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/raid1/www/Hosts/bankrupt/TCR_Public/030902.mbx T R O U B L E D C O M P A N Y R E P O R T E R Tuesday, September 2, 2003, Vol. 7, No. 173 Headlines ACCEPTANCE INSURANCE: Fitch Withdraws Junk L-T Issuer Rating ACP HOLDING: Innisfree Appointed as Special Noticing Agent ACTERNA: Final Exclusivity Extension Hearing Set for September 9 AEROCENTURY CORP: Obtains Waiver of Loan Covenant Violation AEROVOX INC: Plan Confirmation Hearing Scheduled for Sept. 25 AIR CANADA: CIT Wants Jazz Air to Withdraw Termination Notices AMCAST: Secures Bank and Senior Note Credit Maturity Extension AMERCO: Committee Turns to Jefferies & Co. for Financial Advice ANNUITY & LIFE: Fitch Withdraws C Insurer Fin'l Strength Rating AQUILA INC: Unit Settles FERC Charges of Market Manipulation ATA HOLDINGS: Commences Exchange Offers for Senior Notes ATLAS AIR: EETC Holders Extend Forbearance Pact to September 12 AVCORP INDUSTRIES: June 30 Working Capital Deficit Hits C$26MM BEAR STEARNS: Fitch Affirms BB Class B-4 Ser. 1997-4 Note Rating BETHLEHEM STEEL: Proposes Solicitation and Tabulation Procedures BMC INDUSTRIES: Interest Payment Deferral Extended to Sept. 15 BUDGET GROUP: Sale Proceeds Allocation Trial Procedures Approved BURLINGTON: Asks Court to OK Proposed Solicitation Procedures CABLE SATISFACTION: Ability to Continue Operations Uncertain CHIQUITA BRANDS: Sells Stake in Florida Citrus Joint Venture CINRAM INT'L: S&P Assigns BB Rating to $1.2B Senior Secured Loan CMS ENERGY: Tom Webb to Present at Lehman Brothers Conference CONCERT IND.: NA Operations Continue to Incur EBITDA Losses CONSECO FIN.: Home City Seeks Stay Relief to Pursue Litigation COVANTA ENERGY: Asks Court to Clear Mezerhane et al. Settlement DOBSON COMMS: Files Form S-3 re Possible Securities Re-Sales DVI INC: Section 341(a) Creditors' Meeting to Convene on Oct. 3 EAGLE FOOD CENTERS: Reports Results of Store Sale Auction ELAN CORP: EPIL Noteholders Further Extend Waivers Until Friday ENERGY WEST: Wells Fargo Extends Credit Agreement Until Friday EXELON: Raytheon Takes Legal Action Involving Exelon Projects EXIDE: Committee Asks Court to Stay Plan-Related Proceedings GAUNTLET ENERGY CORP: Completes Independent Reserves Evaluation GAUNTLET ENERGY: June 30 Working Capital Deficit Tops $81 Mill. GENUITY INC: Classification & Treatment of Claims Under the Plan GEORGIA-PACIFIC: Commences Exchange Offer for Two Senior Notes HALLWOOD REALTY: Hires Morgan Stanley to Explore Alternatives HYDROMET ENV'L: Debentureholders Agree to Forbear Until Dec. 31 IMC GLOBAL: Board Declares 7.50% Conv. Preferred Share Dividend IMP INC: Fails to Comply with Nasdaq Listing Guidelines INTEGRATED DATA: Proposal to Acquire TransNet Corp. Assets Nixed INT'L DATASHARE: Cash Resources Insufficient to Fund Operations INT'L UTILITY: Fails to Cure Default on 10.75% Senior Notes INT'L UTILITY: June 30 Net Capital Deficit Widens to $24 Million INVERNIA WEST: Shareholders Approve Lisheen Mine Asset Sale LEAP WIRELESS: Providing Adequate Assurance to Five Utilities LOUDEYE CORP: Raises $12.2 Mill. in Private Placement Financing LTV CORP: Settles Disputes with USA, PA, Ohio, Indiana & Chicago MAJESTIC STAR: Planned Debt Refinancing Prompts Ratings Watch MALDEN MILLS: Massachusetts Court Confirms Reorganization Plan MARINER POST-ACUTE: Wants Approval of Indiana Family Settlement MIDWEST EXPRESS: Bank Credit Facility Extended Until November 26 MILACRON INC: Sells Minnesota Twist Drill to MTD Acquisition Inc MIRANT CORP: Pepco Balks at Move to Cancel Power Purchase Pacts MIRANT: Cleco to Seek Damages if Perryville Tolling Pact Rejected MIRANT CORP: Gets Interim Nod to Hire Blackstone as Advisors MOBILE COMPUTING: June 30 Net Capital Deficit Balloons to $10MM MORGAN STANLEY: Fitch Affirms Low-B Ratings on 3 Note Classes MOSAIC: KPMG Appointed Receiver and CCAA Stay Extended to Dec 15 NATIONAL EQUIPMENT: Taps Carl Marks to Assist in Reorganization NORSKE SKOG: Extends Exchange Offer for Sr. Notes Until Tomorrow O-CEDAR HOLDINGS: Delaware Claims Appointed as Noticing Agent OGLEBAY NORTON: Continues to Defer 10% Bond Interest Payment PACIFIC GAS: ACWA Files Comments in PG&E Settlement Proceedings PCNET INT'L: Enters Pact to Merge Operations with Technovision PG&E NATIONAL: Seeks Open-Ended Lease Decision Period Extension PILLOWTEX CORP: Duke Energy Demands Payment of about $1.6 Mill. POLAROID CORP: Perry Mandarino Files Polaroid Examiner's Report PREMCOR INC: Extends Exchange Offer for 7.50% Sr Notes to Friday PROTARGA INC: Taps Fish & Richardson as Transactional Counsel RADIO UNICA: Makes $9.3 Million Interest Payment on 11.75% Notes RESMED INC: S&P Ups Corporate Credit Rating a Notch to BB- SHILOH INDUSTRIES: Will Publish Third Quarter Results Tomorrow SHOLODGE INC: Completes Tender Offer for 7.50% Conv. Debentures SNOW LEOPARD: Resources Insufficient to Continue Business Plan SR TELECOM: Second-Quarter Net Loss Balloons to $5 Million SYSTECH RETAIL: US Bankruptcy Court Confirms Reorganization Plan TCW LINC III: S&P Keeps Watch on 4 BB/CCC- Note Class Ratings TRANSTEXAS GAS: Emerges from Chapter 11 Bankruptcy Proceedings TRISM: Missouri Court Confirms Joint Chapter 11 Liquidating Plan TSI TELSYS: June Quarter Balance Sheet Upside-Down by $521,000 UNIGLOBE.COM INC: June 30 Net Capital Deficit Narrows to $3 Mil. US AIRWAYS: Nason & Cullen Demands Payment of Cure Obligations US FLOW: US Trustee Appoints Official Creditors' Committee VIEWPOINT CORP: Eliminates over 20 Positions in Line with Plan WEIRTON STEEL: Wants Nod to Reimburse Union's Fees and Expenses WORLD AIRWAYS: Provides Update on Insider Stock Selling WORLDCOM INC: Appoints 5 New Members to Board of Directors WORLDCOM: CAGW Calls for MCI Debarment from Federal Contracts W.R. GRACE: Plan Filing Exclusivity Intact Until Feb. 1, 2004 * Large Companies with Insolvent Balance Sheets ********* ACCEPTANCE INSURANCE: Fitch Withdraws Junk L-T Issuer Rating ------------------------------------------------------------ Fitch Ratings withdraws the 'C' long term issuer rating of Acceptance Insurance Companies Inc. and AICI Capital Trust's 'C' trust preferred stock rating. The rating is being withdrawn because Acceptance's only remaining operating subsidiary, Acceptance Insurance Company, is under the supervision of the NE Department of Insurance and has ceased to write new business. Additionally, Acceptance has elected to defer all interest payments on its trust preferred stock issue until no later than September 30, 2007 due to severe cash flow uncertainties. Acceptance Insurance Companies Inc. -- Long-term issuer rating withdrawn 'C'; AICI Capital Trust -- Trust Preferred rating withdrawn 'C'. ACP HOLDING: Innisfree Appointed as Special Noticing Agent ---------------------------------------------------------- ACP Holding Company and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to appoint Innisfree M&A Incorporated as Special Noticing Agent. The Debtors report that they issued public securities, 11-1/8% Series A, B, D, and F Senior Subordinated Notes due 2007. The Debtors only have an estimate of the number of beneficial holders holding the Public Securities in "street name" though a bank, broker, agent, proxy or other nominee. The successful dissemination of notices to the beneficial owners of the Public Securities thus require coordination with the Nominees, primarily to ensure that these entities properly forward notices and other materials to their customers. The Debtors believe that Innisfree is well-suited to assist the Debtors with this task. More specifically, the Debtors anticipate that Innisfree will: a. work with the Debtors to request appropriate information from indenture trustees, transfer agent(s), and The Depository Trust Company; b. mail various documents to holders of record of the Public Securities; c. coordinate the distribution of documents to "street name" holders of the Public Securities by forwarding documents to the Nominee record holders of the Public Securities, who in turn will forward them to beneficial owners; and d. provide soliciting and noticing advisory services, as needed, to the Debtors; Jane Sullivan will head up the engagement. Standard hourly rates will apply for solicitation and noticing advisory services: Co-Chairman $400 per hour Managing Directors $375 per hour Practice Directors $325 per hour Director $275 per hour Account Executives $250 per hour Staff Assistants $175 per hour 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: Final Exclusivity Extension Hearing Set for September 9 ---------------------------------------------------------------- Section 1121(b) of the Bankruptcy Code provides for an initial 120-day period after the Petition Date during which the Acterna Corp., and its debtor-affiliates have the exclusive right to propose and file a Plan. Section 1121(c)(3), moreover, provides that if the Debtors submit a Plan within the exclusive filing period, it has 180 days after the Petition Date to obtain acceptance of that Plan. Pursuant to Bankruptcy Code Section 1121(d), in circumstances where the initial 120 days prove inadequate for a debtor to propose a plan in a large and complex case, the Court has the discretion to extend the exclusive period for substantial periods of time. The Debtors have filed a reorganization plan and disclosure statement on August 4, 2003. But out of abundance of caution, the Debtors believe that the current deadline to present a plan should be extended should the Plan not be confirmed or be confirmed but not effective. By this motion, the Debtors ask the Court to move the Exclusive Filing Period to December 31, 2003 and the Solicitation Period to February 28, 2004. According to Paul M. Basta, Esq., at Weil, Gotshal & Manges LLP, in New York, ample cause exists in support of the Debtors' request. With the Disclosure Statement approval, the Debtors now anticipate a hearing to confirm their Plan on September 25, 2003. Mr. Basta relates that in the unlikely event that the Debtors are not able to confirm their Plan or the Plan is confirmed but does not become effective, they will need additional time to formulate an alternative plan. The Exclusive Periods are designed to provide a debtor with full and fair opportunity to rehabilitate its business and negotiate, develop, propose, confirm and consummate a consensual plan. Mr. Basta informs the Court that the Debtors have made significant progress in their reorganizations and in their efforts to increase efficiency in their businesses. This, Mr. Basta says, is reflected by the Debtors' negotiation with the various constituents in formulating and filing a consensual Plan and Disclosure Statement. Mr. Basta notes that the Debtors' Plan is supported by the Senior Lenders, the Creditors' Committee, and Clayton, Dubilier & Rice, Inc. -- the Debtors' prepetition equity sponsor and second largest security holder. Mr. Basta believes that this is a proof of the Debtors' good faith towards reorganization and that they are not seeking extension to pressure creditors to accede to their reorganization demands. In addition, Mr. Basta tells the Court that the Debtors have had sufficient resources to meet all required postpetition payment obligations. They have had the capability to fund operations under their debtor-in-possession financing facility or significant amount of cash on hand -- which shows that they are effectively managing their businesses and properties. Judge Lifland will convene a hearing regarding the extension of the exclusive periods on September 9, 2003, and entered a Bridge Order extending Acterna's Exclusive Periods through the conclusion of that hearing. (Acterna Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) AEROCENTURY CORP: Obtains Waiver of Loan Covenant Violation ----------------------------------------------------------- AeroCentury Corp., (ASE: ACY), an independent aircraft leasing company, has obtained a waiver by lenders led by National City Bank of the Company's non-compliance with a financial ratio covenant, which non-compliance arose out of the default by a Haitian regional air carrier under a lease for two deHavilland Dash-7 aircraft. The aircraft were recently repossessed and are being prepared for re-lease or re-sale. The waiver was contained in the agreement reached with the lenders extending the maturity date of the Company's credit facility to August 31, 2003. Neal D. Crispin, President of AeroCentury, said, "This renewal should enable us to pursue the opportunities that we have identified. We appreciate the confidence the lenders have in us." Michael J. Labrum, Senior Vice President of National City Bank, said, "We are delighted to continue our relationship with AeroCentury. Their performance over the past three years has been impressive, and we are optimistic about their continued growth potential." The full text of the agreement has been filed in a Form 8-K report with the Securities & Exchange Commission, and is available through the Internet at the SEC's EDGAR system. The filing can also be accessed by clicking "SEC Filings" on the Company's home page at http://www.aerocentury.com National City Corporation (NYSE: NCC) is an over $100 billion financial holding company based in Cleveland, Ohio. The company offers a full range of financial services including investment banking, brokerage, mutual fund, insurance and traditional banking services to individuals and businesses. National City has offices in Ohio, Pennsylvania, Michigan, Indiana, Kentucky and Illinois. National City can be found on the World Wide Web at http://www.nationalcity.com AeroCentury is an aircraft operating lessor and finance company specializing in leasing regional aircraft and engines utilizing triple net leases. The Company's aircraft and engines are on lease to regional airlines and commercial users worldwide. AEROVOX INC: Plan Confirmation Hearing Scheduled for Sept. 25 ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts approved the Second Amended Disclosure Statement relating to New Bedford Capacitor, Inc., formerly known as Aerovox, Inc.'s Second Amended Chapter 11 Liquidating Plan. The Court found that the disclosure document contains adequate information for creditors to decide whether to accept or reject the Plan. The Confirmation Hearing is scheduled for September 30, 2003, at 10:15 a.m. Eastern Standard Time, at the United Stated Bankruptcy Court for the District of Massachusetts. Written objections, if any, to confirmation of the Plan must be delivered to: i) Clerk of the Bankruptcy Court, United Bankruptcy Court 10 Causeway Street Boston, Massachusetts 02222 ii) counsel to the Debtor Hanify & King, PC One Beacon Street Boston Massachusetts 02108 Attn: Harold B. Murphy, Esq. iii) Office of the United States Trustee 1182 Thomas P. O'Neil Federal Building 10 Causeway Street Boston, Massachusetts 02222 iv) counsel to the Committee Holland & Knight LLP 10 St. James Avenue, Massachusetts 02116 Attn: John J. Monaghan, Esq. on or before September 25, 2003 at 4:30 p.m. New Bedford Capacitor, Inc., f/k/a Aerovox Inc., a leading manufacturer of electrostatic and aluminum electrolytic capacitors, filed for chapter 11 protection on June 6, 2001, in Massachusetts. When the company filed for protection from its creditors, it listed $70,702,599 in assets and $54,721,050 in debt. In a Form 8-K dated January 26, 2002, the Debtor reports $65,944,337 in assets and $56,218,563 in liabilities. AIR CANADA: CIT Wants Jazz Air to Withdraw Termination Notices -------------------------------------------------------------- CIT Financial Ltd. wants Jazz Air Inc. to withdraw the notices of termination issued on July 10, 2003 with respect to five Jetstream turboprop aircraft leases. CIT contends that there was no legitimate restructuring purpose in delivering the Termination Notices. The Lease terms for the four aircraft were set to expire in the ordinary course within the next 24 hours. The fifth Aircraft Lease expired on August 16, 2003. For the last few years, CIT also notes that neither Air Canada nor Jazz Air had utilized the Aircraft in their regularly scheduled routes. The Aircraft were either dormant or subleased by Jazz Air from time to time. While the Air Canada Applicants are permitted under the Initial CCAA Order to terminate or suspend unnecessary leases, CIT contends that the Order requires them to first seek its agreement. However, the Applicants did not seek CIT's consent before issuing the Notice. Alternatively, CIT asks the Court to declare that the Termination Notices are merely evidence that Jazz Air will not perform its final obligations under the Leases, namely the final Lease payment and compliance with the return conditions. CIT wants the Court to confirm that the Termination Notices do not alter, amend or terminate the Leases' terms and do not interfere with the obligations of British Aerospace Inc. under a support agreement to the Leases. CIT complains that, as a consequence of the Termination Notice, British Aerospace is avoiding over $8,367,982 in payment obligations. Paul Green, Vice President of CIT's Structured Finance Division, explains that the Leases were the result of sale and lease back transactions wherein a British Aerospace affiliate sold the aircraft to Air BC Limited. CIT's predecessor, Norex Leasing Inc., purchased the aircraft and leased them back to Air BC. Jazz Air is the successor to Air BC. To induce the parties to enter into long-term aircraft leases, British Aerospace provided credit support to CIT by way of remarketing and guarantee agreements and residual value agreements. The Remarketing and Guarantee Agreements provide support to CIT following the date -- Termination Date -- it becomes entitled to take possession of the Aircraft pursuant to the Lease. CIT may repossess the Aircraft in an event of default as defined in the Lease. CIT may also require Jazz Air to return the Aircraft. Under the Remarketing and Guarantee Agreements, within 30 days of the Termination Date, CIT may either: -- take possession of the Aircraft and appoint British Aerospace as its exclusive agent to sell the Aircraft; or -- appoint British Aerospace as its exclusive agent to exercise its rights under the Lease to recover and sell the Aircraft. Either way, British Aerospace is then required to use its best efforts to sell the Aircraft. British Aerospace may also purchase the Aircraft if it wishes. CIT has not exercised any rights under the Remarketing and Guarantee Agreements. The Residual Value Agreements apply in different circumstances. Mr. Green relates that the Residual Value Agreements are intended to compensate CIT, at the end of the Leases' terms for the residual value of the Aircraft in the event Jazz Air does not exercise its purchase option under the Leases. The Residual Value Agreements requires British Aerospace to purchase the Aircraft for 35% of the original cost, so that CIT is certain of its end of term recovery and is not subject to market vagaries. British Aerospace is not obligated to purchase the Aircraft if at or before the Expiry Date CIT becomes entitled to take possession of the Aircraft and has elected to do so. Mr. Green emphasizes that no steps have been taken by CIT with respect to the Aircraft, and the exception to British Aerospace's obligation to purchase the Aircraft does not apply. Accordingly, the Expiry Date occurred on July 11, 2003 with respect to four Aircraft Leases and August 16, 2003 with respect to the fifth Lease. Mr. Green admits that the Applicants' CCAA petition constituted an Event of Default under the Leases. Nevertheless, Mr. Green points out, CIT was stayed by the Initial CCAA Order from taking any steps to enforce its remedies under the Leases, had it wished to do so. On April 10, 2003, CIT provided a notice to British Aerospace and Jazz Air advising them that an Event of Default had occurred. The Default Notice was intended to preserve CIT's rights. CIT would only be entitled to exercise its rights under the Remarketing and Guarantee Agreements on the occurrence of the Termination Date. "It has always been CIT's intention to rely on the Residual Value Agreements and sell the Aircraft to [British Aerospace] on the expiry of the terms of the Leases, and not invoke the Remarketing and Guarantee Agreements," Mr. Green says. CIT advised British Aerospace that the Leases have expired by their terms and that British Aerospace would be required to purchase the Aircraft pursuant to the Residual Value Agreements. But British Aerospace argued that it was not required to purchase the Aircraft since CIT has been entitled to take possession of the Aircraft and has elected to do so. CIT does not remember providing any such notification. British Aerospace also argued that CIT's rights were not exercisable because of the early termination of the Lease. "The questionable delivery by Jazz of purported 'termination notices' less than twenty-four hours prior to the normal Expiry Date of the Leases does not absolve [British Aerospace] of its obligations," Mr. Green asserts. CIT reissued a notice to exercise its rights under the Residual Value Agreements and sell the Aircraft to British Aerospace after August 16, 2003. (Air Canada Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMCAST: Secures Bank and Senior Note Credit Maturity Extension -------------------------------------------------------------- Amcast Industrial Corporation (AICO.OB) has restructured its credit facilities with its bank lending group and senior note holders. The bank and senior note credit maturities have been extended until September 14, 2006. The impact on Amcast's balance sheet will be to reclassify $169.4 million of debt from short term to long term. Amcast had $179.8 million in short-term debt at the end of its fiscal third quarter ended June 1, 2003. If this credit facility restructuring had been in place for Amcast's fiscal third quarter, short-term debt would have been $10.5 million, or 6% of total debt. Joseph R. Grewe, President and Chief Executive Officer, said, "Reaching agreement with the banks and senior note holders to extend our debt maturity is an important accomplishment. We appreciate the confidence our lenders expressed in Amcast and the support received from our suppliers. This debt extension provides Amcast with improved liquidity and operating flexibility while we work on achieving better operating performance. Since the beginning of this fiscal year, Amcast has reduced debt by $18.9 million." Amcast also announced the termination of discussions with Citation Corporation relating to the possible sale of Amcast's Wapakoneta, Ohio, Richmond, Indiana and Cedarburg, Wisconsin plants and its Southfield, Michigan office facility. Mr. Pond, Chairman of the Board, said "As part of our loan agreements, we are committed to a program to reduce our indebtedness that involves a review of various alternatives to seek the best alternative for our stakeholders. We would like to thank our lenders, customers, shareholders, employees and other stakeholders for their loyal support as we move forward." Amcast Industrial Corporation -- whose June 1, 2003 balance sheet shows a working capital deficit of about $152 million, and a total shareholders' equity deficit of about $17 million -- is a leading manufacturer of technology-intensive metal products. Its two business segments are brand name Flow Control Products marketed through national distribution channels and Engineered Components for original equipment manufacturers. The company serves the automotive, construction, and industrial sectors of the economy. AMERCO: Committee Turns to Jefferies & Co. for Financial Advice --------------------------------------------------------------- Pursuant to Sections 327(a), 328(a) and 1103 of the Bankruptcy Code and Rule 2014 of the Federal Rules of Bankruptcy Procedure, the Official Committee of Unsecured Creditors of AMERCO Debtors seek the Court's authority to retain Jefferies & Company, Inc. as its financial advisors under the terms of the Engagement Letter, nunc pro tunc to July 14, 2003. Creditors' Committee Chairperson Kaye Handley tells the Court that the Committee's retention of a financial advisor is necessary and appropriate to enable it to evaluate the complex financial and economic issues raised by the Debtors' reorganization proceedings an to effectively fulfill its statutory duties. The Committee selected Jefferies because of its expertise in providing financial advisory services to debtors and creditors in restructuring and distressed situations. Jefferies is an investment banking firm with principal office in New York, New York. Jefferies is a registered broker-dealer with the U.S. Securities and Exchange Commission, with affiliates being members of the Boston Stock Exchange, the International Stock Exchange, the National Association of Securities Dealers, the Pacific Stock Exchange, the Philadelphia Stock Exchange and the Securities Investor Protection Corporation. Timothy O'Connor, a Managing Director of Jefferies, informs Judge Zive that Jefferies provides a broad range of corporate advisory services to its clients including, without limitation, services pertaining to: (i) general financial advice, (ii) mergers, acquisitions and divestitures, (iii) special committee assignments, (iv) capital raising, and (v) corporate restructurings. Jefferies and its senior professionals have extensive experience in the reorganization and restructuring of troubled companies, both out-of-court an din Chapter 11 proceedings. The Jefferies employees have advised debtors, creditors, equity constituencies and purchasers in many reorganization, including in the cases of AmeriServe Food Distribution, Inc., Ames Department Stores, Inc., Heartland Wireless Communications, Federal Mogul Corporation and Kaiser Group International, Inc. At the Committee's request, Jefferies rendered services to the Committee since July 14, 2003. Specifically, Jefferies will: (a) Become familiar, to the extent Jefferies deems appropriate, with and analyze the business, operations, properties, financial condition and prospects of the Company; (b) Advise the Committee on the current state of the "restructuring market;" (c) Assist and advise the Committee in developing a general strategy for accomplishing a restructuring; (d) Assist and advise the Committee in implementing a plan of restructuring with the Committee; (e) Assist and advise the Committee in evaluating and analyzing a restructuring including the value of the securities, if any, that may be issued under any restructuring plan; and (f) Render other financial advisory services as may from time to time be agreed on by the Parties. Jefferies will bill the Debtors for the