriting guidelines and expanded underwriting guidelines, respectively. Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher LTVs, higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the standard underwriting guidelines. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. CWMBS purchased the mortgage loans from CHL and deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. The Bank of New York will serve as trustee. For federal income tax purposes, an election will be made to treat the trust fund as a real estate mortgage investment conduit. DANA CORP: Board Calls ArvinMeritor Tender Offer "Inadequate" ------------------------------------------------------------- Dana Corporation (NYSE: DCN) issued the following statement in response to the announcement by ArvinMeritor, Inc. (NYSE: ARM) that it will extend the tender period for its offer for outstanding Dana shares. "On July 22, Dana's Board of Directors rejected ArvinMeritor's offer after a thorough review and consultation with its legal and financial advisors. The Board concluded that the offer is a financially inadequate, high-risk proposal that is not in the best interests of Dana or its shareholders and that is subject to serious financing risks and antitrust concerns that could prevent its completion. Further, the Board noted that Dana's restructuring and transformation efforts are producing results and reaffirmed its belief that Dana's ongoing strategy is a better way to enhance value for shareholders," said Joe Magliochetti, Chairman and Chief Executive Officer. "Nothing has changed in this regard. "The small number of shares tendered to date confirms that many of our shareholders agree with Dana's Board that ArvinMeritor's offer is not in their best interest. "According to its public statements, ArvinMeritor has not yet obtained the necessary financing for the proposed transaction. Since the offer was originally announced in July, we believe that the fast-changing conditions in the debt markets have made, and will continue to make, this significant challenge even more difficult. And, ArvinMeritor only recently decided to begin the process of seeking antitrust approval by making the required Hart- Scott-Rodino antitrust filing," Mr. Magliochetti continued. "Contrary to its earlier statements about plans to create a $17 billion combined enterprise, ArvinMeritor is now talking about significant potential divestitures of the combined company's commercial vehicle axle assets and other businesses, which would appear to limit opportunities for synergies and would result in a very different company from the one originally proposed to shareholders. Based on this and other factors, including the declining value of ArvinMeritor's shares since they commenced their offer, both Dana shareholders and ArvinMeritor shareholders are understandably questioning whether this deal makes any sense," concluded Mr. Magliochetti. Dana's shareholders, and its customers, suppliers and employees, are strongly advised to read carefully Dana's solicitation/recommendation statement regarding ArvinMeritor's tender offer, because it contains important information. Free copies of the solicitation/recommendation statement and the related amendments, which have been filed by Dana with the Securities and Exchange Commission, are available at the SEC's web site at http://www.sec.gov, or at the Dana web site at http://www.dana.com, and also by directing requests to Dana's Investor Relations Department. Dana -- whose $250 million debt issue is rated by Standard & Poor's at 'BB' -- is a global leader in the design, engineering, and manufacture of value-added products and systems for automotive, commercial, and off-highway vehicle manufacturers and their related aftermarkets. The company employs more than 60,000 people worldwide. Founded in 1904 and based in Toledo, Ohio, Dana operates hundreds of technology, manufacturing, and customer service facilities in 30 countries. The company reported 2002 sales of $9.5 billion. DEAN FOODS: Will Webcast Investor Presentation on Wednesday ----------------------------------------------------------- On Wednesday, September 3, 2003 at 2:15 p.m. ET, Dean Foods Company (NYSE: DF) will host a live audio webcast of its presentation at the Prudential Securities Back-to-School Consumer Conference at http://www.deanfoods.com An archived copy of the webcast will be available shortly following the completion of the meeting within the Investor Relations section of the company Web site under Audio Archives. Dean Foods Company (S&P, BB+ Corporate Credit Rating, Positive) is one of the nation's leading food and beverage companies. The company produces a full line of company-branded and private label dairy and dairy-related products such as milk and milk-based beverages, ice cream, coffee creamers, half and half, whipping cream, whipped toppings, sour cream, cottage cheese, yogurt, dips, dressings and soy milk. The company is also a leading manufacturer of pickles and other specialty food products, juice, juice drinks and water. The company operates over 120 plants in 36 U.S. states and Spain, and employs approximately 28,000 people. DELTA AIR LINES: Extends Exchange Offer for 6.65% & 7.70% Notes --------------------------------------------------------------- Delta Air Lines (NYSE: DAL) extended its offer to exchange its 10 percent Senior Notes due 2008 for any and all of its $300 million outstanding principal amount of its 6.65 percent Medium-Term Notes, Series C due 2004, and $500 million outstanding principal amount of its 7.70 percent Senior Notes due 2005. Delta has extended the expiration date of the exchange offer until 5 p.m., New York City time, on Sept. 4, 2003, unless further extended by Delta. The other terms of the exchange offer remain unchanged and it is subject to customary conditions. As of Aug. 27, 2003, $62,571,000 principal amount of 2004 notes and $161,613,000 principal amount of 2005 notes had been tendered and not withdrawn in the exchange offer. The new notes offered in the exchange offer will not be registered under the Securities Act of 1933, as amended, and will only be offered in the United States to qualified institutional buyers in a private transaction. Delta Air Lines (S&P/BB-/Negative), the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, offers 5,813 flights each day to 447 destinations in 81 countries on Delta, Song, Delta Express, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, go to http://www.delta.com DOLLAR GENERAL: Names Lawrence V. Jackson President and COO ----------------------------------------------------------- Dollar General Corporation (NYSE: DG) has named Lawrence V. Jackson as its new President and Chief Operating Officer, effective September 22, 2003. Mr. Jackson will report to David A. Perdue, Chairman and CEO. Mr. Jackson will be responsible for overseeing all business operations of the Company, including store operations, merchandising, new store development and supply-chain functions. He most recently served as Senior Vice President, Supply Operations for Safeway, Inc. Prior to joining Safeway, Mr. Jackson spent 17 years in management at Pepsi Cola Company. "Lawrence is absolutely the right person for this job," said Mr. Perdue. "His informed perspective is both strategic and tactical, and his varied experience at Safeway and Pepsi will enable him to contribute immediately. He has proven his ability to lead, to motivate and to effect change in various business situations, and he fits our culture. I am confident that Lawrence will play a key role at Dollar General as we move to the next level in the development of our business model. I am delighted that he is joining our team." After receiving both his bachelor's degree and master of business administration from Harvard University, Mr. Jackson spent three years with McKinsey & Company, from 1979 to 1981. He then joined Pepsi-Cola Company, where he remained for more than 17 years, serving in various functions, including vice president of operations, distribution and technical services (Pepsi-Cola Company, Irvin, Calif. 1988-1991), vice president of on-premise sales, (Pepsi-Cola Company, Dallas, 1991-1992), vice president, general manager (Pepsi-Cola Company, Atlanta, 1992-1994) and chief operating officer, senior vice president of worldwide operations (PepsiCo Food Systems, Dallas, 1995-1997). He joined Safeway in 1997, where he helped improve processes, increase efficiency and create an infrastructure, resulting in impressive growth in profit margins. Jackson was named as one of Fortune Magazine's 50 Most Powerful Black Executives in 2002 and is on the board of directors for Radio Shack, Allied Waste, Inc., and Parsons Corporation. "I am honored to be a member of Dollar General's leadership team," said Jackson. "I am impressed with the Company's strong business model and proven strategy and I look forward to the opportunity to contribute to the Company's future." In addition, the Company announced a reorganization of its executive team to allow a greater focus on specific areas critical to the Company's growth opportunities. Stonie O'Briant has been named executive vice president of merchandising, marketing and strategic planning. Tom Hartshorn has been named executive vice president of new business development. Both O'Briant and Hartshorn along with Jeff Sims, vice president of distribution, and Tony Davis, vice president of transportation, will report directly to Lawrence Jackson. The Company also announced a search for a new store operations executive, which will include both internal and external candidates. O'Briant is a 30-year retail veteran with company experience in merchandising, store operations, distribution, marketing and transportation. Among his recent accomplishments are implementing the Company's "7 Habits of a Highly Effective Store" program, store manager training, and newly launched shrink initiatives, which establish a base for future growth in operations. "In his 12 years with the Company, Stonie has provided forward- thinking leadership in developing strategies that will bring consistency back to our stores. He is recognized as an outstanding leader in our industry," said Perdue in making the announcement. In his most recent role as head of merchandising, marketing, and real estate, Hartshorn has overseen the addition of more than 1,600 new stores, and managed the implementation of new planning systems and merchandising strategies, that have supported the Company's same-store sales performance. In this newly created role, Hartshorn will be responsible for new store development as well as the introduction of new Company platforms and concepts. Hartshorn has more than 35 years of retail experience, 11 of them spent in management at Dollar General. "The tremendous growth in stores and improvement in merchandise productivity that the Company has enjoyed for the past few years is due to Tom's energetic leadership. He will be well positioned to help the Company realize its future growth opportunities," Perdue said. Dollar General (S&P, BB+ Corporate Credit Rating, Negative) is a Fortune 500(R) discount retailer with 6,479 neighborhood stores in 27 states as of August 1, 2003. Dollar General stores offer convenience and value to customers, by offering consumable basics, items that are frequently used and replenished, such as food, snacks, health and beauty aids and cleaning supplies, as well as an appealing selection of basic apparel, housewares and seasonal items at everyday low prices. The typical Dollar General store has 6,750 square feet of selling space and is located within five miles of its target customers. EGAIN COMMUNICATIONS: June Working Capital Deficit Tops $172K ------------------------------------------------------------- eGain Communications Corporation (NASDAQ: EGAN), a leading provider of eService software for the Global 2000, announced financial results for the fourth quarter and fiscal year ended June 30, 2003. Revenue for the quarter was $5.4 million, an increase of 3% compared to $5.2 million for the quarter ended March 31, 2003. For the fiscal year ended June 2003, revenue was $22.1 million, a decrease of 27% compared to revenue of $30.4 million in fiscal 2002. On a generally accepted accounting principles basis, including depreciation, amortization, other non-cash and restructuring charges, net loss applicable to common stockholders for the quarter ended June 30, 2003, was $3.6 million, or $0.10 per share, compared to $4.2 million, or $0.11 per share for the quarter ended March 31, 2003. For the fiscal year ended June 30, 2003, net loss applicable to common stockholders on a GAAP basis was $18.4 million, or $0.50 per share, compared to a net loss applicable to common stockholders of $166.1 million, or $4.58 per share in fiscal 2002. In fiscal 2002 the net loss applicable to common stockholders on GAAP basis included $36.8 million impairment of long-lived assets, $33.2 million amortization of goodwill and $43.8 million beneficial conversion on preferred stock. Pro forma net loss was $149,000 or $0.00 per share for the quarter ended June 30, 2003, compared to a pro forma net loss of $120,000, or $0.00 per share, for the quarter ended March 31, 2003. For the fiscal year ended June 2003, pro forma net loss was $3.1 million, or $0.09 per share, compared to $25.0 million, or $0.69 per share, in fiscal 2002. Pro forma net income (loss) figures exclude depreciation, amortization, accreted dividends and restructuring charges. A table reconciling the pro forma net income (loss) to GAAP net loss is included in the condensed consolidated financial statements in this release. Total cash and cash equivalents increased by $900,000 during the June 2003 quarter to approximately $5.2 million at June 30, 2003. Reverse Stock Split eGain also announced that its Board of Directors has voted to execute a one-for-ten reverse stock split. Stockholders granted the board authority to do so at the Company's annual meeting held in November. To effect the reverse stock split, the Company intends to file an amendment to its Certificate of Incorporation on August 19, 2003. The Company will begin trading under the new symbol, "EGAND" on Wednesday, August 20, 2003. After 20 trading days, the symbol will revert back to "EGAN." Fiscal 2003 in Review "In July 2002, we set two goals for fiscal 2003: first, to achieve pro forma operating breakeven in the December 2002 quarter and to sustain it; and second, to further enhance our product leadership in the customer service and contact center market," said Ashu Roy, CEO of eGain. "We substantially achieved both goals -- thanks to the efficiency of our proven global operating model, the support of our blue-chip customers, and the commitment of our team. In fiscal 2003, we delivered three consecutive quarters of near break-even operating performance in a tough market. To put it in perspective, even with a 27% decrease in revenues in fiscal 2003, our pro forma operating loss of $3.1 million improved by almost 90% from $25 million in fiscal 2002. What makes this more significant is we achieved these financial results without compromising our ongoing commitment to product innovation and in the March quarter, we successfully launched eGain Service 6 -- the biggest product enhancement in the company's history." Fiscal 2003 Business Highlights eGain Service 6 Launch and Market Adoption: - eGain Service 6, the company's latest software release, appeals to enterprise as well as high-growth businesses looking to seamlessly extend multi-channel interaction management with content management, service fulfillment, and multi-tenancy in their contact center operations. - eGain announced the "SafeSwitch" Program designed to replace competitive eService systems unable to cope with evolving business requirements and have been marginalized due to drastically reduced research and development investment or mergers and/or acquisitions. Six companies replaced their existing eService systems with eGain solutions over the past few months. Customer Loyalty: The following represents a sample of new and existing customers, by region, that acquired or expanded their use of eGain solutions in fiscal 2003: North America: GE Appliances, Janus Capital Group, Verizon Communications, Aliant Inc., Lockheed Martin Information Technology, Staples Inc., AA Cargo, Trendwest Resorts, Vistaprint, Newline Cinema, Agora Media, Garnett Hill, ASAP Software, Morningstar.com, winecountrygiftbaskets.com, Monster.com, OnStar Corporation, Replacements, Ltd. and Teleperformance USA. International: Vodafone, Virgin Mobile, Barclays, Irish Ferries, Prolog, BG Transco, Orange, NTL, Poste Italiane, Nuon, Cheltenham & Gloucester, GE Capital, Friends Provident, Skandiaviska Enskilda Banken AB, NS Solutions, Bank of Tokyo Mitsubishi, DoCoMo AOL, Osaka Government, OMRON and Hitachi. eGain participated in the North America User Conference 2003, held at Las Vegas. eGain believes the theme "Do More with Less" resonated strongly with the company's customers who were in attendance. World-class companies from telecom, financial services, retail, utilities, high-technology and other sectors, participated at the event. Industry Endorsements: - eGain was rated as a visionary in Gartner Group's eService magic quadrant 2003, the only vendor to win this rating two years in a row. - eGain was featured by a Tower Group report on best-of-breed Web self-service sites in the financial services industry. The only sites featured in the report were ABN AMRO and JPMorgan Chase, both powered by eGain's self-service solutions. - eGain LiveWebT was selected as a product of the year by Customer Interaction Solutions Magazine. Fourth Quarter and Fiscal 2003 Financial Highlights Revenue: Revenue for the June 2003 quarter was $5.4 million compared to $ 5.2 million for the March 2003 quarter and $6.3 million for the June 2002 quarter. This represents an increase of 3% from the prior quarter and a decrease of 15% from the comparable year-ago quarter. For the fiscal year ended June 2003, revenue was $22.1 million, a decrease of 27% compared to revenue of $30.4 million in fiscal 2002. Licensed Revenue was $1.5 million representing an increase of 50% from the prior quarter and a decrease of 35% from the comparable year-ago quarter. For the fiscal year ended June 2003, licensed revenue was $6.1 million, a decrease of 39% compared to licensed revenue of $10.0 million in fiscal 2002. Hosting Revenue was $819,000, representing a decrease of 7% from the prior quarter and a 27% decrease from the comparable year-ago quarter. For the fiscal year ended June 2003, hosting revenue was $3.7 million, a decrease of 35% compared to hosting revenue of $5.6 million in fiscal 2002. Support and services revenue was $3.1 million, representing a decrease of 8% from the prior quarter and a 5% increase from the comparable year-ago quarter. For the fiscal year ended June 2003, support and services revenue was $12.3 million, a decrease of 17% compared to support and services revenue of $14.8 million in fiscal 2002. International revenue accounted for 44%, and domestic revenue accounted for 56% of total revenue for the quarter, compared to 54% international revenue and 46% domestic revenue for the prior quarter. For the fiscal year ended June 30, 2003, international revenue accounted for 49%, and domestic revenue accounted for 51% of total revenue. Earnings: On a GAAP basis, net loss applicable to common stockholders for the June 2003 quarter was $3.6 million or $0.10 per share, versus a net loss applicable to common stockholders of $4.2 million, or $0.11 per share in the prior quarter and $57.5 million, or $1.57 per share in the comparable year-ago quarter. The GAAP basis net loss applicable to common stockholders for the fiscal year ended June 2003 was $18.4 million, which represents a reduction of $147.8 million or 89% from $166.1 million in fiscal 2002. In fiscal 2002, the net loss applicable to common stockholders on GAAP basis included $36.8 million impairment of long-lived assets, $33.2 million amortization of goodwill and $43.8 million beneficial conversion on preferred stock. For the June 2003 quarter, pro forma net loss was $149,000 or $0.00 per share, compared to pro forma net loss of $120,000, or $0.00 per share, in the prior quarter and a pro forma net loss of $5.6 million or $0.15 per share, in the comparable year-ago quarter. For the fiscal year ended June 2003, the pro forma net loss was $3.1 million representing a decrease of 88% or $21.9 million compared to $25.0 million for fiscal 2002. Balance Sheet Cash: Total cash and cash equivalents were $5.2 million at June 30, 2003, an increase of $900,000 from $4.3 million at March 31, 2003. Included in the June 30, 2003 balance was $790,000 of restricted cash compared to $1.1 million of restricted cash at March 31, 2003. Total cash and cash equivalents at the end of June 2002 was $9.9 million which included no restricted cash. eGain's June 30, 2003, balance sheet discloses a $172,000 working capital deficit. Days Sales Outstanding (DSO): DSO for the June 2003 quarter was 55 days compared to 58 days during the prior quarter and 71 days during the comparable year- ago quarter. eGain (NASDAQ: EGAN) is a leading provider of software and services for the Global 2000 that enable knowledge-powered multi- channel customer service. Selected by 24 of the 50 largest global companies to transform their traditional call centers into multi- channel contact centers, eGain solutions measurably improve operational efficiency and customer retention - thus delivering a significant return on investment (ROI). eGain eService Enterprise -- the company's integrated software suite - includes applications for knowledge management, self-service, email management, Web collaboration and productized integrations with existing call center infrastructure and business systems. Headquartered in Sunnyvale, California, eGain has an operating presence in over 10 countries and serves over 800 enterprise customers on a worldwide basis -- including ABN AMRO Bank, DaimlerChrysler and Vodafone. To find out how eGain can help you gain customers and sustain relationships, visit http://www.eGain.com ENRON: Unit Wins Case vs Sierra Pacific re Terminated Contracts --------------------------------------------------------------- Sierra Pacific Resources (NYSE: SRP) said the Bankruptcy Court for the Southern District of New York has rendered a decision in Enron's bankruptcy proceedings granting Enron Power Marketing Inc.'s motion for summary judgment with respect to Enron's claims for terminated contracts. Walt Higgins, chairman and CEO of Sierra Pacific Resources, said, "We are currently studying the decision and will consider all possible courses of action once an order is issued. "We are disappointed with this decision but, as I've said on many occasions during Enron's bankruptcy proceedings, we will aggressively pursue our rights throughout the court system. We do not believe those who were largely responsible for the 2000-2001 western energy crisis should benefit in any way from the dysfunctional marketplace they helped create." Headquartered in Nevada, Sierra Pacific Resources is a holding company whose principal subsidiaries are Nevada Power Company, the electric utility for most of southern Nevada, and Sierra Pacific Power Company, the electric utility for most of northern Nevada and the Lake Tahoe area of California. Sierra Pacific Power Company also distributes natural gas in the Reno-Sparks area of northern Nevada. Other subsidiaries include the Tuscarora Gas Pipeline Company, which owns a 50% interest in an interstate natural gas transmission partnership. EXIDE TECHNOLOGIES: Judge Carey Approves Disclosure Statement ------------------------------------------------------------- Judge Carey finds that Exide Technologies's Disclosure Statement, as amended, provides adequate information to allow a hypothetical creditor to make an informed decision whether to accept or reject the Debtors' Amended Plan. Accordingly, Judge Carey approves the Disclosure Statement and authorizes the Debtors to distribute the Plan to creditors. Judge Carey will hold a hearing on October 21, 2003 to consider the confirmation of the Amended Plan. (Exide Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Wants SDNY Court to Disallow Scores of Claims ---------------------------------------------------------- The Genuity Debtors object to various Claims on seven different grounds. A. Duplicative Claims Eight duplicative claims were filed against the Debtors in their bankruptcy cases. According to Erin T. Fontana, Esq., at Ropes & Gray, if a claim represents only one obligation, the claimant is entitled to only one distribution as well. The Debtors, therefore, ask the Court to expunge and disallow the duplicate claims to avoid a double recovery by the Claimants. The Debtors note that for each expunged Duplicate Claim, the Claimant will retain a Claim against the estate. However, the Remaining Claim will be subject to the Debtors' right to object to the Claim on grounds other than those asserted, including the Claimants' asserted classification of the Remaining Claims, at a later date. The Duplicate Claims are: Duplicate Remaining Claimant Claim No. Claim No. Amount -------- --------- --------- ------ Rev. Al- Marilyn E. Wood 5355 104 $4,488 CA-Orange County Treas. 5258 5318 18,480 FL-Jefferson County Tax 410 223 18,877 413 GA-Lamar County Tax 411 257 3,042 412 NC-City County Tax 5407 5292 83,208 OH-County of Geauga Treas. 5261 5262 16,064 B. Amended Claims Three claimants filed proofs of claim, which were later on amended or superseded by subsequent claims. Since each Claim represents only one obligation against the Debtors, Ms. Fontana asserts that the Court should expunge and disallow the Amended Claims. Each Claimant will be allowed one remaining claim, which will be subject to the Debtors' right to object to on grounds other than those asserted. The Amended Claims are: Amended Remaining Claimant Claim No. Claim No. Amount -------- --------- --------- ------ Pursley Givens 154 295 $77,689 NC- Guilford County 24 5418 24,029 Nortel Networks Inc. 2826 5485 166,239,626 C. Equity Claims Ownership of the Debtors' stock or of options to purchase stock, Ms. Fontana says, constitutes an equity interest, and not a claim against the Debtors' estates. Moreover, pursuant to the Bar Date Order, holders of equity interest in the Debtors are excluded from the requirement of filing proofs of claim in these cases. In this regard, the Debtors ask the Court to expunge 17 claims filed by equity interest holders. The Debtors do not believe that there will be any distribution to equity holders in these cases. Thus, expunging the Equity Claims will not impair the equity holders' rights. The Equity Claims include: Claimant Claim No. Amount -------- --------- ------ Dicerbo Assoc. LLC 5487 $35,576 Judy Gilder 5463 5,500 Mark Gilder 5464 44,000 Mark & Judy Gilder 5462 3,300 Patel Trustee Sureshi 5477 5,000 Rose Howard 2475 2,837 Morris & Elaine Morris 5475 11,000 Gary M. Venancio 5473 3,000 Fernando Raffaele Mancini 5488 14,918 Charles & Mary-Lynn Allen 5479 2,350 D. No Basis Claims The Debtors want 75 claims asserting a total of $5,081,836 disallowed and expunged in their entirety. Ms. Fontana explains that the Claims are not properly allowable for one reason or another, and the holders of these No Basis Claims are seeking recoveries for which they are not entitled to. Among the No Basis Claims are: Claimant Claim No. Amount -------- --------- ------ Capital Printing 1769 $362,957 Martin Healey 2404 681,962 Ipass Inc. 4028 134,872 Isiscom LLC 3738 113,075 Legato Systems Inc. 3465 250,000 NRC Corp. 2825 602,323 NY-Dept. of Taxation 5388 206,950 Starnet Inc. 4025 595,276 Telefonica Data 4031 217,280 Telefonica Larga 3873 383,944 E. Late Claims The Debtors object to eight untimely filed claims. All of these Claims were filed after the April 18th General Bar Date, Rejection Bar Date, and Governmental Bar Date. Furthermore, the Claimants were not granted an extension of the Bar Dates or otherwise excused from filing a proof of claim pursuant to the Bar Date Order. The Debtors ask Judge Beatty to expunge and disallow these Late Claims in their entirety: Claimant Claim No. Amount -------- --------- ------ City of Gilroy 5476 $5,420 GA-Floyd County Tax 5489 454 IN-Howard Co. Treas. 