services it will render to the Committee on these terms: (a) A $150,000 monthly retainer fee payable in advance on the first day of each month. Fifty percent of any Monthly Retainer payments actually paid to Jefferies after the first six full payments will be credited against any fees payable under the Success Fee. If payment of the first Monthly Retainer is made for a partial month based on the date on which the Agreement is dated, the Monthly Retainer will be pro rated from the date on which the Agreement is dated to the end of the month; (b) In addition, as exclusive financial advisor to the Committee, Jefferies will seek payment of 0.30% of the Total Consideration -- the Success Fee. The Success Fee may be paid in kind at the Committee's option. Fees payable pursuant to the Agreement are due upon consummation of the Restructuring. The Committee will use its best efforts to provide for the payment of the fee in full in any plan of reorganization submitted for confirmation; and (c) reimbursement of all reasonable out-of-pocket expenses, including, without limitation, all reasonable travel expenses, duplicating charges, messenger services, long distance telephone calls and other customary expenditures incurred in performing the services. Mr. O'Connor explains that Total Consideration is the total proceeds and other consideration received or to be received by AMERCO's unsecured creditors in connection with the Restructuring. If the parties are unable to agree on the value of any property, its value will be determined by arbitration in a manner consistent with any Bankruptcy Court order. According to Mr. O'Connor, the Fee Structure is comparable to those generally charged by financial advisory and investment banking firms of similar stature to Jefferies and for comparable engagements, both in and out of court, and reflect a balance between a fixed, monthly fee and a contingent amount which are tied to the consummation of the services to be performed as contemplated in the Jefferies Engagement Letter. To the best of his knowledge, Mr. O'Connor assures the Court that Jefferies principals and professionals do not have any connection with the Debtors, its creditors or any other party-in-interest, and do not hold or represent an interest materially adverse to the Debtors' estates. Although from time to time, Jefferies has provided investment banking, financial advisory or consulting services to certain creditors and other parties-in-interest in matters unrelated to these cases, Jefferies promises the Committee that during its retention as the Committee's financial advisor, it will not provide services to any party-in-interest in connection with any matters related to these cases. Thus, Jefferies is a "disinterested person" under Section 101(14) of the Bankruptcy Code. (AMERCO Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANNUITY & LIFE: Fitch Withdraws C Insurer Fin'l Strength Rating --------------------------------------------------------------- Fitch Ratings has withdrawn its 'C' insurer financial strength rating on Annuity & Life Reassurance, Ltd. The rating is being withdrawn due to the company's announcement earlier this year that it had ceased writing new business and had notified its existing reinsurance clients that it could not accept additional cessions under previously established treaties. ENTITY/ISSUE/ACTION/PRIOR RATING Annuity & Life Reassurance, Ltd. -- Insurer financial strength Withdrawn/'C' AQUILA INC: Unit Settles FERC Charges of Market Manipulation ------------------------------------------------------------ Aquila, Inc.'s (NYSE:ILA) wholly owned subsidiary, Aquila Merchant Services, Inc., has entered into an agreement with the Federal Energy Regulatory Commission trial staff to settle charges that the company allegedly was involved in the manipulation of western power markets during the region's 2000-2001 energy crisis. The $75,975.42 settlement is designed to avoid litigation costs to prove that AMS's energy trading practices were proper and in full compliance with the FERC regulations and standards. Aquila strongly believes that the allegations against AMS do not have any merit and that AMS's trading activities did not violate any tariff, regulation or statute, or adversely affect market prices. Company representatives further believe that the transactions were conducted for legitimate business purposes and that none of the transactions were for the purpose of improperly increasing volumes or revenue, impacting market prices, or for any other improper business purpose. Aquila does not acknowledge any improper conduct but indicates that the settlement allows the company to move on. The agreement, which was filed Friday with the FERC, requires approval by the commission before it becomes effective. The settlement amount is based on the total revenue associated with the transactions in question. AMS is one of more than 60 companies from which the FERC sought information regarding their electricity trading strategies during 2000 and 2001 in the western United States and that were ordered to "show cause" why they should not have to repay the profits gained from such trades. Based in Kansas City, Mo., Aquila (S&P, B+ Credit Facility Rating, Negative) operates electricity and natural gas distribution networks serving customers in Missouri, Kansas, Iowa, Minnesota, Colorado, Michigan and Nebraska, as well as in Canada and the United Kingdom. The company also owns and operates power generation assets. More information is available at http://www.aquila.com ATA HOLDINGS: Commences Exchange Offers for Senior Notes -------------------------------------------------------- ATA Holdings Corp. (Nasdaq:ATAH), the parent company of ATA Airlines, Inc., has launched exchange offers for $175 million outstanding principal amount of its 10-1/2 percent Senior Notes due 2004 and $125 million outstanding principal amount of its 9-5/8 percent Senior Notes due 2005 and solicitations of consents to amend the indentures under which the Existing Notes were issued. Pursuant to the Exchange Offers, ATA Holdings Corp. is offering -- for each $1,000 principal amount of 2004 Notes tendered for exchange, $940 principal amount of the Company's new 11 percent Senior Notes due 2009 and cash consideration of $60, $30 of which constitutes a consent payment, and -- for each $1,000 principal amount of 2005 Notes tendered for exchange, $960 principal amount of the Company's new 10 1/8 percent Senior Notes due 2010 and cash consideration of $40, $30 of which constitutes a consent payment. In each Exchange Offer, the consent payments will only be paid with respect to consents received prior to 5 p.m., Eastern Standard Time, on September 12, 2003, unless extended. Completion of the Exchange Offers is subject to a number of significant conditions, including receiving valid and un-withdrawn tenders representing at least 85 percent in principal amount of each series of Existing Notes and receiving the consent of the Air Transportation Stabilization Board pursuant to ATA Holdings Corp.'s government guaranteed term loan. The Exchange Offers expire at 5 p.m., Eastern Standard Time, on September 26, 2003, unless extended. Tenders of Existing Notes pursuant to the Exchange Offers may be withdrawn at any time on or prior to 5 p.m., Eastern Standard Time, on September 12, 2003. The Exchange Offers are being made pursuant to the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended. The New Notes have not been, and will not be, registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration or applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws. This announcement is neither an offer to sell nor a solicitation of an offer to buy the New Notes nor a solicitation of tenders of Existing Notes in connection with the Exchange Offers. As reported in Troubled Company Reporter's August 1, 2003 edition, Standard & Poor's Ratings Services lowered its ratings on ATA Holdings Corp. and subsidiary ATA Airlines Inc., including lowering the corporate credit rating on both to 'CCC' from 'B-'. Ratings remain on CreditWatch with negative implications, where they were placed March 18, 2003. ATLAS AIR: EETC Holders Extend Forbearance Pact to September 12 --------------------------------------------------------------- Atlas Air Worldwide Holdings, Inc. (NYSE: CGO) announced that, in light of progress being made in negotiations with the holders of a majority of Atlas Air, Inc. Class A Enhanced Equipment Trust Certificates (EETCs), the holders have agreed to extend a previously announced forbearance agreement. This extension, from Aug. 31 to Sept. 12, 2003, enables Atlas Air to continue to negotiate a restructuring of its EETC financing transactions. All other terms of the original forbearance agreement remain in effect. The EETCs were issued in 1998, 1999 and 2000 to finance Atlas Air's initial fleet of 12 Boeing 747-400 freighter aircraft. Atlas Air Worldwide Holdings, the parent company of Atlas Air, Inc. and Polar Air Cargo, Inc., offers its customers a complete line of freighter services, including ACMI (Aircraft, Crew, Maintenance, and Insurance) contracts, charter services and time- definite, airport-to-airport scheduled airfreight service with a fleet of Boeing 747 freighters. Learn more about the Company at http://www.atlasair.com AVCORP INDUSTRIES: June 30 Working Capital Deficit Hits C$26MM -------------------------------------------------------------- Avcorp Industries Inc. (AVP on the Toronto Stock Exchange) announced results for the quarter and six months ended June 30, 2003. (All amounts are expressed in Canadian dollars unless specified otherwise). During the quarter, the Company: -- was profitable, recording its first quarterly profit since September 2001; -- made significant progress in its financial restructuring including signing an agreement for a sale/leaseback of its land and building with a major Canadian insurance company; and -- maintained strong delivery and quality performance and continued its focus on generating new revenue and implementing cost reduction programs. Revenues for the quarter were $14.6 million, representing an increase of 1.5% from the same quarter in 2002 and an increase of 11% over the prior quarter. The increase in revenues from the previous quarter is attributable largely to deliveries to Bombardier as their Challenger business jet production line re- opened and higher-than-normal deliveries to Bombardier's regional jet production lines. Bombardier Aerospace and the Boeing Commercial Airplane Group remain the Company's largest customers. As anticipated, revenues from Cessna Aircraft Company, at $1.5 million, have commenced and are increasing. Gross profit was 22% of revenue compared to 12.9% in the same quarter last year and 5.7% in the prior quarter. The increase in gross profit resulted from a combination of factors including increased revenue; a favorable product mix, which included special process programs; cost reductions realized from lean manufacturing and supply chain initiatives; and controls on direct manufacturing overhead. The net income for the quarter ended June 30, 2003 was $122,000 compared to a net loss from continuing operations of $309,000 in the quarter ended June 30, 2002 and a net loss of $2.5 million in the prior quarter. As at June 30, 2003, order backlog is $459 million, compared to $340 million one year ago and $474 million at the end of the prior quarter. The increase in backlog from one year ago results from the Company's previously announced contract for the Cessna Citation business jet. The financial restructuring plans and progress made during the quarter include: -- sale and leaseback of its land and buildings to a major Canadian insurance company-this transaction closed in July; -- agreements concerning debt repayment and forgiveness have been reached with two major lenders and these agreements are expected to close in the third and fourth quarters; and -- raising of new equity through a private placement-this transaction closed in August. Working capital from a new operating credit with a bank or an asset-based lender is currently being sought to replace the short- term financing that expires September 30, 2003. Negotiations with a third principal lender continue Outlook The Company expects a reduction in third quarter revenues relative to the current quarter, both a cyclical event that is a result of Bombardier's summer shut down of operations, and due to late deliveries from a key supplier that have led to rescheduling of orders originally due in the third and fourth quarters to the fourth quarter and first quarter of 2004 respectively. The expected revenue reduction in the third quarter is expected to adversely affect margins in the third quarter. It is expected that these margin reductions will be offset by non-operating gains related to the financial restructuring. The Company expects revenue and margin growth in the fourth quarter and throughout 2004 as program specific production rates at Boeing and Cessna increase and as the Company continues to benefit from its marketing and cost reduction initiatives. The expected growth in the fourth quarter and beyond will increase working capital requirements, although working capital utilization is expected to improve. The remaining elements of the Company's financial restructuring plans are expected to close in the third and fourth quarters. On closing all of the restructuring actions, the Company's balance sheet will be strengthened, cash flow improved, and cost of borrowing reduced. Avcorp Industries Inc. is a Canadian aerospace industry manufacturer. The company is a single-source supplier for engineering design, manufacture and assembly of subassemblies and complex major structures for aircraft manufacturers. * * * At June 30, 2003, Avcorp Industries' balance sheet shows that its total current liabilities outweighed its total current assets by about C$26 million, while total shareholders' equity dwindled to about C$11 million from about C$14 million six months ago. Long-Term Debt (a) The Company is in breach of its covenant within the security agreement with the Province of British Columbia and has not accrued interest this year. Accordingly, the mortgages have been classified as current. (b) The Company is in breach of the terms of its $2,500,000 debenture with the holder. Accrued interest payable on the debenture to June 30, 2003 is $357,000. The debenture and accrued interest are disclosed within current portion of long-term debt. (c) The Company is re-negotiating its $5,000,000 convertible debenture with the holder. Accrued interest payable on the debenture to June 30, 2003 is $366,000. The debenture and accrued interest are disclosed within current portion of long-term debt. Related-Party Transactions The Company entered into an agreement with certain shareholders in consideration of mutual agreements with a Canadian chartered bank under which the shareholders: -- jointly and severally guarantee the indebtedness of the Company to the bank; -- jointly and severally agree, at the request of the bank, to purchase the loan and security documents in exchange for payment to the bank of the full amount of principal and interest outstanding under the loan; -- provide unconditional, irrevocable standby letter of credit, or a first security interest over cash, in the amount of $4,450,000 in favor of the bank; and -- provide environmental indemnity. As a condition to certain shareholders providing the above-noted security, the Company entered into an agreement with these shareholders to: -- issue warrants granting certain shareholders the right to purchase up to 3,652,450 common shares of the Company at an exercise price of $0.38 per share for a term of 30 months; -- accrue a fee payable in full on repayment in full of the term loans with the bank equal to 15% per annum less the bank term loan rate in effect from time to time, calculated on the daily outstanding principal balance of the term loan; and -- accrue a fee payable monthly equal to 12% per annum, calculated on the daily outstanding principal balance of the term loan. Fees payable to certain shareholders as at June 30, 2003 are $850,000. These fees are included in the statements as interest and amount to $714,000 for the quarter and $1,227,000 year to date. The Company is continuing to work towards securing an operating line and to re-negotiate remaining long-term debt. BEAR STEARNS: Fitch Affirms BB Class B-4 Ser. 1997-4 Note Rating ---------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Bear Stearns Mortgage Securities Inc., Mortgage Pass-Through Certificates, Series 1997-4. Bear Stearns Mortgage Securities Inc., Mortgage Pass-Through Certificates, Series 1997-4: -- Class A affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A'; -- Class B-3 affirmed at 'BBB'; -- Class B-4 affirmed at 'BB'; -- Class B-5 affirmed at 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. BETHLEHEM STEEL: Proposes Solicitation and Tabulation Procedures ---------------------------------------------------------------- Bethlehem Steel Corporation and its debtor-affiliates ask the Court to approve the proposed procedures for the solicitation and tabulation of votes to accept or reject their Joint Liquidation Plan. In addition, the Debtors want Judge Lifland to approve: (i) the proposed record date for Plan voting; (ii) the notice and objection procedures for confirmation of the Plan; (iii) the Solicitation Packages and the corresponding distribution procedures; and (iv) the ballot forms and procedures for voting on the Plan. Voting Record Date In accordance with Rule 3017(d) of the Federal Rules of Bankruptcy Procedure, the Debtors ask the Court to set September 10, 2003 as the Record Date. The Record Date determines which creditors are entitled to vote on the Plan. Ballots and Master Ballots and Distribution The forms for the Ballots are based on Official Form No. 14, but have been modified to address the particular aspects of these Chapter 11 cases and to include certain additional information that the Debtors believe to be relevant and appropriate for each class of claims or interests. The appropriate Ballot forms, as applicable, will be distributed to holders of claims in Classes 1 2, and 3, which are entitled to vote to accept or reject the Plan. With respect to the Ballots that will be sent to claim holders under the notes, bonds, and debentures that are subject to the Indentures in Class 3, the Debtors will send Ballots to record holders of those claims, including brokers, banks, dealers, or other agents or nominees -- the Master Ballot Agents. Each Master Ballot Agent would be entitled to receive reasonably sufficient copies of Ballots and Solicitation Packages to distribute to the beneficial owners of the claims, and the Debtors will be responsible for each Master Ballot Agent's reasonable costs and expenses associated with the distribution of copies of Ballots and Solicitation Packages, as well as tabulation of the Ballots. Additionally, each Master Ballot Agent would receive returned Ballots from the beneficial owners, tabulate the results, and return these results to Bankruptcy Services LLC, the Debtors' solicitation and tabulation agent in Master Ballot by the Voting Deadline. Solicitation Packages and Procedures for Distribution The Debtors propose to mail solicitation packages containing copies of: (a) the Court Order approving these provisions and the Disclosure Statement; (b) the Confirmation Hearing Notice; and (c) either: -- an appropriate form of Ballot and/or Master Ballot together with a return envelope, letters from the Debtors and the Creditors' Committee recommending acceptance of the Plan, and the approved form of the Disclosure Statement; or -- a Notice of Non-Voting Status, as applicable; and -- other materials as the Court may direct. The Debtors expect to complete distribution of the Solicitation Packages no later than September 19, 2003 to: -- the U.S. Trustee; -- the attorneys for the Creditors' Committee; -- the attorneys for the Retirees' Committee; -- all persons or entities that filed proofs of claim on or before the date of the notice of the Disclosure Statement, except to the extent a claim was paid pursuant to, or expunged by, prior Bankruptcy Court order; -- all persons or entities listed in the Debtors' schedules of liabilities, dated January 29, 2002, as holding liquidated, non-contingent, and undisputed claims in an amount greater than zero; -- the transfer agents and the registered holders of the Debtors' debt and equity securities as of the Record Date; -- all other parties-in-interest that have filed a request for notice pursuant to Rule 2002 of the Federal Rules of Bankruptcy Procedure, in the Debtors' Chapter 11 cases; -- the SEC; -- the IRS; -- the DOJ; -- the PBGC; and -- any other known holders of claims against or equity interests in the Debtors. Solicitation Packages for claim holders against or interests in any Debtor placed within a class under the Plan that is deemed to reject the Plan under Section 1126(g) of the Bankruptcy Code will not include a Ballot. Instead, the Solicitation Packages for these claim and interest holders will include a Notice of Non- Voting Status. To avoid duplication and reduce expenses, creditors who have filed duplicate claims against the Debtors, whether against the same or multiple Debtors, which are classified under the Plan in the same class will receive only one Solicitation Package and one Ballot for voting their claims with respect to that Class. The Debtors will not distribute copies of the Plan and Disclosure Statement to holders of equity interests deemed to reject the Plan within Class 4 Equity Interests unless the party makes a specific request in writing. Solicitation Packages will not be sent to creditors whose claims are based solely on amounts the Debtors scheduled but whose claims already have been paid in the full scheduled amount. However, to the extent any creditor would be entitled to receive a Solicitation Package for any reason other than by virtue of the fact that its claim had been scheduled by the Debtors, that creditor will be sent a Solicitation Package in accordance with the established procedures. Accordingly, the Debtors will not send a Solicitation Package to any creditor who filed a proof of claim if the amount asserted in the claim is less than or equal to the amount scheduled, and the amount has already been paid. Since it would be costly and wasteful to mail Undeliverable Disclosure Statement Notices returned by the United States Postal Service to the same addresses to which these were mailed, the Debtors seek exemption from the strict notice rule, excusing them from re-mailing the Solicitation Packages unless accurate addresses for the entities are provided before the Solicitation Date. Notice of Non-Voting Status to Holders of Claims or Interests Deemed to Reject the Plan Since Class 4 Claimants are deemed to reject the Plan, the Debtors will not distribute copies of the Plan and Disclosure Statement to any holder of the Class, unless otherwise requested in writing. Instead, the Debtors will mail a Notice of Non- Voting Status to the Class 4 interest holders. Similarly, the Debtors propose to send a Notice of Non-Voting Status to the holders of the Debtors' publicly traded stock as reflected in the records maintained by the Debtors' transfer agents as of the close of business on the Record Date. However, the Debtors recognize that the records maintained by the transfer agents reflect the brokers, dealers, commercial banks, trust companies, or other nominees -- the Nominee Stockholders -- through which the beneficial owners or Beneficial Stockholders hold stock. Accordingly, the Debtors request that: (a) the Nominee Stockholders forward the Notice of Non- Voting Status or copies of it to the Beneficial Stockholders within three business days of the receipt by the Nominee Stockholders of the Notice of Non- Voting Status; and (b) the Debtors provide the Nominee Stockholders with sufficient copies of the Notice of Non-Voting Status to forward to the Beneficial Stockholders. To the extent the Nominee Stockholders incur out-of-pocket expenses in connection with distribution of the Notice of Non- Voting Status, the Debtors will reimburse these entities for their reasonable, actual, and necessary out-of-pocket expenses incurred in this regard. Voting Deadline To be counted as a vote to accept or reject the Plan, each Ballot must be properly executed, completed, and delivered to BSI, no later than 5:00 p.m. Eastern Time, on October 15, 2003, by: (i) first-class mail, in the return envelope provided with each Ballot; (ii) overnight courier; or (iii) personal delivery. Vote Tabulation Procedures A. Ballot Tabulation Solely for purposes of voting to accept or reject the Plan and not for the purpose of the allowance of, or distribution on account of, a claim, and without prejudice to the Debtors' rights in any other context, each claim within a class of claims entitled to vote to accept or reject the Plan will be temporarily allowed in an amount equal to the amount of the claim as set forth in a timely filed proof of claim. If no proof of claim was filed, the claim will be allowed at an amount set forth in the Schedules. However, the general procedure will be subject to these exceptions: (a) If a claim is deemed allowed in accordance with the Plan, the claim is allowed for voting purposes in the deemed allowed amount set forth in the Plan; (b) If a claim for which a proof of claim has been timely filed is marked as contingent, unliquidated, or disputed, the claim will be temporarily allowed for voting purposes only, and not for purposes of allowance or distribution, at $1; (c) If a claim has been estimated or otherwise allowed for voting purposes by Court order, the claim is temporarily allowed in the amount so estimated or allowed by the Court for voting purposes only, and not for purposes of allowance or distribution; (d) If a claim is listed in the Schedules as contingent, unliquidated or disputed, then the claim will be disallowed for voting purposes and for purposes of allowance and distribution, given the claim was not: -- filed by the applicable bar date for the filing of proofs of claim established by the Court; or -- deemed timely filed by a Court order before the Voting Deadline, unless the Debtors have consented in writing; and (e) If the Debtors have served an objection to a claim at least ten days before the Voting Deadline, the claim will be temporarily disallowed for voting purposes only and not for purposes of allowance or distribution, except to the extent and in the manner as may be set forth in the objection. If any creditor seeks to challenge the allowance of its claim for voting purposes in accordance with these procedures, the creditor must serve on the Debtors and file with the Court, a motion for an order temporarily allowing the claim in a different amount for purposes of voting to accept or reject the Plan on or before the 10th day after the later of: (i) service of the Confirmation Hearing Notice; and (ii) service of notice of an objection, if any, to the claim. The creditor's Ballot will not be counted unless temporarily allowed by the Court for voting purposes, after notice and a hearing. Furthermore, the Debtors propose that: (a) if no votes to accept or reject the Plan are received with respect to a particular class, the class will be deemed to have voted to accept the Plan; (b) whenever a creditor casts more than one Ballot voting the same claim before the Voting Deadline, the last Ballot received before the Voting Deadline be deemed to reflect the voter's intent and thus to supersede any prior Ballots; and (c) creditors must vote all of their claims within a particular class under the Plan, whether or not the claims are asserted against the same or multiple Debtors, either to accept or reject the Plan and may not split their votes, and a Ballot that partially rejects and partially accepts the Plan will be deemed a vote to accept the Plan. These Ballots will not be counted or considered for any purpose in determining whether the Plan has been accepted or rejected: -- any Ballot received after the Voting Deadline unless the Debtors have granted in writing an extension of the Voting Deadline with respect to the Ballot; -- any Ballot that is illegible or contains insufficient information to permit the identification of the claimant or interest holder; -- any Ballot cast by a person or entity that does not hold a claim in a class that is entitled to vote to accept or reject the Plan; -- any Ballot cast for a claim scheduled as unliquidated, contingent, or disputed for which no proof of claim was timely filed; -- any unsigned Ballot; and -- any Ballot transmitted to BSI by facsimile. Ballots that are properly completed, executed, and timely returned to BSI, but do not indicate an acceptance or rejection of the Plan, partially accept and partially reject the Plan, or indicate both an acceptance and rejection of the Plan, will be counted as votes in favor of acceptance of the Plan. B. Master Ballot Tabulation With respect to the tabulation of Master Ballots and Ballots cast by Master Ballot Agents and beneficial owners, for purposes of voting, the amount that will be used to tabulate acceptance or rejection of the Plan will be the Record Amount -- the principal amount held as of the Record Date. Accordingly, these additional rules will apply to the tabulation of Master Ballots and Ballots cast by Master Ballot Agents and beneficial owners: (a) Votes cast by beneficial owners through a Master Ballot Agent will be applied against the positions held by these entities in the applicable security as of the Record Date, as evidenced by the record and depository listings. Votes submitted by a Master Ballot Agent, whether pursuant to a Master Ballot or pre-validated Ballots, will not be counted in excess of the Record Amount of the securities held by the Master Ballot Agent; (b) To the extent that conflicting votes or overvotes are submitted by a Master Ballot Agent, whether pursuant to a Master Ballot or pre-validated Ballots, BSI will attempt to reconcile discrepancies with the Master Ballot Agent; (c) To the extent that overvotes on a Master Ballot or pre-validated Ballots are not reconcilable prior to the preparation of the vote certification, BSI will apply the votes to accept and to reject the Plan in the same proportion as the votes to accept and reject the Plan submitted on the Master Ballot or pre-validated Ballots that contained the overvote. However, this is only to the extent of the Master Ballot Agent's position in the applicable security; and (d) For purposes of tabulating votes, each Master Ballot Agent or beneficial owner will be deemed to have voted the principal amount of its Claim relating to the security. Plan Confirmation A. Confirmation Hearing The Debtors ask the Court to fix October 22, 2003 as its Confirmation Hearing Date. However, the Confirmation Hearing may be continued from time to time by the Court or the Debtors without further notice except for adjournments announced in open court. B. Confirmation Hearing Notice Simultaneous with the distribution of the Solicitation Packages, the Debtors will mail the Confirmation Hearing Notice to all creditors and equity security holders, setting forth: -- the Voting Deadline for the submission of ballots to accept or reject the Plan; -- the time fixed for filing objections to confirmation of the Plan; and -- the time, date, and place for the Confirmation Hearing. The Debtors will likewise publish the Confirmation Hearing Notice, electronically on their website http://www.bethsteel.comas well as in the national editions of The Wall Street Journal and The New York Times, not less than 25 days before the time fixed for filing objections and the Confirmation Hearing. Objections or proposed modifications, if any, to confirmation of the Plan must: (a) be in writing; (b) state the name and address of the objecting party and the amount and nature of the claim or interest of such party; (c) state with particularity the basis and nature of any objection or proposed modification; and (d) be filed, together with proof of service, with the Court and served at the addresses set forth in the Confirmation Hearing Notice, no later than 4:00 p.m. Eastern Time, on October 15, 2003, so that they are received by: -- the Clerk of the Court; -- attorneys for the Debtors; -- attorneys for the Creditors' Committee; -- attorneys for the Retirees' Committee; and -- the U.S. Trustee for the Southern District of New York. (Bethlehem Bankruptcy News, Issue No. 41; Bankruptcy Creditors' Service, Inc., 609/392-0900) BMC INDUSTRIES: Interest Payment Deferral Extended to Sept. 15 -------------------------------------------------------------- BMC Industries, Inc.'s (OTCBB:BMMI) lenders have agreed to an additional temporary deferral of interest payments that extends to September 15, 2003, the termination date of the company's existing 60-day waiver. The agreement defers interest totaling approximately $1.1 million. This is in addition to $687 thousand of interest payments that were deferred under an earlier temporary deferral agreement dated July 30, 2003. The earlier agreement, subject to certain conditions, deferred these interest payments until August 28, 2003. BMC Industries, Inc., founded in 1907, is comprised of two business segments: Buckbee-Mears and Optical Products. The Buckbee-Mears group is the only North American manufacturer of aperture masks, a key component in color television picture tubes. The Optical Products group, operating under the Vision-Ease Lens trade name, is a leading designer, manufacturer and distributor of polycarbonate and glass eyewear lenses. Vision-Ease Lens also distributes plastic eyewear lenses. Vision-Ease Lens is a technology and a market share leader in the polycarbonate lens segment of the market. Polycarbonate lenses are thinner and lighter than lenses made of other materials, while providing inherent ultraviolet (UV) filtering and impact resistant characteristics. BMC Industries, Inc. is quoted on the Over-The-Counter Bulletin Board under the ticker symbol "BMMI." For more information about BMC Industries, Inc., visit the company's Web site at http://www.bmcind.com BUDGET GROUP: Sale Proceeds Allocation Trial Procedures Approved ---------------------------------------------------------------- William Bowden, Esq., at Ashby & Geddes, in Wilmington, Delaware, informs the Court that the Official Committee of Unsecured Creditors of Budget Group Inc., and its debtor-affiliates is fully supportive of an expeditious and efficient procedure for the resolution of all issues between the estates before the end of this year as proposed by the Debtors. However, the Committee proposes different timelines within the year-end schedule. The Committee wants the Court to conform certain other related proceedings with respect to the claims determination between the estates which proceedings were recently commenced by the Administrator of Budget Rent-a-Car International, Inc. In late November 2002, the Committee and the Debtors successfully closed a transaction for the sale of Debtors' assets related to the Debtors' U.S. operations to Cendant for $110,000,000. In March 2003, the Committee, the Debtors, and later with the assistance of the U.K. Administrator, the parties successfully closed a transaction for the sale of the Debtors' assets relating to their international operations to Avis Europe PLC for $20,000,000. There are no other material assets in the non-BRACII estates that have not been liquidated. The only material asset not yet liquidated in the BRACII estate is certain pending foreign litigation against third parties which is not projected to be resolved in the near future. The Debtors and the Committee have been working on four primary aspects of the cases to: 1. expeditiously formulate and file a reorganization plan to achieve a prompt interim dividend to creditors; 2. evaluate and resolve tens of tens of millions of dollars of claims filed against the estates; 3. resolve certain outstanding disputes with Cendant; and 4. resolve or litigate inter-estate claims between certain domestic entities of the Debtors, primarily Budget Rent-A- Car Corporation, or BRAC, and BRACII with respect to allocation of sale proceeds and other intercompany claims. Mr. Bowden contends that resolution of these issues before yearend is important for a number of reasons: (a) The issues between the parties are not so complicated and thus, permit the parties adequate time to conduct discovery and prepare for trial; (b) The Debtors no longer have offices or personnel. Locating records and knowledgeable witnesses becomes more difficult with each day; (c) The estates are incurring expenses retaining former Budget employees and it most efficient and cost effective to utilize them for discovery and trial while they remain available; (d) The Committee's schedule also has the added benefit of promoting early and meaningful discussions between the parties as both sides will be compelled to focus quickly and sharply on the issues; and (e) Prompt resolution of the inter-estate claims will further the Committee's goal of maximizing the amount of a prompt, early dividend to creditors and minimize the time for continued accrual of administrative costs against the limited estate funds. The primary distinction between the Committee's proposed schedule and the Debtors' proposed schedule is that the Committee's schedule streamlines some of the processes and procedures. For instance, the Committee's proposed schedule eliminates the need for the filing of "position papers" and instead proposes the filing of a joint, brief statement of the general claims to be tried. Otherwise, the Committee's schedule expands somewhat the time allowed for discovery by shifting some of the internal deadlines. The Committee outlines its proposed schedule: Deadline Event -------- ----- August 22 Filing of Brief Summary Joint Statement of Claims to be Litigated August 26 Exchange Documents Requests September 5 Productions of Responsive Documents and Identification of Known Potential Witnesses, including Expert Witnesses October 15 Completion of all depositions, submissions of supplemental document request and filing of discovery motions, other than discovery relating to expert witnesses or discovery motions related to discovery not yet answered October 30 Exchange of Expert Reports November 11 Completion of Expert Depositions November 19 Joint Pre-Trial Statement December 5 Pre-trial Briefs and Pre-Trial Motions Within 30 days, Trial subject to the Court's calendar Mr. Bowden notes that the proposed litigation schedule includes dates for the briefing and argument as to the law applicable to the resolution of the intercompany claims between BRAC and BRACII. Further, the Debtors' proposed litigation schedule contemplates resolution of the intercompany claim disputes in connection with the other claims between the estates. The Committee supports this proposal as it promotes judicial economy and fairness. Much of the litigation on the allocation issues will involve discovery of the same people and records as may be required in connection with litigation of the intercompany claim, and as previously discussed, these records and people are becoming increasing difficult and costly to access. Therefore obtaining whatever discovery is needed is best accomplished at one time and discovery with respect to issues concerning allocation should be conducted simultaneously with discovery in regard to the intercompany claims. Accordingly, the Committee asks the Court to enter an order adopting their proposed litigation schedule with respect to all claims between the BRAC and BRACII estates. U.K. Administrator Has Own Schedule Too Simon Freakley and Gurpal Singh Johal, as administrators of Budget Rent-A-Car International, Inc.'s insolvency proceedings in the High Court of Justice, Chancery Division, in London England, seek to modify the Debtors' proposed litigation schedule. Mark D. Collins, Esq., at Richards, Layton & Finger P.A., in Wilmington, Delaware, relates that it is necessary for the Court to resolve a number of outstanding disputes between BRACC and BRACII, including: 1. the nature, extent and validity of BRACC's scheduled intercompany claim against BRACII; 2. the proof of claim filed by the Administrator against BRACC for, inter alia, improper termination of the License Agreement that granted BRACII the right to use the Budget trademark outside of North America, which was terminated in connection with the Cendant Acquisition, and significant postpetition causes of action related to it; and 3. the allocation of the Cendant Acquisition Proceeds and the EMEA Sale Proceeds between the BRACC and BRACII estates. The various intercompany claims arise predominantly from the same set of circumstances and transactions and will necessarily impact the allocation of the Cendant Acquisition Proceeds and the EMEA Sale Proceeds. The resolution of both the intercompany issues and the allocation of sale proceeds depend on the same two parties and the same central documents. Thus, a coordinated process for adjudicating the Disputes before a single forum will conserve judicial resources and preserve the estate assets by minimizing the costs associated with litigation. The Administrator proposes these most significant changes: 1. The provision for submission of "Position Papers" and responses will be eliminated. In the place of "Position Papers," the Administrator will file a "Statement of Claims to be Litigated" which will be no more than two pages in length and which will summarize the issues to be litigated by the parties. Thereafter, the parties will: (a) conduct discovery to flesh out the disputed issues; and (b) file pre-trial briefs with the Court. Mr. Collins maintains that these briefs will be focused, being aided by the discovery already taken, and therefore will be useful to the Court. Moreover, preparing "Position Papers" will be time consuming and expensive; 2. The provision for "Dispositive Motions" will be eliminated because there is little point in filing a Motion for Summary Judgment on the eve of a bench trial; 3. Certain dates proposed by the Debtors will be modified to afford the parties with a litigation schedule that will be more conducive to litigating this matter in a prompt and efficient manner. Rather than condensing a document discovery into two weeks, the Administrator's schedule follows the Federal Rules of Bankruptcy Procedure. Additionally, more time is allotted for depositions of the complex issues, which comprise the Disputes. The depositions should not commence until after the parties have reviewed the document production. All of this is accomplished by moving the proposed trial date back only one month, from December to January. Moreover, because the Administrator believes that the Court should reserve at lease two full trial days, the extra month might accommodate the Court's busy year-end calendar more readily. U.K. Administrator outlines its own Schedule: Deadline Event -------- ----- August 22 Filing of Statement of Claims to be Litigated by each of the Committee and the Administrator or, preferably, a Joint Statement of Claims to be Litigated. Exchange of Document Requests September 8 Hearing on any disputes concerning the Statement of Claims to be Litigated September 22 Productions of Responsive Documents and Identification of Known Potential Witnesses, including Expert Witnesses October 30 Exchange of Expert Reports November 5 Completion of all depositions, submissions of supplemental document requests and filing of discovery motions, other than discovery relating to expert witnesses or discovery motions related to discovery not yet answered. November 17 Completion of Expert Depositions December 4 Joint Pre-trial Statement December 15 Pre-trial Briefs and Pre-trial Motions January Two to Three Day Trial (dates to be selected by the Court) The Administrator also asks the Court to confirm that, for litigation purpose, BRACC is a "party" that can be served with discovery pursuant to Rules 7026 to 7034 of the Federal Rules of Bankruptcy Procedure. BRACC need not be subpoenaed or served with a Bankruptcy Rule 2004 examination. * * * Judge Walrath approves the Debtors' Allocation Procedures and aligns the Committee and the U.K. Administrator as adversaries. The Committee will represent the U.S. Debtors and the U.K. Administrator will represent BRACII. The proceedings will follow this schedule: Deadline Event -------- ----- August 22 Filing of Statement of Claim to be Litigated by each of the Committee and the Administrator or, preferably a Joint Statement of Claims to be Litigated August 28 Exchange of Document Requests September 8 Hearing on any disputes concerning the Statement of Claims to be Litigated September 22 Production of Responsive Documents and Identification of Known Potential Witnesses, including Expert Witnesses October 30 Exchange of Expert Reports November 5 Completion of all depositions, submissions of supplemental document requests and filing of discovery motions, other than discovery relating to expert witnesses or discovery motions related to discovery not yet answered. November 17 Completion of Expert Depositions December 4 Joint Pre-trial Statement December 15 Pre-trial Briefs and Pre-Trial Motions January 13 & 14 Trial (Budget Group Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) BURLINGTON: Asks Court to OK Proposed Solicitation Procedures ------------------------------------------------------------- Rebecca L. Booth, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that time is of essence in the confirmation of the Burlington Industries Debtors' Amended Plan. Accordingly, the Debtors sought and obtained a Court order: (a) directing them to mail Solicitation Packages on or before September 12, 2003; (b) establishing October 10, 2003 as the Voting Deadline or at other date established by the Debtors that is at least 25 days after service of the Solicitation Packages; (c) directing them to file all exhibits to the Plan and the Plan Supplement with the Court and make them available for review on their web site at http://www.burlington.com/on or before September 30, 2003; (d) scheduling the Confirmation Hearing on October 30, 2003 at 2:00 p.m., Eastern Time; (e) setting the deadline to file objections to confirmation of the Plan at no later than 4:30 p.m., Eastern Time, on October 10, 2003; and (f) directing them to file (i) the hearing agenda and related hearing binder for the Confirmation Hearing, (ii) any consolidated reply to any Objections to the Plan, and (iii) the affidavit of the Solicitation and Tabulation Agent on October 21, 2003. Furthermore, Judge Newsome approves the proposed Solicitation Procedures, including the form of the Ballots, the Solicitation Packages, the Tabulation Rules and the Noteholder Solicitation Procedures. The Court also sets August 27, 2003 as the Record Date for Plan Voting. Ballot Form The Ballots are based on Official Form No. 14, but have been modified to address the particular terms of the Plan. The appropriate form of Ballot will be distributed to holders of claims in the classes entitled to vote to accept or reject the Plan: Ballot Type Description ----------- ----------- Ballot No. 1 Ballot for Class 3 Prepetition Bank Claims Ballot No. 2 Ballot for Class 4 General Unsecured Claims Ballot Nos. 3A, 3D Individual ballot to be returned directly to the Solicitation and Tabulation Agent for Class 4 claims on account of Old Senior Notes -- the Form A Individual Ballots Ballot Nos. 3B, 3C Individual ballot to be returned to a Master Ballot Agent for Class 4 claims on account of Old Senior Notes -- the Form B Individual Ballots Ballot Nos. 4A, 4B Master ballot for Class 4 claims on account of Old Senior Notes Ballot No. 5 Ballot for Class 5 Convenience Claims Class 1 Unsecured Priority Claims and Class 2 Other Secured Claims under the Plan are unimpaired and, therefore, are conclusively presumed to accept the Plan in accordance with Section 1126(f) of the Bankruptcy Code. Holders of claims and interests in Class 6 Penalty Claims, Class 7 Intercompany Claims and Class 8 Equity Interests under the Plan neither retain nor receive any property under the Plan. Therefore, these classes are deemed to reject the Plan in accordance with Section 1126(g) of the Bankruptcy Code. Thus, solicitation of Classes 1, 2, 6, 7 and 8 -- the "Non-Voting Classes" -- under the Plan is not required, and no Ballots have been proposed for creditors and interest holders in these classes. Certain beneficial owners hold Old Senior Notes through brokers, banks, dealers or other agents or nominees -- the Master Ballot Agents. Each Master Ballot Agent will receive both: (a) a Master Ballot to be completed by them, and (b) Form B Individual Ballots to be completed by the beneficial owners of the Old Senior Notes for whom the Master Ballot Agent provides services. The Master Ballot Agent then will tally on the Master Ballot the votes of the Beneficial Owners that return Form B Individual Ballots, and return the completed Master Ballot to Logan & Company, Inc. at 546 Valley Road, Upper Montclair, New Jersey 07043, phone (973) 509-3190, fax (973) 509-3191. Tabulation Rules A. Unless otherwise provided, a claim will be deemed temporarily allowed for voting purposes in an equal amount equal to the amount of the claim as set forth in a timely filed proof of claim. B. If a claim is deemed allowed in accordance with the Plan, the claim will be temporarily allowed for voting purposes in the deemed allowed amount set forth in the Plan. C. If a claim for which a proof of claim has been timely filed is marked as contingent, unliquidated or disputed on its face, that claim will be temporarily allowed for voting purposes for $1. D. If a claim has been estimated or otherwise allowed for voting purposes by Court Order, the claim will be temporarily allowed for voting purposes in the amount estimated or allowed by the Court. E. If a claim is listed in the Debtors' schedules of assets and liabilities filed on February 13, 2002 as contingent, unliquidated or disputed and a proof of claim was not timely filed, the claim will be disallowed for voting purposes. F. If the Debtors have filed and served an objection to a claim at least 15 days before the Voting Deadline, the claim will be temporarily allowed or disallowed for voting purposes in accordance with the relief sought in the objection. G. Individual creditors holding claims under the Prepetition Credit Facility will be counted solely in the amounts identified in the Master Bank Loan List supplied by JPMorgan Chase Bank, as agent under the Prepetition Credit Facility, subject to the other Tabulation Rules, unless the applicable Credit Facility Creditor obtains a Court Order allowing the claim in a different amount for voting purposes. H. With respect to the Old Senior Note Claims asserted by the holders of the Old Senior Notes, the amounts of the claims for voting purposes will be the lesser of: (1) the amounts provided to the Debtors by the Indenture Trustee on the Record Holder Register or the Master Ballot Register as applicable, or (2) the amounts identified by an Individual Record Holder in a Form A Individual Ballot or by a Master Ballot Agent on a Master Ballot, in each case calculated in accordance with the Proposed Solicitation Procedures. I. If a claim holder identifies a claim amount on its Ballot that is less than the amount otherwise calculated in accordance with the Tabulation Rules, the claim will be temporarily allowed for voting purposes in the lesser amount identified on the Ballot. Tabulation Procedures A. Any Ballot that is properly completed, executed and timely returned to the Solicitation and Tabulation Agent but does not indicate an acceptance or rejection of the Plan will not be counted. B. If a creditor casts more than one Ballot voting the same claim before the Voting Deadline, the latest-dated Ballot received before the Voting Deadline will be deemed to reflect the voter's intent and thus will supersede any prior Ballots. C. Creditors will be required to vote all of their claims within a particular class under the Plan either to accept or reject the Plan and may not split their votes. D. In the event a Ballot partially rejects and partially accepts the Plan, the Ballots will be identified by the Solicitation and Tabulation Agent and, to the extent the votes are statistically significant, and the Court will determine whether to count the Ballot on or before the Confirmation Hearing. If any claimant seeks to challenge the allowance of its claim for voting purposes, the claimant is required to file a motion, pursuant to Rule 3018(a) of the Federal Rules of Bankruptcy Procedure, for an order temporarily allowing the claim in a different amount or classification for purposes of voting to accept or reject the Plan and serve the motion on the Debtors so that it is received by the later of: -- September 10, 2003, and -- 10 days after the date of service of a notice of objection, if any, to the claimant's claim. Any Ballot submitted by a creditor that files a Rule 3018 Motion will be counted solely in accordance with the Debtors' proposed