5482 19,346 MA-City of Boston 5458 54,733 NC-Lee County Tax 5457 788 NY-County of Schenectady 5468 9,637 TN-Dept. of Rev. 5459 833,774 TX-Hondo Ind. School 5481 1,745 F. Misclassified and/or Overstated Claims to be Reduced and/or Reclassified According to Ms. Fontana, 72 claims filed in the Debtors' claims register are either misclassified or overstated. For instance, some of the Claims were filed as secured or priority claims. The Debtors' books and records, however, reflect that these classifications are inaccurate. Additionally, the Debtors believe that some of the claims were filed in excessive amounts. Therefore, the Debtors ask the Court to reclassify these misclassified claims to unsecured status, and to reduce the overstated claims. Among the Misclassified and Overstated Claims are: Overstated Reduced Claimant Claim No. Amount Amount -------- --------- --------- ------- 300 Metronorth Corp. 315 $1,162,477 $1,099,684 American Landmark III 3798 5,466,796 4,891,702 Cambridgepark 150 Realty 2748 1,051,947 990,457 CEP Second St. Investors 3752 1,678,796 1,661,141 Commonwealth Grand Ave. 3114 729,691 652,596 FL-Hillsborough County 5382 312,561 135,675 The Irvine Co. 4030 492,135 468,855 Liberty Prop. Ltd. 4380 1,426,843 928,784 Polaris Ventures IV Ltd. 335 129,784 127,462 Robert Samuel 3806 387,319 149,740 G. No Support Claims The Debtors ask the Court to expunge 120 claims filed by claimants who failed to provide sufficient documentation to support their claims. The liabilities asserted in the Claims are not contained in the Schedules and Statements, and neither were the Claims identifiable through the Debtors' review of their books and records. However, if any of the Claimants can provide evidence corroborating the Claims on or before the deadline to respond to the Debtors' objection, the Debtors will consider the evidence and proceed as if a response has been filed. The 10-largest of 120 insufficiently documented Claims are: Claimant Claim No. Amount -------- --------- ------ APCN-2 Cable Consortium 4244 $1,367,517 AT&T Corp. 4242 526,993 Avaya 25 67,916 Boston Edison Co. 90 130,754 Boston Edison Co. 2017 93,108 Carlson Implementation 4437 257,916 Firstnet Services Ltd. 1451 73,680 GE Network Sol'n. 1141 220,003 RW Hyde Const. 2317 96,476 Skytel Comm. 328 134,918 (Genuity Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) GEO SPECIALTY: Obtains Amendment to Senior Credit Agreement ----------------------------------------------------------- GEO Specialty Chemicals, Inc. has successfully obtained an amendment to its Senior Credit Agreement. The amendment allows for continued access by GEO to its revolving loan facility and the payment of interest due to the holders of GEO's 10-1/8% Senior Subordinated Notes due 2008 within the 30-day grace period that commenced on August 1, 2003. As part of the amendment, $6.1 million of additional funding was obtained through the issuance of a Senior Promissory Note. CIBC World Markets advised GEO in connection with the amendment. "With the amendment and the payment of the interest due to our bondholders, GEO now has the flexibility and the liquidity needed to pursue its business plans," stated William P. Eckman, GEO's Chief Financial Officer. GEO (S&P, CCC+ Corporate Credit Rating, Negative) is a global manufacturer of specialty chemicals serving the water-treatment, rubber and plastics, coating, construction, opto-electronics and compound semiconductor industries. GEO has seventeen plants in the USA, two plants in Europe, and one in Australia. GOODYEAR TIRE: Furloughing Staff at NAT Manufacturing Locations --------------------------------------------------------------- The Goodyear Tire & Rubber Company (NYSE: GT) will eliminate approximately 500 salaried and non-bargaining unit positions at its North American Tire manufacturing locations. The reductions will affect management and staff positions at most manufacturing plants throughout North America. Each location is developing its own restructuring plan for how the reductions will be achieved. When the plans are finalized within the next few weeks, local management will communicate the specific details to associates at their facilities. It is expected that the reductions will be completed by the end of September. "When we announced our turnaround plan at the end of last year, we said that difficult decisions would be required," explained Jon Rich, president of Goodyear's North American Tire business unit. "This is one of those very difficult actions, but it is absolutely necessary to achieve our cost reduction objectives." Earlier this year, Goodyear eliminated approximately 700 salaried positions, the majority of which were located at its headquarters in Akron, Ohio. Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 85 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 92,000 people worldwide. For more information about the company, visit http://www.goodyear.comon the Internet. As reported in Troubled Company Reporter's July 2, 2003 edition, Fitch Ratings placed the Goodyear Tire & Rubber Company's senior unsecured rating of 'B' and the senior secured bank facilities rating of 'B+' on Rating Watch Negative. Approximately, $5 billion of debt is affected. GOODYEAR TIRE: Brings-In Thomas A. Connell as VP and Controller --------------------------------------------------------------- The Goodyear Tire & Rubber Company has named Thomas A. Connell vice president and controller. Connell, 54, formerly vice president and corporate controller for TRW Inc., will join Goodyear September 1. He will report to Stephanie W. Bergeron, senior vice president, corporate financial operations. "Tom brings to Goodyear experience as TRW's controller for six years as well as his financial leadership in its operating businesses," said Bergeron. "His knowledge of both technical and operational accounting as well as financial analysis will be important as our corporate financial team further aligns itself to support Goodyear's turnaround." Connell joined TRW in 1979 as manager of financial accounting. He was named director of financial reporting in 1983; finance director and controller, valve division in 1986; and finance director and controller, engine components in 1987. He became vice president of finance, occupant restraint systems in 1990 and was named to his most-recent position in 1996. TRW was recently acquired by Northrop Grumman Corp. Prior to joining TRW, Connell was an audit supervisor with accounting firm Ernst & Ernst from 1970 to 1979. He worked in the company's Cleveland and Sao Paulo, Brazil offices. A native of Bayonne, N.J., Connell earned a bachelor of business administration in accounting and a master of business administration degree from John Carroll University. He is a Certified Public Accountant. Goodyear is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 85 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 92,000 people worldwide. For more information about the company, visit http://www.goodyear.comon the Internet. As reported in Troubled Company Reporter's July 2, 2003 edition, Fitch Ratings placed the Goodyear Tire & Rubber Company's senior unsecured rating of 'B' and the senior secured bank facilities rating of 'B+' on Rating Watch Negative. Approximately, $5 billion of debt is affected. HEALTHSOUTH CORP: Payment Blockage of Past Due Interests Waived --------------------------------------------------------------- HealthSouth Corporation (OTC Pink Sheets: HLSH) announced that its lending banks have waived a payment blockage to allow past due interest to be paid to the holders of the Company's subordinated indebtedness. The banks had previously issued a payment blockage notice with respect to the Company's subordinated indebtedness, which blockage would have precluded holders of those instruments from receiving past due interest. The Company also announced that it will transfer sufficient funds to the trustees for holders of all of its outstanding notes to permit payment of interest on past due interest owed to these holders in accordance with the terms of the relevant indentures. It is expected that payment of the past due interest will be made to the holders of Company's notes shortly after the record date of August 29, 2003. "We're pleased to have received this waiver, representing the culmination of active negotiations by the Company with our bank lenders to pay past due interest owed to our subordinated noteholders," said Joel C. Gordon, HealthSouth's Interim Chairman. "We greatly appreciate the support our banks have shown in our turnaround efforts. These interest payments represent another step in addressing our financial situation and restoring our financial credibility." As previously announced, on August 12, 2003, HealthSouth paid $117 million to its lending banks and the trustees under its indentures, representing payment of all past due interest owed by the Company under its various borrowing agreements. HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations in all 50 states and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com HIGHWAY ONE OWEB: Ex-Accountant Raises Going Concern Uncertainty ---------------------------------------------------------------- HJ & Associates, L.L.C., Certified Public Accountants, of Salt Lake City, Utah, audited Highway One Oweb Inc.'s financial statements for the fiscal year ended December 31, 2002, and reviewed the Company's financial statements for the quarterly periods ended March 31, 2003, and June 30, 2003. On August 19, 2003, the Company's Board of Directors resolved to engage Seligson & Ginnatasio, Certified Public Accountants, of North White Plains, New York, to review its financial statements for the quarterly period ended September 30, 2003, and to audit its financial statements for the year ended Dec. 31, 2003. The reports of HJ & Associates, L.L.C. contained a "going concern" qualification. INTEGRATED HEALTH: Assigns Ventas Allowed Claims to TRS LLC ----------------------------------------------------------- The Confirmation Order provides that any and all of the claims of Ventas, Inc., and Ventas Realty, Limited Partnership against Integrated Health Services, Inc., and its debtor-affiliates will be allowed as a general unsecured claim for $1,200,000. Ventas, Inc. and Ventas Realty assigned the Allowed Claim to Ventas TRS, LLC. Accordingly, the parties stipulate that any and all distributions on account of the Allowed Claim would be distributed to Ventas TRS. (Integrated Health Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service, Inc., 609/392-0900) IVACO INC: Disappointing Q2 Results Shows $2.3M Operating Loss -------------------------------------------------------------- Ivaco Inc. reported its results for the second quarter ended June 30th, 2003. Paul Ivanier, President and Chief Executive Officer, said that the operating loss for the second quarter ended June 30, 2003 was $2.3 million compared to operating earnings of $24.4 million in 2002. The Steel segment reported operating earnings of $3.4 million in 2003 compared to $11.1 million last year, while the Fabricated Steel Products segment's operating loss was $2.6 million compared to operating earnings of $15.1 million in 2002. The Precision Machined Components segment reported operating earnings of $1.1 million, which is similar to last year's second quarter. Mr. Ivanier said that the disappointing second quarter results compared to last year's second quarter were due in part to lower sales in both the Steel segment and the Fabricated Steel Products segment. About 70% of Ivaco's products are sold to U.S. customers and the Company generated approximately 10% less in Canadian dollar revenues from these sales in the second quarter of 2003 compared to last year's second quarter due to the higher value of the Canadian dollar in relation to the U.S. dollar. The impact of the higher Canadian dollar accounted for approximately $10.8 million of the reduction in EBITDA in the second quarter of 2003 compared to last year's second quarter, Mr. Ivanier commented. The second quarter results were also negatively impacted by U.S. anti- dumping duties on shipment of certain wire rod to the U.S., which took effect in October 2002, as well as the higher costs of purchasing raw materials such as scrap and higher energy and other manufacturing costs. Mr. Ivanier said that sales in the Steel segment were lower than last year's second quarter. Tons shipped of wire rod were down about 8% compared to last year's second quarter but tons shipped of billets compensated for the lower rod shipments. The impact of the higher value of the Canadian dollar versus the U.S. dollar was a significant factor contributing to lower sales in the Steel segment, he added. Sales in the Fabricated Steel Products segment were also lower in the second quarter compared to last year mainly as a result of lower shipments of fastener products and wire and wire products. As in the case of the Steel segment, the impact of the higher Canadian dollar versus the U.S. dollar also resulted in reduced sales and operating earnings in the Fabricated Steel Products segment. Mr. Ivanier commented that Ivaco Rolling Mills and Sivaco Quebec are running full out so far into the third quarter while production levels at Ifastgroupe's Infasco division are now operating on two shifts in order to reduce inventory levels. In order to return to profitability, the Company is continuing to address cost cutting and cost efficiency measures including discussions with its unions and the introduction of the Kaizen method at Ivaco Rolling Mills. The Kaizen method is a Japanese technique involving many small groups of employees who work together to improve operating efficiency. The increase in the relative value of the Canadian dollar to the U.S. dollar during the first half of 2003, combined with the increase in scrap, transportation and energy costs have together had a significantly negative impact on operating earnings and cash flow during the first half of 2003. This in turn has resulted in liquidity and financing challenges for the Company which the Company is currently addressing in discussions with its lenders, among other things. In May 2003, the Company announced that it had suspended dividends on its preferred and second preferred shares as a cash conservation measure. Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, Ivaco's fabricated steel products operations have a rated production capacity in the area of 400,000 tons per annum of wire, wire products and processed rod, and over 200,000 tons per annum of fastener products. Shares of Ivaco are traded on The Toronto Stock Exchange. Management's Discussion and Analysis - June 30, 2003 Results of Operations Net sales for the second quarter of 2003 were $206.9 million, down $38.4 million or 15.7% over second quarter 2002 net sales of $245.3 million. In the Steel segment, external sales for the quarter declined $12.4 million or 13.1 % versus the same period last year. Total tons shipped of wire rod were down about 8% compared to last year's second quarter but tons shipped of billets compensated for the lower rod shipments. The impact of the higher value of the Canadian dollar versus the U.S. dollar of approximately 10% was a significant factor contributing to the lower sales in the Steel segment. The Fabricated Steel Products segment reported a decline in sales of $27.5 million or 20.2% compared to the same period last year, as a result of the ongoing sluggish global and domestic economies throughout the second quarter of 2003, and the impact of the higher Canadian dollar versus the U.S. dollar. Improved axle sales helped the Precision Machined Components segment increase its sales 11% to $15.9 million from $14.3 million during the same quarter last year. EBITDA is defined as operating earnings before foreign exchange gains or losses, net interest expense, dividends on Second Preferred Shares, Series 5, amortization and income taxes. EBITDA is not a measure of performance under Canadian generally accepted accounting principles, however, management uses this performance measure in assessing the operating performance of its reportable segments. The Company reported an EBITDA loss of $2.3 million for the quarter ended June 30, 2003. This compares with a positive EBITDA of $24.4 million for the same period last year. The stronger Canadian dollar in relation to the U.S. dollar was a significant factor accounting for approximately $10.8 million of the reduction in consolidated EBITDA in the second quarter of 2003. In addition, EBITDA in the Steel segment which was reduced to $3.4 million in the second quarter of 2003 from $11.1 million in 2002 was impacted by U.S. anti-dumping duties on shipments of certain wire rod to the United States, and increased scrap, labor and energy costs. The lower volumes of shipments at the Company's fastener operations and wire operations, combined with the impact of the higher Canadian dollar relative to the U.S. dollar, and increases in raw material and energy costs, resulted in a negative EBITDA for the Fabricated Steel Products segment of $2.6 million in the second quarter of 2003 compared with EBITDA of $15.1 million in 2002. In the Precision Machined Components segment, despite the increased sales volumes, operating margins were lower for certain of its product lines and resulted in EBITDA remaining at the same level as the previous year. Ivaco's other segment, which includes corporate and other, reported an EBITDA loss of $4.2 million compared to an EBITDA loss of $3.0 million last year. Net interest expense during the second quarter of 2003 increased by $0.8 million to $6.6 million from $5.8 million for the same quarter last year, principally as a result of an increase in interest rates on the Company's floating rate long-term debt. In accordance with GAAP, undeclared cumulative cash dividends of $1.8 million on Second Preferred Shares, Series 5, for the three months ended June 30, 2003 have been accrued. Amortization costs declined to $11.2 million in 2003 from $12.5 million in last year's second quarter. Net sales for the first half of 2003 were $441.3 million; a decrease of $34.2 million or 7.2% compared to first half of 2002 sales of $475.5 million. In the Steel segment and the Fabricated Steel Products segment, net sales decreased by $7.0 million and $29.4 million respectively, for the first six months versus the same period last year. In the Precision Machined Components segment, net sales increased by $2.2 million. EBITDA for the first half of 2003 in the Steel segment, Fabricated Steel Products segment and the Precision Machined Components segment were lower than 2002 levels by $13.2 million, $25.0 million and $0.6 million, respectively. Liquidity and Capital Resources Operating Activities The net loss from operations, adjusted for items not affecting cash, used $8.5 million of cash for the three months ended June 30, 2003. For the same period last year, net earnings from operations, similarly adjusted, provided $12.8 million of cash. The unfavorable change was a result of lower sales, the higher Canadian dollar versus the U.S. dollar and increased scrap, transportation, labor and energy costs. Working capital items provided $26.6 million of case in the second quarter of 2003 due primarily to lower accounts receivable and inventories, and higher accounts payable. This increase in cash was offset by the cash funding of employee future benefits in excess of expenses and by non-cash foreign exchange gains, other than on long-term debt, of $3.9 million and $5.3 million, respectively. For the three months ended June 30, 2002, working capital items provided $4.0 million of cash. Higher cash funding of employee future benefits resulted in a cash usage of $5.5 million and higher non-cash foreign exchange gains, other than on long-term debt, resulted in a cash usage of $2.6 million. For the six months ended June 30, 2003, the net loss from operations, adjusted for items not affecting cash, resulted in a cash outflow of $4.0 million. Operations provided $30.6 million of cash, similarly adjusted, for the first half of 2002. The unfavourable cash flow change was due primarily to lower operating earnings in the first half of 2003. Working capital items provided $21.4 million of cash in the first six months of 2003, mainly due to lower accounts receivable, lower prepaid expenses and higher accounts payable since December 31, 2002, which was offset by the cash funding of employee benefits in excess of expenses and non- cash foreign exchange gains, other than on long-term debt, of $7.1 million and $9.5 million, respectively. This compares with a cash outflow of $6.8 million in the first half of 2002, resulting primarily from higher accounts receivable and inventories since December 31, 2001. The cash funding of employee future benefits in excess of expenses and the foreign exchange gains, other than on long-term debt, of $8.5 million and $2.6 million, respectively, also reduced the cash provided by operating activities in the first half of 2002. Financing Activities The repayment of long-term debt in the first half of 2003 included scheduled debt payments and a $10 million reduction in revolving bank lines. Bank indebtedness increased in the first half of both years as a result of the operating activities. During the second quarter, the Company issued 694,246 Class A Subordinate Voting Shares with an aggregate value of $1.0 million as partial contribution to some of its U.S. pension plans. On March 31, 2003, the Company redeemed 465,643 Second Preferred Shares, Series 5 at $25.00 per share by issuing 6,032,484 Class A Subordinate Voting Shares with an aggregate value of $11.3 million. In May 2003, the Company suspended dividends on its Preferred and Second Preferred Shares as a cash conservation measure. Investing Activities Net additions to capital assets was $2.9 million for the six months ended June 30, 2003, similar to the previous year. During the second quarter of 2003, the Company disposed of its investment in a joint venture and received $1.4 million in cash. Cash Resources Cash and cash equivalents were nil at June 30, 2003 compared to $27.7 million at December 31, 2002. For the six months ended June 30, 2003 operating activities provided $0.2 million of cash while financing activities used $26.9 million, including the repayment of long-term debt. Investing activities used $1.0 million. The ratio of current assets to current liabilities was 1.3:1 compared to 1.5:1 at December 31, 2002. The increase in the value of the Canadian dollar relative to the U.S. dollar, the increase in scrap prices, transportation and energy costs and the imposition of U.S. anti-dumping duties, impacted the Company's EBITDA and liquidity, and resulted in the Company not being in compliance with one of the financial covenants under one of its Credit Agreements as at June 30, 2003. The Company has received a waiver of compliance for that covenant for the relevant period and the Company is also actively working with lenders to address the liquidity and financing challenges it is currently confronting. Outlook The higher value of the Canadian dollar in relation to the U.S. dollar has had an adverse affect on selling prices for the Company's export products. Other market conditions that depressed second quarter earnings are expected to continue for the balance of the year. In addition, costs of purchasing scrap have begun to increase during the third quarter of 2003 and if this trend persists it could have a further negative impact on margins in the second half. As a result, the Company is addressing liquidity and financing issues and firmly continues to address cost cutting and cash efficiency measures including discussions with its unions and the introduction of the Kaizen method at Ivaco Rolling Mills. JOHNSONDIVERSEY: Moody's Assigns B3 Rating to Sr. Discount Notes ---------------------------------------------------------------- Moody's Investors Service rates the $406.3 million senior discount notes of JohnsonDiversey Holdings, Inc., parent of JohnsonDiversey, Inc. at B3. The senior discount notes were issued to Unilever as part of the total consideration for the sale of its DiverseyLever business last year. Neither Holdings nor JD will receive proceeds from Unilever's proposed resale under Rule 144A and Regulation S. Moody's also confirms JD's existing debt ratings: - Senior implied rating, at Ba3; - $1.2 billion senior secured credit facilities due 2008- 2009, at Ba3; - $300 million senior subordinated notes due 2012, at B2; - EUR 225 million senior subordinated notes due 2012, at B2. With approximately $2.1 billion of rated debt affected, Moody's revised the ratings outlook to negative from stable. The rating confirmation reflects JD's meaningful integration progress, particularly in a difficult operating environment, following the large-scale combination of S.C. Johnson Commercial Markets and DiverseyLever in May 2002, Moody's states. Nonetheless, the revised outlook recognizes the challenges JD has experienced to date in reducing its substantial debt levels, which could cause liquidity and financial flexibility pressures if they persist over the medium-to-long term. With principal executive offices in Sturtevant, Wisconsin, JohnsonDiversey, Inc. is a leading manufacturer and marketer of cleaning products and services for the global institutional and industrial cleaning and sanitation market. KINDERCARE LEARNING: FY 2003 Revenues Increase by 3.8% to 850MM --------------------------------------------------------------- KinderCare Learning Centers, Inc. is pleased to announce net revenues of $850.0 million in fiscal 2003, an increase of $31.1 million, or 3.8%, from the same period last year. The increase was due to higher tuition rates as well as additional net revenues generated by newly opened centers. Comparable center net revenues increased $10.2 million, or 1.3%. Comparable centers are those that have been open for at least one year. The average weekly tuition rate was $144.45, an increase of $6.73, or 4.9%, which is primarily due to tuition increases. Occupancy was 63.3%, a decline of 2.3 percentage points due primarily to reduced full-time equivalent attendance within the population of older centers. During fiscal 2003, 28 new centers were opened compared to 35 in the same period last year, while 28 centers were closed compared to 13 in the same period last year. In fiscal 2003, operating income was $70.6 million, a decrease of $3.9 million, or 5.2%, from the same period last year. While tuition rates were higher, operating income decreased due primarily to $12.7 million of increased insurance costs and $4.8 million of higher rent expense due primarily to our sale-leaseback program. Also, as a result of our sale-leaseback program, depreciation expense decreased by $1.2 million, due to centers being classified as operating leases when they are sold and leased back. Net income for fiscal 2003 was $13.4 million, a decrease of $3.1 million, or 18.9%, from the same period last year. The decrease in net income was due to higher insurance costs, the write down of a minority investment of $4.0 million, net of tax, and increased rent expense, offset in part by higher tuition rates and reduced interest costs. Basic and diluted net income per share were $0.68 and $0.67, respectively, in fiscal 2003. For fiscal 2002, basic and diluted net income per share were $0.83 and $0.82, respectively. In fiscal 2003, EBITDAR was $176.7 million, a decrease of $2.6 million from the same period last year. The decrease was primarily due to higher insurance costs and the write down of a minority investment, offset by higher tuition rates and control over labor productivity. EBITDAR is a non-GAAP financial measure and is defined as earnings before interest, taxes, depreciation, amortization, rent and related components of discontinued operations. At May 30, 2003, our net debt was $437.0 million, a decrease of $86.7 million from May 31, 2002. The decrease was largely the result of $88.8 million of net proceeds received from our sale- leaseback program and $78.7 million of cash provided by operating activities during fiscal 2003. Capital expenditures were $83.1 million in fiscal 2003, a decrease of $12.7 million from the same period last year. The decrease was due to a reduction in spending for new center development. Fourth Quarter of Fiscal 2003 Net revenues for the fourth quarter of fiscal 2003, were $206.1 million, an increase of $7.3 million, or 3.7%, from the same period last year. The increase was due to higher tuition rates, as well as additional net