Tabulation Rules and the other applicable provisions unless and until the underlying claim is temporarily allowed by the Court for voting purposes in a different amount, after notice and a hearing. Confirmation Notice Any objections to the confirmation of the Plan must: (a) be in writing; (b) state the name and address of the objecting party and the nature of the claim or interest of the party; (c) state with particularity the basis and nature of any objection to the confirmation of the Plan; and (d) be filed with the Court and served on the parties on the Core Group Service List before October 10, 2003, as amended from time to time. Solicitation Packages The Solicitation Packages will comprise of materials to be provided to holders of claims and equity interests under Bankruptcy Rule 3017(d). It will contain copies of: -- the Confirmation Hearing Notice; -- the Disclosure Statement; -- letters from the Debtors and other constituencies recommending acceptance of the Plan; and -- an appropriate form of Ballot, a Ballot return envelope and other materials as the Court may direct. The Court directs the Debtors to publish notice of the Confirmation Hearing, the Confirmation Objection Deadline and the Voting Deadline not less than 20 days before the commencement of the Confirmation Hearing in the national editions of The Wall Street Journal and The New York Times. Transferred Claim With respect to a transferred claim, the Court orders that the transferee will be entitled to receive a Solicitation Package and cast a Ballot on account of the transferred claim only if: (a) all actions necessary to effect the transfer of the claim pursuant to Bankruptcy Rule 3001(e) have been completed, or (b) the transferee files by the Record Date: (1) the documentation required by Bankruptcy Rule 3001(e) to evidence the transfer, and (2) a sworn statement of the transferor supporting the validity of the transfer. Each transferee will be treated as a single creditor for purposes of the numerosity requirements in Section 1126(c) of the Bankruptcy Code and the other voting and solicitation procedures. Special Solicitation Procedures for Noteholders With respect to the Noteholders' Old Senior Note Claims: A. The Debtors will cause a Solicitation Package to be mailed by first class mail, postage prepaid, to: (1) each holder of record of Old Senior Notes as of the Record Date that hold Old Senior Notes in their own name; and (2) each Master Ballot Agent for distribution to Beneficial Owners as of the Record Date. B. The Indenture Trustees will be required to provide these documents to the Debtors within three business days after the Record Date: (1) a list in appropriate electronic or other format agreed to by the Debtors containing the names, addresses and holdings of the Individual Record Holders as of the Record Date; (2) a list in appropriate electronic or other format agreed to by the Debtors containing the names and addresses of the Master Ballot Agents and, for each Master Ballot Agent, the aggregate holdings of the Beneficial Owners for whom the Master Ballot Agent provides services; and (3) accompanying mailing labels. C. The Debtors will send each Individual Record Holder a Solicitation Package containing the appropriate Form A Individual Ballot. The Form A Individual Ballot must be completed and returned to the Solicitation and Tabulation Agent so that it is received prior to the Voting Deadline. D. Upon receipt of the Master Ballot Agent Register, the Solicitation and Tabulation Agent or its agent will: (1) contact each Master Ballot Agent to determine the number of Solicitation Packages needed by the Master Ballot Agent for distribution to the applicable Beneficial Owners for whom the Master Ballot Agent performs services; and (2) deliver to each Master Ballot Agent a Master Ballot and the requisite number of Solicitation Packages with the appropriate Form B Individual Ballots. E. The Master Ballot Agents will be required to distribute the Solicitation Packages they receive as promptly as possible to the Beneficial Owners for whom they provide services. The Master Ballot Agents will include as part of each Solicitation Package sent to a Beneficial Owner a Form B Individual Ballot and a return envelope addressed to the Master Ballot Agent. The Beneficial Owners then must return the Form B Individual Ballots to the Master Ballot Agent in the manner and by the deadline directed by the Master Ballot Agent in the instructions accompanying the Form B Individual Ballots. The Master Ballot Agent will summarize the votes of its Beneficial Owners on a Master Ballot. The Master Ballot Agent must return the Master Ballot to the Solicitation and Tabulation Agent so that it is received prior to the Voting Deadline. F. The Debtors will serve a copy of the Solicitation Procedures Order, along with a copy of the Motion, on the: (1) Indenture Trustees; (2) Master Ballot Agents; and (3) ADP Investor Communication Services, which is an intermediary that processes voting materials for many brokerage firms and banks. G. With respect to Individual Record Holders and Beneficial Owners of Old Senior Notes Ballots, these tabulation procedures will apply: (1) All Master Ballot Agents will be required to retain the Form B Individual Ballots cast by the Beneficial Owners for inspection for a period of one year after the Voting Deadline; (2) The Solicitation and Tabulation Agent will compare (i) the votes cast by Individual Record Holders and Beneficial Owners to (ii) the Record Holder Register and the Master Ballot Agent Register. Votes submitted by an Individual Record Holder on a Form A Individual Ballot will not be counted in excess of the record position in the Old Senior Notes for that particular Individual Record Holder. Votes submitted by a Master Ballot Agent on a Master Ballot will not be counted in excess of the aggregate position in the Old Senior Notes of the Beneficial Owners for whom the Master Ballot Agent provides services, as identified in the Master Ballot Agent Register. The submission of a Form A Individual Ballot or a Master Ballot reflecting an aggregate amount of voting claims that exceeds the record position as identified on the Record Holder Register or the aggregate position identified on the Master Ballot Agent Register, respectively, is referred to as an "overvote"; (3) To the extent that a Form A Individual Ballot submitted by an Individual Record Holder contains an overvote or otherwise conflicts with the Record Holder Register, the Solicitation and Tabulation Agent will tabulate the Individual Record Holder's vote to accept or reject the Plan based on the information contained in the Record Holder Register; (4) To the extent that a Master Ballot contains an overvote or votes that otherwise conflict with the Master Ballot Agent Register, the Solicitation and Tabulation Agent will attempt to resolve the overvote or conflicting vote prior to the Voting Deadline; (5) To the extent that an overvote or a conflicting vote on a Master Ballot is not reconciled prior to the Voting Deadline, the Solicitation and Tabulation Agent will: (i) calculate the percentage of the total stated amount of the Master Ballot voted by each Beneficial Owner, (ii) multiply the percentage for each Beneficial Owner by the amount of aggregate holdings for the applicable Master Ballot Agent identified on the Master Ballot Agent Register, and (iii) tabulate votes to accept or reject the Plan based on the result of the calculation. (6) A single Master Ballot Agent may complete and deliver to the Solicitation and Tabulation Agent multiple Master Ballots summarizing the votes of Beneficial Owners of Old Senior Notes. Votes reflected on multiple Master Ballots will be counted, except to the extent that they are duplicative of other Master Ballots. If two or more Master Ballots are inconsistent, the latest dated Master Ballot received prior to the Voting Deadline will, to the extent of the inconsistency, supersede and revoke any prior Master Ballot. (Burlington Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) CABLE SATISFACTION: Ability to Continue Operations Uncertain ------------------------------------------------------------ Cable Satisfaction International Inc. (TSX: CSQ.A), a provider of fixed alternative direct broadband communications services in Portugal through its subsidiary Cabovisao- Televisao por Cabo, S.A., announced its financial and operating results for the second quarter and first six months ended June 30, 2003. All amounts are presented in Canadian dollars unless indicated otherwise. HIGHLIGHTS - Total revenue generating units increased 20% to 516,122 as of June 30, 2003 compared to 431,247 as of June 30, 2002. - Blended average revenue per subscriber connection for residential services was euro 36.92 ($58.63) for the quarter ended June 30, 2003 compared to euro 28.57 ($40.83) for the quarter ended June 30, 2002. ARPU for business services was euro 59.38 ($94.29) for the quarter ended June 30, 2003 compared to euro 60.11 ($85.89) for the quarter ended June 30, 2002. - Operating revenue increased 62% to $42.4 million compared to $26.2 million in the second quarter of 2002. - Net loss was $16.4 million compared to $15.3 million in the second quarter of 2002. MANAGEMENT'S DISCUSSION AND ANALYSIS All of the Company's operating revenue and the majority of its operating expenses originate in Portugal and are recorded in euros. The Company's financial statements are presented in Canadian dollars. As of June 30, 2003 and 2002, the exchange rates for the Canadian dollar and euro were euro 1.00 (equal sign) $1.5591 and euro 1.00 (equal sign) $1.4972, respectively. As of December 31, 2002, the exchange rate for the Canadian dollar and euro was euro 1.00 (equal sign) $1.6564. RESULTS OF OPERATIONS Operating revenue was significantly higher in the second quarter of 2003 compared to the same period last year, reflecting a higher RGU base. Operating Revenue Total operating revenue in the second quarter of 2003 increased 62% to $42.4 million compared to $26.2 million in the same period last year. The higher operating revenue reflects mainly year-over- year subscriber growth for all services and increased blended ARPU. Total RGUs rose 20% to 516,122 compared to 431,247 at the end of the second quarter in 2002. RGUs represent the number of services purchased by subscribers. The blended ARPU was euro 36.92 ($58.63) for the quarter ended June 30, 2003 compared to euro 28.57 ($40.83) for the quarter ended June 30, 2002. This increase reflects the introduction of new bundling packages and more services per subscriber. Operating revenue from cable television services, including pay TV, was up 43% to $19.9 million compared to $14.0 million for the second quarter of 2002, reflecting year-over-year RGU growth and a rate increase of more than euro 1.0 ($1.56 as of June 30, 2003) implemented in May 2003. High-speed Internet revenue rose 115% to $9.8 million compared to $4.6 million as a result of higher modem sales and subscriber growth. Telephony revenue increased 64% to $12.7 million compared to $7.7 million due to subscriber and traffic growth. Business services totaled 19,932 RGUs compared to 10,152 in the second quarter of 2002. ARPU per business customer was euro 59.38 ($94.29) for the quarter ended June 30, 2003 compared to euro 60.11 ($85.89) for the quarter ended June 30, 2002. On a sequential basis compared to the first quarter of 2003, operating revenue for the second quarter was up 6% and the Company added 3,692 net RGUs. This performance is consistent with the Company's emphasis on maintaining services to existing customers during the restructuring and refinancing process. Direct Costs Direct costs totaled $17.6 million compared to $14.6 million in the second quarter of 2002. The increase in dollar amount reflects a higher subscriber base in all services. Direct costs include mainly programming costs for basic cable television and pay TV services, as well as transportation costs for high-speed Internet and interconnection costs for telephony services. As a percentage of operating revenue, direct costs declined to 41% compared to 56% in the second quarter last year. This reflects lower programming costs for cable television services, reduced interconnection costs, a more favourable call termination pattern and the implementation of more efficient call routing procedures. Gross Margin Gross margin increased to $24.8 million compared to $11.6 million in the second quarter of 2002. The gross margin percentage improved to 59% compared to 44% in the year-ago period, reflecting the factors mentioned above. Operating and Administrative Expenses Operating and administrative expenses were $13.4 million compared to $11.6 million in the second quarter of 2002. The modest increase relative to the greater scale of operations reflects cost control efforts. As a percentage of operating revenue, operating and administrative expenses declined to 32% compared to 44% in the same 2002 period. Operating and administrative expenses for both years reflect a new accounting policy for development costs adopted retroactively in the third quarter of 2002. Under this new policy, the Company is expensing a higher proportion of sales and marketing expenses as incurred, thereby reducing the proportion of such expenses that were capitalized under the previous accounting policy. EBITDA Earnings before interest, taxes, amortization and depreciation (EBITDA) were $10.1 million compared to negative EBITDA of $0.5 million in the same quarter last year. EBITDA is a key measure used by management to evaluate the Company's financial performance. EBITDA should not be considered a measure of financial performance under generally accepted accounting principles (GAAP). It should not be used in isolation or as an alternative to net income (loss), cash flows from operations, investing and financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Because EBITDA is not a GAAP measurement, EBITDA as presented may not be comparable to other similar titled measures of other companies. Depreciation and Amortization Reflecting mainly the significant investment in network build-out during the past three years, depreciation and amortization was $19.9 million compared to $10.6 million in the second quarter of 2002. Other Revenue (Expenses) Financial expenses totaled $15.0 million compared to $12.2 million in the same period in 2002. The increase reflects mainly interest on the Secured Term Loan. The Company recorded restructuring and other related expenses of $4.6 million in the second quarter of 2003, mainly for professional fees related to its financial restructuring. These increases were partially offset by a foreign exchange gain of $13.0 million in the latest quarter, reflecting mainly the impact of the appreciation of the euro against the U.S. dollar on the Senior Notes. As a result, other expenses totaled $6.6 million compared to $4.3 million in the second quarter last year. Net Loss and Net Loss per Share Net loss in the second quarter of 2003 was $16.4 million, or $0.18 per share, compared to a net loss of $15.3 million, or $0.17 per share in the same quarter last year. The weighted average number of outstanding multiple voting shares and subordinate voting shares was 91,367,967 compared to 91,060,670 in the second quarter of 2002. SIX MONTHS ENDED JUNE 30, 2003 For the first six months ended June 30, 2003, operating revenue increased 74% to $82.4 million compared to $47.2 million for the same 2002 period. This increase reflects a larger subscriber base and higher blended ARPU. EBITDA was $19.2 million compared to negative EBITDA of $2.7 million in the first six months of last year. The EBITDA improvement was driven mainly by economies of scale related to fixed operating and administrative expenses as a result of RGU growth, rate increases for certain services and cost-cutting measures. BALANCE SHEETS Total assets decreased to $535.8 million as of June 30, 2003 compared to $607.0 million as of December 31, 2002. This reflected mainly a decrease in capital assets to $472.5 million compared to $521.3 million at the end of 2002, as depreciation during the first six months of 2003 was higher than acquisitions of capital assets. Total liabilities declined to $562.7 million compared to $598.2 million at the end of 2002. This decrease was due mainly to the strengthening of the euro against the U.S. dollar. LIQUIDITY AND CAPITAL RESOURCES The Company used net cash of $9.5 million in operating activities for the first six months of 2003 compared to $19.9 million in the same 2002 period. This decrease reflects lower cash used by operations and slower payment of accounts payable. Investing activities used net cash of $17.6 million compared to $105.3 million in the first six months of 2002. This decline reflects a lower level of network construction due to reduced cash availability. Financing activities generated $22.8 million compared to $124.4 million in the first six months of last year. The Company obtained a euro 14.0 million ($21.9 million as of June 30, 2003) liquidity line from its bankers in January 2003 through an amendment to its Secured Term Loan. In the first six months of 2002, the Company raised net proceeds of $46.3 million at the corporate level through the issuance of subordinate voting shares and Cabovisao drew $78.1 million under its credit facility. As of June 30, 2003, the Company held cash and cash equivalents of $1.5 million. On July 21, 2003, the Company executed an amendment to Cabovisao's credit facility, providing access to an additional euro 6.0 million ($9.3 million as of June 30, 2003) under an interim liquidity facility committed by Caisse de d�p�t et placement du Qu�bec. Under this agreement, Cabovisao gained immediate access to euro 1.5 million ($2.3 million as of June 30, 2003) and can access an additional euro 4.5 million ($7.0 million as of June 30, 2003) at a later date, subject to satisfactory agreements with its trade creditors and the satisfaction of other conditions. This financing will allow Cabovisao to maintain normal service to customers over the coming months pending the finalization of the restructuring and refinancing process currently under way. There is no assurance that Cabovisao will meet the conditions relating to the additional euro $4.5 million financing. SIGNIFICANT EVENTS Since December 31, 2002, Cabovisao is in default of certain financial and operational covenants under its credit facility. The credit facility consisted of a fully drawn Secured Term Loan of euro 100 million ($155.9 million as of June 30, 2003) that matured on December 31, 2002 and undrawn Secured Revolving Advances of euro 260 million ($405.4 million as of June 30, 2003). On the maturity date, the credit facility allowed the Secured Term Loan to be converted into Secured Revolving Advances, the availability of which was subject to certain financial covenants and conditions. The Secured Revolving Advances were cancelled on December 19, 2002 and such conversion did not occur. The Company has obtained waivers with respect to Cabovisao's non- compliance and successive extensions of the maturity date of the Secured Term Loan until October 31, 2003, subject to certain conditions. On March 1, 2003, the Company did not make the semi-annual interest payment on its US$155 million ($210.1 million as of June 30, 2003) Senior Notes. The grace period with respect to such payment expired on March 31, 2003 without such payment having been made. On June 13, 2003, the Company announced that it had received a commitment from Capital Communications CDPQ Inc., in connection with a proposed recapitalization and restructuring plan. Under the CDP Plan, euro 45 million (approximately $71 million) of new common equity will be injected into Csii upon the effective date of the Plan, including a minimum investment of euro 27 million by CDP and any co-investors designated by CDP. The balance will be raised by providing existing holders of its outstanding US$155 million Senior Notes the opportunity to subscribe for up to euro 14 million in new equity and existing Csii shareholders (including CDP) the opportunity to subscribe for up to euro 4 million in new equity. CDP has undertaken to increase its minimum investment up to euro 45 million to cover any shortfall in such balance which is not subscribed by the noteholders or shareholders. The ownership structure of Csii following the proposed recapitalization and restructuring would be as follows (before the exercise of any warrants or stock options): - 70% of the equity of the recapitalized Csii, represented by the euro 45 million investment; - 26% of the equity owned by noteholders in exchange for the complete equitization of the Senior Notes; - 4% of the equity owned by Csii's shareholders in exchange for the shares held by them. Assuming the Backstop Commitment is not called upon and all noteholders and shareholders exercise their rights to subscribe for equity of Csii, the existing shareholders of Csii (including CDP) will own 10% of the equity of the recapitalized Csii and the noteholders will own 48%. The remaining 42% would represent the euro 27 million of new equity invested by CDP and any co- investors designated by CDP. According to the Special Committee of the Board of Directors formed to review and evaluate the alternatives of the Company, the CDP Plan was the most attractive offer received by the Company following the extensive solicitation of potential investors and evaluation of bids by Rothschild, the Company's financial advisor. On June 27, 2003, the Company voluntarily filed for and obtained an order from Quebec Superior Court for protection under the Companies' Creditors Arrangement Act for an initial 30-day period. As part of the court order, the Company's annual meeting scheduled for June 30, 2003 has been postponed up to November 30, 2003. This court protection was subsequently extended to October 15, 2003. While Csii is under court protection, the Company's subsidiary in Portugal, Cabovisao, is not subject to this court order and will continue to provide normal service to customers. On July 25, 2003, the Company filed a plan of arrangement and reorganization with Quebec Superior Court, which is similar in all material respects to the CDP Plan. In order for the plan of arrangement and reorganization to become effective, a court-supervised vote will be required to obtain consent from Csii's unsecured creditors as prescribed by Canadian law. In addition, implementation of any court-sanctioned plan will require or be subject to the approval of Cabovisao's bank syndicate, satisfactory agreements with Cabovisao's trade creditors, the execution of definitive documentation and the satisfaction of other customary conditions. There can be no assurance that the plan of arrangement and reorganization will be completed successfully or on the terms announced. Furthermore, one holder of approximately 34% of the outstanding unsecured Senior Notes has indicated that it will not vote in favour of the proposed plan of arrangement and restructuring and that it may propose an alternate plan. The Company continues discussions with such holder and, until a credible superior proposal is presented, continues to believe that the CDP Plan is the best alternative available for the Company and its stakeholders. Given this context, there is significant uncertainty regarding the Company's ability to continue as a going concern. The consolidated financial statements do not include any adjustments to the amounts and classifications of the assets and liabilities that might be necessary should the Company be unable to continue as a going concern. Financial Statements and Other Information The Company's financial statements and accompanying notes for the second quarter and first six months ended June 30, 2003 are available in PDF format on SEDAR and on its Web site at http://www.csii.ca Additional information regarding the Company's filing under the Companies' Creditors Arrangement Act is available on its Web site under "Publications". Csii builds and operates large bandwidth (750 Mhz) hybrid fibre coaxial networks and, through its subsidiary Cabovisao - Televisao por Cabo, S.A. provides cable television services, high-speed Internet access, telephony and high-speed data transmission services to homes and businesses in Portugal through a single network connection. The subordinate voting shares of Csii are listed on the Toronto Stock Exchange (TSX) under the trading symbol "CSQ.A". CHIQUITA BRANDS: Sells Stake in Florida Citrus Joint Venture ------------------------------------------------------------ Chiquita Brands International, Inc. (NYSE: CQB) has sold the company's interest in a Florida citrus joint venture, The Packers of Indian River, Ltd., to its joint venture partner for an undisclosed amount of cash and the assumption of debt. Based in Fort Pierce, Fla., the Packers of Indian River is a produce company that grows and packs grapefruit and other citrus products. The company's assets include two packing houses and approximately 6,000 acres of groves. Chiquita Brands International (S&P, B Corporate Credit Rating, Positive) is a leading international marketer, producer and distributor of high-quality fresh and processed foods. The company's Chiquita Fresh division is one of the largest banana producers in the world and a major supplier of bananas in North America and Europe. Sold primarily under the premium Chiquita(R) brand, the company also distributes and markets a variety of other fresh fruits and vegetables. Additional information is available at http://www.chiquita.com CINRAM INT'L: S&P Assigns BB Rating to $1.2B Senior Secured Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services said it assigned its 'BB' rating to Cinram International Inc.'s proposed US$1.2 billion three-tranche senior secured credit facility. At the same time, Standard & Poor's assigned its 'BB' long-term corporate credit rating to the company. Toronto, Ontario-based Cinram is one of the world's largest manufacturers of pre-recorded multimedia products, such as CDs and DVDs. The outlook is stable. Of the US$1.2 billion available under the proposed credit facility, US$1.05 billion is expected to fund the acquisition of certain assets from AOL Time Warner Inc., while the remaining US$150 million is expected to be available for general corporate purposes on a revolving basis. The credit facility consists of a US$150 million revolving tranche due 2007; a US$150 million term loan A tranche due 2007; and a US$900 million tranche B due 2009. Pro forma the acquisition, operating lease-adjusted total debt is estimated at C$1.5 