revenues generated by newly opened centers. Comparable center net revenues increased $2.6 million, or 1.3%. The average weekly tuition rate was $146.33, an increase of $6.09, or 4.3%, from the same period last year, which is due primarily to tuition increases. Occupancy was 65.9%, a decrease of 1.9 percentage points largely as a result of reduced full-time equivalent attendance within the population of older centers. During each of the fourth quarters in fiscal 2003 and fiscal 2002, four new centers were opened. Four centers were closed in the fourth quarter of fiscal 2003 compared to five in the same period last year. In the fourth quarter of fiscal 2003, operating income was $21.7 million, a decrease of $0.2 million, or 0.8%, from the same period last year. While tuition rates were higher, operating income decreased due primarily to $5.3 million of increased insurance costs and $1.8 million of higher rent expense due primarily to our sale-leaseback program. Also, as a result of our sale-leaseback program depreciation decreased $0.4 million as a result of centers being classified as operating leases when they are sold and leased back. Net income was $3.4 million, a decrease of $2.4 million, or 41.2%, in the fourth quarter of fiscal 2003. This decrease was due to higher insurance costs, the write down of a minority investment of $4.0 million, net of tax, and increased rent expense, offset by higher tuition rates. Basic and diluted net income per share were both $0.17 in the fourth quarter of fiscal 2003. For the fourth quarter of fiscal 2002, basic and diluted net income per share were both $0.29. EBITDAR, a non-GAAP financial measure, was $42.7 million for the fourth quarter of fiscal 2003, a decrease of $4.6 million, or 9.6%, from the same period last year. The decrease was primarily due to higher insurance costs and the write down of a minority investment, offset by higher tuition rates and control over labor productivity. During the fourth quarter of fiscal 2003, our net debt decreased $35.6 million to $437.0 million at May 30, 2003. The decrease was largely the result of $21.9 million of net proceeds received from our sale-leaseback program and $30.2 million of cash provided by operating activities. Capital expenditures were $13.4 million in the fourth quarter of fiscal 2003, a decrease of $6.3 million from the same period last year, which was primarily due to a reduction in spending for new center development. Debt Refinancing On July 1, 2003, we successfully completed a refinancing involving a $300.0 million mortgage loan secured by first mortgages or deeds of trust on 475 early education and child care centers. The mortgage loan bears interest at a rate equal to LIBOR plus 2.25%. We also obtained a new $125.0 million revolving credit facility that replaced our then existing revolving credit facility. The new revolving credit facility is secured by mortgages or deeds of trust on 119 centers and certain other collateral. The revolving credit facility bears interest of LIBOR plus 3.25% and may change based on the achievement of certain performance measures. Both the mortgage loan and the new revolving credit facility are scheduled to mature in July 2008. The maturity of the mortgage loan may be extended to July 2009, subject to certain conditions. The proceeds from the mortgage loan were used to pay off $145.0 million of loans outstanding under our previous credit facilities and $97.9 million outstanding under the synthetic lease facility, both of which were scheduled to expire in February 2004. We also used $38.6 million of the proceeds to repurchase $37.0 million aggregate principal amount of our 9.5% senior subordinated notes. Non-GAAP Financial Measures A non-GAAP financial measure is a numerical measure of historical or future financial performance, financial position or cash flows that excludes or includes amounts, or is subject to adjustments that have the effect of excluding or including amounts, from the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. We have provided a reconciliation of EBITDA and EBITDAR, non-GAAP measures of our liquidity, to cash provided by operating activities, the most comparable GAAP financial measure, at the end of this release. We believe EBITDA and EBITDAR are useful tools for certain investors and creditors for measuring our ability to meet debt service requirements. Additionally, management uses EBITDA and EBITDAR for purposes of reviewing our results of operations on a more comparable basis. We have provided EBITDA and EBITDAR in previous earnings releases and continue to provide this measure for comparability between periods. EBITDA and EBITDAR were restated from amounts reported in previous periods to comply with Securities and Exchange Commission Regulation G, Conditions for Use of Non-GAAP Financial Measures. EBITDA and EBITDAR do not represent cash flow from operations as defined by GAAP, are not necessarily indicative of cash available to fund all cash flow needs and should not be considered alternatives to net income under GAAP for purposes of evaluating our results of operations. Comparable Centers A center is included in comparable center net revenues when it has been open and operated by us at least one year and it has not been rebuilt or permanently relocated within that year. Therefore, a center is considered comparable during the first four week period it has prior year net revenues. Discontinued Operations Discontinued operations represents the operating results for all periods presented of the 28 centers closed during fiscal 2003. Stock Split These per share amounts were adjusted to reflect a 2-for-1 stock split effective August 19, 2002. Fiscal Calendar We utilize a fiscal reporting schedule comprised of 13 four-week periods. The fiscal year ends on the Friday closest to May 31st. The first fiscal quarter includes 16 weeks and the remaining quarters each include 12 weeks. Conference Call We will host a conference call at 888-203-4765 (reference: KinderCare) to discuss the results of fiscal 2003 on Tuesday, September 2, 2003, at 11:30 a.m. Pacific Daylight Time. Replays will be available through Monday, September 8, 2003, at 800-642-1687, access identification number 2468619. This call will also be streamed over the Internet, accessible via http://www.kindercare.com/about_ir, at the webcast listing. Replays will be available at our website for 90 days from the date of the call. Portland, Oregon-based KinderCare (S&P, B+ Corporate Credit and B- Subordinated Debt Ratings) is the largest provider of proprietary center-based preschool education and child-care services in the U.S., with 1,266 facilities in 39 states and two centers in the U.K. KMART CORP: Second Quarter 2003 Net Loss Tops $293 Million ---------------------------------------------------------- Kmart Holding Corporation (Nasdaq: KMRT) announced the Company's financial results for the second quarter of fiscal 2003. For the 13 weeks ended July 30, 2003, Kmart Holding Corporation reported a net loss of $5 million. Kmart Corporation reported a net loss of $293 million for the 13 weeks ended July 31, 2002. Income before interest, reorganization items, income taxes and discontinued operations was $8 million for the second quarter of 2003, versus a loss of $264 million in the same period a year ago. Last year's results include a charge of $27 million in the second quarter of 2002 in connection with store closing liquidation sales. This charge is included in the Cost of sales, buying and occupancy in the accompanying unaudited Condensed Consolidated Statements of Operations. Net sales for the 13 weeks ended July 30, 2003, were $5.652 billion, a decrease of 21.3 percent from $7.183 billion a year ago. On a same-store basis, sales declined 5.4 percent for the second quarter of 2003, compared to the second quarter of 2002. Julian C. Day, President and Chief Executive Officer of Kmart, said: "We are pleased with the progress we continue to make in our business. We are focused on profitable sales, reducing SG&A and enhancing the productivity of our assets. As a result, our liquidity position remains strong." As of July 30, 2003, Kmart had approximately $1.2 billion in cash and cash equivalents, and borrowing availability of approximately $1.5 billion on its $2 billion credit facility inclusive of outstanding letters of credit. In light of its favorable liquidity position, the Company is exploring various alternatives to reduce the cost of its Exit Financing Facility. Gross margin decreased $37 million to $1.234 billion, for the 13 weeks ended July 30, 2003, from $1.271 billion for the 13 weeks ended July 31, 2002. Gross margin, as a percentage of sales, increased to 21.8% for the 13 weeks ended July 30, 2003, from 17.7% for the comparable period in the prior year. The improvement in the gross margin rate is attributable to a decrease in shrinkage and an overall improvement in the Company's sales mix. In addition, the gross margin rate was positively affected by the termination of the Company's supply arrangement with Fleming, lower buying and occupancy expenses as a result of the write-off of long-lived assets in conjunction with the application of Fresh- Start accounting and the effect of co-op recoveries recorded in Cost of sales, buying and occupancy in 2003. Previously, co-op recoveries were recorded in Selling, general and administrative expenses prior to the adoption in the fourth quarter of 2002 of EITF 02-16, "Accounting by a Customer (Including a Reseller) for Certain Consideration Received from a Vendor." These improvements in the gross margin rate were partially offset by the impact of clearance markdowns. Selling, general and administrative expenses, which includes advertising costs (net of co-op recoveries of $91 million in 2002), decreased $307 million to $1.228 billion for the 13 weeks ended July 30, 2003 from $1.535 billion for the 13 weeks ended July 31, 2002. The decrease in SG&A is primarily due to the reduction in the Company's store base after closing 599 stores during fiscal 2002 and the first quarter of 2003, as well as a decrease in payroll and other related expenses from corporate headquarters cost reduction initiatives and lower depreciation expense due to adjustments to the book value of the Company's property and equipment, resulting from impairment charges taken while operating in bankruptcy and the write-off of long-lived assets in conjunction with Fresh-Start accounting. Collectively, these reductions were partially offset by an increase in workers' compensation expense and the impact of the reclassification of co- op recoveries as discussed above. SG&A, as a percentage of sales, increased to 21.7% for the 13 weeks ended July 30, 2003, from 21.4% for the comparable period in the prior year. Disclosure of Financial Information in Accordance with Regulation FD Year-to-date Adjusted EBITDA Year-to-date Adjusted EBITDA was $164 million. Disclosure of Year- to-date Adjusted EBITDA is being made for purposes of communicating to employees year-to-date performance results as compared to the performance goals outlined in the Company's incentive compensation program, and accordingly, to comply with the disclosure requirements under Regulation FD. Year-to-date Adjusted EBITDA (Year-to-date earnings before interest, taxes, depreciation, amortization, reorganization costs, fresh start valuation charges, restructuring, impairment and other charges and other bankruptcy-related items) is a non-GAAP financial measure. Year-to-date Adjusted EBITDA is not the same as EBITDA defined in Kmart's Exit Financing Facility. Year-to-date Adjusted EBITDA is a Company-defined metric used solely by Kmart's management for the administration of the Company's incentive compensation program for eligible employees. Year-to-date Adjusted EBITDA is not a measure or indicator of the overall financial condition or performance of Kmart and should not be used by investors as a basis for formulating investment decisions. Upon emergence from bankruptcy on May 6, 2003, Kmart Corporation (Predecessor Company) applied the provisions of Fresh-Start accounting effective as of April 30, 2003, at which time a new reporting entity, Kmart Holding Corporation, was deemed to be created. As a result of applying Fresh-Start accounting, the reported historical financial statements of the Predecessor Company for periods ended prior to May 1, 2003 generally are not comparable to those of Kmart. Therefore, comparisons of earnings per share data are not included herein. As referenced within this news release, results of operations for the 13 weeks ended April 30, 2003 and periods ended in fiscal 2002 refer to the Predecessor Company. Board Approves up to $10 million Share Repurchase The Board of Directors today approved the repurchase of up to $10 million of the Company's outstanding stock for the purpose of providing restricted stock grants to certain employees. The repurchase was subject to an amendment to the Credit Agreement of our Exit Financing Facility, the approval of which was obtained today. Certain of such restricted stock grants may be subject to shareholder approval. Kmart and its subsidiaries is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include DISNEY, JACLYN SMITH, JOE BOXER, KATHY IRELAND, MARTHA STEWART EVERYDAY, ROUTE 66, SESAME STREET, and THALIA SODI. The Company operates more than 1,500 stores in 49 states and is one of the 10 largest employers in the country with 170,000 associates. For more information visit the Company's Web site at http://www.kmart.com LEAP WIRELESS: Gets Clearance to Pay More Critical Trade Claims --------------------------------------------------------------- As previously reported, on April 14, 2003, the Court authorized the Leap Wireless Debtors to pay certain prepetition claims by certain critical trade creditors in an aggregate amount not to exceed $15,100,000. Concurrent to that Order, the Debtors discovered more trade vendors that play important roles in their ongoing business operations. The Supplemental Trade Creditors include: A. Federal Express: The Debtors estimate that Federal Express is owed $90,000 prepetition. Federal Express provides shipping and packaging services to the Debtors for parts, supplies and regular correspondence at a discount. On a monthly basis, Federal Express bills Cricket $50,000 to $60,000. The Debtors determined that using Federal Express results in $30,000 to $40,000 cost savings per month. However, Federal Express has notified the Debtors that it will not continue to provide services unless the Debtors pay their prepetition obligations. Federal Express is crucial to the Debtors' business. The Debtors ship thousands of packages a month including parts, supplies and products in addition to normal correspondence. Importantly, replacing Federal Express with other shipping companies would be time-consuming. B. Display Network, Inc. Display Network manufactures displays for the Debtors' local stores. Currently, Display Network is mid-way through a large project for Indirect Floorstands for the Debtors. The cost of the Display Project is three equal payments of $217,788. The first payment arose prepetition and remains outstanding. The Debtors also owe Display Network $2,250 worth of prepetition invoices for 500 security pull boxes for cell phone displays, $7,537 for 1,000 phone cradles, 150 graphic stands and 500 pull boxes, and $1,575 for 225 Phone Lens Hologram Displays. The Debtors owe Display Network $229,151 in aggregate prepetition invoices. Display Network has indicated to the Debtors that it may not complete the Display Project unless the Debtors pay their prepetition obligations. Mr. Klyman notes that the Debtors do a large volume of business from the stores and their appearance is an important factor in their success. The Display Project is intended to create attractive modern displays for certain of the Debtors' stores, which should lead to increased foot traffic and increased customers. C. Installeck Communication LLC and Clearcomm Wireless Installeck and Clearcomm provide high quality, low-cost construction, repair and maintenance services to the Debtors' cell towers and antennas in the New Mexico, Arizona and Colorado markets. But Installeck and Clearcomm's competitive pricing is 20% less than other contractors. The Debtors estimate that they saved $20,000 in the first quarter of 2003 alone by using Installeck and Clearcomm. Currently, Clearcomm is owed $47,000 prepetition on a project to construct certain cell towers. Installeck is owed $15,000 prepetition for maintenance services. The Debtors want to maintain their goodwill and status quo prepetition relationship with Installeck and Clearcomm to ensure that Installeck and Clearcomm will restore their damaged cell sites to operation in a timely manner after a natural disaster and during the normal course of operations. D. Generator Vendors Certain vendors lease or rent to the Debtors generators used to back-up the Debtors' telecommunications network in case of a power failure. The Generator Vendors also service and refuel the leased or rented generators. As part of these services, the Debtors owe one Generator Vendor $27,000 for payment related to the recent purchase of a generator. The Debtors also estimate that, in the aggregate, they owe the Generator Vendors $150,000 for prepetition goods and services. It is crucial that the Debtors' network have constant power to operate its cell sites, switches, circuits and other aspects of the network. Prolonged disruption to its services would quickly anger customers and harm the Debtors' business, thereby jeopardizing their chances for a successful reorganization. With the Court's permission, the Debtors will include the Supplemental Trade Creditors to the Critical Trade Creditor list and pay their outstanding prepetition obligations to the Supplemental Trade Creditors in the ordinary course of business pursuant to the terms of the Critical Vendor Order. (Leap Wireless Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) LTV: Copperweld's Disclosure Statement Hearing Set for Sept. 9 -------------------------------------------------------------- The Copperweld Debtors, indicating their intent to move their Plan along quickly, bring a Motion asking Judge Bodoh to: (1) approve the Disclosure Statement; (2) establish procedures for the solicitation and tabulation of votes to accept or reject the Joint Plan of Reorganization of the Copperweld Debtors; (3) approve the form of the ballots for submitting votes on the Plan; (4) set a deadline for creditors to cast their ballots; (5) approve the solicitation packages to be distributed to creditors and other parties-in-interest in connection with vote solicitation; (6) set the record date for Plan voting; and (7) schedule a hearing on confirmation of the Plan. Hearing On Disclosure Statement: September 9, 2003 The Debtors obtain a hearing date of September 9, 2003, as the date on which Judge Bodoh will consider whether the Copperweld Disclosure Statement meets the Code's requirements for approval. Deadline for Disclosure Statement Objections: September 3, 2003 The Debtors recite the notice of the contents of the Disclosure Statement that they have made, and will make, including notice by publication in the national edition of The Wall Street Journal, The New York Times, USA Today, and in the Pittsburgh Tribune- Review. The Notice accompanying the Disclosure Statement sets the requirements for any objections to the Disclosure Statement, including setting a final filing date of September 3, 2003. The Ballots: Classes 2A and 2B Only The Debtors include forms of ballots for those creditors holding claims in impaired classes entitled to vote, which are only parties having claims classified as: Class 2A Secured Tax Claims Class 2B Other Secured Claims Class 1 is unimpaired, and therefore claimants in that Class are not entitled to vote. Holders of claims and interests in Classes 3 through 8 neither retain nor receive any property under the Plan, and are therefore deemed to have rejected the Plan. For these reasons, no ballots are being sent out for claimants in Classes 1 or 3 through 8. Deadline for Voting: October 10, 2003 The Debtors ask Judge Bodoh to set 5:00 p.m. Eastern Time on October 10, 2003, as the deadline for the few creditors entitled to vote to do so. The Copperweld Debtors proposed the standard procedures for tabulating the votes, including exclusion of any claim to which an objection is made unless a motion under Fed R Bankr Pro 3018 temporarily allowing the claim is made. The Debtors also ask that any creditor having the right to vote be required to vote all claims within a particular class and not be permitted to split that vote. Confirmation Hearing: October 20, 2003 The Copperweld Debtors propose to schedule the confirmation hearing for October 20, 2003, and to require that all objections to confirmation of the Plan be filed no later than October 10, 2003. Further, the Debtors ask that Judge Bodoh establish pre- trial procedures for the confirmation hearing. The Debtors propose to provide notice by publication of these dates in the Birmingham News, the Chicago Sun-Times, the Chicago Tribune, the Elizabethtown News Enterprise, the Elk Valley Times, The Oregonian, the Piqua Daily Call, the Pittsburgh Tribune-Review, the Shelby Daily Globe, and the national editions of The Wall Street Journal, The New York Times, and USA Today. The Record Date: September 5, 2003 The Debtors propose that Judge Bodoh set September 5, 2003, as the record date for determining the holders of stocks, bonds, debentures, notes an other securities entitled to receive materials connected with the Plan, including ballots. (LTV Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-00900) MASSEY: Don Blankenship to Present at Lehman Bros. Conference ------------------------------------------------------------- Massey Energy Company (NYSE: MEE) announced that its Chairman and CEO, Don L. Blankenship, will appear as a speaker at the Lehman Brothers CEO Energy/Power Conference on September 3, 2003 in New York City. The conference will be webcast. Blankenship's presentation is scheduled to begin at 4:00 p.m. EDT and can be accessed via the following address: http://customer.nvglb.com/LEHM002/090203a_by/default.asp?entity=massey Massey Energy Company, headquartered in Richmond, Virginia, is the fourth largest coal company in the United States based on produced coal revenue. Massey Energy Company, headquartered in Richmond, Virginia, is the fourth largest coal company in the United States based on produced coal revenue. * * * As reported in Troubled Company Reporter's July 15, 2003 edition, Standard & Poor's Ratings Services revised its outlook on Massey Energy Company to stable from negative. At the same time, Standard & Poor's assigned its BB+ rating to Massey's $355 million secured credit facility. In addition, Standard & Poor's affirmed its existing ratings on the company. The new $355 million bank credit facility was rated 'BB+', one notch above the corporate credit rating. The new facility consists of a $250 million term loan due 2008 and a $105 million revolver due 2007 and is secured by various assets including certain account receivables, inventory, and certain property, plant & equipment. The term loan has a manageable amortization schedule of $0.6 million per quarter until maturity, and an early maturity trigger based on whether Massey's existing 6.95% senior notes are refinanced before January 1, 2007. MCMORAN EXPLORATION: Declares Quarterly Preferred Cash Dividend --------------------------------------------------------------- McMoRan Exploration Co. (NYSE: MMR) declared, for the period from July 1, 2003 through September 30, 2003, a cash dividend of $0.3125 per share payable on September 30, 2003 to holders of record as of September 15, 2003 for its 5% convertible preferred stock (OTCBB: MMREP.OB). McMoRan Exploration Co. is an independent public company engaged in the exploration, development and production of oil and natural gas offshore in the Gulf of Mexico and onshore in the Gulf Coast area. Additional information about McMoRan is available at http://www.mcmoran.com At June 30, 2003, McMoRan Exploration's balance sheet shows a working capital deficit of about $2 million, and a total shareholders' equity deficit of about $52 million. MINEGEM INC: Commences Share Offering to Pay Debt Obligations ------------------------------------------------------------- MineGem Inc. (YGL-TSX VENTURE) is pleased to announce that it has issued 2,414,617 common shares of the Corporation at a value of CDN$0.10 each to satisfy its obligations under debt settlement agreements entered into with certain insider trade creditors of the Corporation as announced in a press release on July 15, 2003. In exchange, the Corporation has been provided with formal releases. As a result of the debt settlement, the Corporation has 49,879,585 Common Shares issued and oustanding. All Common Shares issued pursuant to the debt settlement agreements are subject to a four month hold period commencing on the date of the distribution of the securities. At June 30, 2003, the Company's current debts exceeded it current assets by $899,000. MIRANT: Turns to Paul Hastings for Post-Petition Legal Advice ------------------------------------------------------------- Pursuant to Section 327(e) of the Bankruptcy Code, Mirant Corp., and its debtor-affiliates seek the Court's authority to employ Paul Hastings Janofsky & Walker LLP as their special counsel, nunc pro tunc to July 14, 2003. As special counsel, Paul Hastings will provide necessary postpetition legal advice to the Debtors. According to Meredyth A. Purdy, Esq., at Haynes and Boone, LLP, in Dallas, Texas, Paul Hastings has been representing and providing advice to Mirant in connection with these matters: (a) Paul Hastings represents Mirant Mid-Atlantic in connection with its ongoing collective bargaining negotiations and federally supervised mediation with Local 1900 of the International Brotherhood of Electrical Workers. The parties have previously agreed to a series of extensions of the predecessor agreement. If an agreement is not reached in time, the union may lawfully strike; (b) Paul Hastings represents Mirant NY in connection with its collective bargaining agreement, executed in June 2003, post-execution and ancillary issues arising therefrom; (c) Paul Hastings represents Mirant in connection with the sale of its Shady Hills, West Georgia and Wrightsville projects, including the formulation and preparation of applicable transitional documents; (d) Paul Hastings represents Mirant in connection with minority ownership of entities located in the Caribbean, which includes advising Mirant on corporate governance and shareholder matters with respect to these entities; (e) Paul Hastings represents an officer of Mirant in connection with an ongoing SEC investigation into Mirant's accounting policies. Mirant has agreed to indemnify the officer, including the costs of legal representation; and (f) Paul Hastings represents Mirant and the other Debtors in connection with general corporate governance and operational matters that arise in connection with the Debtors' business. Ms. Purdy contends that allowing Paul Hastings to handle its ongoing representations is beneficial to the Debtors because: (a) it will avoid unnecessary litigation and reduce the overall expenses of administering Mirant's case; (b) the firm has extensive experience and knowledge of the Debtors' businesses and financial affairs; and (c) the firm has a recognized national reputation and expertise in the areas for which it is being retained. Jonathan Birenbaum, Esq., a partner at Paul Hastings, informs Judge Lynn that the firm agreed to be compensated for the services in accordance with its customary hourly rates in effect from time to time. Currently, the hourly rates of its attorneys and paraprofessionals range from $60 to $740. Moreover, the Debtors agreed to reimburse Paul Hastings for its necessary and reasonable out-of-pocket expenses. Mr. Birenbaum informs the Court that within the year prior to the Petition Date, Paul Hastings received $1,365,329 worth of payment from the Debtors and their affiliates for services rendered and expenses incurred prepetition. Moreover, Paul Hastings is owed $236,410 with respect to services rendered and costs incurred on the Debtors' behalf, prior to the Petition Date. To the best of his knowledge, Mr. Birenbaum assures the Court that Paul Hastings represents no interest adverse to the Debtors or to their estates in matters for which it is to be retained. Paul Hastings understands that the Debtors will employ White & Case LLP and Haynes and Boone LLP as bankruptcy counsel, as well as other professionals in connection with the prosecution of these Chapter 11 cases. Paul Hastings intends to carefully coordinate its efforts and clearly delineate its duties with these and other professionals retained in these cases so as to prevent inefficient duplication of services. * * * Pending a final hearing, Judge Lynn authorizes the Debtors to employ Paul Hastings effective as of July 14, 2003. (Mirant Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) MIRANT: Wants to Walk Away from Pepco Power Purchase Agreement -------------------------------------------------------------- Mirant has filed a motion with the U.S. Bankruptcy Court in the Northern District of Texas, which is overseeing its Chapter 11 case, to reject an out-of-market agreement to purchase power from Pepco. Pepco is an electricity distribution company serving the District of Columbia and the neighboring Maryland suburbs. Mirant is also seeking to renegotiate the terms of two out-of-market agreements to sell power to Pepco. As a Chapter 11 debtor-in-possession, Mirant has an obligation to review, and take action on, unfavorable contracts that may reduce the company's ability to provide value to its stakeholders. Under the agreement Mirant now seeks to reject, the company is obligated to purchase power from Pepco at prices that are significantly out- of-line with market prices for power, requiring Mirant to pay substantially more than market rates. Mirant forecasts it would cost the company and its stakeholders hundreds-of-millions of dollars over the duration if this agreement if it were to remain in effect. The obligations under this agreement will run out over time and end in 2021. "Mirant has filed this motion with the Court to fulfill legally- mandated obligations to its stakeholders," said Marce Fuller, president and chief executive officer, Mirant. "Importantly, the rejection will have no effect on Mirant's ongoing generation and sale of power into the PJM marketplace. These actions will not affect Pepco's ability to purchase power and provide reliable electric service to its customers in the District of Columbia and Maryland." In order to protect the Court's control over the rejection process, Mirant also obtained an injunction preventing Pepco and the Federal Energy Regulatory Commission from initiating any conflicting proceedings pending the resolution of the motion. The two power sales agreements that Mirant is seeking to renegotiate with Pepco require Mirant to sell power for substantially less than current market rates. From today through their expiration -- one agreement expires in June 2004 and the other in January 2005 -- these agreements would cost Mirant tens- of-millions. "Although these power sales agreements are due to expire in a relatively short time, our strong desire is to renegotiate -- not reject -- these agreements," said Fuller. "However, if we are unable to renegotiate, Mirant may only be able to fulfill its Chapter 11 duties by rejecting these agreements, as well." Mirant is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 22,000 megawatts of electric generating capacity globally. Mirant operates an integrated asset management and energy marketing organization from our headquarters in Atlanta. For more information, visit http://www.mirant.com MIRANT CORP: Reports $28MM First-Quarter 2003 Net Loss ------------------------------------------------------ Mirant reported a $28 million net loss for the first quarter 2003. This compares to a restated net loss of $10 million for the first quarter 2002. The 2003 first quarter results include a $15 million loss from discontinued operations and a $28 million charge primarily related to the adoption of the provisions of the Financial Accounting Standards Board's Emerging Issues Task Force Issue 02-03 (that rescinded the prior EITF consensus 98-10 related to accounting for contracts involved in energy trading and risk management activities). NOTE: Restated first quarter 2002 results reflect $305 million in restructuring charges, net of gains from asset sales previously disclosed. For a more detailed discussion of the 2002 first quarter restatements please see Note C to the Consolidated Financial Statements in the Company's 2003 Form 10-Q for the first quarter, filed with the Securities and Exchange Commission. 2003 First Quarter Results - Income from continuing operations was $15 million. - Gross margin for the first quarter 2003 was $520 million compared to $587 million for the first quarter 2002. - Total operating revenue for first quarter 2003 was $1.5 billion compared to $959 million for 2002, reflecting increased power sales volumes and higher market prices for power. NOTE: These revenue levels reflect Mirant's adoption of the provisions of the Financial Accounting Standards Board's EITF Issue 02-03 with respect to netting revenues and expenses on energy marketing contracts. - Cost of fuel, electricity and other products for the first quarter of 2003 was $978 million, compared to $372 million for 2002. This increase reflects significantly increased prices paid for natural gas, oil, and purchased power, unfavorable power price fluctuations related to power sales agreements in the Mid- Atlantic region, hedging losses related to the company's risk management activities and lower trading results. Additionally, Mirant experienced unplanned plant outages and transmission interruptions, which increased purchased power requirements. - Operating Expenses other than costs of fuel, electricity and other products for the first quarter of 2003 were $347 million, compared to $907 million for the first quarter 2002. The 2002 amount reflected $555 million in restructuring costs. - Net cash used in operating activities for the first quarter 2003 was $238 million, compared to $347 million cash provided by operating activities for 2002. - In the first quarter of 2003, net collateral and other working capital outflows used $283 million, as compared to generating $155 million in the first quarter of 2002. - As of Aug. 15, 2003, Mirant had approximately $1.29 billion in total cash and cash equivalents; approximately $226 million of which is legally restricted and $125 million of which is held for operating, working capital or other purposes at various subsidiaries. The total cash and cash equivalents is $220 million lower than the $1.51 billion the company had at March 31, 2003. Quarterly Review of Operations by Business Segment - North American operations reported income from continuing operations before income taxes and minority interest of $65 million compared to a loss from continuing operations before income taxes and minority interest of $351 million for the first quarter 2002 (as restated). - International operations reported income from continuing operations before income taxes and minority interest of $82 million compared to income from continuing operations before income taxes and minority interest of $349 million for the first quarter 2002 (as restated). This decrease reflects the sale of Bewag, a Berlin-based utility, in the first quarter 2002. - Corporate (and other income and expenses) reported a loss from continuing operations before income taxes and minority interest of $96 million, including $48 million of interest expenses, compared to a loss from continuing operations before income taxes and minority interest of $72 million for the first quarter 2002 (as restated). In addition, Mirant filed amended Forms 10-Q for each of the first, second and third quarters of 2002, as well as an amended 2002 Form 10-K for its Mirant Americas Generation, LLC subsidiary. Also, Forms 15 were filed by the previous voluntary filers, Mirant Americas Generation and Mirant Mid-Atlantic, indicating that those entities would no longer be submitting SEC filings in the future. Mirant is a competitive energy company that produces and sells electricity in North America, the Caribbean, and the Philippines. Mirant owns or controls more than 22,000 megawatts of electric generating capacity globally. Mirant operates an integrated asset management and energy marketing organization from our headquarters in Atlanta. For more information, visit http://www.mirant.com NAVIDEC INC: Enters into Agreement with LenderLive Network, Inc. ---------------------------------------------------------------- Navidec, Inc. (OTC Bulletin Board: NVDC), has entered into an agreement with LenderLive Network, Inc., a Tennessee corporation, whereby Navidec, in conjunction with LenderLive, will offer mortgage loan processing, underwriting, and funding. "As the rise in mortgage rates and resultant decline in refinance loan originations clears the horizon of inefficient mortgage loan originations, Navidec will offer financial professionals and institutions access to a unique, low cost, private labeled mortgage loan origination solution," stated John McKowen, President and CEO of Navidec. "Additionally, using LenderLive we can aggregate the mortgage needs of our customers at rates that allow them to meet the competition head on in terms of pricing." "As we grow the new Navidec we will continue to look for opportunities in distressed markets where technology and capital come together to gain market share from inefficient participants." Navidec Inc. (OTCBB: NVDC) Navidec evaluates, purchases and grows business opportunities that offer cash flow, strong management and opportunity for growth. Navidec's corporate Web site is http://www.navidec.com * * * Liquidity and Going Concern Uncertainty In its most recent Form 10-Q filed with the Securities and Exchange Commission, Navidec Inc. reported: The Company's financial statements for the six months ended June 30, 2003 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has historically reported net losses, including reporting a loss from operations of $703,000 and $1,380,000 for the three and six months ended June 30, 2003 respectively and has working capital of $878,000 as of June 30, 2003. Management cannot provide assurance that the Company will ultimately achieve profitable operations or be cash positive or raise necessary additional debt and/or equity capital. Management believes that the Company has adequate capital resources to continue operating and maintain its business strategy during the next 12 months. If substantial losses continue and/or the Company is unable to raise additional capital, liquidity problems could cause the Company to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other such actions that could adversely affect future operations. These financial statements do not include any adjustments relating to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the company be unable to continue as a going concern. NEFF CORP: S&P Upgrades Corporate Credit Rating to B- from CCC -------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on Neff Corp. The corporate credit rating was raised to 'B-' from 'CCC'. At the same time, all ratings were removed from CreditWatch, where they were placed on July 1, 2003 with positive implications. The outlook is stable. The company's debt totaled approximately $250 million as of June 30, 2003. "The rating actions result from Neff's reduction in debt, lower cash interest cost, and stable relations with its bank group," said Standard & Poor's credit analyst John Sico. The company's amended credit agreement waived financial covenant violations and made it possible for the company to pay the interest on the subordinated notes on June 1, 2003, and reduced the maximum commitment under the credit facility. The ratings reflect Neff's modest position in the challenging equipment rental industry, thin liquidity, and weak financial profile. Miami, Florida-based Neff is a relatively modest-sized regional equipment rental company that operates mainly in the Sunbelt through about 70 locations. It has experienced significant financial stress because of the weakness in the equipment rental business and its heavy debt burden. Liquidity is constrained. The company has no cash on hand, but has about $20 million in availability on its amended credit agreement. Neff has reduced cash interest payments on its two subordinated notes by $8 million per year with the purchase of about $80 million of face amount of notes through a $48 million term loan that pays interest-in-kind and matures in 2008. The limited availability on the company's revolving line and no cash on hand results in thin liquidity. Neff plans to continue to reduce capital spending and improve cash flow generation in 2003, which is expected to be positive. NMF CANADA: Heroux-Devtek Offers to Acquire Assets for $34 Mill. ---------------------------------------------------------------- Heroux-Devtek Inc. (TSX: HRX), a leading Canadian manufacturer of aerospace and industrial products, has delivered to NMF Canada Inc. of Mirabel, Quebec and Litwin Boyadjian Inc., trustee to the Notice of Intention of NMF Canada and to the principal secured creditors of NMF Canada an offer to purchase all of the assets of NMF Canada for a total purchase price of $34 million consisting of the assumption of already existing debts and cash payment at closing. The offer is conditional to a number of closing conditions, some of which require the collaboration of NMF Global Inc., the parent company of NMF Canada. Heroux-Devtek is hopeful that the offer will be well received by the secured and unsecured creditors of NMF Canada as it allows significant recapture of their current indebtedness. Heroux-Devtek Inc., a Canadian company, specializes in the design, development, manufacture and repair of aerospace and industrial products. The Company's head office is located in Longueuil, Quebec. Heroux-Devtek operates ten business units grouped under four divisions: the Landing Gear Division, Aerostructure Division, Gas Turbine Components Division and the Logistics and Defence Division. 75% of the Company's sales are outside Canada, mainly in the United States. Heroux-Devtek's shares trade on the Toronto Stock Exchange under the symbol HRX. NORTHWEST AIRLINES: PACE Int'l Files Counter Suit vs. Pinnacle -------------------------------------------------------------- The Paper, Allied-Industrial, Chemical & Energy Workers (PACE) International Union filed a counter lawsuit in federal court against Northwest-owned Pinnacle Airline Inc. for retaliating against its employees for unionizing. The suit, filed electronically late Wednesday afternoon in the United States District Court for the District of Columbia, charges Pinnacle with refusing to recognize and bargain with the union, retaliating against employees for unionizing and refusing the union access to the employees. Through the lawsuit, PACE is seeking an order from the federal court to order Pinnacle to recognize PACE and bargain in good faith with it. The union also asks that the airline reestablish the full-time ramp positions, which the company abolished in retaliation for this group's avid union support; reinstate ramp employees to their full-time positions; and make employees who have been discriminated against whole for all wages, benefits and seniority stripped from them as a result of the airline's unlawful conduct. Finally, the union seeks certification for its representatives so that they may obtain a necessary security clearance and gain access to the Pinnacle fleet and passenger service employees they represent. "It's time for Northwest and Pinnacle to stop creating the Wal- Mart of airlines and get down to the business of running an operation devoted to passenger safety and first-rate service," said PACE Region Seven Vice President Lloyd Walters. "The money used in fighting the employees' desire for a union would be better spent creating a quality airline with full-time employees." PACE's action also is a challenge to Pinnacle's lawsuit against PACE and the National Mediation Board. The company says the NMB erred in certifying PACE as the employees' union representative. PACE asserts that Pinnacle lacks jurisdiction to challenge the union's certification because the NMB's decision to certify PACE is not subject to review under the facts asserted by Pinnacle. Pinnacle has fought its fleet and passenger service employees' desire to form a union since their organizing drive began in the spring of 2002. The NMB overturned the first election held on July 10, 2002 because it found the company fired union supporters and illegally conducted surveillance of employees, which interfered with the first election. The discharged workers' case is pending in the U.S. District Court for the Western District of Tennessee. The NMB had to cancel the scheduled rerun election because Pinnacle misidentified the Social Security numbers of many of the eligible voters. Ultimately, PACE won the election, with the NMB certifying the results on May 29, 2003. Besides the fleet and passenger service employees, PACE represents 250 Pinnacle flight attendants. It negotiated a collective bargaining agreement for the flight attendants that became effective Aug. 1, 1999. PACE also represents 300,000 workers in the pulp, paper, oil, chemical, industrial, auto supply, atomic and mining sectors, and is headquartered in Nashville, Tenn. Visit http://www.paceunion.orgfor more information. Northwest Airlines (S&P, B+ Corporate Credit Rating) is the world's fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,500 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents. In 2002, consumers from throughout the world recognized Northwest's efforts to make travel easier. A 2002 J.D. Power and Associates study ranked airports at Detroit and Minneapolis/St. Paul, home to Northwest's two largest hubs, tied for second place among large domestic airports in overall customer satisfaction. Readers of TTG Asia and TTG China named Northwest "Best North American airline." For more information pertaining to Northwest, visit Northwest's Web site at http://www.nwa.com NUEVO ENERGY: Closes Sale of Orcutt Hill Field for $13 Million -------------------------------------------------------------- Nuevo Energy Company (NYSE:NEV) announced the sale of the Orcutt Hill Field and several surface tracts for $12.9 million effective July 1, 2003. The Orcutt Hill Field represented the last onshore California oil field Nuevo owned outside of the San Joaquin Basin. Average net production from this field was approximately 1,235 barrels per day, 2% of Nuevo's total production. This asset was included in assets held for sale at fair value as of June 30, 2003. The remaining assets held for sale include real estate in Orcutt and Brea, California, which Nuevo is actively marketing. The Company's goal is to conclude additional asset sales by year- end. Operating cash flow combined with the previously announced monetization of $69.5 million of non-core assets has enabled Nuevo to achieve a net debt reduction of $122 million in the first half of 2003. Proceeds from this sale will be used to eliminate a portion of bank debt which had a balance outstanding of $66.2 million on June 30, 2003. * * * Balance Sheet In the second quarter 2003, Nuevo redeemed $157.2 million of 9-1/2% Senior Subordinated Notes due 2008 and $2.4 million of 9-1/2% Senior Subordinated Notes due 2006. At June 30, 2003, total debt outstanding was $316.2 million versus $438.3 million at year- end 2002. At the end of the second quarter 2003, Nuevo's debt to capital ratio as defined in our credit agreement declined to 48% compared to 57% at year-end 2002. The fixed charge coverage ratio improved to 5.0 times for the four quarters ending June 30, 2003 versus 2.6 times in the comparable period a year ago. As of June 30, 2003, Nuevo had assets held for sale with a book value of approximately $48.2 million related to certain California real estate and a non-core oil field. Nuevo Energy Company (S&P/BB-/Stable) is a Houston, Texas-based company primarily engaged in the acquisition, exploitation, development, exploration and production of crude oil and natural gas. Nuevo's domestic producing properties are located onshore and offshore California and in West Texas. Nuevo is the largest independent producer of oil and gas in California. The Company's international producing property is located offshore the Republic of Congo in West Africa. To learn more about Nuevo, please refer to the Company's internet site at http://www.nuevoenergy.com OUTSOURCING SOLUTIONS: Moody's Withdraws Junk Ratings ----------------------------------------------------- Moody's Investors Service has withdrawn the ratings of Outsourcing Solutions Inc. due to the company's voluntary filing for reorganization under Chapter 11 of the United States Bankruptcy Code on May 12, 2003. The withdrawn ratings are: - $125 million Senior Secured Term Loan A, due 12/10/05, rated Caa1, - $275 million Senior Secured Term Loan B, due 6/10/06, rated Caa1, - $75 million Senior Secured Revolving Credit Facility, due 12/10/05, rated Caa1, - $100 million 11% Senior Subordinated Notes, due 11/01/2006, rated Ca, - Senior Implied, rated Caa1, - Issuer Rating, rated Caa3. Approximately $575 million of debt maturities are affected. Headquartered in St. Louis, Missouri, Outsourcing Solutions Inc. (Bankr. E.D. Mo. Case No. 03-46349) is an accounts receivable management company. It provides outsourcing services, purchases portfolios, and offers recovery related services. PETRO STOPPING: S&P Keeps Watch on B Rating over High Leverage -------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on Petro Stopping Centers Holdings L.P. and its operating subsidiary Petro Stopping Centers L.P.-including Petro's 'B' corporate credit rating--on CreditWatch with negative implications. "The CreditWatch listing results from the potential impact of Petro's recent announcement on the company's highly leveraged capital structure, marginal credit protection measures, and potentially limited liquidity," said credit analyst Patrick Jeffery. On Aug. 25, 2003, Petro announced an offer and consent solicitation to its $113.4 million senior discount notes due 2008. The offer expires on Sept. 16, 2003 and provides $242.57 cash and $1,030.30 in principal of new secured notes due 2014 for each existing $1,000 of principal at maturity notes. Should Petro be unsuccessful in completing the offer, it would most likely have to find alternative sources of financing to refinance the existing senior discount notes that require the initial cash payment in February 2005. Standard & Poor's will meet Petro's management after the expiration of the offer to determine the impact on the existing ratings. PILLOWTEX: Gets Go-Ahead to Honor Prepetition Shipment Claims ------------------------------------------------------------- Pillowtex Corporation and its debtor-affiliates sought and obtained the Court's authority to make payments, in their sole discretion, with respect to certain prepetition obligations relating to shipment of goods used. Payments to Carriers The Debtors will pay, directly or through an agent, the prepetition claims of the Carriers in an amount not to exceed $150,000. Payments of Custom Duties The Court authorized the Debtors to pay prepetition Customs Duties, Advances and Fees in an amount not to exceed $475,000. (Pillowtex Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX CORP: Charlotteans Embrace Laid-Off Pillowtex Workers --------------------------------------------------------------- Facing the largest mass lay-off in North Carolina history with the demise of Pillowtex Corp., Charlotteans are doing what they do best: giving. From potluck suppers, knitting circles and garage sales to multi- million dollar donations, the New South city's firefighters, church ladies and soccer moms are joining corporate scions, politicians and community leaders to help laid off Pillowtex workers get back on their feet. While all communities tend to rally during a crisis, what makes the Charlotte region's response unique is that giving is embedded in the city's culture, according to Michael Almond, president of the Charlotte Regional Partnership. "Executives relocating to Charlotte quickly find that voluntarism and community service are part of doing business in the 16-county region that links the Carolinas," says Almond. "Getting involved and giving back aren't options, but expectations." The speed and sheer magnitude of donations in response to Pillowtex's bankruptcy filing on July 30 are also typical of Charlotte, according to Almond. Charlotte is known for its giving nature: in a study by Harvard University that examined charitable donations, voluntarism and religious activity, Charlotte ranked second out of more than 40 major metropolitan areas examined for "social capital." While the textile industry, once the South's economic mainstay, has been dying slowly for years, the closing of Pillowtex's historic Plant #1 (formerly Cannon Mills) hit especially hard. After a century of operation and months of uncertainty, more than 4,800 North Carolinians were suddenly out of work. "When one member of our community is affected, all of us are affected, and as family, we need to respond," says Michael R. Coltrane, chairman and chief executive officer of CT Communications Inc., a growing, $148 million telecommunications company. CT Communications Inc., for example, has created a $50,000 community support fund to assist laid off workers in North Carolina, joining some of the area's heavy hitters, including Duke Energy, Bank of America and Wachovia, which pledged similar amounts. CTC already gives more than $400,000 to various community groups-a significant amount for a mid-sized business with 660 employees. Such largesse is typical of the Charlotte region, which also leads the nation in charitable giving for the arts (beating out New York City, Chicago and other cultural meccas) and attracts more than 35,000 volunteers each year to area public schools. However, even for an optimistic city like Charlotte, which has recently rebounded from a failed arena referendum and refuses to call its uptown area downtown because of the negative connotations, the slow death of the textile industry that has helped fuel the region's economy for decades is a tough challenge. How the region responds over the long-term will determine once and for all whether the 16-county metropolitan area becomes an economic powerhouse like Atlanta or just another southern city where it's nice to raise a family. Civic boosters are hoping that regional cooperation and a national advertising and public relations campaign called Charlotte USA will keep Charlotte top of mind among corporate executives and consultants for business relocations and expansion. "Our community's response to the demise of Pillowtex is going to set the stage for our next decade of growth," said Almond, whose economic development group is charged with marketing the region. "Our economy's shifting, and we need to leverage our unique balance of business strength, global accessibility and quality of life more effectively in attracting more jobs and industries to the Charlotte USA region." PLAINTREE SYSTEMS: Needs New Financing to Continue Operations ------------------------------------------------------------- Plaintree Systems Inc. (Plaintree, TSE: LAN; OTC BB: LANPF), reported results for the first quarter of fiscal 2004 ended June 30, 2003. Consolidated revenue for the first quarter 2004 was $121,563 compared to $527,450 for the first quarter of fiscal 2003. The net loss this period fell to $229,272, or 0.00 cents per share, from $284,900 for the corresponding quarter last year. "This is an important quarterly report for our shareholders to analyse", said David Watson CEO. "This is the first quarter after the major corporate restructuring we did last year and reflects actual operating expenses without inventory write-downs and other non-operational expenses. "Even at this low expenditure level Plaintree was still able to make major technological developments to its product lines and fully support its customer base. Our customers are indicating that we should see sales increase in the fall of this year". For more information on these results, please refer to Plaintree's First Quarter financial statements together with the related Management's Discussion and Analysis report, copies of which can be obtained from the Company's Web site at