billion. "The rating on Cinram's proposed secured credit facility equals the long-term corporate credit rating on the company as the analysis of the collateral package indicates that in the event of default or bankruptcy, lenders could expect only a modest recovery (less than 50%) of the principal," said Standard & Poor's credit analyst Barbara Komjathy. The credit facility is secured by a perfected first-priority lien on substantially all of Cinram's and its subsidiaries' assets and capital stock. In addition, Cinram and its subsidiaries have provided unconditional guarantees to eliminate structural subordination. Standard & Poor's applied its distressed enterprise value methodology to determine the recovery prospects of the borrowings under the credit facility, as Cinram's business is considered reorganizable and the credit facility is secured by substantially all the assets of the company. Elements of a default scenario could include the loss of a major contract, particularly the AOL Time Warner supply agreement, and erosion of margins, due to capacity and pricing pressures. The ratings on Cinram largely reflect the risk associated with customer and product concentration in the longer term, the integration risks represented by the scope of the assets acquired from AOL Time Warner, and the fundamental commodity-like nature of the media replication industry, which is also subject to shifts in technology and availability of winning content. The ratings are supported by the rapid growth prospect for DVDs, the degree of revenue and margin stability attributable in the medium term to the company's key contracts, such as the AOL Time Warner and the Twentieth Century Fox agreements, and management's proven track record in adapting to changing technologies and achieving solid operating margins. In addition, the company's credit measures are in line with the ratings category and Cinram generates relatively strong discretionary cash flow, which should allow for material annual debt reductions. The stable outlook reflects Standard & Poor's expectation that Cinram will successfully integrate its acquired assets in 2004, maintain its strong global market positions, and rapidly reduce debt outstanding. In particular, Standard & Poor's anticipates that the company will repay C$400 million-C$500 million of debt by the end of 2005. CMS ENERGY: Tom Webb to Present at Lehman Brothers Conference ------------------------------------------------------------- CMS Energy's (NYSE: CMS) chief financial officer, Tom Webb, will provide a Company overview at the Lehman Brothers CEO Energy/Power Conference on Thursday, Sept. 4. Webb's presentation is scheduled to start at 8:40 a.m. EDT. Those interested may participate in an audio Internet webcast of the presentation by going to the CMS Energy home page, http://www.cmsenergy.comand selecting "Lehman Brothers CEO Energy/Power Conference, Presentation by Tom Webb, Chief Financial Officer, at 8:40 a.m., EDT, Thursday, September 4." An audio replay of the presentation will be available approximately 24 hours after the webcast, and will be archived for a period of 30 days on CMS Energy's website in the "Invest in CMS" section. CMS Energy (S&P, senior secured rated 'BB-', Rating Outlook Negative) is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. For more information on CMS Energy, visit http://www.cmsenergy.com CONCERT IND.: NA Operations Continue to Incur EBITDA Losses ----------------------------------------------------------- Concert Industries Ltd. (TSX: CNG) announced its financial results for the second quarter and six months ended June 30, 2003. Overview of Results Second quarter revenue of $40.6 million rose 5.7% from $38.4 million in the first quarter of 2003. The increase in revenue reflects higher overall volume in the quarter, offset by lower average selling prices, change in product mix at the Gatineau plant, and oversupply in the North American market place. Compared to the second quarter last year, revenue increased 59.2% from $25.5 million. The increase over the previous year's corresponding period reflects higher sales volumes in Europe and higher volume from the Gatineau plant in 2003, which was not in full commercial production during the same period last year. For the first six months of this year, revenue was $79.1 million, compared to $47.6 million for the same six-month period last year. The comparable period in 2002 includes only one month of the operating results of Gatineau, as the facility was not in commercial production until June 1, 2002 Second quarter net loss was $5.9 million and a $8.5 million loss for the six-month period. This compares with a net loss of $1.0 million and a net loss of $1.2 million for the respective periods last year. Increases in losses relate to the lower margin products made in Gatineau, which was in full production in 2003, while the comparable period in 2002 only includes one month of commercial production for the facility. EBITDA Quarter-over-quarter revenue from European operations in the second quarter increased $0.3 million to $22.6 million and rose $6.9 million year-over-year from $15.7 million, due to higher volumes, partially offset by reduced pricing. Six-month revenue was $44.9 million compared to $31.0 million a year ago. Second quarter EBITDA from European operations was $3.3 million compared to $3.6 million in the first quarter of 2003 and $1.8 million in the second quarter a year ago. Six month EBITDA was $7.0 million compared to $3.9 million last year. Increases in sales and EBITDA compared to the same periods last year relate to higher volumes, reduced waste, and a strengthening Euro compared to the Canadian dollar. Quarter-over-quarter revenue from North American operations in the quarter rose $2.0 million to $18.1 million, due to higher volumes and lower pricing. Second quarter revenue of $18.1 million is an increase of 84.7% over the $9.8 million reported in the comparable quarter in 2002. The increase in revenue is a result of increased price levels and volume compared to the same period in 2002 when the Gatineau operations were in its commercial production for only one month. North American revenue for the six months was $34.2 million compared to $16.6 million last year. Second quarter EBITDA from North American operations was a loss of $4.8 million compared to a loss of $2.6 million in the first quarter of 2003 and $0.1 million in the second quarter a year ago. Six month EBITDA was a loss of $7.4 million compared to $0.1 million last year. Gross Margin Gross margin of $6.3 million (15.5% of revenue) was lower than the previous quarter's $6.8 million (17.6% of revenue). The decline in gross margin reflects competitive conditions in North America, a reduction in selling prices and a change in the product mix at the Gatineau plant. Gross margin in the same quarter a year ago was $6.2 million (24.3% of revenue). Lower efficiencies at the Gatineau plant, not included in operating results while in its commercial start-up phase last year, were the primary factor for the lower gross margin percentage. Fixed Expenses Fixed expenses of $7.6 million in the quarter, excluding amortization and interest expense, increased from $5.8 million in the second quarter of 2002. Fixed expenses in the same period last year were $4.3 million, when Gatineau's fixed expenses were not fully included in operating results. Increases in fixed costs were due to higher costs to support the restructuring plans and to support the increased volumes achieved in the second quarter. Management Change During the second quarter, the Company appointed a new President, Raoul F.J. Heredia, who has extensive experience in global manufacturing and distribution, together with a successful track record of turning around underperforming businesses and maximizing shareholder value. CCAA Protection Update The Company remained in violation of certain bank covenants, defaulted on interest payments to convertible debenture holders and, with the concurrence of its Senior Secured Lenders, did not make monthly interest payments and did not make a $2.0 million principal payment. Due to these factors and other financial and business related issues, and after attempting alternate financing arrangements, the Company, subsequent to the second quarter, announced its intention to enter into a restructuring plan. On August 5, 2003, Concert Industries Ltd. and its subsidiaries, Concert Fabrication Ltee, Concert Airlaid Ltee, Advanced Airlaid Technologies Inc., and Concert ACI Inc, obtained an order from the Quebec Superior Court providing creditor protection under the Companies' Creditors Arrangement Act ("CCAA"). Excluded from this order are the Company's subsidiaries, Concert GmbH and AA-Tech Systems Advanced Airlaid-Technology GmbH. The Company also announced additional funding by way of a $13.6 million increase, subject to certain conditions, in the Company's line of credit from its current syndicate of financial institutions. Concert President Raoul Heredia said it is business as usual as the Company formulates its restructuring plan. "The additional interim funding of $13.6 million has given us sufficient breathing room to maintain operations while we craft the necessary plan of reorganization going forward. Although the overall market remains particularly challenging, especially in North America, our immediate emphasis is on improving cash flow from operations. To that end, we have embarked on a cost efficiency program focusing on manufacturing efficiencies and waste reduction. I am pleased with the pace at which operational improvements are now being implemented in our Gatineau plant. These turnaround efforts represent the cornerstone on which to build our plan of reorganization." Additional information Additional information is contained in the Company's interim financial statements and management's discussion and analysis, which are available on the Company's Web site, http://www.concert.ca and on the Web site of the Canadian Securities Administrators, http://www.sedar.com Concert Industries Ltd. is an international technology based company specializing in the development and manufacture of advanced airlaid materials. Concert's products are key components in a wide range of personal care consumer products including feminine hygiene and adult incontinence products. Other applications include pre-moistened baby wipes, disposable medical and filtration applications and tabletop products. CONSECO FIN.: Home City Seeks Stay Relief to Pursue Litigation -------------------------------------------------------------- Home City, Ltd. asks Judge Doyle to lift the automatic stay to allow a state court litigation and an American Arbitration Association arbitration to proceed. On December 17, 2001, Conseco Finance Servicing Corp. filed a lawsuit against Home City in Wake County, North Carolina Superior Court. Home City asserted compulsory counterclaims on May 17, 2002. E.D. Gaskins, Jr., Esq., at Everett, Gaskins, Hancock & Stevens, in Raleigh, North Carolina, relates that Home City did not receive notice of the Conseco Finance Corp. bankruptcy. Instead, its representatives read in newspaper reports that certain Conseco entities had sought bankruptcy protection. According to Mr. Gaskins, CFSC asserts that its claims against Home City are not stayed, but Home City's counterclaims are stayed and that it intends to go forward in the Wake County action. In addition, CFSC has filed an American Arbitration Association proceeding against Home City. Home City filed its interpretation of events with the AAA. CFSC represents that Home City's claims are improper due to the automatic stay. Mr. Gaskins argues that allowing CFSC to proceed against Home City while not allowing the inverse would be inequitable and a waste of resources for all involved, including the Court. Before the Petition Date, Home City entered into a Floorplan Financing and Security Agreement with Green Tree Financial Corporation. CFSC agreed to advance funds to Home City to finance the acquisition of inventory. In exchange, Home City granted CFSC a continuing security interest in the existing and after-acquired inventory. On February 28, 2002, Home City breached the Inventory Agreement by defaulting on its payments due to CFSC. As per the Agreement, CFSC accelerated the balance due from Home City, which amounted to $3,020,952. Thus far, Home City has not paid its debt. (Conseco Bankruptcy News, Issue No. 30; Bankruptcy Creditors' Service, Inc., 609/392-0900) COVANTA ENERGY: Asks Court to Clear Mezerhane et al. Settlement --------------------------------------------------------------- On January 13, 1999, Covanta Energy Corporation and the Venezuelan Parties -- Nelson Mezerhane and Fondo de Valores Inmobiliarios SACA -- entered into a Memorandum of Understanding agreeing to engage in a Casino Project and form a new corporation to carry out the Casino Project. Half of the corporation's shares were to be owned by the Debtors while the Venezuelan Parties would control the other half. Inversora Turistica Caracas, S.A., not a party to the Memorandum of Understanding, holds certain permits the Republic of Venezuela issued in connection with the Casino Projects. Deborah M. Buell, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, relates that the Memorandum of Understanding required the Debtors and the Venezuelan Parties to contribute $200,000 each to the Casino Project to cover expenses incurred while the casino and entertainment areas were designed and planned. Presently, the Debtors and the Venezuelan Parties dispute on each other's degree of compliance with the agreement. Funding for the Casino Project was to come from the sale of debt and equity by the new corporation pursuant to the Memorandum of Understanding. Ms. Buell informs the Court that Covanta retained Peckham, Guyton, Albers & Viets to draw up plans for the Casino. Peckham was never paid for its work in connection with the Casino Project. As part of the Debtors' efforts to sell and dispose of their assets in the entertainment industry, Covanta withdrew from the Casino Project in September 1999 in accordance with the provisions of the Memorandum of Understanding. Following that, on October 6, 1999, Peckham filed a suit against Covanta and Ogden Entertainment, Inc., in the U.S. District Court for the Eastern District of Missouri to recover payment for architectural design services performed in connection with the Casino Project. On April 17, 2000, Covanta filed a third-party action against the Venezuelan Parties in the Missouri District Court for breach of contract, indemnification, conversion, fraud, unjust enrichment and equitable subrogation. Covanta alleged that the Claims Peckham made against it were properly made against the Casino Project. The Debtors say the Venezuelan Parties were liable under any judgment that Peckham may obtain against Covanta. On December 19, 2000, the Third-Party Complaint was transferred to the U.S. District Court for the Southern District of Florida. On February 28, 2001, Covanta and Peckham settled Peckham's action against Covanta and Ogden Entertainment for $530,000. The settlement provided, among other things, Peckham's general release of any claim against Covanta and Ogden in connection with the Casino Project. In their answer to the Third-Party Complaint, the Venezuelan Parties asserted counterclaims against Covanta, claiming an offset against any judgment entered in favor of Covanta. The Venezuelan Parties alleged that the Debtors breached the Memorandum of Understanding by failing to pay its share of the development costs incurred before Covanta withdrew from the Memorandum of Understanding. The Venezuelan Parties further alleged damages in excess of $1,000,000. Accordingly, the Debtors and the Venezuelan Parties engaged in extensive discussions to resolve their dispute, which resulted in the execution of the Settlement Agreement. Without admitting to any wrongdoing or liability, the Settlement Agreement provides that: (a) Covanta will voluntarily dismiss, with prejudice, its claims against the Venezuelan Parties in the Lawsuit, and any other existing or future claims arising from or in connection to the Memorandum of Understanding, the Permits or the Casino Project; (b) The Venezuelan Parties will voluntarily dismiss, with prejudice, the Counterclaims against Covanta in the Lawsuit, and, along with ITC, any other existing or future claims arising from or in connection to the Memorandum of Understanding, the Permits or the Casino Project; and (c) Covanta and the Venezuelan Parties will provide a mutual release of any further obligations under the Memorandum of Understanding, and the Parties will provide a mutual release of any other obligations arising from or in connection to the Permits or the Casino Project. Pursuant to Section 363 of the Bankruptcy Code and Rule 9019 of the Federal Rules of Bankruptcy Procedure, Covanta asks the Court to approve the terms of the Mutual Settlement, Waiver and Release Agreement, dated as of June 16, 2003 it executed with the Venezuelan Parties and ITC. Ms. Buell asserts that the Settlement is fair and reasonable because: (a) Covanta has engaged in a thorough analysis of the relevant facts and legal precedents. The Lawsuit involves contested factual and legal issues that would be expensive and time-consuming to litigate; (b) While Covanta believes that the Venezuelan Parties are liable for the payments it made to Peckham, and that the Counterclaims will prove unsuccessful, it recognizes that, because of the relevant legal issues involved, its probability of success on the merits is uncertain. Covanta would face considerable delay and cost, including additional attorney fees, if forced to continue litigating the matter. In addition, because most or all of the Venezuelan Parties' collectible assets are located in Venezuela, Covanta would face the difficulty and cost of pursuing cross-border enforcement proceedings even if it prevailed in the Lawsuit. The Settlement Agreement also benefits Covanta's estate as it will allows Covanta to avoid both the cost and uncertainty that would attend a protracted legal dispute and the distraction of its management team in connection with the litigation; (c) The Settlement Agreement provides for full resolution of the Lawsuit, as well as any other potential claims arising from or in connection with the Permits or the Casino Project. The Settlement Agreement also provides a general release for Covanta from any other obligations arising under the Memorandum of Understanding; and (d) The Settlement Agreement is the product of vigorous arm's- length bargaining. Each of the Parties was represented by knowledgeable counsel during the course of the negotiations. The terms of the Settlement Agreement are well within the range of reasonableness. (Covanta Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 609/392-0900) DOBSON COMMS: Files Form S-3 re Possible Securities Re-Sales ------------------------------------------------------------ Dobson Communications Corporation (Nasdaq:DCEL) filed on August 28, 2003 of a registration statement on Form S-3 with the Securities and Exchange Commission covering possible re-sales from time to time by certain shareholders of an aggregate of 686,201 shares of Dobson's Series F convertible preferred stock and 44,166,583 shares of Dobson's Class A common stock that were issued in connection with the restructuring of American Cellular Corporation. None of the shares included in the registration statement will be offered by Dobson Communications. The Form S-3 registration statement has not yet become effective, and is subject to review and comment by the Securities and Exchange Commission. Dobson Communications (S&P, B- Corporate Credit Rating, Stable) is a leading provider of wireless phone services to rural and suburban markets in the United States. Headquartered in Oklahoma City, the rapidly growing Company owns or manages wireless operations in 16 states. For additional information on the Company and its operations, visit its Web site at http://www.dobson.net DVI INC: Section 341(a) Creditors' Meeting to Convene on Oct. 3 --------------------------------------------------------------- The United States Trustee will convene a meeting of DVI, Inc., and its debtor-affiliates' creditors on October 3, 2003, 10:30 a.m., at the J. Caleb Boggs Federal Building, 2nd Floor, Room 2112, in Wilmington, Delaware. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Jamison, Pennsylvania, DVI, Inc. is the parent company of DVI Financial Services, Inc. and DVI Business Credit Corp. DVI Financial Services, Inc. provides lease or loan financing to healthcare providers for the acquisition or lease of sophisticated medical equipment. DVI Business Credit Corp. extends revolving lines of credit to healthcare providers. The Debtors filed for chapter 11 protection on August 25, 2003 (Bankr. Del. Case No. 03-12656). Bradford J. Sandler, Esq., at Adelman Lavine Gold and Levin, PC represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,866,116,300 in total assets and $1,618,751,400 in total debts. EAGLE FOOD CENTERS: Reports Results of Store Sale Auction --------------------------------------------------------- Eagle Food Centers, Inc., which owns and operates supermarkets in Illinois and Iowa, has accepted bids for certain assets of 5 of its stores. Butera Finer Foods, Inc. emerged as the successful bidder for the following 3 stores: St. Charles, IL, Lindenhurst, IL and Naperville, IL (Chicago Avenue location). Supermercado El Guero De Aurora, Inc. emerged as the successful bidder for the Aurora, IL store (Farnsworth Avenue location). SVT, LLC emerged as the successful bidder with respect to the Watseka, IL store. Eagle intends to submit the results of Friday's auction for approval by the United States Bankruptcy Court for the Northern District of Illinois at a hearing in Chicago on September 11, 2003. The Company continues to pursue opportunities for the balance of its stores. ELAN CORP: EPIL Noteholders Further Extend Waivers Until Friday --------------------------------------------------------------- Elan Corporation, plc (NYSE: ELN) has sought and received additional agreements from a majority of the holders of the guaranteed notes issued by Elan's qualifying special purpose entities, Elan Pharmaceutical Investments II, Ltd., and Elan Pharmaceutical Investments III, Ltd. The agreements extend to September 5, 2003, the EPIL II and EPIL III noteholders' waivers of compliance by Elan with certain provisions of the documents governing the EPIL II and EPIL III notes that required Elan to provide the noteholders with Elan's 2002 audited consolidated financial statements by June 29, 2003. The waivers had previously been set to expire Friday last week. Elan did not pay a fee in connection with these waivers. As previously announced, Elan and its auditor, KPMG, are currently working to conclude all audit related issues and matters in order to complete Elan's 2002 Form 20-F as soon as practicable. However, Elan cannot provide any assurances as to the timing of the completion and filing of the 2002 Form 20-F. Elan is focused on the discovery, development, manufacturing, sale and marketing of novel therapeutic products in neurology, pain management and autoimmune diseases. Elan shares trade on the New York, London and Dublin Stock Exchanges. ENERGY WEST: Wells Fargo Extends Credit Agreement Until Friday -------------------------------------------------------------- Energy West, Incorporated (Nasdaq: EWST), a natural gas, propane and energy marketing company serving the Rocky Mountain states, announced that Wells Fargo Bank Montana, N.A., has extended its credit facility through September 5, 2003. The Wells Fargo credit facility was originally scheduled to expire on May 1, 2003 and previously was extended through August 29, 2003. The other terms of the original credit facility, as previously modified, remain in full force and effect. The current extension of the Wells Fargo credit facility gives Energy West additional time to seek replacement credit facilities from new lenders. There is no assurance that Energy West will be able to obtain a commitment from a replacement lender or negotiate any further extension with Wells Fargo. Energy West, Incorporated (Nasdaq: EWST), a natural gas, propane and energy marketing company serving the Rocky Mountain states, has agreed with Wells Fargo Bank Montana, N.A., on an additional extension of its credit facility through August 29, 2003. Energy West's March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $2.4 million. EXELON: Raytheon Takes Legal Action Involving Exelon Projects ------------------------------------------------------------- Raytheon Company (NYSE: RTN) filed a lawsuit in Suffolk County Superior Court in Massachusetts seeking to protect Raytheon's rights in connection with the Exelon Mystic and Exelon Fore River power plant projects in Massachusetts. Last month, Raytheon transferred care, custody, and operational control of Fore River, the last of the two power plant projects to Exelon. Shortly thereafter, Exelon stated that it was exiting the projects and had commenced the process of an orderly transition of ownership of the two projects. Exelon also announced that its project banks would forebear on a default until Aug. 29, 2003. Since Exelon's announcements, Raytheon has continued to perform final close-out work on the projects. The purpose of Raytheon's lawsuit is to obtain adequate assurances of payment and to protect the Company's rights under its support agreements. Raytheon Company (NYSE: RTN), with 2002 sales of $16.8 billion, is an industry leader in defense, government and commercial electronics, space, information technology, technical services, and business and special mission aircraft. With headquarters in Lexington, Mass., Raytheon employs more than 76,000 people worldwide. EXIDE: Committee Asks Court to Stay Plan-Related Proceedings ------------------------------------------------------------ The Official Committee of Unsecured Creditors of Exide Technologies and debtor-affiliates, asks the Court to stay all proceedings related to the Debtors' proposed reorganization plan. The Committee believes that the filing of the Plan at this time is premature and contrary to the Debtors' best interests. Aside from the fact that the Debtors simply are not ready to emerge from bankruptcy, the Committee's litigation against the Debtors' prepetition bank lenders is still pending before the Court. Until the pending litigation is resolved, the status and amount of the Prepetition Bank Lenders' claims will not be known and thus proper