http://www.plaintree.comand/or under Plaintree's name at http://www.sedar.com Plaintree continues to investigate sources of financing. However, if the Company is not successful in obtaining the necessary funding and/or if the Company does not meet its existing forecast, continuation of the existing business may not be viable. There can be no assurance that the Company will be able to raise additional capital or that anticipated revenues will materialize or be at a level sufficient to sustain Plaintree's operations. Ottawa-based, Plaintree Systems Inc. (www.plaintree.com), founded in 1988, through its wholly-owned operating subsidiary, develops and manufactures the WAVEBRIDGE series of Free Space Optical wireless links using Class 1, eye- safe LED (Light Emitting Diode) technology providing high-speed network connections for ISPs, traditional telcos, GSM or cellular operators, airports and campus networks. Acting as a replacement for cable, fiber or radio frequency systems, the WAVEBRIDGE links offer broadband access with no spectrum interference problems, and same day installation for rapid network deployment. Plaintree is publicly traded in Canada on The Toronto Stock Exchange (Symbol: LAN) and in the U.S. on the OTC BB (LANPF), with 90,221,634 shares outstanding. PROMAX ENERGY: June 30 Working Capital Deficit Tops $83 Million --------------------------------------------------------------- Promax Energy Inc. (TSX:PMY) announces the restated financial and operating results of the first quarter, 2003 and its financial and operating results for the six months ended June 30, 2003. RESTATED FINANCIALS In the first three months of 2003 the Company recorded certain facility equipment leases as operating leases. Adjustments have been made to treat these facility equipment leases as capital leases commencing at their inception in January 2003. As a result of these adjustments, the Company has restated the 2003 first quarter. The following is a summary of restated numbers and the results: At March 31, 2003, petroleum and natural gas assets increased by $1,024,766 to $119,849,625 based on the capital leases and an offsetting obligation under capital lease of $856,117 was recorded plus the current portion of the lease amounting to $191,562. The changes had no material impact on the statement of earnings, future income taxes and cash flow from operations in the first quarter. The adjustments also affected the 2003 first quarter MD&A as follows: Petroleum and natural gas assets increased by $1,024,766 in the capital expenditures section by recording the leases as assets under capital lease. As result, depletion expense has increased from $823,920 to $828,598 in the depletion, depreciation and site restoration section. Additionally, in the interest expense section, capital lease interest increased from $91,592 to $109,826 for the related interest on the capital leases. The overall affect on these adjustments was a slight decrease in net earnings for the period from $2,605,328 to $2,582,416. The complete restated financials for the first quarter of 2003 may be obtained from SEDAR, Promax Energy Inc. or viewed its Web site at http://www.Promaxenergy.com Promax Energy Inc.'s June 30, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $83 million. CREDITOR PROTECTION On May 7, 2003, the Company was granted an order by the Court of Queen's Bench of Alberta providing creditor protection under the Companies' Creditors Arrangement Act. The initial order was amended by the Court on May 27, 2003 and further amended on June 27, 2003 and provides for a general stay period that expires on September 2, 2003 at which time the company will be seeking an extension of the stay until approximately October 30. The order may be further amended by the Court throughout the CCAA proceedings based on motions from the Company, its creditors and other interested parties. OPERATIONS Promax's efforts have been focused primarily on working with its financial advisor, BMO Nesbitt Burns Inc. to prepare a data room and presentation materials for the value maximization process, the completion of engineering evaluations of its properties, and preparing to make presentations and respond to information requests from potential purchasers. The Company has also concentrated on retaining as much of its mineral lease rights as possible, and making improvements and repairs to its wells and facilities with a view to obtaining the greatest improvements in production and revenue from the least amount of expenditures. The Company's production averaged 1,369 BOEPD (using an energy conversion factor of 6:1) for the second quarter of 2003. The average production decreased by 3% over the same period in 2002. The 12% decline from Q1/03 is attributed to a limited capital program and the disruption of a non-operated pipeline that shut-in several of the Company's wells. Operational highlights from the second quarter include: - Drilling three wells to the minimum depth required to hold over 2000 ha of mineral rights to evaluate both CBM and Med Hat/ Milk River potential. - Engaging Gilbert Laustsen Jung Associates Ltd.("GLJ"), an independent engineering firm, to provide an up-to-date reserve review of Promax's properties. Promax also engaged Citadel Engineering to update a reserve review it had prepared in late 2002 using the same capital expenditures and drilling plans as GLJ. - Engaging consulting engineers to evaluate multi well pools in the Mannville and Belly River formations. They have outlined a program of workovers and drilling which could add some 24 BCF of reserves valued at over $30 MM to the values already assigned by GLJ. - Acquiring a 55% interest in a suspended Colony well including all surface and pipeline facilities and a 100% interest in a suspended Glauconite well in Cessford at no cost to the company. - Completing an extensive cleanout program on its Med Hat/ Milk River wells that has added 267 BOE/d of production. The on-going program of well cleanouts has resulted in stabilizing the shallow production at 225 BOE/d above levels seen prior to operations under CCAA. - Surplus surface rental production equipment has been returned resulting in reducing operating leases by $26,000/ month. FINANCIAL The Company generated revenue from gas sales of C$3,772,102 in the quarter, an operating cash loss of C$732,202, and earnings of $3,168,871 largely related to a foreign exchange gain associated with its US dollar denominated debt. To date costs of $653,948 have been booked as expenses related to CCAA restructuring. SUBSEQUENT EVENTS & OUTLOOK Under the current circumstances, the Company's outlook will be determined by the outcome of its re-organization under CCAA. In the event that it becomes apparent that a financial restructuring cannot be accomplished, or that a plan of arrangement is not feasible in the Company's CCAA proceedings, the Company will likely be placed in receivership or bankruptcy. Promax Energy Inc. is a junior oil and gas company listed and trading on the Toronto Stock Exchange under the symbol "PMY". It has a high working interest in over 285,000 acres in a gas prone area of southeastern Alberta with multiple producing horizons including long life Medicine Hat/Milk River and Coal Bed Methane. PROTARGA: Employing Barnes Richardson as Special Customs Counsel ---------------------------------------------------------------- Protarga, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to engage the professional services of Barnes, Richardson & Colburn as Special Customs and International Trade Counsel. The Debtor has not yet obtained FDA approval for any of its drugs; however, it now has one drug in the final phase of testing required before FDA approval can be sought. As such, the Debtor has never generated any revenue, but has raised substantial amounts of equity and debt funding to operate its business. The filing of this Chapter 11 case results from the Debtor's inability to raise sufficient additional equity or debt funding. The Debtor reports that prior to the Filing Date, the Debtor retained Barnes Richardson's services in connection with certain customs and international trade issues. The professional services that Barnes Richardson will render to the Debtor include representation with respect to providing the Debtor with continued advice with respect to certain customs and international trade issues. These services will not be duplicative of services performed by any other professionals retained by the Debtor in this Chapter 11 case. Robert A. Shapiro, a member of Barnes Richardson discloses that his firm will charge the Debtor its current hourly rates, which range from: Principals $400 per hour Associates $185 to $220 per hour Legal Assistants $110 to $150 per hour The professionals who will be primarily responsible in this engagement are: Robert Shapiro Member $400 per hour James B. Doran Associate $210 per hour Holly Files Legal Assistant $110 per hour Protarga, Inc., headquartered in King of Prussia, Pennsylvania, is a clinical stage pharmaceutical company that is developing Targaceutical(R) drugs for new medical therapies. The Company filed for chapter 11 protection on August 14, 2003 (Bankr. Del. Case No. 03-12564). Raymond Howard Lemisch, Esq., at Adelman Lavine Gold and Levin, PC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated assets of over $1 million and estimated debts of over $10 million. RESIDENTIAL ACCREDIT: Fitch Rates Class B-1, B-2 Certs. at BB/B --------------------------------------------------------------- Fitch rates Residential Accredit Loans, Inc. (RALI) mortgage pass- through certificates, series 2003-QS16, as follows: -- $179 million, classes A-1, A-P, A-V, R senior certificates 'AAA'; -- $3.1 million class M-1 certificate 'AA'; -- $400,000 class M-2 certificate 'A'; -- $600,000 class M-3 certificate 'BBB'; -- $300,000 privately offered class B-1 certificate 'BB'; -- $200,000 privately offered class B-2 certificate 'B'. Fitch does not rate the $300,000 million privately offered class B-3 certificate. The 'AAA' ratings on senior certificates reflect the 2.60% subordination provided by the 1.70% class M-1, 0.20% class M-2, 0.30% class M-3, 0.15% privately offered class B-1, 0.10% privately offered class B-2 and 0.15% privately offered class B-3 (not rated by Fitch). Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings reflect the quality of the mortgage collateral, strength of the legal and financial structures, and Residential Funding Corp.'s servicing capabilities (rated 'RMS1' by Fitch) as master servicer. As of the cut-off date, Aug. 1, 2003, the mortgage pool consists of 1,146 conventional, fully amortizing, 15-year fixed-rate mortgage loans secured by first liens on one- to four-family residential properties with an aggregate principal balance of $183,757,688. The mortgage pool has a weighted average original loan-to-value ratio of 65.79%. The pool has a weighted average FICO score of 728, and approximately 58.34% and 3.71% of the mortgage loans possess FICO scores greater than or equal to 720 and less than 660, respectively. Loans originated under a reduced loan documentation program account for approximately 69.08% of the pool, equity refinance loans account for 50.94%, and second homes account for 1.86%. The average loan balance of the loans in the pool is $160,347. The three states that represent the largest portion of the loans in the pool are California (28.03%), Texas (12.40%) and Florida (5.48%). None of the Mortgage Loans are 'high cost' home loans as defined in the Georgia Fair Lending Act, as amended, the New York Predatory Lending Law, the Arkansas Home Loan Protection Act, as amended, or Kentucky Revised Statutes, as amended. For additional information on Fitch's rating criteria regarding predatory lending legislation, please see the press release issued May 1, 2003 entitled, 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at 'www.fitchratings.com'. All of the mortgage loans were purchased by the depositor through its affiliate, Residential Funding, from unaffiliated sellers except in the case of 27.1% of the mortgage loans, which were purchased by the depositor through its affiliate, Residential Funding, from HomeComings Financial Network, Inc., a wholly-owned subsidiary of the master servicer. Approximately 16.3% of the mortgage loans were purchased from National City Mortgage Company. No other unaffiliated seller sold more than approximately 8.6% of the mortgage loans to Residential Funding. Approximately 82.5% of the mortgage loans are being subserviced by HomeComings Financial Network, Inc. (rated 'RPS1' by Fitch). Approximately 7.53% of the mortgage loans were originated by Capitol Commerce Mortgage Co. which closed its offices and ceased originating loans on or about Aug. 14, 2003. Residential Funding represents and warrants to the trust in the Assignment and Assumption Agreement that it has good title to and is the sole owner of each mortgage loan, free and clear of any pledge, lien, encumbrance and security interest, as of the cut-off date. Residential Funding confirmed to Fitch that this representation and warranty is also applicable on loans originated by Capitol Commerce Mortgage Co. The mortgage loans were originated under GMAC-RFC's Expanded Criteria Mortgage Program. Alt-A program loans are often marked by one or more of the following attributes: a non-owner-occupied property; the absence of income verification; or a LTV or debt service/income ratio that is higher than other guidelines permit. In analyzing the collateral pool, Fitch adjusted its frequency of foreclosure and loss assumptions to account for the presence of these attributes. Deutsche Bank Trust Company Americas will serve as trustee. RALI, a special purpose corporation, deposited the loans in the trust, which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as a real estate mortgage investment conduit. RICA FOODS INC: Gets Conditional Waiver of Loan Covenant Breach --------------------------------------------------------------- Rica Foods, Inc. (Amex: RCF), received a conditional waiver, effective as of August 19, 2003, from Pacific Life Insurance Company with respect to the Company's breach, during the fiscal quarter ended June 30, 2003, of certain negative covenants entered into in connection with a private placement with PacLife of notes during the first quarter of 1998. As a condition of the waiver, the Company has agreed that the aggregate amount of loans to affiliates shall not be increased at any time, and, if any of such loans are repaid, neither the Company nor any of its subsidiaries shall make any additional affiliate loans. SCORES HOLDING: Second Quarter Results Show Improved Performance ---------------------------------------------------------------- Scores Holding Company Inc. (OTC Bulletin Board: SCOH) announced that for the three-month periods ended June 30, 2003 and June 30, 2002, we had revenue of $288,473 and $6,250, respectively. For the six-month periods ended June 30, 2003 and June 30, 2002, we had revenue of $805,745 and $56,250 respectively. The increase in revenue was due to the revenues generated from sales of the Diamond Dollar rights in the independently owned Scores Showroom pursuant to the assignment agreement between us. Cost of goods sold for the three-month periods ended June 30, 2003 and June 30, 2002 was $231,027 and $0, respectively. Cost of goods sold was $461,922 for the six-month period ended June 30, 2003 and $0 for the six-month period ended June 30, 2002. The increase in cost of goods sold was due to the costs associated with the diamond dollars program. "We incurred general and administrative expenses of $423,130 and $711,001 for the three-month periods ended June 30, 2003 and June 30, 2002, respectively. The decrease in general and administrative expenses was primarily attributable to legal, consulting, rent and salary expenses that the Company is no longer responsible for due to the unwinding agreement involving our former subsidiary, Go West Entertainment. We incurred general and administrative expenses of $1,005,531 for the six-months ended June 30, 2003 and $925,613 for the six-months ended June 30, 2002. For the three- month periods ended June 30, 2003 and June 30, 2002, we had interest income of $8,743 and $337 respectively. The increase in interest income was due to the note due from Go West Entertainment issued under the unwinding agreement. For the six-months ended June 30, 2003 we had interest expense of $6,872 compared to interest income of $674 for the six-months ended June 30, 2002. The increase in interest expense was due to expenses incurred in financing activities undertaken by us relating to the issuance of debentures and notes payable. For the three-months ended June 30, 2003 and June 30, 2002, we had a net loss of $352,801 or $.02 per share and $704,414, or $.04 per share, respectively. For the six- months ended June 30, 2003, we had a net loss of $655,440 or approximately $.04 per share as compared to a net loss of $868,689 or $.05 per share, for the six-months ended June 30, 2002. "We are very pleased that we achieved our two main goals for the 2nd quarter, namely increasing our net sales by 98% and reducing our costs by 50% in order to better position ourselves for profitable growth in the future," said Chairman and Chief Executive Officer Richard Goldring. "Looking ahead, we expect the net income from operations to continue to grow in 2003. We expect to report a profit for the year with Club Licensing revenues projected to show double-digit growth in the 3rd and 4th quarters as a result of the continued cash generating power of SCORES SHOWROOM in New York City. SCORES SHOWROOM is expected to generate $500,000 in licensing fees for the Company in the 3rd and 4th quarters. We believe that the opening of SCORES CHICAGO and SCORES WEST in the 4th quarter could generate an additional $150,000 to $200,000 in quarterly licensing fees to the Company. " The Company owns the brand and intellectual property associated with the "SCORES" trademark, which is the most recognizable name in adult nightclub entertainment. Since our recent restructuring our new business strategy will be to focus our efforts to actively market the "SCORES" brand name in order to take full commercial advantage of the name and its recognition value. We will continue to seek, through Entertainment Management Services Inc. our Master Licensee, to generate revenue by granting licenses to use the "SCORES" brand name to adult entertainment nightclubs. We will also shift our focus to take advantage of merchandising opportunities as well as opportunities in other media outlets. On March 31, 2003, we entered into a Master License Agreement with Entertainment Management Systems, Inc. The Master License grants to EMS the exclusive worldwide license to use and to grant sublicenses to use the "SCORES" trademarks in connection with the ownership and operation of upscale, adult-entertainment cabaret night clubs/restaurants and for the sale of merchandise by such establishments. Merchandise must relate to the nightclub that sells it, and may be sold at the nightclub, on an internet site maintained by the nightclub, by mail order and by catalogue. The term of the Master License is twenty years. EMS has the option to renew the Master License for six consecutive five-year terms. We will receive royalties equal to 4.99% of the gross revenues of all sublicensed clubs that are controlled by EMS. Sublicenses are currently in effect with three adult nightclubs, SCORES SHOWROOM in New York City, SCORES WEST in New York City and SCORES CHICAGO. The Company's June 30, 2003 balance sheet shows a working capital deficit of about $1.2 million, and a total shareholders equity deficit of about $830,000. SIEBEL SYSTEMS: Intends to Redeem 5-1/2% Convertible Sub. Notes --------------------------------------------------------------- Siebel Systems, Inc. (Nasdaq:SEBL) announced that its Board of Directors has approved the redemption, on September 30, 2003, of its 5-1/2% Convertible Subordinated Notes due 2006. The aggregate principal amount of the notes outstanding is $300 million. The redemption price is equal to 102.36 percent of the outstanding principal amount of the notes, plus accrued and unpaid interest to the redemption date. "Siebel Systems' solid financial condition allows us to redeem the notes nearly three years prior to maturity, thereby saving $16.5 million per year in interest expense and cash," said Ken Goldman, Chief Financial Officer, Siebel Systems. "The company generated more than $500 million of cash in each of the last two calendar years and $140 million in the first half of 2003, bringing total cash and short-term investments to $2.3 billion as of June 30. Siebel Systems ended its second quarter with over $2 billion of shareholders' equity. Redeeming the notes will eliminate all of the company's debt except for $24 million of capitalized leases as of June 30." Before 5:00 p.m. (Eastern Time) on September 29, 2003, holders may convert their notes into shares of Siebel Systems Common Stock at a conversion rate of approximately 42.89 shares per $1,000 principal amount of notes, which is equivalent to a conversion price of approximately $23.32 per share. Cash will be paid in lieu of fractional shares. On August 28, 2003, the last reported sale price of Siebel Systems Common Stock on the NASDAQ National Market was $10.17. Any notes not converted on or before 5:00 p.m. (Eastern Time) on September 29, 2003, will be automatically redeemed on September 30, 2003, after which interest will cease to accrue. A Notice of Redemption is expected to be mailed to all registered holders of the notes on or about August 29, 2003. Copies of the Notice of Redemption may be obtained after August 29, 2003, from J.P. Morgan Trust Company, N.A., at (713) 216-1328. In connection with the redemption of the notes, Siebel Systems estimates that it will record a one-time charge of approximately $10.7 million on a pre-tax basis and approximately $6.8 million on an after-tax basis. Siebel Systems, Inc. (Nasdaq:SEBL) (S&P, BB Corporate Credit and B+ Subordinated Ratings), is a leading provider of eBusiness applications software, enabling corporations to sell to, market to, and serve customers across multiple channels and lines of business. With more than 3,500 customer deployments worldwide, Siebel Systems provides organizations with a proven set of industry-specific best practices, CRM applications, and business processes, empowering them to consistently deliver superior customer experiences and establish more profitable customer relationships. Siebel Systems' sales and service facilities are located in more than 28 countries. Siebel is a trademark of Siebel Systems, Inc. and may be registered in certain jurisdictions. All other product and company names mentioned are the property of their respective owners and are mentioned for identification purposes only. SPACEHAB INC: Credit Suisse Discloses 15.5% Equity Stake -------------------------------------------------------- Credit Suisse First Boston, on behalf of the Credit Suisse First Boston business unit, beneficially owns 2,275,230 shares of the common stock of Spacehab, Inc. which represents 15.5% of the outstanding common stock of Spacehab. Credit Suisse shares the voting and dispositive powers over the stock. Credit Suisse First Boston, a Swiss bank, has filed the report of ownership on behalf of itself and its subsidiaries, to the extent that they constitute the Credit Suisse First Boston business unit excluding Asset Management. The CSFB business unit is also comprised of an asset management business principally conducted under the brand name Credit Suisse Asset Management. The Reporting Person provides financial advisory and capital raising services, sales and trading for users and suppliers of capital around the world and invests in and manages private equity and venture capital funds. Asset Management provides asset management and investment advisory services to institutional, mutual fund and private investors worldwide. The ultimate parent company of the Bank is Credit Suisse Group, a corporation formed under the laws of Switzerland. CSG is a global financial services company with two distinct business units. In addition to the CSFB business unit, CSG and its consolidated subsidiaries are comprised of the Credit Suisse Financial Services business unit. Spacehab's working capital deficit at March 31, 2003, tops $636,000. SPECTRUM PHARMA: Second Quarter Net Loss Narrows to $1.6 Million ---------------------------------------------------------------- Spectrum Pharmaceuticals, Inc. (NASDAQ: SPPI) today reported a net loss for the second quarter ended June 30, 2003 of $1.6 million, compared to a net loss of $5.1 million for the second quarter ended June 30, 2002. The decrease in net loss during the second quarter principally reflects the reduction in expenses caused by the completion of a large clinical trial in April of 2002 as well as cost reduction efforts implemented upon change in management at the Company during August 2002. Financial Highlights For the second quarter, research and development expenses decreased from $3.8 million in 2002 to $0.5 million in 2003. The decrease in research and development expense reflects lower expenses related to the completion of a large clinical trial in April of 2002 and three smaller clinical trials in the second and third quarter of 2002, and cost reduction efforts including a major restructuring of the Company in August of 2002. General and administrative expenses decreased from $1.4 million during the second quarter of 2002 to $1.2 million during the second quarter of 2003. The decline principally reflects a decrease in salary and related expenses due to reductions in workforce implemented at the Company during 2002, offset by the shift of certain fixed costs from research and development in 2002 to general and administrative in 2003. Spectrum had cash and equivalents of $4.3 million on June 30, 2003, and earlier this week, the Company raised approximately $3.0 million through the sale of common stock (before offering costs and commissions estimated to be $300,000). Shares of common stock outstanding on June 30, 2003 were 3,355,686. Operational Highlights Oncology Drug Development In June, positive late-stage clinical data on the efficacy of satraplatin in hormone-refractory prostate cancer were presented at ASCO, and our co-development partner, GPC Biotech, reiterated last week its plan to begin the Phase 3 registrational trial for satraplatin during the third quarter. Dosing of the first patient in this study will trigger a milestone payment and purchase of Spectrum equity totaling $2 million. GPC Biotech also recently announced results of a more comprehensive market analysis, which indicates that the market potential of satraplatin could be more than $500 million in annual peak sales. This revised estimate is based on what the Company believes to be modest assumptions for penetration in other areas of potential application for satraplatin, beyond hormone-refractory prostate cancer. These other areas include earlier stages of prostate cancer, as well as other tumor types such as small-cell lung cancer and ovarian cancer, where satraplatin has demonstrated clinical activity, and in combination with radiotherapy. Positive results from a phase 1 study of EOquin(TM) superficial bladder cancer were also reported during the month of June, and the Company announced that it had initiated a larger phase 2 study of the drug at additional sites in England and the Netherlands. The Company expects to begin enrollment of patients in this study shortly after an expanded investigators' meeting, which will be held in Europe in mid-September. The protocol for the expanded study has been finalized, and takes into consideration the insights and positive results observed during the phase 1 study. Development of elsamitrucin also remains on track, as the Company finalized its supply agreement and acquired the bulk drug necessary to complete the phase 2 study of elsamitrucin in refractory non-Hodgkin's lymphoma. This trial is expected to begin during the second quarter of 2004. Generic Drug Development, Distribution and Marketing The Company's first generic drug product, ciprofloxacin, is currently under review by the U.S. Food and Drug Administration, and work continues on two additional products for which the Company plans Abbreviated New Drug Application (ANDA) filings before year end. In