distributions cannot be made and the Plan cannot be confirmed. The Committee argues that the Debtors' Plan also could not be confirmed because there is a "settlement" in the Pending Litigation, which has not been agreed to and never negotiated or even discussed with the Committee. At the inception of these cases, the Debtors waived their right to pursue all actions against the Prepetition Bank Lenders, leaving the actions to the Committee and other parties-in-interest to pursue. Thus, it is the Committee, not the Debtors, which have been authorized to prosecute this Pending Litigation. The Committee maintains that to avoid the costly waste of time and effort, all proceedings related to the Plan and the Disclosure Statement must be stayed because it has not agreed to this "settlement." The Committee also finds it unfathomable that the Debtors proposed a Plan, which was not negotiated with it but was negotiated with the investors in the Prepetition Banks' claims and the Prepetition Bank Lenders themselves. Even worse, the Plan itself is effectively giving Reorganized Exide to the Bank Lenders while virtually wiping out the interests of all other creditors. Despite the Pending Litigation, the Plan transfers virtually all of the value of the Debtors' businesses to the Prepetition Bank Lenders, leaving practically nothing for the more than $1,000,000,000 of claims held by the Debtors' diverse unsecured creditors. The Debtors' Plan does, however, grant some real value to two other groups -- the Debtors' management and outside professionals. Under the Plan, the Debtors' management team and outside professionals will receive significant value in the form of bonuses, stock grants or options and success bonuses if the Plan is confirmed. If the Court does not stay or reschedule the proceedings related to the Plan or the Disclosure Statement, the Committee suggests that the Exclusive Periods be terminated so it can propose and pursue an alternative plan. The Debtors and the Prepetition Bank Lenders continue to assert that the Debtors must exit from bankruptcy before the end of 2003, and both are proceeding on this timetable. Given this, the Committee is concerned that there will be little time for other parties to present an alternative Plan unless the Exclusive Periods are terminated immediately. If not terminated, the Debtors' Exclusive Periods will continue until October 7, 2003 -- about a month before the Debtors intend to exit from bankruptcy. The Committee believes that the Debtors will attempt to use the Exclusive Periods as a weapon to railroad all other parties into accepting their Proposed Plan. Although the Committee has stated its opposition to this timetable, the Debtors refuse to take any steps to alter the timetable but have even taken affirmative steps to show their commitment to it. Most notable, the Committee points out that the Debtors and the Prepetition Bank Lenders are forcing Exide's hasty exit so that the valuation of the enterprise will be assessed at a time when the business has not yet realized all of the benefits of its restructuring. As a result, the Debtors' Plan is premised on an artificially low valuation of their business. The Committee assures the Court that it will endeavor to actively file an alternative plan, which will be based on the draft term sheet. It will include a more typical capital structure for the Reorganized Debtors, one that is reasonably leveraged with debt and which uses the remaining equity to provide a fully valued return to all creditors, including the unsecured creditors. Equity Committee Supports Creditors' Request The Official Committee of Equity Security Holders also believes that the Debtors' proposed timetable for exiting from Chapter 11 is improvident. Indeed, if the Debtors are allowed to confirm a plan in the next few months, the Equity Committee believes that the Debtors' entire reorganization will boil down to two feats -- fixing the company for the exclusive benefit of secured lenders and insulating those lenders from any challenge to such benefit. The Debtors cite 18 restructuring achievements, including plant closings, downsizing, consolidations, contract rejections and renegotiations and the development of a new business plan. Taken together, these improvements will soon result in increased revenues, better margins, enhanced cash flows and even a return to profitability. Unfortunately, the Equity Committee believes that the Debtors are intent to emerge from bankruptcy before their restructuring efforts have been recognized. The Equity Committee believes that given additional time, the Debtors' enterprise value will increase dramatically as the business plan will take hold. With current industry trends, favorable exchange rates and a short history of exceeding their projections, the Equity Committee tells the Court that the Debtors have a promising future and substantial upside. But, based entirely on the timing controlled by Bank Lenders, all that upside is being undervalued and handed to the Bank Lenders under the pretext that they are being impaired. The Debtors aim to avoid defaulting the DIP and Standstill Agreement otherwise the Banks will foreclose against them. But the Equity Committee contends that if the Debtors are allowed to cram down a Plan by mid-November to avoid foreclosure, the constituencies represented by the Creditors' Committee and Equity Committee will receive next to nothing. Thus, the Committees' expected recoveries would be scarcely affected by a default under the DIP Agreement and the Standstill Agreement. The only constituencies whose position would deteriorate as a result of default and disclosure are the Banks themselves and they can prevent this by simply deciding not to foreclose. For these reasons, the Equity Committee supports the Creditors' Committee's request to stay all plan-related proceedings or, in the alternative, terminate the Debtors' exclusivity. (Exide Bankruptcy News, Issue No. 29; Bankruptcy Creditors' Service, Inc., 609/392-0900) GAUNTLET ENERGY CORP: Completes Independent Reserves Evaluation --------------------------------------------------------------- Gauntlet Energy Corporation obtained an order, on June 17, 2003, from the Court of Queen's Bench of Alberta providing creditor protection under the Companies' Creditors Arrangement Act. The Court order provided for the appointment by the Court of a Monitor and an interim stay of proceedings and restraint of certain rights and remedies against the Company. The purpose of the stay period order is to provide the Company with relief designed to stabilize operations and business relationships with customers, vendors, employees and creditors and to permit the Company to develop a financial restructuring plan to present to its creditors. As part of the process to develop a financial restructuring plan under CCAA, the Company recently completed independent reserves evaluations effective August 1, 2003. As a result of the downward reserve revisions recognized in these evaluations during Q2 2003 and lower commodity pricing at June 30, 2003 the application of the ceiling test resulted in a write-down of $58.5 million to property and equipment. There is no assurance that the Company will be able to restructure its financial affairs or that such efforts will improve the financial condition of the Company. GAUNTLET ENERGY: June 30 Working Capital Deficit Tops $81 Mill. --------------------------------------------------------------- On June 17, 2003, Gauntlet Energy Corporation obtained an order from the Court of Queen's Bench of Alberta providing creditor protection under the Companies' Creditors Arrangement Act. The Court order provided for the appointment by the Court of a Monitor and an interim stay of proceedings and restraint of certain rights and remedies against the Company. The purpose of the stay period order is to provide the Company with relief designed to stabilize operations and business relationships with customers, vendors, employees and creditors and to permit the Company to develop a financial restructuring plan to present to its creditors. The Company's ability to continue as a going concern is dependent on the ability of the Company to restructure its financial affairs, including the continuing support of the Company's lender, the Company's ability to realize sufficient proceeds through a sale of some or all of its assets to fund a Plan of Arrangement, and the Company's ability to negotiate a Plan of Arrangement with creditors, including satisfactory resolution of outstanding legal claims, enabling the Company to continue operations. There is no assurance that the Company will be able to restructure its financial affairs or that such efforts will improve the financial condition of the Company. The Company's Q2 2003 cash flow from operations was lower than Q2 2002 primarily due to lower production volumes. The Company's cash flow from operations for the first six months of 2003 exceeded the corresponding period of 2002 due to higher average natural gas prices and favorable royalty adjustments. The Company reported a loss during Q2 2003 as opposed to the net income recorded during Q2 2002 on a quarter and year-to-date basis due to the write-down of property and equipment during the quarter. Natural gas production volumes for Q2 2003 are significantly lower than Q2 2002 on a quarter and year-to-date basis primarily due to lower Northern area production as well as declines at Three Hills Creek and the disposition of minor properties during 2002. The Company's August 1, 2003 independent reserve report indicates downward revision since April 1, 2003 to proven reserves primarily related to our Three Hills Creek property. As at June 30, 2003, the Company's debt and working capital deficiency totaled $80.9 million which includes obligations subject to builders' liens and $44.3 million of secured bank debt. Effective July 1, 2003 the Company and its principal lender entered into a second Loan Extension Agreement, the terms of which include the Company complying with all provisions of the CCAA order and the interim stay of proceedings remaining in force. The terms of the second Loan Extension Agreement do not constitute a waiver of the Company's defaults under the original Loan Extension Agreement dated April 10, 2003, and the lender has reserved all rights and remedies arising from such defaults. During June, 2003, the Company announced that Statements of Claim had been filed against the Company and its directors, underwriters and engineers by certain shareholders who purchased common shares under a short-form prospectus of the Company dated November 28, 2002. The offering raised total gross proceeds of $25.0 million from the sale of 3,205,127 flow-through common shares of the Company. The Company has previously renounced the full amount of the gross proceeds of the offering in favor of the purchasers. The claims are for rescission or alternatively damages in the amount of $25.0 million. The Company is undergoing mediation proceedings with respect to the outstanding litigation. RESULTS OF OPERATIONS Petroleum and Natural Gas Sales Petroleum and natural gas sales for Q2 2003 were in line with Q2 2002 as the 41% decrease in natural gas sales volumes was offset by a 78% increase in the natural gas price. Natural gas production decreased as Northern area production declined significantly. The Three Hills Creek and Brazeau areas experienced production declines and the impact of selling the Gadsby Hackett property was recognized. The winter drilling remediated production from certain existing wells but did not add any significant new production volumes. Petroleum and natural gas sales for the first six months of 2003 were 18% higher than the comparable period of 2002 as the 96% increase in natural gas sales prices more than offset the 37% decrease in natural gas production volumes. Production volume changes were attributable to the properties discussed above. Royalties and the Alberta Royalty Tax Credit Royalty expense for Q2 2003 decreased 39% from Q2 2002 due to significant gas cost allowance and custom processing credits received from the Crown for 2002 activities. The average royalty rate declined from 23% in Q2 2002 to 14% during Q2 2003 due to the previously mentioned credits from the Crown. The ARTC in Q2 2003 was comparable to Q2 2002. Royalty expense for the first six months of 2003 decreased 12% from the comparable 2002 level due to the previously mentioned credits from the Crown. The average royalty rate declined to 18% for the first six months of 2003 from 24% during the comparable period of 2002 due to the previously mentioned factors. ARTC on a year to date basis was also in line with 2002. Operating Expenses Operating expense in Q2 2003 decreased 15% from Q2 2002 levels primarily due to the 42% decrease in boe production volumes. Operating costs on a unit of production basis increased to $8.42/boe in Q2 2003 from $5.70/boe in Q2 2002. The increase to unit operating costs was due to higher fixed costs and lower production volumes in the Northern area and Central Alberta facilities. Operating expense for the first six months of 2003 increased 2% from the comparable period of 2002 primarily due to higher fixed costs and lower production volumes in the Northern area and Central Alberta facilities. Operating costs on a unit of production basis increased to $8.71/boe for the first six months of 2003 from $5.32/boe during the first six months of 2002 due to the same factors. General and Administrative Expenses General and administrative expenses increased 41% to $1,589,000 in Q2 2003 as compared to $1,123,000 during Q2 2002 primarily due to a provision for severance related to litigation by the former CEO during Q2 2003. General and administrative expenses increased substantially on a unit of production basis to $6.35/boe in Q2 2003 from $2.60/boe in Q2 2002 as the impact of lower production volumes and higher costs increased the rate. The Company capitalized $112,300 of general and administrative costs directly attributable to April, 2003, exploration and development activities in Q2 2003 versus $806,000 related to the full quarter during Q2 2002. The Company has not capitalized any general and administrative costs since April, 2003. General and administrative expenses for the first six months of 2003 were 29% higher than the corresponding period of 2002 and increased on a unit of production basis to $4.60/boe in 2003 from $2.21/boe during 2002 for the reasons previously mentioned. The Company capitalized $311,000 of general and administrative costs directly attributable to exploration and development activities during the first six months of 2003 versus $1,032,000 during the corresponding period of 2002. Corporate Restructuring Costs During Q2 2003 the Company initiated a process to pursue strategic alternatives and after certain Statements of Claim were filed against the Company related to the November 28, 2002 Prospectus the Company entered CCAA. Costs specifically related to these processes are recognized as corporate restructuring costs and include professional fees, additional credit facility costs, and consulting and advisory services. Interest Expense Interest expense during Q2 2003 and for the first six months of 2003 was 142% and 95% higher than the corresponding periods of 2002 due to higher debt levels and higher interest rates. Depletion and Depreciation Expense Depletion and depreciation expense increased significantly during Q2 2003 to $6,925,000 ($27.69/boe) from $2,055,000 ($4.75/boe) in Q2 2002. The increase is due to significant downward reserve revisions at our Snowfall area that were recognized at year-end 2002 based on our 2003 winter drilling results in the area as well as negative reserve revisions at our Three Hills Creek property recognized during 2003 and based on independent engineers reserve evaluations. Overall depletion and depreciation expense increased significantly to $11,298,000 ($25.64/boe) for the first six months of 2003 as compared to $3,276,000 ($4.62/boe) for the corresponding period of 2002. The increase is due to the previously mentioned negative reserve revisions. Write-down of Property and Equipment The Company recently received updated reserves evaluations from its independent engineers effective August 1, 2003. Net negative reserves revisions were recognized in comparing these reports to the previously completed independent engineers reserves effective April 1, 2003. As a result of the negative reserve revisions recognized during Q2 2003 which were based on the Company's recently completed independent reserves evaluations effective August 1, 2003 and lower commodity pricing at June 30, 2003 ($6.60/mcf) versus March 31, 2003 ($7.88/mcf), the ceiling test resulted in a write-down to property and equipment of $58.5 million. Income Taxes Future income taxes recognize a recovery of $18,686,000 in Q2 2003 versus an expense of $850,000 during Q2 2002 in line with the significant decrease to income (loss) before taxes. The reduction is primarily attributable to the write-down of property and equipment previously discussed. A capital taxes recovery was recorded during Q2 2003 as the write-down of property and equipment significantly reduces the capital tax base of the Company. No cash taxes were payable in Q2 2003. The Company recognized a recovery in future income taxes for the first six months of 2003 of $18,675,000 versus an expense of $1,373,000 for the corresponding period of 2002 due to the previously mentioned write-down. Capital taxes for the six months ended June 30, 2003 were lower than the corresponding 2002 period due to the write-down of property and equipment and capital taxes were the only cash taxes payable in the periods. As at June 30, 2003, after fully renouncing all flow-through obligations, the Company has tax pools available in excess of recorded assets which may generate a benefit to the Company. This benefit is not recognized on the financial statements as an asset since there is not sufficient assurance that the Company will be able to realize this benefit. All flow-through obligations related to the November 28, 2002 short-form prospectus have been renounced to investors and are recorded in the financial statements. Cash Flow and Netback Cash flow from operations, which is determined before changes in non-cash working capital, is used by the Company as a performance measure. Cash flow from operations does not have a standardized meaning prescribed by Canadian Generally Accepted Accounting Principles and therefore may not be comparable with the calculation of similar measures for other companies. Cash flow from operations per share is calculated using the same share bases which are used in the determination of earnings per share. The Company's cash flow from operations decreased to $3.4 million in Q2 2003 from $3.8 million in Q2 2002 and decreased on a per share basis to $0.16 ($0.16 - diluted) during Q2 2003 versus $0.22 ($0.19 - diluted) during Q2 2002. Cash flow from operations increased to $7.6 million for the first six months of 2003 from $6.1 million during the corresponding period of 2002 and was relatively consistent on a per share basis at $0.36 ($0.36 - diluted) for 2003 versus $0.38 ($0.33 - diluted) for 2002. Both time periods were affected by the considerably higher natural gas price realized during 2003 versus 2002 and the offsetting impact of the significantly lower production volumes. Net Income The Company experienced a loss of $43,315,000 in Q2 2003 versus income of $910,000 in Q2 2002 and on a per share basis a loss of $2.07 ($2.07 - diluted) was recognized in Q2 2003 versus income of $0.05 ($0.05 - diluted) during Q2 2002. A loss of $43,537,000 was recognized during the first six months of 2003 versus income of $1,468,000 during the corresponding period of 2002 and on a per share basis a loss of $2.08 ($2.08 - diluted) was recognized in the 2003 period versus income of $0.09 ($0.08 - diluted) during the 2002 period. The loss recognized during both periods is primarily attributable to the write-down of property and equipment. LIQUIDITY AND CAPITAL RESOURCES The combined debt and working capital deficiency at June 30, 2003 was $80.9 million as compared to $32.7 million at December 31, 2002. This increase is a result of the Company's $55.8 million 2003 capital expenditure program and its lack of success. At August 29, 2003, the Company had the following securities outstanding: 20,950,215 common shares; 1,420,847 common share purchase warrants exercisable at a price of $1.00 per share and 1,457,877 options which are exercisable at an average price of $3.63 per share. A Loan Extension Agreement dated April 10, 2003 was entered into by the Company and the lender as a result of material downward reserve revisions indicated in the Company's April 1, 2003 independent reserve evaluation of its Northern area reserves, and the minimal success of the Company's 2002/2003 winter drilling program which caused the Company's debt levels to increase substantially. These events further resulted in a reduction of the Company's maximum borrowing base below the aggregate of the amounts drawn under the facility and the Company's working capital deficiency, and the Company being in default of the required loan covenants. Under the Loan Extension Agreement, the amount available under the facility was reduced to $49.5 million and the terms under which these funds were available were amended. The lender also retained the right to further review the facility at any time up to June 30, 2003 when the facility was to be repaid in full, and also retained the right to demand repayment of the facility at any time. Effective July 1, 2003, as a result of the Company failing to repay the amounts outstanding under its revolving production loan facility in full on June 30, 2003, as required under the Loan Extension Agreement dated April 10, 2003, and certain other defaults of the provisions contained therein, the Company and the lender entered into a Second Loan Extension Agreement, extending the date for repayment of the facility, including outstanding accrued interest and monthly extension fees, to September 30, 2003. The terms of the Second Loan Extension Agreement are subject to the Company complying with all provisions of the CCAA order and the interim stay of proceedings remaining in force. The terms of the Second Loan Extension Agreement do not constitute a waiver of the Company's defaults under the Loan Extension Agreement dated April 10, 2003, and the lender has reserved all rights and remedies arising from such defaults. On July 14, 2003, the Company announced it had engaged an exclusive financial advisor to the Special Committee of the Board of Directors in connection with its previously announced process to develop a financial restructuring plan under the CCAA, and initiated the stakeholder maximization process for the sale and restructuring of the Company and its assets. The Company's reserve engineers were also retained to prepare updated reserve engineering reports, effective August 1, 2003. Due to downward reserve revisions contained in the updated independent engineering reports, the Company recorded a ceiling test write-down at June 30, 2003 in the amount of $58.5 million. The Company's ability to continue as a going concern is dependent on the ability of the Company to restructure its financial affairs, including the continuing support of the Company's lender, the Company's ability to realize sufficient proceeds through a sale of some or all of its assets to fund a Plan of Arrangement, and the Company's ability to negotiate a Plan of Arrangement with creditors, including satisfactory resolution of outstanding legal claims, enabling the Company to continue operations. There is no assurance that the Company will be able to restructure its financial affairs or that such efforts will improve the financial condition of the Company. The ultimate outcome of the Company's financial restructuring plan and an estimate of contingent losses resulting from various Statements of Claim cannot be reasonably determined at this time, however, if the going concern assumption were not appropriate, significant adjustments would be necessary to the reported carrying values of the Company's assets and liabilities, revenues and expenses. In such circumstances the carrying value of the Company's property and equipment in the amount of $97.3 million may not reflect fair market value of these assets and the recorded liabilities may be subject to compromise. GENUITY INC: Classification & Treatment of Claims Under the Plan ---------------------------------------------------------------- In accordance with Section 1122 of the Bankruptcy Code, Genuity Inc., and its debtor-affiliates' the Joint Plan provides for the classification of Classes of claims and equity interests. Pursuant to Section 1123(a)(1), Administrative Expense Claims and Priority Tax Claims are not classified and the holders of these Claims are deemed to vote in favor of the Plan because their claims will be paid in full. All other Claims and Interests are assigned to one of seven Classes: * Class 1 - Priority Claims, * Class 2 - Miscellaneous Secured Claims, * Class 3 - Bank Group Claims, * Class 4 - General Unsecured Claims, * Class 5 - Verizon Investments Claims, * Class 6 - 510(b) Claims, and * Class 7 - Equity Interests. Class 1 and 2 Claimholders will be paid Cash in the full amount of their Allowed Claims. Classes 1 and 2 are unimpaired and are deemed to accept the Plan. As consequence, holders of Claims in these Classes are not entitled to vote. The Bank Lenders -- Class 3 Claimholders -- have direct claims against Genuity Inc., and claims arising from guaranties against Debtors Genuity Solutions and Genuity Telecom, while Class 4 Claimholders have claims only against a single Debtor, predominantly Genuity Solutions. Pursuant to a separate and independent agreement between the Bank Lenders and Verizon, Verizon has subordinated certain of its claims to the Bank Lenders. Meaning, certain amounts that would otherwise have been payable to Verizon will be paid instead to the Bank Lenders. Classes 3, 4, 5, 6 and 7 are impaired. However, only Class 3 and 4 Claimholders are allowed to vote since Classes 5, 6 and 7 Claim and Interestholders will receive no distribution and are deemed to reject the Plan. The Debtors believe that this classification of Claims and Equity Interests is appropriate and consistent with applicable law. In detail, the Claims are classified as: Class Description Treatment ----- ------------ --------- N/A Administrative 100% payment in cash Claims N/A Priority Tax 100% Claims At the Debtors' option, claimants may be: -- paid in full, in Cash; -- paid over a six-year period from the date of assessment pursuant to Section 1129(a)(9)(c) of the Bankruptcy Code; or -- upon terms as mutually agreed by the parties. 