addition, the Company and its partner, JB Chemicals & Pharmaceuticals, Ltd., have identified and begun development of additional products, for which ANDA's will be filed next year. The Company's goal remains to enter into at least one more partnership with an Indian pharmaceutical company before year-end, so that the Company can increase the number of ANDA's and expand its generic product portfolio. Spectrum Pharmaceuticals' primary focus is to develop in-licensed drugs for the treatment and supportive care of cancer patients. The Company's lead drug, satraplatin, is a phase 3 oral, anti- cancer drug being co-developed with GPC Biotech AG. Elsamitrucin, a phase 2 drug, will initially target non-Hodgkin's lymphoma. EOquin(TM) is being studied in the treatment of superficial bladder cancer, and may have applications as a radiation sensitizer. The Company is actively working to develop, seek approval for and oversee the marketing of generic drugs in the U.S. Spectrum also has a pipeline of pre-clinical neurological drug candidates for disorders such as attention-deficit hyperactivity disorder, schizophrenia, mild cognitive impairment and pain, which it is actively seeking to out-license or co- develop. For additional information, visit the Company's Web site at http://www.spectrumpharm.com * * * Liquidity and Going Concern Uncertainty In its latest Form 10-Q filed with the Securities and Exchange Commission, Spectrum Pharmaceuticals reported: "The [Company's] unaudited condensed consolidated financial statements are prepared on a consistent basis in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and consolidation and elimination entries) considered necessary for a fair presentation have been included. Operating results for the three-months and six-months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ended December 31, 2003. The balance sheet at December 31, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in our Amendment Number 2 to the Annual Report on Form 10-K for the year ended December 31, 2002. "Certain quarterly amounts have been reclassified to conform to the current period presentation. All share and per share information has been restated to affect for the 25-for-1 reverse split of our outstanding common stock approved on September 5, 2002 and executed on September 6, 2002. Liquidity "On August 20, 2002, we announced a shift in our strategic focus from discovery and development of neurology drugs to the in- licensing of oncology drug candidates and the further development of and strategic alliances for these drug candidates and the development and marketing of generic drugs in the United States. As a result of these changes and the completion of a large Alzheimer's disease clinical trial, our expense burn rate fell from approximately $7 million per quarter to approximately $1.6 million during the three-month period ended June 30, 2003. The recent and the prospective reduction in the burn rate is principally due to reductions in clinical, research and administrative personnel, the termination of a facility lease for office space used to administer the Alzheimer's disease clinical trial, the reduction of expenses for the manufacturing of Neotrofin supplies (one of our neurology drug candidates), a reduction in our research and fellowship grant commitments, and the elimination of the research operations of our functional genomics business. "During the six-month period ended June 30, 2003, we sold 600 shares of our Series D 8% Cumulative Convertible Voting Preferred Stock and warrants to purchase up to an aggregate of 2,553,190 shares of our common stock, half at an exercise price of $3.00 and the other half at an exercise price of $3.50 per share, for net cash proceeds of approximately $5.1 million. Additionally, we sold 347,788 shares of our common stock for net cash proceeds of approximately $715,000 and issued warrants to purchase 55,555 shares of our common stock at an exercise price of $3.25 per share. Subsequent to June 30, 2003, we received gross cash proceeds of $3.0 million from the sale of 737,040 shares of our common stock and warrants to purchase 368,520 shares of our common stock at an exercise price of $4.75 per share. "On September 30, 2002, we entered into a co-development and license agreement with GPC Biotech AG for the development and commercialization of our lead drug candidate, satraplatin. Under the co-development and licensing agreement, Spectrum could receive up to $22 million in license fees and milestone payments. The license fee consists of a total of $4 million; $2 million received upon signing and $1 million in cash and a $1 million equity investment within 30 days after the first dosing of a patient in a registrational study. GPC Biotech has agreed to make additional payments totaling up to $18 million upon achieving agreed upon milestones. However, there can be no assurance that any milestone will be achieved. Furthermore, GPC Biotech has agreed to fully fund development and commercialization expenses for satraplatin. Upon commercial sale of satraplatin, if any, Spectrum will be entitled to receive royalty payments based upon net sales. "Our common stock is listed on the Nasdaq SmallCap Market. To remain listed on this market, we must meet Nasdaq's continued listing requirements. Among other requirements, Nasdaq rules require that a SmallCap Market company maintain a minimum stockholders' equity of $2.5 million or a minimum market value of listed securities of $35 million or a net income from continuing operations (in latest fiscal year or 2 of the last 3 fiscal years) of at least $500,000. As of June 30, 2003, we were in compliance with this standard, however, there is no assurance that we will be able to maintain compliance with any of the continued listing requirements. If we fail to do so, our common stock could be delisted from the Nasdaq SmallCap Market. As an additional condition of its continued listing, the Company must show that it continues to meet the minimum stockholder's equity and other requirements for continued listing on the Nasdaq SmallCap Market in timely filings of its Form 10-Q reports with the Securities and Exchange Commission for the second and third quarters of 2003. "As shown in the accompanying condensed consolidated financial statements, we continue to incur significant losses and negative cash flow from operations. During the three-month period ended June 30, 2003, we incurred a loss of approximately $1.6 million." STARWOOD HOTELS: Files Proxy Statement re Westin Partnership ------------------------------------------------------------ Starwood Hotels & Resorts Worldwide, Inc. (NYSE:HOT) has filed a preliminary proxy statement with the Securities and Exchange Commission relating to Starwood's solicitation of consents from the holders of limited partnership units of Westin Hotels Limited Partnership. The consent solicitation would be conducted simultaneously with a contemplated tender offer for all outstanding Units under which Unitholders would receive $600 per Unit in cash. WHLP is the owner of The Westin Michigan Avenue, Chicago hotel in downtown Chicago, Illinois. The tender offer would be conditioned on, among other things, (1) the valid and not withdrawn tender of at least a majority of the issued and outstanding Units, and (2) the consent by Limited Partners who collectively hold more than 50% of the Units to each of the proposals for which their consent is being solicited so that the proposed amendments to WHLP's agreement of limited partnership, described on the preliminary proxy statement, have been implemented and are in full force and effect. The preliminary proxy statement is currently available at no charge on the SEC's Web site at http://www.sec.gov An unsolicited tender offer for approximately 59% of the Units at a purchase price of $550 per Unit is currently pending and is currently scheduled to expire at 5:00 p.m., Eastern time, on Friday August 29, 2003. There are currently 135,600 Units outstanding. Subsidiaries of Starwood are the general partner of WHLP and manage the Westin Michigan Avenue. Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 740 properties in more than 80 countries and 105,000 employees at its owned and managed properties. With internationally renowned brands, Starwood is a fully integrated owner, operator and franchisor of hotels and resorts including: St. Regis(R), The Luxury Collection(R), Sheraton(R), Westin(R), Four Points(R) by Sheraton, W(R) brands, as well as Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, visit http://www.starwood.com As reported in Troubled Company Reporter's May 16, 2003 edition, Fitch Ratings assigned a rating of 'BB+' to the $300 million in 3.5% convertible senior notes (potentially as much as $360 million including an overallotment option) due 2023 issued by Starwood Hotels & Resorts Worldwide, Inc. Proceeds are to be used to repay a portion of outstanding balances under the revolving credit facility and for general corporate purposes. The notes will rank pari-passu with all other senior debt including bank facilities. The notes are not redeemable prior to May 23, 2006, but may be put to the company on May 16 of 2006, 2008, 2013 and 2018. The Rating Outlook is Negative. The 'BB+' rating reflects the company's standing as one of the premier global lodging companies, with substantial product and geographic diversification, strong cash flow generating ability, and continued access to capital markets. Nonetheless, like its peers, Starwood has faced persistent industry weakness in revenue per available room, with little visibility for improvement in the near term. While debt has been reduced since year-end 2001, leverage is high for the ratings category, and continues to climb as EBITDA deterioration has outpaced debt reduction. However, potential asset sales, forecast by the company at $1.1 billion in 2003, could accelerate debt reduction in 2003 and keep credit measures stable. The Rating Outlook remains Negative due to the weak lodging fundamentals. SYMBIAT: Fails to File Financial Reports Due to Inadequate Funds ---------------------------------------------------------------- On August 1, 2003, Deborah Bailey, was elected Chief Executive Officer of Symbiat (formerly Computone Corp.). Deborah has been a member of the Symbiat Board of Directors since July 2001 and was appointed as the Acting CEO in June of this year. Ms. Bailey has been a CPA for 23 years and has extensive experience in business turnarounds and rapidly growing businesses. Ms. Bailey has quickly identified a game plan for the turnaround of Symbiat and the funds required to execute that turnaround. The Board of Directors at Symbiat has appointed Philadelphia Brokerage to act as the Placement Agent for a Private Placement of convertible preferred stock. The goal is to raise at least $1,000,000 that will be used to negotiate some of the Company's financial obligations as well as provide working capital. The holders will have a mandatory conversion after 12 months to the Company's common stock at $.10 per share and carries an 8% paid- in-kind coupon. The Company will also execute a reverse stock split on the now outstanding common stock with the ratio to be determined. The Company, because of its cash flow shortage, has not been able to pay their auditors, Deloitte and Touche for the audit for the fiscal year ended March 31, 2002 and has not had the available funds to pay for the audit ended March 31, 2003. As a result, the Company has not filed its most recent 10K and 10Q. Inadequate resources have also prevented the Company from timely filings of form 8Ks with the SEC. As a result, the Company is now traded on the OTC-Other Markets/Pink Sheets. The Company will remit funds to Deloitte and Touche once the private placement is complete and will complete the audit and all delinquent SEC filings. The Company has paid to LC Capital Partners LLC a principle payment of $250,000 as a requirement of restructuring and extension of the Company's subordinated note. The default on this note has been cured and extended until 2005. As a part of the total restructuring of Company debt, efforts were made to restructure other notes payable due by the Company to various parties totaling approximately $655,000. Many of these notes are currently in default. None of these negotiations have been completed. The Company announced on May 20, 2003, that Symbiat's management had uncovered incidents of employee theft at the Company. The theft involved cash only, and appears to have been perpetrated by a single individual who hid the losses through an intricate, sophisticated pattern of deception. The Company has determined that the amount missing is approximately $446,000, although the investigation is ongoing. The Company continues to pursue its claim with its insurer for the full amount of the insured coverage of $250,000. The banking institution through which over 97% of the fraudulent transactions were processed has informed the Company that it acknowledges no responsibility for the action perpetrated against the Company. The Company continues to weigh its options for pursuing that recovery while assisting, local and federal investigators in criminal charges against the individual. The Company is in arrears in payment of compensation to officers, reimbursement of Company expenses for inventory, sales activities and operating expenses that have been charged on various officers' personal credit cards. The reimbursement of expenses to other employees has been delayed. Symbiat is behind on reimbursing employees for expenses and has delayed payment of commissions. The Company has not funded $32,307.38 that is presently due to its various retirement plan administrators. Of that amount, payments of $25,643.48 have not been contributed within the time requirements. TENFOLD CORP: Rand Technology Purchases Deployment License ---------------------------------------------------------- TenFold(R) Corporation (OTC Bulletin Board: TENF), provider of the Universal Application(TM) platform for building and implementing enterprise applications, announced that Rand Technology, Inc. has purchased a TenFold deployment license and technical support, which will allow Rand Technology to quickly put its BizNet application into production. Rand Technology previously purchased a TenFold development license in order to use the Universal Application to develop a replacement of its mission-critical, internal application, "BizNet," which handles worldwide inventory management, sales, purchasing, and requisition. "We selected TenFold's Universal Application to increase our competitive edge and develop a more robust, feature- rich application, which will keep Rand Technology in front of a rapidly changing industry," said Gregg Knutson, Rand's CIO. "Within a few short months, we were able to replace 90% of our existing application with a more agile and robust application. We are looking forward to putting our new application into production and are pleased to expand our relationship with TenFold." Rand Technology is a global distributor of Information Technology hardware serving many of the major Fortune 500 companies. Rand Technology does business in North America, Europe, and Asia. The BizNet application will support Rand Technology's global supply chain distribution system allowing multiple users and customers around the world to place and track orders, and will allow Rand Technology to control inventory management on a real time basis. "We are delighted that Rand Technology has purchased a license to deploy the BizNet system," said Dudley Morris, TenFold's Senior Vice President of Business Development. "It is exciting that Rand Technology could build and successfully deploy this mission critical application in such a short time frame, and is a tribute to both TenFold's technology and Rand Technology's staff." TenFold (OTC Bulletin Board: TENF) -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $12 million -- licenses its breakthrough, patented technology for applications development, the Universal Application platform, to organizations that face the daunting task of replacing legacy applications or building new applications systems. Unlike traditional approaches, where business and technology requirements create difficult IT bottlenecks, Universal Application technology lets a small, primarily non-technical, business team design, build, deploy, maintain, and upgrade new or replacement applications with extraordinary speed and limited demand on scarce IT resources. For more information, visit http://www.10fold.com Founding Rand Technology, Inc. in 1992, Andrea Klein, CEO and President organized her company with three key principles in mind: Quality Components, Professional Excellence and Outstanding Customer Service. Ten years later, those core beliefs still are at the heart of The Rand Way, and through this pursuit of operational excellence, Rand has become one of the top ten Independent Distributors of electronics components in the world today. With offices in North America, Europe and Asia Rand operates 24 hours a day helping global customers solve electronic component shortages and achieve supply chain continuity through unique customer care techniques. As one of the few international distributors to achieve ISO9001:2000 certification and also full ESD compliance, Rand has demonstrated its successful quality control program through a return rate of less than 1%. For more information about Rand Technology, visit http://www.randtech.com TSI TELECOM: Negative Outlook Reflects Low Free Cash Flow Level --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' corporate credit and bank loan ratings, as well as its 'B-' subordinated debt rating, on TSI Telecommunication Services Inc., and revised the company's outlook to negative from stable. The outlook revision reflects Standard & Poor's expectation for lower free cash flow levels over the intermediate term. The ratings on TSI reflect the company's high debt levels, its niche position as an independent provider of wireless transaction processing, and its reliance on growth in roaming transactions in a consolidating wireless telecommunications market. These are only partially offset by TSI's recurring revenues and good profitability. "Although TSI is expected to generate sufficient free cash flow to meet its remaining debt amortizations in 2003, lower free cash flow levels over the intermediate term would challenge the company's ability to meet future stepped-up debt amortizations," said credit analyst Emile Courtney. "A decline in free cash flow could result in lower ratings." Tampa, Florida-based TSI is an independent provider of transaction processing services to wireless telecommunications carriers. TSI's interoperability software allows the clearing of billing data for roaming events and enables various wireless protocols to work together, enabling cell phone users to roam across service areas. TSI's SS7 network provides call setup and intelligent network services. TWINLAB CORP: Begins Negotiations to Sell Assets to IdeaSphere -------------------------------------------------------------- IdeaSphere Inc., confirmed that it is in negotiations to purchase, subject to court approval, substantially all of the assets of Twinlab Corp. (OTC Bulletin Board: TWLB). The proposed asset purchase is in conjunction with Twinlab's anticipated filing of a voluntary petition for relief under Chapter 11 of the U.S. Bankruptcy Code. IdeaSphere, of Grand Rapids, Mich., provides healthy living solutions for today's consumers of natural products. The Company is led by a proven management team with global experience in the health and wellness sector, including Dave Van Andel, Chairman and CEO; Bill Nicholson, Vice Chairman; Anthony Robbins, Vice Chairman Sales and Marketing; and Mark Fox, President and Chief Operating Officer. The Board of Twinlab chose IdeaSphere as a potential purchaser because of its commitment to assuring ongoing operations of the company and its financial strength and experience to lead the global expansion of the brand and product line. "It is always difficult to sell a family business," said Ross Blechman, Twinlab Chairman, President and Chief Executive Officer. "However, in IdeaSphere we feel we have found an acquirer that will respect our commitment to science, quality and consumer satisfaction and at the same time will bring substantial resources and global capabilities that will take the Twinlab brand to a new leadership level in the 21st century." Mr. Van Andel commented, "Having grown up in a family business that has experienced more than four decades of continuous growth and has revenues today of nearly $5 billion, I understand the importance of preserving and enhancing the brand leadership that Twinlab has deservedly enjoyed." Twinlab, of Hauppauge NY, has been a leader in manufacturing and marketing high quality, science-based nutritional supplements. It was honored earlier this year by Consumerlab.com, the independent testing group, with the Consumer Satisfaction Award as Top Rated Retail Brand. IdeaSphere is a leader in changing the landscape of the natural products industry by bringing together advanced science, consumer education and outcome-driven products that will help consumers make choices to sustainably improve their lives both emotionally and physically. Mr. Fox said, "We studied the industry and recognized the opportunity to integrate industry leaders like Anthony Robbins, Rebus Publishing and now Twinlab to educate and inspire consumers to take active roles in their health." Further details of the transaction will be disclosed following the filing. IdeaSphere is a leader in healthy living solutions for today's natural products consumers. It is a vertically integrated provider of natural and organic supplements, foods, beverages, personal care and home care products and is an equity owner in Rebus Publishing. Rebus is a 25-year-old consumer health and science publisher delivering through print and electronic media. Rebus has built an outstanding reputation for expertise in the areas of health, fitness and nutrition. It is the creator and exclusive publisher of two world renown newsletters-the UC Berkeley Wellness Letter and the Johns Hopkins Health After 50. Following are biographies of IdeaSphere's senior management team: Dave Van Andel, Chairman and Chief Executive Officer Mr. Van Andel is a co-founder of IdeaSphere Inc., which is fast becoming a leader in the natural and earth-friendly consumer marketplace. He is chairman of the Van Andel Institute for Education and Medical Research, which was created by the Van Andel family, and is a member of the board of Alticor, the company co- founded by his parents as Amway Inc. Bill Nicholson, Vice Chairman Mr. Nicholson is a co-founder of IdeaSphere and has been active in leading its growth in the organic market space. For nine years previously, he was Chief Operating Officer of Amway, now Alticor Inc., where he led the company's revenue growth to more than $5 billion from less than $1 billion. He is an advisor and investor in Irwin Jacobs' $500 million IMR fund, and an investor and director of Genmar, the world's largest recreational boat builder. He is also an investor in Jacobs Trading Company and FLW Outdoors. Anthony Robbins, Vice Chairman Sales and Marketing Mr. Robbins is a world leader in the psychology of peak performance and personal, professional and organizational turnaround. In 2002, the Accenture Institute for Strategic Change listed him as one of the world's Top 50 Business Thinkers. He brings more than 25 years' experience to the Company and its partners to develop personal enhancement programs and branded products for consumers. As a motivational leader he has trained more than 3 million people in 80 countries. His books and audio programs have sold more than 50 million copies worldwide. Mark A. Fox, President and Chief Operating Officer Mr. Fox has been developing business strategy and new ventures for leaders in the health care, pharmaceutical and e-health sectors for 20 years. For DuPont, he developed and implemented a consumer- health business strategy and engineered acquisitions valued at more than $600 million. He led an early stage strategic investment of $220 million in WebMD and continued to work with WebMD's executive management for two years to advance its strategic growth objectives. Mr. Fox is Treasurer of the Board for the International AIDS Trust, a global NGO co-chaired by Presidents Clinton and Mandela. Steven R. Heacock, J.D., C.P.A., Chief Financial and Legal Officer Mr. Heacock, prior to joining IdeaSphere Inc., was an executive manager at a $450 million managed care organization that services 350,000 people in 27 counties. He has been a partner in Warner Norcross and Judd, a 200-member law firm serving West Michigan. He also worked with Price Waterhouse, the international public accounting firm. Tony Hoyt, Publisher & President, Rebus Mr. Hoyt, who has been in the publishing industry for 30 years, is regarded for his record of successful publishing turn-arounds. He was publisher of House Beautiful and Redbook and of Cosmopolitan, Hearst's flagship magazine. While he was publisher of American Media Inc., (National Enquirer and Star) its operations were successfully re-organized, delivering increased revenue and profits to effect the sale to its current owners. Peter Lusk, Independent Director Mr. Lusk is vice-chairman of WL Ross & Co. LLC, a market-leading global hedge fund with $1.5 billion under management. He draws on years of experience in the public and private sectors to advise IdeaSphere on growing and managing its financial assets as it grows in publishing and marketing a broad range of health- and wellness-related products and services. UAL CORP: Moody's Lowers Selected Equipment Trust Certificates -------------------------------------------------------------- Moody's Investors Service cut the ratings of certain of United Airlines, Inc.'s Equipment Trust Certificate and Enhanced Equipment Trust Certificate transactions. Ratings affected by this action include: Equipment Trust Certificates: - All to Ca from previous Caa1 and Caa2 ratings Enhanced Equipment Trust Certificates: - Series 1997-1 Class A to Caa1 from Baa3 Class B to Ca from Ba2 - Series 2000-1 Class A to Ba3 from Baa3 Class B to Ca from B3 - Series 2000-2 Class A to Ba3 from Baa3 Class B to Caa1 from Ba3 Class C to Ca from B3 - Series 2001-1 Class A to Ba3 from Baa3 Class B to B3 from Ba1 Class C to Ca from B3 Class D to C from Caa3 Jets Equipment Trusts - Series 1994 Class A to Caa3 from Caa1 Class B to Ca from Caa2 Certificates to C from Caa3 - Series 1995-A Class A to Caa3 from Ba2 Class B to Ca from Caa1 Class C to C from Caa2 Certificates to C from Caa3 - Series 1995-B Class A to Caa3 from Ba3 Class B to Ca from Caa1 Class C to C from Caa2 Certificates to C from Caa3 Approximately $7 billion of debt securities are affected. According to Moody's, the downgrades were prompted by uncertainties surrounding the availability of sufficient cash flow in each transaction to allow the original terms of the debt to be met and the increased potential for principal loss to debt holders as a result of prolonged negotiations regarding the disposition of the aircraft combined with continued declines in the value of the underlying aircraft collateral. UNITED AIRLINES: Strikes Marketing Alliance with Air China ---------------------------------------------------------- United Airlines and Air China have reached a marketing alliance, including cooperation on code share flights, frequent flyer programs and airport lounges, taking an important step toward expanding their networks and better serving the needs of customers. The marketing alliance between United and Air China will take effect on Oct. 31, when United's 14 weekly flights (daily Beijing- Chicago and daily Shanghai-San Francisco service) connecting the U.S. with China will carry United's and Air China's codes. At the same time, Air China's 12 weekly flights (four Beijing-Los Angeles, three Beijing-New York and five Beijing-San Francisco) will be operating under Air China's and United's flight numbers. In total, the two carriers will offer 26 nonstop code share flights a week between China and the U.S. "Our new marketing alliance with Air China will provide our customers with more travel options and benefits," said Glenn F. Tilton, Chairman, President and CEO, United Airlines. "China's aviation market is growing rapidly, and