1 Priority Non-Tax 100% Claims 2 Miscellaneous 100% Secured Claims At the Debtors' option, claimants may receive: -- a full Cash payment; -- legal, equitable and contractual rights associated with the claim left unaltered; -- distribution of proceeds from the sale or other disposition of assets securing the claim; -- provision of the indubitable equivalent of the claim; or -- other treatment to which the Holder consents. 3 Bank Group 39-47% Claims The allowed Claim holder will receive: (A) Class A Beneficial Interests; and (B) $514,200,000 Cash plus the Bank Tranche Amount plus 68% of Residual Cash, if any, all to be distributed in accordance with the terms of the Bank Credit Agreement. 4 General Unsecured 10% to 35% projected recovery. Claims Pro Rata Shares of Class B Beneficial Interests in Liquidating Trust. 5 Verizon 0% Investments Claims 6 510(b) Claims 0% 7 Equity Interests 0% After distributions have been made to Classes 1 and 2, and after a reserve has been established for disputed or as yet unasserted Administrative Claims, Priority Tax Claims, Cure Claims, Priority Claims and Miscellaneous Secured Claims, to the extent the Debtors have sufficient cash, the Plan provides for distributions to Classes 3 and 4. (Genuity Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service, Inc., 609/392-0900) GEORGIA-PACIFIC: Commences Exchange Offer for Two Senior Notes -------------------------------------------------------------- Georgia-Pacific Corp. (NYSE: GP) commenced an offer to exchange its new 7.375 percent senior notes due 2008 and 8 percent senior notes due 2014 that have been registered under the Securities Act of 1933 for all of its outstanding 7.375 percent senior notes due 2008 and 8 percent senior notes due 2014, respectively, that originally were issued by the company in June under Rule 144A and Regulation S of the Securities Act of 1933. The terms of the new notes are substantially identical to the original notes, except that transfer restrictions and registration rights applicable to the original notes will not apply to the new notes. The exchange offer will expire at 5 p.m., Eastern time, Sept. 30, unless extended. Tenders of original notes must be made on or prior to the expiration of the exchange offer and may be withdrawn at any time on or prior to the expiration of the exchange offer. Georgia-Pacific also extended until 5 p.m., Eastern time, tomorrow, its offer, previously scheduled to expire at 5 p.m., Aug. 29, to exchange its new 8.875 percent senior notes due 2010 and 9.375 percent senior notes due 2013 that have been registered under the Securities Act of 1933 for all of its outstanding 8.875 percent senior notes due 2010 and 9.375 percent senior notes due 2013, respectively, that originally were issued by the company in January under Rule 144A and Regulation S of the Securities Act. To date, approximately $1,045,252,000 aggregate principal amount of these senior notes has been deposited with the exchange agent. Copies of the prospectus and other documents describing the terms of the exchange offers, including the related transmittal materials for use in making tenders, may be obtained from the exchange agent, The Bank of New York, 101 Barclay Street, Floor 7E, New York, N.Y. 10286, (212) 815-3687. Headquartered at Atlanta, Georgia-Pacific (S&P, BB+ Corporate Credit Rating, Negative) is one of the world's leading manufacturers of tissue, packaging, paper, building products, pulp and related chemicals. With 2002 annual sales of more than $23 billion, the company employs approximately 61,000 people at 400 locations in North America and Europe. Its familiar consumer tissue brands include Quilted Northern(R), Angel Soft(R), Brawny(R), Sparkle(R), Soft 'n Gentle(R), Mardi Gras(R), So- Dri(R), Green Forest(R) and Vanity Fair(R), as well as the Dixie(R) brand of disposable cups, plates and cutlery. Georgia- Pacific's building products distribution segment has long been among the nation's leading wholesale suppliers of building products to lumber and building materials dealers and large do-it- yourself warehouse retailers. For more information, visit http://www.gp.com HALLWOOD REALTY: Hires Morgan Stanley to Explore Alternatives ------------------------------------------------------------- Hallwood Realty Partners, L.P. (AMEX: HRY) issued the following statement: "With regard to the announcement by High River Limited Partnership on August 19, 2003, that it had increased to $120 per unit the purchase price in its tender offer to acquire the Partnership, the Board of Directors of Hallwood Realty, LLC, the general partner of the Partnership, has carefully considered the revised tender offer for any and all of the outstanding units of the Partnership at the revised purchase price of $120 per unit in cash. "The Board noted that at its direction, its financial adviser, Morgan Stanley & Co. Incorporated, is actively engaged in a process of identifying alternatives that may be in the best interests of the unitholders, including initiating discussions with prospective parties interested in participating in a transaction with Hallwood at prices and on terms which the Board believes would be in the best interest of all partners of Hallwood, including, without limitation, a merger, reorganization or liquidation involving Hallwood or any of its subsidiaries or a purchase, sale or transfer of a material amount of assets by Hallwood or any of its subsidiaries. The Board believes that Morgan Stanley should have the opportunity to complete this process in an appropriate manner and that it is premature for holders to tender units pursuant to the amended offer. "The Board also noted that High River's original offer provided for consideration of $100 per unit and that as a result, in part, of the Board's prior recommendation that unitholders not tender their units at that price, and the Board's authorization of Morgan Stanley to conduct its marketing process, the Offer has been substantially increased. Having completed its review of the revised offer, in consultation with its outside counsel and its financial advisor, Morgan Stanley, the Board has concluded that the revised offer is also inadequate and not in the best interests of the unitholders and unanimously recommends that unitholders of the Partnership not tender their units in the offer." The Partnership has today filed with the Securities and Exchange Commission an amendment to its Schedule 14D-9, which sets forth the factors that the Board considered in reaching its conclusion with regard to the revised offer. Unitholders may obtain copies of the amended Schedule 14D-9 by contacting MacKenzie Partners, Inc. at 1-800-322-2885 toll-free or by email at proxy@mackenziepartners.com or on the Securities and Exchange Commission's website at http://www.sec.gov. The Partnership, a publicly traded Delaware limited partnership, is engaged in the acquisition, ownership and operation of commercial real estate assets. HRP operates in the commercial real estate industry. HRP's activities include the acquisition, ownership and operation of its commercial real estate assets. While it is the General Partner's intention to operate HRP's existing real estate investments and to acquire and operate additional real estate investments, Realty also continually evaluates each of HRP's real estate investments in light of current economic trends, operations, and other factors to determine if any should be considered for disposition. As of June 30, 2003, HRP owned 14 real estate assets, located in six states containing 5,200,000 net rentable square feet. HRP seeks to maximize the value of its real estate by making capital and tenant improvements, by executing marketing programs to attract and retain tenants, and by controlling or reducing, where possible, operating expenses. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-Q filed with the Securities and Exchange Commission, Hallwood Realty reported: "HRP's cash position decreased $2,407,000 during the first six months of 2003 to $29,956,000 as of June 30, 2003. The sources of cash during the period were $5,402,000 of cash provided by operating activities and $48,000 from the exercise and issuance of unit options. The uses of cash were $5,858,000 for property and tenant improvements, $1,971,000 for scheduled mortgage principal payments, and $28,000 for loan fees. "For the foreseeable future, HRP anticipates that mortgage principal payments, tenant and capital improvements, lease commissions and litigation costs will be funded by net cash from operations. We believe that there will be sufficient cash from operations to meet these needs because HRP had leases in place as of December 31, 2002 to provide $54,963,000 of minimum rental payments during 2003. For the prior year of 2002, HRP had leases in place to provide $55,261,000 of minimum rental payments (based on leases in place as of December 31, 2001), however the actual rental payments recorded for 2002 were $61,481,000. Actual rental payment results for 2002 were greater than the minimum rental payment amount primarily due to our ability to attract and retain tenants. For the six months ended June 30, 2003 and 2002, HRP's actual rental payments were $30,275,000 and $30,690,000, respectively. Our ability to fund operations in the future will depend upon continued success in maintaining current occupancy levels by retaining current tenants and attracting new tenants, as well as sustaining or increasing rental rates. "The primary sources of capital to fund any future acquisitions or developments will be proceeds from the sale, financing or refinancing of one or more of our properties. HRP has estimated and budgeted tenant and capital improvements of $15,631,000 and lease commissions of $2,851,000 for 2003. For the first six months of 2003, HRP incurred $5,858,000 of tenant and capital improvements and $1,342,000 of lease commissions of these estimates. Each quarter Realty reviews HRP's capacity to make cash distributions. HRP has not made any cash distributions since February, 1992." HYDROMET ENV'L: Debentureholders Agree to Forbear Until Dec. 31 --------------------------------------------------------------- Hydromet Environmental Recovery Ltd. (TSX Venture Exchange: YHM.A) announced that its plant in Newman, Illinois has successfully processed tin waste slurry and recovered brown tin. The plant has commenced production this week to recover white tin from tin waste slurry. Hydromet further announced that, in accordance with the resolution passed at a Special Meeting of shareholders held March 10, 2003, it is proceeding with a 1 for 6 share consolidation and corporate name change. The proposed new name of the corporation is Stanmet Limited. The share consolidation and corporate name change is subject to TSX Venture Exchange approval which is currently being sought. Filings made by Hydromet in respect of a $995,000 convertible debenture are still subject to TSX Venture Exchange approval. As previously announced in a press release dated October 25, 2002, the debenture is convertible into Units of Hydromet. Each Unit consists of one post consolidated Class A Common Share and one share purchase warrant. For the first eighteen months, the conversion price is $0.10 per Unit and $0.12 per Unit for following eighteen months. Each warrant has an expiry date of the earlier of the last date for exercising the convertible debenture and two years from the conversion date. Each warrant entitles the holder to purchase one post consolidation Class A Common Share at the exercise price of $0.12 per share if conversion occurs on or before eighteen months from the date of issuance of the Debenture and $0.15 per share if conversion occurs at anytime after eighteen months from the date of issuance of the Debenture. Hydromet also announced that the $995,000 convertible debenture is now closed. Hydromet has concluded negotiations in respect of an additional 12.5% convertible debenture up to a total of $750,000. The terms of conversion are the same as described above. The terms and conditions of the debenture are subject to TSX Venture Exchange approval. Hydromet has entered into forbearance agreements in respect of the above-noted debentures whereby interest payments will not be payable until December 31, 2003. Any interest accrued prior to December 31st will be capitalized as principal under the debentures and subject to the same conversion rights as previously described. IMC GLOBAL: Board Declares 7.50% Conv. Preferred Share Dividend --------------------------------------------------------------- The Board of Directors of IMC Global Inc. (NYSE: IGL) declared an initial cash dividend of $0.9479 per share on the Company's 7.50% mandatory convertible preferred stock (NYSE: IGL.M) for the period of June 30 through September 30, 2003. The dividend is payable on October 1, 2003 to mandatory convertible preferred stockholders of record at the close of business on September 15, 2003. The Board of Directors also declared a dividend of 2 cents per share of common stock for the quarter ending September 30, 2003. The common stock dividend is payable on September 30, 2003 to stockholders of record at the close of business on September 15, 2003. With 2002 revenues of $2.1 billion, IMC Global (S&P, B+ Corporate Credit Rating, Stable) is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. IMP INC: Fails to Comply with Nasdaq Listing Guidelines ------------------------------------------------------- IMP, Inc. (NasdaqSC: IMPXE) announced that on August 22, 2003 it received notice from the Nasdaq indicating that IMP, Inc. has failed to comply with Nasdaq's independent director and audit committee rules set forth in Nasdaq Marketplace Rules 4350(c) and 4350(d)(2). These Rules require IMP, Inc. to have at least three independent directors on its board and to have an audit committee consisting solely of independent directors and with at least three members. At this time, IMP, Inc. has no independent directors on its board. Because of its failure to comply with these Rules, IMP, Inc.'s securities are subject to delisting from the Nasdaq SmallCap Market. IMP, Inc. is currently in the process of appealing a decision by Nasdaq to delist its stock from the Nasdaq SmallCap Market. There can be no assurances that any request made by IMP, Inc. for continued listing will be granted. If IMP, Inc.'s stock is delisted from the Nasdaq SmallCap Market, its stock will not be immediately eligible to trade on the Over-the-Counter Bulletin Board (OTCBB) because IMP, Inc. is not at this time, current in its reporting obligations under the Securities Exchange Act of 1934 which is a requirement in order to be quoted on the OTCBB. IMP, Inc. plans to take the necessary steps to become eligible for quotation on the OTCBB, but there can be no assurances that it will be successful. As reported in Troubled Company Reporter's July 9, 2003 edition, IMP, Inc. reported that its independent certified public accountants, BDO Seidman, LLP has resigned effective June 26, 2003. The report of BDO Seidman, LLP, dated July 12, 2002, on the Company's financial statements for the fiscal year ended March 31, 2002, contained an explanatory paragraph that stated that "the Company continues to experience severe liquidity problems and absorb cash in its operating activities and, as of March 31, 2002, the Company has a working capital deficiency, is in default under the terms of certain financing agreements, is delinquent in the payment of its federal employment taxes, and has limited financial resources available to meet its immediate cash requirements. These matters raise substantial doubt about the Company's ability to continue as a going concern." INTEGRATED DATA: Proposal to Acquire TransNet Corp. Assets Nixed ---------------------------------------------------------------- TransNet Corporation (OTC Bulletin Board: TRNT), a leading IT sales and service company, commented on the unsolicited non- binding letter of intent received from Integrated Data Corp. of Conshohocken, PA expressing an interest in acquiring all of TransNet's "assets and business." Integrated Data referred to the letter in a recent press release. After an evaluation of the letter, TransNet management determined that it is not in favor of the proposed transaction and will not pursue it further. The letter received by the Board of Directors stated that Integrated Data's proposal was subject to various conditions, one of which could limit TransNet's use of its own working capital. More than 60% of the consideration proposed by Integrated Data would be shares of Integrated Data common stock. TransNet management considered the proposal in the context of what it believed was in the best interests of TransNet and its shareholders. In deciding not to pursue the proposal, management noted the weak financial condition of Integrated Data; Integrated Data's questionable viability as a going concern; its recent emergence from bankruptcy and lack of demonstrable revenue and profit generation; and the lack of synergy between the two firms' operations. TransNet's management also took into consideration the historical trading pattern of Integrated Data's stock, specifically the extremely thin trading volume and price volatility. Further, TransNet retained an investment advisor to assist management in considering the proposal. The advisor concluded that the proposed transaction posed a significant economic risk for TransNet and its shareholders. In addition, Integrated Data's proposal contained certain conditions that would not be satisfied in order to close the transaction. Based upon these factors, TransNet has determined not to pursue the matter further. TransNet Corporation is a leading IT support organization for corporate and educational clients. TransNet provides sophisticated solutions, including system design and integration, help-desk support services and end-user training. Its clients include Fortune 100 organizations, primarily in the pharmaceutical, oil and gas, finance and communications industries, as well as educational and governmental institutions. INT'L DATASHARE: Cash Resources Insufficient to Fund Operations --------------------------------------------------------------- Throughout the second quarter of 2003, International Datashare Corp continued to realize the benefits of the integration, rationalization and restructuring of its business. On April 14, 2003, iDc announced an Agreement to a merger between iDc and Divestco.com, which will enable both companies to join together to offer clients industry leading geological, geophysical data, and software offerings that will significantly grow revenues. Additional cost savings are also expected to be realized. Revenue for the quarter was $1,805,500 an decrease of 11% from the first quarter of 2003. The net loss for the quarter was $1,248,200. With the ESRI platform gaining momentum in oil and gas companies within Canada, both GEOcarta and the GEOcarta Tools for ARCGIS are seeing increased interest by companies with operations in both the US and Canada. Revenues associated with the electronic versions of the Riley logs surpassed hardcopy sales for the first time in Riley's history in during the second quarter. iDc fully expects this trend to continue as customers begin to see the incomparable quality and coverage of the Riley log inventory in the US. Further planned enhancements to the delivery system and the introduction of a transactional ordering system will also accelerate the growth of these revenues. iDc is an oil and gas service company. Its primary areas of operation are Calgary, Alberta, Houston, Texas and Oklahoma City, Oklahoma. The integration of the recent acquisitions, gives iDc the capability to provide seismic data management, transcription, storage and delivery of oil and gas exploration geophysical data. Riley Electric Log Inc. positions iDc as the leader in North America for log data and Request Integrated Solutions offers state-of-the-art seismic archiving technology. These divisions complement our industry leading open system desktop mapping engine and analytical tool, GEOcarta. Discussion of results for the 6 months ended June 30, 2003 Revenue increased 10% from the previous year. This increase is due primarily from the Riley Electric Log, Inc. acquisition completed at the end of the first quarter 2002. Direct costs increased 27% from the prior year. This is primarily attributable to the three acquisitions completed in 2002. There were research and development costs in the quarter as iDc is no longer deferring those costs. Sales and marketing costs decreased by 20% from the previous year. General and administrative expenses increased 33% compared to the previous year. This is due to restructuring costs and the three acquisitions completed in 2002. EBITDA was a deficit of $988,200 compared to a deficit of $275,600 from the previous year. At June 30, 2003, the Company's balance sheet shows a working capital deficit of about $5 million, while net capital dwindled to about $3 million from $6 million six months ago. The Company's consolidated financial statements have been prepared on the basis of accounting principles applicable to a "going concern" entity, which assumes that the Corporation will continue operations in the foreseeable future and will be able to realize its assets and discharge its liabilities in the normal course of business. The Corporation's ability to continue as a going concern is dependent upon its ability to raise additional funds either through issuance of debt or equity or to achieve positive cash flow. At June 30, 2003 the Corporation has indebtedness under its bank credit facility of $198,800. The credit facility is currently limited to the lesser of 75% of accounts receivable or $350,000. At June 30, 2003 the Corporation has outstanding notes payable of $4,220,500 which are payable on demand. Although the Corporation has completed equity financings as outlined in the 2002 year-end results, its future viability is dependent on the ability to achieve positive cash flow from operations. Although there is no assurance the Corporation will be successful in its endeavors, management is confident that it will be able to secure additional financing until such time as positive cash flow has been achieved. These consolidated financial statements do not give effect to any adjustments that may be necessary should the Corporation be unable to continue as a going concern. Share capital As at June 30, 2003 and December 31, 2002, the Corporation had outstanding 14,963,335 common shares and 726,000 common share options. At June 30, 2003, the Corporation had 50,000 common share purchase warrants outstanding. These warrants are exercisable for common shares at $1.60 per share, expiring in November 2003. On January 1, 2002 the Corporation adopted the new CICA Handbook Section on Stock-Based Compensation and Other Stock-Based Payments, and has continued to account for common share options granted to employees, officers and directors using the intrinsic value method. There were no common share options granted in the six months ended June 30, 2003. Basic and diluted loss per share has been calculated using the treasury method and the weighted average number of common shares outstanding during the June 30, 2003 quarter of 14,963,335. International Datashare Corporation is a Calgary based company that markets data and software to companies operating within the energy industry around the world. INT'L UTILITY: Fails to Cure Default on 10.75% Senior Notes ----------------------------------------------------------- As stated in its July 31st press release, the Company did not make the scheduled August 1, 2003 semi-annual interest payment in the aggregate amount of US$3,750,000 due on its 10.75% Senior Subordinated Notes due February 1, 2008 and its 13% Subordinated Notes due February 1, 2008. Under the terms of the Indentures governing such notes, the failure to pay would become an Event of Default on September 1, 2003 if it did not cured by the Company by such date. The Company did not make the interest payment by the cure date. The Company is diligently pursuing a consensual financial restructuring process, is continuing discussions with several potential restructuring partners with the resources to provide new capital, has commenced discussions with noteholders, and expects to formulate a restructuring plan in the next 30 days. It is the Company's goal to complete a financial restructuring but there can be no assurance that it will be successful in achieving this goal. The Company is carrying on business as usual and continues to provide its high level of services and products to customers and continues to pay its suppliers on a timely basis. Robert Jack, President & CEO said: "Our Company has two priorities at this time. One priority is to ensure that financial issues affecting IUSI in Canada have no effect on our operating businesses. The notes are not secured by the assets of our operating subsidiaries, Petitjean S.A.S. and IUS (Kansas) Inc., nor do such subsidiaries guarantee the Company's obligations under the notes. An equally important priority is to complete the financial restructuring in a manner that appropriately takes into account the interests of all stakeholders." International Utility Structures Inc. is a world leader in the manufacture and marketing of metal overhead lighting, power line, traffic and telecommunications support structures for customers in more than 100 countries. Headquartered in Calgary, Alberta, IUSI has manufacturing, design and engineering capacity in the United States, France and Ireland. The Company's common shares trade on the Toronto Stock Exchange under the symbol IUS. INT'L UTILITY: June 30 Net Capital Deficit Widens to $24 Million ---------------------------------------------------------------- International Utility Structures Inc. released results for fiscal 2003, third quarter ending June 30, 2003. All amounts stated are in U.S. dollars. IUSI is a world leader in the manufacture and marketing of metal overhead lighting, powerline, traffic and telecommunications support structures for customers in more than 100 countries. Headquartered in Calgary, Alberta, IUSI also has manufacturing, design and engineering capacity in North America and Europe. Review of the third quarter of fiscal 2003, ending June 30, 2003 During the third quarter of fiscal 2003, IUSI began to see some improvement