Air China's extensive network covers all major business and travel hubs in China. The new relationship with Air China will further expand United's worldwide network and access to China." Air China President, Li Jiaxiang, added, "Air China aims to become one of the world's major airlines. To align with world-class airlines such as United is a key component of Air China's globalization strategy. The agreement with United Airlines is an important milestone for Air China." Under the agreement with Air China, United will extend its service from Beijing and Shanghai to five other cities via code-share flights operated by Air China carrying United's codes. The five cities are Guangzhou, Shenyang, Xi'an, Fuzhou and Shenzhen. Air China will also extend its network by adding its flight numbers onto United's flights from Chicago, San Francisco and Los Angeles to 14 other U.S. cities: Atlanta, Boston, Dallas, Honolulu, Houston, Las Vegas, Miami, Minneapolis, New York, Philadelphia, Phoenix, Portland, Seattle and Washington D.C. Members of United Airlines' Mileage Plus frequent flyer program and Air China's Companion frequent flyer program will be able to earn qualifying frequent flyer miles/kilometers on both carriers' code-share flights and redeem awards on all United and Air China flights. Air China is a subsidiary of China National Aviation Holding Company and was established on October 28, 2002, consolidating the original Air China, China National Aviation Company, and China Southwest Airlines. Air China completed an internal restructuring plan on July 28, 2003. Currently, Air China operates 395 routes, including 73 international and 322 domestic routes and offers 480 scheduled services on a daily basis. It has branch offices in Chengdu, Hangzhou, Chongqing, Tianjin, and Inner Mongolia. It has a total of 31 domestic offices and 46 overseas offices. Air China ranks first among the Chinese airlines in terms of its total assets, fleet and extensive domestic and international networks. United entered China's market in 1986 and is one of the major U.S. carriers serving China, with 21 weekly flights to Beijing and Shanghai. In 2002, United's employees broke 35 company records and achieved the best overall operational performance in the company's 77-year history. United Airlines finished 2002 ranked No. 1 in the industry in domestic on-time performance among major airlines as published in the Department of Transportation's Air Travel Consumer Report for 2002. United and United Express operate more than 3,300 flights a day on a route network that spans the globe. News releases and other information about United can be found at the company's Web site at http://www.united.com US AIRWAYS: Goldman Sachs Agrees to Join in Private Placement ------------------------------------------------------------- US Airways Group Inc. has reached an agreement with Goldman, Sachs & Co., whereby Goldman Sachs will join in the previously announced private placement of US Airways common stock. Under the transaction, which was announced on Aug. 14, 2003, Aviation Acquisition, L.L.C., an entity managed by Farallon Capital Management, L.L.C., and OCM Principal Opportunities Fund II, L.P., a unit of Oaktree Capital Management, LLC, agreed to purchase approximately 5.0 million shares of US Airways stock at a price of $7.34 per share. Goldman Sachs will participate in that transaction, also at a purchase price of $7.34 per share. The Goldman Sachs investment will be approximately $7 million of the approximately $35 million private placement. The stock sale price of $7.34 per share is consistent with the common share valuation paid by the Retirement Systems of Alabama when it made its equity investment in conjunction with US Airways' emergence from Chapter 11 protection on March 31, 2003, and with the terms of the agreement made with Aviation Acquisition and OCM. "Goldman Sachs' participation in the private placement with Farallon and Oaktree is a further validation of investor confidence in our company," said David N. Siegel, US Airways president and chief executive officer. "Having three well-known equity investors believe in the restructuring of US Airways is a tremendous first step in re-entering the stock market." The shares to be placed with the three firms represent the stock that was withheld for employee tax obligations. Under the company's restructuring, employees will hold 30 percent of the stock in the airline, and already are 50 percent vested in their stock holdings. The transaction with Goldman Sachs, as well as the remainder of the private placement with Aviation Acquisition and OCM, closed today. The total number of shares will be slightly less than 5.0 million, due to the election by some pilots to pay cash in lieu of having shares withheld for taxes. US Airways said this private placement is part of its strategy for achieving an orderly return to the equity markets and it continues to explore all options, including a listing of the new stock on a national exchange. Aviation Acquisition, L.L.C., is a private equity limited liability company and owned by various investment funds managed by Farallon Capital Management, based in San Francisco. OCM Principal Opportunities Fund II, L.P., is a private equity- based fund managed by Oaktree Capital Management, LLC, a Los Angeles-based private investment firm that manages niche investments totaling approximately $25 billion for institutions and select individuals. Goldman, Sachs & Co. is a leading global investment banking, securities and investment management firm that provides a wide range of services worldwide to a substantial and diversified client base that includes corporations, financial institutions, governments and high-net-worth individuals. WEIRTON STEEL: Court Fixes October 20, 2003 Claims Bar Date ----------------------------------------------------------- James H. Joseph, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, recounts that in June 2003, Weirton Steel Corporation submitted an application to the Emergency Steel Loan Board for a federal guarantee under the Emergency Steel Loan Guarantee Act -- Byrd Bill. The Byrd Bill will expire on December 31, 2003. This means that any reorganization plan that includes Byrd Bill financing must become effective on or before December 31, 2003. Presently, the Debtor is in the process of preparing a reorganization plan. Consequently, it is necessary for the Debtor to have complete information from its creditors regarding the nature, status and amounts of all claims that will be asserted against them. Pursuant to Rule 3003(c) of the Federal Rules of Bankruptcy Procedure, the Debtor sought and obtained the Court's approval to establish October 20, 2003, as the deadline for all persons and entities holding or wishing to assert a claim, as defined in Section 101(5) of the Bankruptcy Code, against the Debtor to file a proof of Claim in the Debtor's case. Mr. Joseph explains that setting the October 20, 2003, Bar Date will provide the Debtor with sufficient time to evaluate its alternatives without unnecessarily prolonging the duration of the case and without jeopardizing the availability of Byrd Bill Financing, while at the same time providing sufficient notice to all creditors of the Bar Date. The Bar Date will apply to all Persons or Entities holding secured, priority or unsecured claims against the Debtor that arose prepetition, including: (a) any Person or Entity whose Claim is listed as "disputed," "contingent," or "unliquidated" and that desires to participate or share in any distribution in the Debtors' Chapter 11 case; (b) any Person or Entity whose Claim is improperly classified in the Schedules or is listed in an incorrect amount and that desires to have its Claim allowed in a classification or amount other than set forth in the Schedules; and (c) any Person or Entity whose Claim against a Debtor is not listed in the Debtor's Schedules. The Court orders that these Persons or Entities need not file proofs of claims: (a) Any Person or Entity: (1) that agrees with the nature, classification, and amount of the Claim set forth in the Schedules; and (2) whose Claim against a Debtor is not listed as "disputed," "contingent," or "unliquidated" in the Schedules; (b) Any Person or Entity that has already properly filed a proof of claim against the Debtor; (c) Any Person or Entity asserting a claim allowable under Sections 503(b) and 507(a)(1) of the Bankruptcy Code as an administrative expense of the Debtor's Chapter 11 case; (d) Any Person or Entity whose Claim against the Debtor previously has been allowed by, or paid pursuant to a Bankruptcy Court Order; (e) Any holder of equity securities of the Debtor solely with respect to the holder's ownership interest in or possession of the equity securities, provided, however, that any holder who wish to assert a claim against the Debtor based on transactions in the Debtor's securities, including, but not limited to, claims for damages or recision based on the purchase or sale of the securities, must file a proof of claim on or prior to the Bar Date; and (f) Any person or entity whose claim is limited exclusively to a claim for the repayment by the Debtor of principal and interest -- a "Debt Claim" -- under notes or other debt instruments issued by the Debtor pursuant to an indenture or the indenture in respect of any of the Notes; provided, however, that (1) the exclusion in this subparagraph will not apply to the indenture trustees under each of the Indentures, (2) each of the Indenture Trustees will be required to file a proof of claim on account of the applicable Notes and Indentures for which it is trustee, on or before the Bar Date, and (3) each Indenture Trustee and any holder of Notes that wishes to assert a claim arising out of or relating to the Notes or the Indentures, other than a Debt Claim, will be required to file a proof of claim on or before the Bar Date, unless another exception is identified. Nevertheless, the Debtor will retain the right to dispute, or assert offsets or defenses against, any filed Claim or any Claim listed or reflected in the Schedules as to nature, amount, liability, classification, or otherwise; or subsequently designate any Claim as disputed, contingent, or unliquidated. In the event that the Debtor amends its Schedules to reduce the undisputed, noncontingent, and liquidated amounts or to change the nature or classification of a Claim against the Debtor, then the Amended Schedule Bar Date for filing a proof of claim or amending a previously filed proof of claim will be the later of: (i) the Bar Date, or (ii) 30 days after a claimant is served with notice that the Debtor has amended its Schedules reducing, deleting or changing the status of a scheduled Claim. For any Claim relating to a Court-approved rejection of an executory contract or unexpired lease, the Rejection Claim Bar Date will be the later of: (i) the Bar Date, or (ii) 30 days after the entry of an order approving the Debtor's rejection of the executory contract or unexpired lease; provided, however, that any nondebtor party to an executory contract or unexpired lease must file a proof of claim on or before the Bar Date with respect to any claim against the Debtor that existed as of the Petition Date other than a claim relating to the rejection of the party's contract or lease with the Debtor. Section 502(b)(9) of the Bankruptcy Code provides that governmental units will have 180 days after the Petition Date to file proofs of claim. Accordingly, the Debtor sought and obtained the Court's approval to set November 17, 2003, as the Governmental Unit Bar Date for governmental units to file proofs of claim in this case. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, that Court also orders that any Person or Entity required to file a proof of claim in this Chapter 11 case but fails to do so in a timely manner should be forever barred, estopped, and enjoined from: (a) asserting any claim against the Debtor that the Person or Entity has that: -- is in an amount that exceeds the amount, if any, that is set forth in the Schedules, or -- is of a different nature or in a different classification; and (b) voting upon, or receiving distributions under, any plan or plans of reorganization in the Debtor's Chapter 11 case in respect of an Unscheduled Claim. The Debtor will give notice of the Bar Date to all creditors and holders of executory contracts or unexpired leases, pursuant to Rule 2002(a)(7) of the Federal Rules of Bankruptcy Procedure: (a) on or before September 5, 2003, by first class mail, (b) by publication, on or before September 12, 2003, or as soon thereafter as the Bar Date Notice may be published, once in each of the regional edition of The New York Times; the regional edition of The Wall Street Journal; the Pittsburgh Post-Gazette; the Weirton Daily Times; and American Metal Markets. Along with mailing the Bar Date Notice, the Debtor will provide each creditor with a Proof of Claim form. Given the 50-day notice period contemplated by the Debtor, creditors will have sufficient notice, time and opportunity to file their claims against the Debtor's estate. Accordingly, to receive, docket, maintain, photocopy and transmit proofs of claim, the Debtor will use the services of Donlin Recano & Company, Inc., an independent third party, to coordinate the receipt and processing of proofs and claim in cooperation with the Clerk's Office. (Weirton Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) WILLIAMS: Completes Sale of Utah Oil and Gas Assets for $48MM ------------------------------------------------------------- Williams (NYSE: WMB) has completed the previously announced sale of its Brundage Canyon, Utah, oil and gas properties. Berry Petroleum Company (NYSE: BRY) purchased the properties from a unit of Williams for $48.6 million. The properties consist of approximately 43,500 net acres in northeastern Utah. Including Thursday's announcement, Williams this year has sold or agreed to sell assets and certain contracts for in excess of $2.9 billion in aggregate cash through more than 15 transactions. Williams' production business primarily develops natural gas reserves in the Piceance, Powder River, San Juan and Arkoma basins. The company is actively developing its interests in these areas. Williams (S&P, B+ Long-Term Corporate Credit Rating, Negative), through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com WORLDCOM INC: Court Clears EDS Contract Waiver Letter ----------------------------------------------------- The Global Information Technology Services Agreement is an 11- year, $5,000,000,000 agreement in which the Worldcom Debtors agreed to outsource their information technology services to Electronic Data Systems Corporation and EDS Information Systems, LLC at specified rates. The Debtors outsourced to EDS all mainframe operations and support, all document services center support, some midrange hardware and software operational support, applications development for selected systems, and all assets and personnel needed to perform these functions. The GITSA requires the Debtors to purchase a minimum amount of services every year. The Debtors are required to make a shortfall payment each year they do not meet this obligation. The Debtors currently spend $600,000,000 a year under the GITSA. To date, the Debtors have paid EDS $1,800,000,000 pursuant to the Agreement. EDS asserts $98,668,965 in claims against the Debtors under the GITSA. On April 28, 2003, the Debtors and EDS executed a Seventh Amendment to the GITSA. Pursuant to the Seventh Amendment, the Debtors agreed to assume the GITSA and pay EDS $98,627,276 within 30 days of the "Amendment Effective Date". The Seventh Amendment defines the "Amendment Effective Date" as the date: "on which the Bankruptcy Court for the Southern District of New York shall have entered the Approval Order and the Approval Order shall have been final and nonappealable." In exchange for the assumption of the GITSA, EDS made several concessions. EDS agreed to a substantial reduction in the pricing under the GITSA, which will allow the Debtors to save $83,000,000 a year. The Debtors will save $10,000,000 a month for the remainder of 2003 and $7,000,000 a month in 2004. A benchmarking process will set new pricing for 2005. Pursuant to an earlier letter agreement, the parties agreed that the new pricing would be retroactive to the services rendered in April 2003 and invoiced in May 2003, provided the Amendment Effective Date occurs by June 15, 2003. The retroactive price reductions provided the Debtors a $30,000,000 cost savings incentive to obtain a timely order approving the assumption of the GITSA. The Seventh Amendment also provides that the parties will execute a Sun Server Service Request, which will be part of the GITSA. Under the Sun Server Agreement, certain employees, equipment and functions would be transferred from the Debtors to EDS. EDS also agreed to withdraw its Proof of Claim relating to the GITSA and release the Debtors from all prepetition claims arising out of the GITSA before the Petition Date. As part of their restructuring strategy, the Debtors sought and obtained the Court's authority to assume the amended GITSA on June 4, 2003. Nine days later, the Ad Hoc MCI Trade Claims Committee appealed the Approval Order. In a correspondence dated June 9, 2003 and countersigned on June 12, 2003, the Debtors and EDS agreed to fix the "Amendment Effective Date" as "June 7, 2003". The parties fixed a certain date to promptly effectuate the amended GITSA terms. The Debtors need to lock the Amendment Effective Date to secure the benefits of the reduced pricing in the Seventh Amendment retroactively. The Debtors would only obtain reduced pricing retroactive to April 2003 if the Amendment Effective Date occurred by June 15, 2003. A fixed Effective Date is also needed to permit the requisite transfer of numerous employees and equipment in a prompt and timely manner. EDS also desired a firm Amendment Effective Date so that it could obtain the $98,668,965 cure payment by a specific date. If the Debtors do not promptly make the cure payment, EDS will rescind the retroactive price discounts and seek reimbursement for the discounts already provided, unwind the Sun Server Service Agreement, and sue the Debtors for breach of contract. Consequently, Judge Gonzalez confirms that the Waiver Letter is consistent with the Approval Order and complies with the pertinent contract requirements indicated in the GITSA. Judge Gonzalez approves the Waiver Letter to enable the Debtors and EDS to implement the terms of the Seventh Amendment and start to realize immediately the direct and indirect benefits flowing from the assumption of the amended GITSA. (Worldcom Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLDCOM INC: Mitch Marcus Applauds Oklahoma AG Action vs. MCI -------------------------------------------------------------- The following statement was issued Wednesday by Mitch Marcus, WorldCom whistleblower and founder of BoycottMCI.com at http://www.BoycottMci.com "The action announced [Wednes]day by Oklahoma Attorney General Drew Edmondson is a major turning point in the handling of the WorldCom/MCI scandal, which, to date, has been characterized in Washington by the same 'turn a blind eye' approach at the U.S. Securities and Exchange Commission, the Department of Justice, Congress, and the Federal Communications Commission. "BoycottMCI.com has been calling for federal and states investigations of WorldCom/MCI for more than a year, and [Wednes]day, we finally see criminal charges brought against WorldCom/MCI. Attorney General Edmondson deserves the public's support and applause for his bold action. Where the Department of Justice and SEC dropped the ball, Oklahoma has stepped in. It is our hope that attorneys general in other state will see fit to join with Oklahoma in doing what the federal government should have done many months ago. "This is playing out very much like the telecom world equivalent to the Wall Street analyst scandal. Washington refused to take action, so a brave state attorney general had to step in to protect the interest of the public. If it had been allowed to go unchallenged, the proposed reorganization plan of WorldCom/MCI would eliminate all debts arising from its fraudulent acts, rewarding the company for staging the largest fraud in American history. In effect, the states had to step in here to reserve the right to strip WorldCom/MCI of the fruits of its misconduct. "To date, the Department of Justice and the SEC have not pursued criminal actions against WorldCom/MCI. Instead, the federal government has chosen to embark on a token enforcement effort focusing on a few individuals, and has done nothing to address the fact that WorldCom/MCI used its illicit conduct to acquire assets and customers it never would have had absent its criminal activity. "The fraud at WorldCom/MCI caused the loss of more than $175 billion in retirement savings and shareholder equity, in what independent examiner former U.S. Attorney General Richard Thornburgh characterized as 'a concerted program of manipulation' that 'gave rise to a smorgasbord of fraudulent journal entries and adjustments.' It would be an obscene perversion of the law for this kind of criminal enterprise to use the bankruptcy process to launder its ill-gotten gains and absolve itself from the lawful consequences of its criminal actions. "There are certain facts that WorldCom/MCI cannot manipulate as easily as it manipulated its books. One such fact is that WorldCom/MCI violated federal and state securities laws and should be prosecuted to the fullest extent of the law. Additionally, due process and the administration of justice are essential to the public interest. "We salute Attorney General Edmondson for standing up for Oklahoma citizens and against the complacency in Washington when it comes to the ever-deepening scandal at WorldCom/MCI." Mitch Marcus is a former WorldCom account manager turned whistleblower who resigned before the company acknowledged its $11 billion accounting scheme. Since its founding in May 2002, the Web site now known as http://www.BoycottMCI.comhas supported a variety of steps to highlight problems at the former WorldCom. Marcus has called for the debarment of the troubled telecommunications company from future federal contracts. BoycottMCI.com also has opposed efforts by the SEC to let WorldCom off the hook with no meaningful penalty. Earlier this year, Marcus highlighted financial issues that were buried in reports issued by the former WorldCom. BoycottMCI.com was established in May 2002 to: dissuade consumers, businesses, and governmental entities from purchasing Internet/data/ telecom services and equipment from WorldCom, Inc. or any of its owned companies or subsidiaries; encourage retail and institutional investors to divest of all MCI/WorldCom equities and initiate class action; and organize grassroots efforts to encourage Federal and State investigations into WorldCom's business practices. BoycottMCI.com founder Mitch Marcus is a former WorldCom account relations manager, who resigned his position due to concerns about company operations. W.R. GRACE: Secures Okay for Voluntary Trust Fund Contributions --------------------------------------------------------------- Judge Fitzgerald authorizes -- but not requires - the W. R. Grace Debtors to make annual contributions of approximately $40,000,000 in both 2003 and 2004 into a trust that funds the defined benefit retirement plans covering their employees, in accordance with a specific "funding strategy." The Grace Retirement Plans currently consist of 19 funded, defined benefit pension plans, each of which is qualified under Section 401(k) of the Internal Revenue Code. The most significant Grace Retirement Plan is the W. R. Grace & Co. Retirement Plan for Salaried Employees, which comprises approximately 83% of the assets, 85% of the Economic Obligation, 84% of the ABO, and 85% of the PBO. All of the assets of each Grace Retirement Plan are held in a master trust at The Northern Trust Company. Within that trust, Northern Trust separately accounts for assets allocated to each Grace Retirement Plan. 2003-2004 Funding Strategy To implement the Overall Funding Strategy, the Debtors will contribute $40,000,000 to the Grace Retirement Plans during 2003 and anticipate contributing approximately $40,000,000 in 2004. The 2003 Funding will: (a) satisfy the Minimum Funding Requirement for 2003, (b) avoid the need to provide the Underfunding Notice for the 2004 plan year, and (c) begin to satisfy the Minimum Funding Requirement for 2004. (W.R. Grace Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Bush's Steel Program is Preserving Over 1.1MM American Jobs ------------------------------------------------------------- President Bush's Steel Program has helped to preserve more than 1.1 million jobs and it must be maintained for the full three years intended, said Charles W. Connors, president and CEO of Magneco-Metrel in Addison, Illinois, and chairman of the American Steel Coalition, which represents small and medium-sized businesses who support the 201 steel tariff remedy. Connors said while it has been estimated that since the tariffs, 16,000 steelworkers' jobs have been restored at formerly closed mills, little attention has been given to the significant volume of upstream manufacturing companies that supply products and services to the steel industry and whose viability depends on having a healthy domestic steel industry. He said industry experts estimate these upstream manufacturers employ in excess of 1.1 million people in this sector. "My company, which is a steel industry supplier and customer (employing 143 people in Illinois, northern Indiana and eastern Ohio), came close to bankruptcy, losing $2 million in 2001 and $300,00 in January and February 2002. One more month with such losses and we would have been out of business," Connors said. He credits President Bush's Steel Program, launched in March of 2002, with the survival of his company and thousands like it, and urges the President to keep the steel safeguard in place until March of 2005 as promised. University of Maryland Professor and former Director of Economics for the U.S. International Trade Commission, Peter Morici, said the tariffs are having their intended effect as U.S. steel makers are seizing on the three-year- program by streamlining and revamping their operations to increase competitiveness. "If you take away the tariffs now, a lot of the progress that has been made will be dashed, and consuming industries will be harmed," Professor Morici said. "It is in the long term best interests of steel consumers to have a healthy domestic steel industry. Otherwise, ready availability of steel products at affordable prices, as we now have, will not be the case." The American steel industry was injured as a result of repeated surges of low-priced, subsidized steel imports dumped illegally on American shores suppressing domestic steel prices to unsustainable 20-year lows. Domestic producers were unable to compete with foreign producers subsidized by their respective governments. The President's Steel Program was implemented to give the domestic steel industry a much-needed period of relief from the flood of imports and to provide the industry with the opportunity to restructure and consolidate. " ... Overall imports of steel are up since the tariffs were implemented and most steel prices are below 20-year averages," Senator Evan Bayh (D-Ind) said in recent testimony before the International Trade Commission aimed at gauging impact of the steel tariffs. "Prices in the U.S. market are below those in most other major steel markets. These statistics are evidence that, however invaluable, the tariffs represent a modest remedy for the industry. When you take all of these factors into account, it is really remarkable what the industry has accomplished in 18 months." "President Bush warned steel-makers to restructure or lose the tariffs. As a consequence of the stability created by the tariffs, steel-making assets were redeployed getting rid of burdensome legacy costs and improving work rules and plant floor efficiency, thus shifting the cost curve. Overall, the steel program benefited U.S. manufacturers and saved jobs in the long run by ensuring a steady supply of steel made at lower cost," Morici said. Despite what the tariffs' critics have said, Connors insists that maintaining the tariffs for the remaining 18 months is the best way to ensure the health of the domestic steel industry and the steel supplying businesses that depend on its existence. "Some users of steel products are clamoring to have the Administration end the sanctions early, saying they're being hurt because they have to pay higher prices for raw materials," Connors said. "But the latest global pricing data reveals that U.S. prices for domestic steel are among the lowest in the world." The American Steel Coalition, which has 451 individual and company members, is a national organization dedicated to ensuring a robust U.S. steel industry through fair, enforceable global trade practices. The Coalition stands firmly behind the President's steel tariff program and supports the plan's successful revitalization of our domestic steel industry. Membership is voluntary and open to individuals and companies who support the steel industry. To learn more about the American Steel Coalition, visit http://www.steelcoalition.org * New Rules for Reducing Tax Attributes in a Consolidated Group --------------------------------------------------------------- Treasury Department and the IRS issued temporary regulations last week that provide rules for reducing tax attributes (e.g., net operating losses, tax credit carryovers) when the debt of a member of a consolidated group is forgiven. "These regulations are an important clarification of how consolidated groups are to treat debt forgiveness in bankruptcy," stated Pam Olson, Assistant Secretary for Tax Policy. Under current law, the discharge of indebtedness is generally income to a debtor corporation. There is an exception to this rule, however, when the debtor corporation is in bankruptcy. In lieu of including the amount of indebtedness discharged in income, the bankrupt corporation must reduce its "tax attributes" by the amount of debt discharged. The reduction of attributes prevents corporations from avoiding taxable income in bankruptcy while retaining tax attributes that can reduce future tax liability. Because consolidated attributes could later be used to reduce the tax liability of the bankrupt member, the temporary regulations clarify that all of the consolidated attributes of the group are available for reduction when the debt of a member of the group is discharged. In addition, they provide a methodology for reducing attributes. The temporary regulations apply immediately. The full text of the new regulations is available at no charge in Microsoft Word format at: http://ustreasury.mondosearch.com/cgi-bin/MsmGo.exe?grab_id=95868248&EXTRA_A RG=&host_id=1&page_id=3490&query=discharge Background The Debt Discharge Rules Pursuant to section 61(a)(12), gross income includes income from the discharge of indebtedness (COD income). Section 108(a)(1), which reflects the amendments enacted in the Bankruptcy Tax Act of 1980, Public Law 96-589, section 2, 94 Stat. 3389 (1980) (1980-2 C.B. 607), however, provides that, where the discharge occurs in a title 11 case, where the taxpayer is insolvent, or where the indebtedness is "qualified farm indebtedness" or "qualified real property business indebtedness," gross income does not include any amount that otherwise would be includible in gross income by reason of that discharge (in whole or in part) of the indebtedness of the taxpayer. Although section 108(a) excludes COD income from gross income under those circumstances, section 108(b) requires the reduction of certain tax attributes in an amount that reflects the amount excluded from gross income, thereby generally deferring, rather than permanently eliminating, the inclusion of COD income. Section 108(b)(2) requires the reduction of the following tax attributes of the taxpayer in the following order: (A) net operating losses; (B) general business credits; (C) minimum tax credits; (D) capital loss carryovers; (E) adjusted basis of property; (F) passive activity losses and credit carryovers; and (G) foreign tax credit carryovers. Section 108(b)(4)(A) provides that the reductions are made after the determination of the tax imposed for the taxable year of the discharge. Section 108(b)(4)(B) provides that the reductions of net operating losses and capital loss carryovers are made first in the loss for the taxable year of the discharge and then in the carryovers to such taxable year in the order of the taxable years from which each such carryover arose. If the excluded COD income exceeds the sum of the taxpayer's tax attributes, the excess is disregarded such that it does not result in income or have other tax consequences. See H.R. Rep. No. 96-833, at 11 (1980). Instead of reducing tax attributes in the order set forth in section 108(b)(2), a taxpayer may elect under section 108(b)(5) to reduce first the adjusted bases of depreciable property to the extent of the excluded COD income. The amount to which the election applies is limited to the aggregate adjusted basis of the depreciable property held by the taxpayer as of the beginning of the taxable year following the taxable year in which the discharge occurs. If the adjusted bases of depreciable property are insufficient to offset the entire amount of excluded COD income, the taxpayer must then reduce any remaining tax attributes in the order set forth in section 108(b)(2). Congress intended the election under section 108(b)(5) to allow debtors, including debtors in bankruptcy, to account for a debt discharge amount in a manner most favorable to their tax situations. See S. Rep. No. 96-1035, at 10 (1980); H.R. Rep. No. 96-833, at 9 (1980). Section 1017(a) provides that when any portion of COD income excluded from gross income under section 108(a) is to be applied to reduce basis, then such portion shall be applied to reduce the basis of any property held by the taxpayer at the beginning of the taxable year following the taxable year in which the discharge occurs. Section 1017(b)(1) provides that the amount of reduction under section 1017(a), and the particular properties the bases of which are to be reduced, shall be determined under regulations. The Reorganization Rules Section 368(a)(1) defines a reorganization to include certain types of asset acquisitions. Under section 361, a corporation that is a party to a reorganization recognizes neither gain nor loss when it exchanges property, in pursuance of the plan of reorganization, solely for stock or securities in another corporation that is a party to the reorganization. If the corporation receives in the exchange not only stock or securities permitted to be received without the recognition of gain, but also other property or money, then the corporation may be required to recognize gain. Under section 362(b), if property is acquired by a corporation in connection with a reorganization, then the basis is the same as it would be in the hands of the transferor, increased by the amount of gain recognized to the transferor on such transfer. Section 332(a) provides that a corporation recognizes no gain or loss on the receipt of property distributed in complete liquidation of another corporation. Section 337(a) provides that a liquidating corporation recognizes no gain or loss on the distribution to the 80-percent distributee of any property in a complete liquidation to which section 332 applies. Under section 334(b)(1), if property is received by a corporate distributee in a distribution in a complete liquidation to which section 332 applies, the basis of such property in the hands of such distributee is the same as it would be in the hands of the transferor. However, in any case in which gain or loss is recognized by the liquidating corporation with respect to such property, the basis of such property in the hands of such distributee is the fair market value of the property at the time of the distribution. Section 381 provides that a corporation that acquires the assets of another corporation in a distribution to which section 332 applies or in a transfer to which section 361 applies (but only if the transfer is in connection with certain reorganizations described in sections 368(a)(1)(A), (C), (D), (F), or (G)) shall succeed to, and take into account, as of the close of the day of distribution or transfer, the items described in section 381(c) of the distributor or transferor corporation, subject to certain conditions and limitations. Among those items described in section 381(c) are net operating loss carryovers, capital loss carryovers, general business credits, and minimum tax credits. With respect to net operating loss carryovers and capital loss carryovers, the regulations under section 381 reflect that the acquiring corporation succeeds to only those carryovers that remain after the application of sections 172 and 1212 and their carryforward and carryback provisions. See 1.381(c)(1)-1; 1.381(c)(3)-1. Furthermore, those regulations provide that the acquiring corporation succeeds to only those general business credits that remain unused by the transferor corporation after computing its taxable income for the year of the transfer. See Sec. 1.381(c)(23)-1. Section 381(b)(1) provides that, except in the case of an acquisition in connection with a reorganization described in section 368(a)(1)(F), the taxable year of the distributor or transferor corporation ends on the date of distribution or transfer. Interaction Between Debt Discharge and Reorganization Rules Questions have arisen regarding the application of the attribute reduction rules of sections 108 and 1017 when a transaction described in section 381(a) ends a taxable year in which the transferor excludes COD income from gross income. If section 108(b)(4)(A) and section 1017 were interpreted to require attribute reduction to occur after the close of the taxable year of discharge and after the transfer of assets and carryover of items described in section 381(c), then arguably no attributes described in section 108(b)(2) would be available for reduction. Explanation of Provisions The IRS and Treasury Department believe that the rule of section 108(b)(4)(A) prescribes an ordering of calculations. First, section 108(b)(4)(A) requires a determination of the taxpayer's tax for the taxable year of discharge in order to identify the amounts, if any, of the tax attributes described in section 108(b)(2) that remain available for reduction. Second, section 108(b)(4)(A) requires the reduction of those attributes. This ordering rule affords the taxpayer the use of certain of its tax attributes described in section 108(b)(2), including any losses carried forward to the taxable year of discharge, for purposes of determining its tax for the taxable year of discharge, before subjecting those attributes to reduction. Similarly, the IRS and Treasury believe that the rule of section 1017 prescribes an ordering of calculations. The Bankruptcy Tax Act of 1980 reflects that Congress enacted the rule of section 1017 "to avoid interaction between basis reduction and reduction of other attributes." S. Rep. No. 96-1035, at 14 (1980); H. Rep. No. 96-833, at 11 (1980). Without this rule, a circular calculation could be required. The taxpayer's net operating loss for the year of the discharge of indebtedness might be based in part on the amount of cost recovery deductions allowed to the taxpayer. The amount of cost recovery deductions, however, would depend on the taxpayer's basis in its depreciable or amortizable property at the end of the year. Because net operating losses are reduced by excluded COD income prior to the reduction of asset basis absent an election under section 108(b)(5), the amount of basis required to be reduced would depend on the amount of net operating losses. Reducing the basis of property held by the taxpayer at the beginning of the taxable year following the taxable year in which the discharge occurs avoids this circularity. The position that sections 108 and 1017 require the reduction of attributes, including the basis of transferred assets, in cases where the debtor's taxable year ends with a transfer of assets in a transaction described in section 381 is consistent with the policies underlying sections 108 and 1017 and the corporate reorganization provisions, including "deferring, but eventually collecting within a reasonable period, tax on ordinary income realized from debt discharge." S. Rep. No. 96-1035, at 10 (1980). For example, assume that a debt of corporation X is discharged in a title 11 case. X's attributes described in section 108(b)(2) consist solely of basis in property. As part of a plan of reorganization, X transfers all of its assets to a newly formed corporation, Y. Under section 368(a)(3)(C), even though the transaction also qualifies as a reorganization under section 368(a)(1)(F), the transaction is treated as qualifying as a reorganization only under section 368(a)(1)(G). If sections 108 and 1017 were interpreted to not require a reduction of the bases of the property transferred, X would permanently exclude from gross income the COD income, notwithstanding that X underwent nothing more than a mere change in identity, form, or place of organization. Accordingly, consistent with the legislative history of the Bankruptcy Tax Act of 1980, the IRS and Treasury Department believe that the basis reduction rules of sections 108 and 1017 apply to property of a debtor transferred in a transaction described in section 381(a). The legislative history of the Bankruptcy Tax Act of 1980 reflects that Congress specifically anticipated that amounts that carry over in a transaction described in section 381, including the basis of transferred property, are to be adjusted under the rules of sections 108 and 1017 to account for excluded COD income. See H.R. Rep. No. 96-833, at 32-34 (1980). The legislative history states: Assume that Corporation A is in a bankruptcy case commenced after October 1, 1979. Immediately prior to a transfer under a plan of reorganization, A's assets have an adjusted basis of $75,000 and a fair market value of $100,000. A has a net operating loss carryover of $200,000. A has outstanding bonds of $100,000 (on which there is no accrued but unpaid interest) and trade debts of $100,000. Under the plan of reorganization, A is to transfer all its assets to Corporation B in exchange for $100,000 of B stock. Corporation A will distribute the stock, in exchange for their claims against A, one-half to the security holders and one-half to the trade creditors. A's shareholders will receive nothing. The transaction would qualify as a reorganization under new section 368(a)(1)(G) of the Code, since all the creditors are here treated as proprietors for continuity of interest purposes. Thus, A would recognize no gain or loss on the transfer of its assets to B (sec. 361). B's basis in the assets would be $75,000 (sec. 362), and B would succeed to A's net operating loss carryover (sec. 381). Under the bill, . . . [o]n the distribution of B stock to A's trade creditors, A excludes from gross income the debt discharge amount of $50,000 -- i.e., the difference between the $100,000 debt held by non-security creditors and the $50,000 worth of stock given for such debt. A may elect to reduce the basis of its depreciable assets transferred to B by all or part of the $50,000 debt discharge amount; to the extent the election is not made, the debt discharge amount reduces A's net operating loss carryover by the remainder of the debt discharge amount. H.R. Rep. No. 96-833, at 34 (1980). The treatment of the net operating loss and basis in the legislative history demonstrates that, in a transaction described in section 381, the transferor's attributes, including the basis of transferred property, that carry over to the transferee are reduced. Accordingly, these temporary regulations clarify that, in the case of a transaction described in section 381(a) that ends a year in which the distributor or transferor corporation excludes COD income from gross income under section 108(a), any tax attributes to which the acquiring corporation succeeds and the basis of property acquired by the acquiring corporation in the transaction shall reflect the reductions required by sections 108 and 1017. For this purpose, all attributes listed in section 108(b)(2) of the distributor or transferor corporation immediately prior to the transaction described in section 381(a), including the basis of property, but after the determination of tax for the year of the discharge, are available for reduction under section 108(b)(2). These temporary regulations also clarify that the tax attributes subject to reduction under section 108(b)(2) that are carryovers to the taxable year of the discharge, or that may be carried back to taxable years preceding the year of the discharge, are first taken into account by the taxpayer for the taxable year of the discharge or the preceding years, as the case may be, before such attributes are reduced pursuant to section 108(b)(2). These temporary regulations apply to discharges of indebtedness occurring after [August 29, 2003]. Special Analyses It has been determined that these temporary regulations are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these temporary regulations, and, because no preceding notice of proposed rulemaking is required for these temporary regulations, the provisions of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to section 7805(f) of the Internal Revenue Code, these temporary regulations will be submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business. Drafting Information The principal author of these temporary regulations is Theresa M. Kolish, Office of Associate Chief Counsel (Corporate). However, other personnel from the IRS and Treasury Department participated in their development. List of Subjects in 26 CFR Part 1 Income taxes, Reporting and recordkeeping requirements. Proposed Amendments to the Regulations Accordingly, 26 CFR part 1 is amended as follows: PART 1--INCOME TAXES Paragraph 1. The authority citation for part 1 is amended by adding the following entry in numerical order to read as follows: Authority: 26 U.S.C. 7805 * * * Section 1.108-7T also issued under 26 U.S.C. 108. * * * Par. 2. Section 1.108-7T is added to read as follows: Sec. 1.108-7T Reduction of attributes (temporary). (a) In general. (1) If a taxpayer excludes discharge of indebtedness income (COD income) from gross income under section 108(a)(1)(A), (B), or (C), then the amount excluded shall be applied to reduce the following tax attributes of the taxpayer in the following order: (i) Net operating losses. (ii) General business credits. (iii) Minimum tax credits. (iv) Capital loss carryovers. (v) Basis of property. (vi) Passive activity loss and credit carryovers. (vii) Foreign tax credit carryovers. (2) The taxpayer may elect under section 108(b)(5), however, to reduce first the basis of depreciable property to the extent of the excluded COD income. If the basis of depreciable property is insufficient to offset the entire amount of the excluded COD income, the taxpayer must then reduce any remaining tax attributes in the order specified in section 108(b)(2). If the excluded COD income exceeds the sum of the taxpayer's tax attributes, the excess is permanently excluded from the taxpayer's gross income. For rules relating to basis reductions required by sections 108(b)(2)(E) and 108(b)(5), see section 1017 and 1.1017-1. For rules relating to the time and manner for making an election under section 108(b)(5), see 1.108-4. (b) Carryovers and carrybacks. The tax attributes subject to reduction under section 108(b)(2) and paragraph (a)(1) of this section that are carryovers to the taxable year of the discharge, or that may be carried back to taxable years preceding the year of the discharge, are taken into account by the taxpayer for the taxable year of the discharge or the preceding years, as the case may be, before such attributes are reduced pursuant to section 108(b)(2) and paragraph (a)(1) of this section. (c) Transactions to which section 381 applies. In the case of a transaction described in section 381(a) that ends a taxable year in which the distributor or transferor corporation excludes COD income under section 108(a), any tax attributes to which the acquiring corporation succeeds and the basis of property acquired by the acquiring corporation in the transaction shall reflect the reductions required by section 108(b). For this purpose, all attributes listed in section 108(b)(2) of the distributor or transferor corporation immediately prior to the transaction described in section 381(a), but after the determination of tax for the year of the discharge, including basis of property, shall be available for reduction under section 108(b)(2). (d) Examples. The following examples illustrate the application of this section: Example 1. (i) Facts. In Year 4, X, a corporation in a title 11 case, is entitled under section 108(a)(1)(A) to exclude from gross income $100,000 of COD income. For Year 4, X has gross income in the amount of $50,000. In each of Years 1 and 2, X had no taxable income or loss. In Year 3, X had a net operating loss of $100,000, the use of which when carried over to Year 4 is not subject to any restrictions other than those of section 172. (ii) Analysis. Pursuant to paragraph (b) of this section, X takes into account the net operating loss carryover from Year 3 in computing its taxable income for Year 4 before any portion of the COD income excluded under section 108(a)(1)(A) is applied to reduce tax attributes. Thus, the amount of the net operating loss carryover that is reduced under section 108(b)(2) and paragraph (a) of this section is $50,000. Example 2. (i) Facts. The facts are the same as in Example 1, except that in Year 4 X sustains a net operating loss in the amount of $100,000. In addition, in each of Years 2 and 3, X reported taxable income in the amount of $25,000. (ii) Analysis. Pursuant to paragraph (b) of this section and section 172, the net operating loss sustained in Year 4 is carried back to Years 2 and 3 before any portion of the COD income excluded under section 108(a)(1)(A) is applied to reduce tax attributes. Thus, the amount of the net operating loss that is reduced under section 108(b)(2) and paragraph (a) of this section is $50,000. Example 3. (i) Facts. In Year 2, X, a corporation in a title 11 case, has outstanding trade debts of $200,000 and a depreciable asset that has an adjusted basis of $75,000 and a fair market value of $100,000. X has no other assets or liabilities. X has a net operating loss of $80,000 that is carried over to Year 2 but has no general business credit, minimum tax credit, or capital loss carryovers. Under a plan of reorganization, X transfers its asset to Corporation Y in exchange for Y stock with a value of $100,000. X distributes the Y stock to its trade creditors in exchange for release of their claims against X. X's shareholders receive nothing in the transaction. The transaction qualifies as a reorganization under section 368(a)(1)(G) that satisfies the requirements of section 354(a)(1)(A) and (B). For Year 2, X has gross income of $10,000 (without regard to any income from the discharge of indebtedness) and is allowed a depreciation deduction of $10,000 in respect of the asset. In addition, it generates no general business credits. (ii) Analysis. On the distribution of Y stock to X's trade creditors, under section 108(a)(1)(A), X is entitled to exclude from gross income the debt discharge amount of $100,000. (Under section 108(e)(8), X is treated as satisfying $100,000 of the debt owed the trade creditors for $100,000, the fair market value of the Y stock transferred to those creditors.) In Year 2, X has no taxable income or loss because its gross income is exactly offset by the depreciation deduction. As a result of the depreciation deduction, X's basis in the asset is reduced by $10,000 to $65,000. Pursuant to paragraph (c) of this section, the amount of X's net operating loss to which Y succeeds pursuant to section 381 and the basis of X's property transferred to Y must take into account the reductions required by section 108(b). Pursuant to paragraph (a) of this section, X's net operating loss carryover in the amount of $80,000 is reduced by $80,000 of the COD income excluded under section 108(a)(1). In addition, X's basis in the asset is reduced by $20,000, the extent to which the COD income excluded under section 108(a)(1) did not reduce the net operating loss. Accordingly, as a result of the reorganization, there is no net operating loss to which Y succeeds under section 381. Pursuant to section 361, X recognizes no gain or loss on the transfer of its property to Y. Pursuant to section 362(b), Y's basis in the asset acquired from X is $45,000. Example 4. (i) Facts. The facts are the same as in Example 3, except that X elects under section 108(b)(5) to reduce first the basis of its depreciable asset. (ii) Analysis. As in Example 3, on the distribution of Y stock to X's trade creditors, under section 108(a)(1)(A), X is entitled to exclude from gross income the debt discharge amount of $100,000. In addition, in Year 2, X has no taxable income or loss because its gross income is exactly offset by the depreciation deduction. As a result of the depreciation deduction, X's basis in the asset is reduced by $10,000 to $65,000. Pursuant to paragraph (c) of this section, the amount of X's net operating loss to which Y succeeds pursuant to section 381 and the basis of X's property transferred to Y must take into account the reductions required by section 108(b). As a result of the election under section 108(b)(5), X's basis in the asset is reduced by $65,000 to $0. In addition, X's net operating loss is reduced by $35,000, the extent to which the amount excluded from income under section 108(a)(1)(A) does not reduce X's asset basis. Accordingly, as a result of the reorganization, Y succeeds to X's net operating loss in the amount of $45,000 under section 381. Pursuant to section 361, X recognizes no gain or loss on the transfer of its property to Y. Pursuant to section 362(b), Y's basis in the asset acquired from X is $0. * BOND PRICING: For the week of September 1 - 5, 2003 ----------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 3.250% 05/01/21 25 Adelphia Communications 6.000% 02/15/06 25 Alexion Pharmaceuticals 5.750% 03/15/07 73 American & Foreign Power 5.000% 03/01/30 64 AMR Corp. 9.000% 08/01/12 66 AMR Corp. 9.000% 09/15/16 63 AnnTaylor Stores 0.550% 06/18/19 68 Burlington Northern 3.200% 01/01/45 52 Burlington Northern 3.800% 01/01/20 73 Calpine Corp. 7.750% 04/15/09 71 Calpine Corp. 7.875% 04/01/08 73 Calpine Corp. 8.500% 02/15/11 72 Calpine Corp. 8.625% 08/15/10 72 Cincinnati Bell Telephone 6.300% 12/01/28 72 Comcast Corp. 2.000% 10/15/29 30 Coastal Corp. 6.950% 06/01/28 69 Coastal Corp. 7.420% 02/15/37 72 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 33 Crown Cork & Seal 7.500% 12/15/96 72 Cummins Engine 5.650% 03/01/98 63 Delta Air Lines 7.900% 12/15/09 72 Delta Air Lines 9.000% 05/15/16 66 DVI Inc. 9.875% 02/01/04 32 Dynex Capital 9.500% 02/28/05 2 Elwood Energy 8.159% 07/05/26 69 Fibermark Inc. 10.750% 04/15/11 74 Foamex L.P. 9.875% 06/15/07 66 GB Property Funding 11.000% 09/29/05 60 Gulf Mobile Ohio 5.000% 12/01/56 64 IMC Global Inc. 7.300% 01/15/28 72 International Wire Group 11.750% 06/01/05 51 Level 3 Communications Inc. 6.000% 09/15/09 58 Level 3 Communications Inc. 6.000% 03/15/10 57 Liberty Media 3.500% 01/15/31 71 Liberty Media 3.750% 02/15/30 57 Liberty Media 4.000% 11/15/29 61 Lucent Technologies 6.450% 03/15/29 66 Lucent Technologies 6.500% 01/15/28 66 Mirant Americas 8.300% 05/01/11 72 Mirant Corp. 2.500% 06/15/21 43 Mirant Corp. 5.750% 07/15/07 43 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 70 Missouri Pacific Railroad 5.000% 01/01/45 61 Nexprise Inc. 6.000% 04/01/07 3 Northern Pacific Railway 3.000% 01/01/47 50 Northwest Airlines 7.875% 03/15/08 67 Northwest Airlines 9.875% 03/15/07 72 Northwestern Corporation 8.750% 03/15/12 75 NTL Communications Corp. 7.000% 12/15/08 19 Pac-West Telecom 13.500% 02/01/09 74 Salomon SB Holdings 0.250% 02/18/10 74 Scotia Pacific Co. 6.550% 01/20/07 67 Silicon Graphics 5.250% 09/01/04 73 Sonat Inc. 7.000% 02/01/18 75 Tital Wheel Int'l 8.750% 04/01/07 59 Tribune Company 2.000% 05/15/29 75 US Timberlands 9.625% 11/15/07 59 Universal Health Services 0.426% 06/23/20 63 Viropharma Inc. 6.000% 03/01/07 50 Worldcom Inc. 6.250% 08/15/03 29 Xerox Corp. 0.570% 04/21/18 65 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***