in both European and North American markets. Although many utility companies continue to delay their capital expenditures, the Company's backlog is growing. The new facility in Kansas posted a significant increase in sales in the third quarter compared to last year and is seeing increases in both quotations and orders. A soft fourth quarter is expected but the Company's strengthening backlog should translate into an improved first quarter for fiscal 2004. As stated in its July 31st press release, the Company did not make the scheduled August 1, 2003 semi-annual interest payment in the aggregate amount of US $3,750,000 due on its 10.75% Senior Subordinated Notes due February 1, 2008 and its 13% Subordinated Notes due February 1, 2008. Under the terms of the Indentures governing such notes, the failure to pay will become an Event of Default on September 1, 2003 if it is not cured by the Company by such date. The Company will not make the interest payment by the cure date. The Company is diligently pursuing a consensual financial restructuring process, is continuing discussions with several potential restructuring partners with the resources to provide new capital, has commenced discussions with noteholders, and expects to formulate a restructuring plan in the next 30 days. It is the Company's goal to complete a financial restructuring but there can be no assurance that it will be successful in achieving this goal. The Company is carrying on business as usual and continues to provide its high level of services and products to customers and continues to pay its suppliers on a timely basis. Operating Results For the third quarter of fiscal 2003, IUSI reported sales of $21.9 million, a $5.5 million or 33% increase over the $16.5 million reported for the third quarter of last year. Of this $5.5 million increase, $3.6 million is due to the increase in the value of the Euro as compared to the US dollar year over year. Gross profit for the quarter was $6.6 million, compared to $5.3 million for the same period last year. Gross margin, as a percentage of sales, was down slightly to 30.1% in the third quarter of fiscal 2003, compared to 31.8% for the same period last year, due to the higher steel prices and product mix. Fixed plant, selling and general administrative expenses were $6.9 million for the quarter, compared to $7.5 million last year, which included $1.0 million of plant relocation expenses. Fixed expenses were actually down 5% compared to last year on a currency neutral basis. The net loss for the third quarter of fiscal 2003 was $4.5 million or $0.40 per share, compared to a net loss of $10.1 million, or $0.88 per share for the same period last year. Last year's loss included a write down of $4.4 million relating to the escrow settlement with Metaltec Holding Corporation, the purchaser of the Union Metal Group of Companies. Cash used by operations for the three months ended June 30, 2003, was $4.3 million compared to $5.3 million for the same period last year. At June 30, 2003, net working capital was $15.5 million compared to $15.9 million at September 30, 2002, while total shareholders' equity deficit stood at $24 million. At June 30, 2003, the Company had drawn $1.6 million under its $9.6 million of operating lines of credit and is using $14.8 million of its $21.5 million factoring facility. These operating lines and factoring facilities are available to IUSI's European operations. Outlook The recent power blackout in Northeastern United States and Eastern Canada is a testament to the need for significant improvements and upgrades to the electricity transmission system. Since 1990, electricity demand in the United States has increased by 25%, but construction of transmission lines in the United States has declined by 30%. As funding is made available to finance these upgrades and additions to the electricity transmission structure, IUSI will be presented with increased opportunities. INVERNIA WEST: Shareholders Approve Lisheen Mine Asset Sale ----------------------------------------------------------- Ivernia West Inc. reported that shareholders have approved the sale to Anglo American plc of the Company's 50% participating interest in the Lisheen Mine. The Company anticipates that the Lisheen Sale will be completed during September 2003. (All dollar amounts are in United States dollars). Ivernia reported a net loss of $1.24 million for the second quarter, compared with a loss of $1.19 million for the second quarter of 2002. The primary reasons for the increased net loss during the second quarter of 2003 compared to the same period in 2002 were non-recurring costs associated with the Irish office closure following the Lisheen sale ($268,000) and the Magellan transaction fees ($284,000), substantially offset by a reduction in interest charges expensed during the period due to lower interest rates and reduced debt, reduced general and administrative costs following significant progress during the quarter in the closure of the Irish office, and an increase in the foreign exchange gain due to the weakening of the US dollar against the Euro, Australian dollar and Canadian dollar. Net cash utilized in investing activities during the second quarter of 2003 was $2.61 million representing additions to property, plant and equipment during the quarter. These additions were in respect of Magellan capitalized expenditure of which $1.29 million related to the buy out of a third party farm-in and royalty agreement for the Magellan property (note 3), and the balance of $1.32 million principally related to project engineering and final feasibility study expenditure in the quarter. This net cash utilized in investing activities compared to net cash generated of $8.41 million in the same period in 2002. Net cash generated from financing activities during the second quarter of 2003 was $3.85 million of which the main components were net $700,000 of loans from The Sentient Global Resources Fund, $1.15 million of advance proceeds against the issue of convertible notes and warrants of the Company, a $1.7 million contribution from Sentient for the Magellan joint venture, less $203,000 of deferred legal fees in respect of the Lisheen Sale and the convertible notes. This net cash generated from financing activities compared to net cash utilized of $6.63 million in the same period of 2002. As at June 30, 2003 the Company had a working capital deficiency of $29.90 million compared with a working capital deficiency of $24.74 million as at December 31, 2002. As at June 30, 2003, Ivernia had cash and cash equivalents of $1.36 million compared to $191,000 as at December 31, 2002. As at June 30, 2003 restricted cash and cash equivalents of $4.19 million represented a cash collateral deposit in respect of the Project Bonds compared to $3.47 million at December 31, 2002. At June 30, 2003, Ivernia's balance sheet shows that its total shareholders' equity dwindled to about $4.6 million from about $6.5 million six months ago. On June 19, 2003, Ivernia signed definitive agreements with Sentient for a joint venture to develop the Magellan Project. Pursuant to the Magellan Transaction, Sentient agreed to provide $4.6 million in financing to Magellan Metals. This amount was advanced by way of a $1.7 million subscription for 40% of the shares of Magellan Metals, $2.4 million in secured loans, and $0.5 million in notes which are convertible into shares of Magellan Metals. The total amount provided by Sentient under these arrangements was used to refinance certain secured loans granted by Sentient to IAHL since February 2003. On July 18, 2003, Ivernia signed a definitive agreement with Anglo for the purchase by Anglo of the Company's 50% participating interest in the Lisheen Mine. Pursuant to the Lisheen Sale, Anglo has agreed to purchase all of the shares of the Company's subsidiary Ivernia West Limited and its other subsidiaries holding the Company's interest in the Lisheen Mine for consideration consisting of an aggregate cash purchase price of $1.8 million and the assumption by Anglo of all the Company's existing debt obligations relating to the Lisheen Mine, including outstanding loans from the project's lenders to IWL's subsidiary Ivernia Lisheen Finance Limited in the amount of $73.19 million. Of the $1.8 million purchase price, $0.5 million has already been advanced to the Company by Anglo and the balance will be received on completion. A portion of the remaining $1.3 million will represent the repayment by IWL of certain outstanding indebtedness to the Company, which repayment will be funded by Anglo on or after closing of the Lisheen Sale. The Lisheen Sale received shareholder approval on August 28, 2003 and the Company anticipates that the Lisheen Sale will be completed during September 2003. As a result of the signing of the definitive agreement for the Lisheen Sale, the Company does not consider it appropriate to provide further operations review reports on the Lisheen Mine. Operations Review Magellan Project, Western Australia Significant progress was made on the Magellan Lead Project during the second quarter. Sentient funding was made available to progress the design work to develop the project and in particular to update and uprate the 2001 feasibility study to incorporate the additional reserves and resources from the Cano deposit, the recent pyrometallurgical test work and pilot plant tests and to update and enhance the engineering cost base to a bankable standard. Design engineering contractor appointed Proteus, a medium sized engineering design house, was commissioned to undertake the work to produce an engineered package to meet bankable standards and to prepare the documentation for the bidding process for a Procure, Construct and Management contract for the construction and commissioning of the Magellan Project. Complete flotation cell requirement purchased The entire flotation circuit was procured during the quarter from the closed Mt Todd gold mine in the Northern Territory of Australia. The equipment will be moved to the Magellan site during third quarter. The purchase of this equipment is particularly important for Magellan as it increases the flotation residence capacity by approximately 50% above the derived design requirements from the AMDEL test work and permits the use of a large volume open circuit first cleaning stage which was always regarded as highly desirable but difficult to justify at new equipment prices. It is anticipated that the additional residence time will be reflected in improved recoveries and treatment capacity over the original design. Simplified concentrate filtration process A major cost element of the plant is the filtration of the concentrate because of the fine nature of the material and the high particle specific gravities. Vacuum based systems do not function well as the cake is "self-blinding" preventing further water drainage. Conventional high-pressure systems are effective but the resultant cake while manageable is still of high moisture content. A compromise solution of incorporating a ceramic filter has been adopted as it utilizes a very thin cake thereby limiting the blinding effect. On-going testwork to prove up the viability of using a twin-belt press is producing encouraging results and if selected will provide a lower cost process than that currently selected. Magellan has taken a purchase option over two suitable second hand fully refurbished units. Further resource definition Infill drilling work on the Cano ore-body is currently in progress and further definition drilling will be undertaken at the adjacent Gama deposit as well as in the area between the Magellan and Cano deposits. The closer drill spacing on Cano is desirable as although the current spacing is adequate for the definition of proven and probable reserves, the experience in the Magellan deposit has shown that wider spacing tends to result in an underestimation of the ore grade from the geo-statistical constraints on this unusual collapsed structure. Furnace design Optimization work continued with BJ Industries and has resulted in a better than expected overall treatment rate, to such an extent that a two furnace plant will be sufficient to meet all medium term needs. A more economic source of sodium metal units for the furnace slag requirements is currently being investigated. Magellan project Deferred expenditure on the Magellan project during the three month and six month period ended June 30, 2003 was $2.61 million and $2.77 million respectively. In May 2003 the Company entered into a termination agreement with an Australian mining company to make a payment of A$2.10 million ($1.29 million) to terminate the 1997 farm-in agreement under the terms of which such mining company was entitled to a royalty of between A$1 and A$1.75 per ton of ore processed by Magellan Metals dependent on lead price. The $1.29 million is included in the above stated deferred expenditure for the three month period ended June 30, 2003 and was funded out of the proceeds of the Second Sentient Loan. On June 19, 2003 the Company signed definitive agreements with Sentient for a joint venture to develop the Magellan Project. Pursuant to the Magellan Transaction, Sentient agreed to provide $4.60 million in financing to the Company's subsidiary Magellan Metals Pty. Limited. This amount was advanced by way of a $1.70 million subscription for 40% of the shares of Magellan Metals, $2.40 million in secured loans and $0.50 million in notes which are convertible into shares of Magellan Metals. The total amount provided by Sentient under these arrangements was used to extinguish the First Sentient Loan and the Second Sentient Loan. On an ongoing basis, 40% of the funding for the Magellan Project will be provided by Sentient, with 60% to be funded by or on behalf of Ivernia. If Sentient acquires additional Magellan Metals shares upon the conversion of Magellan Notes, Sentient's share of the funding requirement will be increased, with retroactive effect from June 19, 2003, to the extent of its percentage share ownership following such conversion. In the event that the Company is unable to fund its share of contributions to the Magellan Project, Sentient will make contributions on the Company's behalf under an interim funding arrangement. Such contributions will be repaid by Magellan Metals to Sentient out of project cash flow with interest at a rate that provides Sentient with a 30% internal rate of return. The obligations of Magellan Metals under the Magellan Loans, the Magellan Notes and the Cash Flow Note are secured by a charge over the assets of Magellan Metals. In addition, IAHL and Polymetals have guaranteed Magellan Metals' obligations under these facilities. The guarantees are secured by equitable mortgages over the Company's shares of IAHL, Magellan Metals and Polymetals. The events of default which would entitle Sentient to increase its ownership of Magellan Metals to 51% would also entitle Sentient to exercise its security. Prior to the signing of the Magellan Transaction, on June 19, 2003, the Company completed a reorganization of its subsidiaries with the result that Ivernia Inc.'s interests in the Magellan Project and the Lisheen Mine are held through separate wholly- owned subsidiaries. Following the Magellan Transaction the Company now accounts for the Magellan joint venture by the proportional consolidation method. Under this method the Company has included in its balance sheet at June 30, 2003 its 60% share of the Magellan assets and liabilities. The 2.53% of the company's share of the Magellan joint venture that is currently held by minority interests will be acquired by the company on August 25, 2003. Magellan notes Pursuant to the Magellan Transaction, Magellan Metals issued $0.50 million of Magellan notes which are convertible into shares of Magellan Metals. Of the $0.50 million principle amount of the Magellan Notes, $0.40 million is convertible at Sentient's option into an additional 9% of the shares of Magellan Metals. If certain default events occur, then the final $0.10 million of Magellan Notes will become convertible into a further 2% of the shares of Magellan Metals. These default events include the inability of the Company to arrange, by January 31, 2004, project financing for Magellan Metals from a financial institution. As at June 30, 2003 the Company's 60% proportional share of the Magellan Notes was $0.30 million. Magellan loans Pursuant to the Magellan Transaction, Magellan Metals received $2.40 million of Magellan Loans from Sentient. The Magellan Loans bear interest at the rate of 15% per annum and are repayable from Magellan cash flow and must be repaid by June 19, 2012 or such earlier date on which Sentient ceases to be a shareholder. As at June 30, 2003 the company's 60% proportional share of the Magellan Loans was $1.44 million. LEAP WIRELESS: Providing Adequate Assurance to Five Utilities ------------------------------------------------------------- In view of the Utility Injunction Order, a host of utility companies sought further adequate assurance of future payments from the Leap Wireless Debtors. The Debtors engaged into meaningful discussions with these utilities, which discussions culminated into separate payment concessions. The utilities are AT&T Corp., BellSouth Telecommunications, Inc., Qwest Wireless, Qwest Communications Corporation, and Qwest Corporation. Accordingly, the Court approves the terms of the Stipulations between the Debtors and each of the Utilities: (1) The Debtors will cure all postpetition invoices the Utilities billed but remain unpaid as of June 30, 2003. The Debtors will pay the Postpetition Amounts to each Utility within five business days after each Utility provides a list of the unpaid invoices; (2) To the extent the Debtors and a Utility cannot agree on the Postpetition Amounts, the Debtors will pay any undisputed portion of the Postpetition Amounts. The parties reserve the right to request the Court for a final determination of any Postpetition Amounts. The Debtors will create a reserve under their reorganization plan equal to the disputed portion of the Postpetition Amounts to the extent the Court has not entered an order resolving the dispute; (3) The Debtors will remit a postpetition deposit to each of the Utilities, equal to the Utility's average expected charges for one-half month's utility service: Utility Deposit Amount ------- -------------- AT&T Corp $500,000 Bellsouth 750,000 Qwest Wireless 12,000 Qwest Communications 492,000 Qwest Corporation 156,000 (4) The Debtors will make prepayments to each of the Utilities, equal to one-half month's utility service: Utility Deposit Amount ------- -------------- AT&T Corp $500,000 Bellsouth 750,000 Qwest Wireless 13,650 Qwest Communications 499,182 Qwest Corporation 695,773 The invoice or request may be sent by any reasonable means available. The Debtors will identify one or more individuals to receive invoices or requests, and will provide to each of the Utilities the individuals' telephone and facsimile numbers, regular mail address, overnight delivery address and e-mail address. The Debtors cannot make the Prepayments without the invoice or request due to accounting and record-keeping concerns. Subsequent Prepayments will be made within 14 days of receipt of subsequent invoices or requests and it is the parties' intent that payments will be made on a regular basis -- every 15 days; (5) Pursuant to an Arbitration Award, Qwest Corporation will provide a $4,203,301 credit against Cricket Communications' Regulated Wholesale and Retail prepetition accounts. Any remaining balance due to Cricket will be applied to Cricket's Regulated Wholesale postpetition account. Rather than issuing a refund under the Arbitration Award, Qwest Corporation will also provide a $1,176,154 additional postpetition credit to Cricket's Regulated Wholesale Amounts; (6) Within 30 days of the end of each month, or in accordance with the parties' normal billing schedule, each of the Utilities will send to the Debtors bills for actual services provided during the previous month, or applicable billing cycle, so that the Debtors and each of the Utilities can reconcile the Prepayments to the actual services provided. After the reconciliation, to the extent the actual services for a given month exceed the Prepayments for the month, the Debtors will pay the difference to each of the Utilities within two business days of the reconciliation. To the extent the actual services for a given month are less than the Prepayments for the month, each of the Utilities will credit that amount to the next Prepayment to be made by the Debtors. The parties will use their commercially reasonable efforts to complete the reconciliation and payments as soon as practicable; (7) Upon the effective date of confirmation of the Debtors' Plan and payment by the Debtors of any amounts owing to each of the Utilities due to services provided after the Petition Date through the Plan Effective Date, each of the Utilities will refund to the Debtors: (i) the Postpetition Deposit, or (ii) the portion of the Postpetition Deposit remaining after application of the Postpetition Deposit to any unpaid amounts owing for postpetition services provided before the Plan Effective Date by each Utility; (8) On the Plan Effective Date AT&T will refund to the Debtors the $309,333 portion of the Postpetition Deposit or the portion of the Postpetition Deposit remaining after application of the Postpetition Deposit to any unpaid amounts owing for postpetition services; (9) The Debtors and each of the Utilities will designate individuals to deal with late payments, missed payments and failures to appropriately credit past payments in these Chapter 11 cases; (10) In the event the Debtors fail to timely pay any undisputed postpetition charges for Utility Services, each of the Utilities will send, via facsimile, to the Debtors or their counsel, a notice of default. The Notice, which will include the amount outstanding, the billing date, the invoice number and the Debtors' account number. The Debtors will have three business days from receipt of the Notice to cure any default by wire transfer or similar good federal funds. However, nothing in the Stipulations will prohibit each of the Utilities from pursuing those remedies available to it under the terms of its contract with the Debtors, so long as the terms of the contracts afford the Debtors a longer period of time to cure the default; (11) In the event the Debtors do not cure Payment Defaults within three business days of receipt of the Notice of Default, each of the Utilities may, through an Emergency Motion, petition the Court for immediate payment of the outstanding invoices, or for relief from the automatic stay to discontinue Utility Services to the Debtors; provided, however, that the Debtors' objections will be returnable no earlier than two business days after the filing and service of the petition; (12) The Debtors will provide the Utilities, upon written request, with their monthly operating reports and cash position report; (13) Any disputes with respect to charges or reconciliations for the Utility Services provided by each of the Utilities may be made by Motion to the Court. The Debtors will not be required to segregate any disputed amounts during the resolution of the dispute; (14) Except as expressly permitted by a Court order, the payment made by the Debtors after the Petition Date will be applied by each of the Utilities toward the postpetition Utility Services and will not be used to pay any amounts outstanding to each of the Utilities for prepetition Utility Services or as a deposit for future Utility Services. Likewise, the Debtors may not use credits earned or arising prepetition to reduce their postpetition obligations; (15) Each of the Utilities will have the right to petition for reconsideration of the Stipulation upon a material adverse change in the Debtors' liquidity or other material change in the Debtors' circumstances that could affect the Debtors' ability to pay for future Utility Services. There will be a presumptive right to reconsideration if the amount of Cricket Communications' weekly cash balances fall below 90% of the Cash Balance line item in its budget; and (16) The Stipulations are without prejudice to the Debtors' right to seek, by adversary proceeding or otherwise, an order prohibiting the termination of a Utility Service based on their postpetition default, each Utility's right to alter the terms for the provision of new postpetition Utility Service ordered by the Debtors pursuant to a prepetition agreement, tariff or other arrangement, or each party's right to seek an order determining that a particular provider is or is not a Utility Company or that a service is or is not a Utility Service. (Leap Wireless Bankruptcy News, Issue No. 9; Bankruptcy Creditors' Service, Inc., 609/392-0900) LOUDEYE CORP: Raises $12.2 Mill. in Private Placement Financing --------------------------------------------------------------- Loudeye Corp. (Nasdaq: LOUD), a leading provider of services for the management, promotion and distribution of digital media, has entered into a definitive agreement with certain institutional investors in connection with a private placement of shares of the Company's Common Stock raising gross proceeds to the Company of approximately $12,150,000. Loudeye has agreed to sell an aggregate of 7,838,708 shares of Common Stock at $1.55 per share. The investors and placement agent will also receive warrants to purchase an aggregate of 979,839 shares of common stock at an exercise price of $2.00 per share. "This financing strengthens Loudeye's institutional shareholder base, cash position and balance sheet and puts us in a stronger position to increase our market share within the digital media distribution space," said Jeff Cavins, Loudeye's president and chief executive officer. "We are pleased with the confidence shown in Loudeye by these institutional investors." Loudeye provides the business infrastructure and services for managing, promoting and distributing digital content for the entertainment and corporate markets. For more information, visit http://www.loudeye.com As reported in Troubled Company Reporter's April 16, 2003 edition, the company's independent auditors issued in connection with the company's audited financial statements for the year ended December 31, 2002 contains a statement expressing substantial doubt regarding the company's ability to continue as a going concern. While the company took a number of steps in 2002 to reduce its operating expenditures and conserve cash, the company has suffered recurring losses and negative cash flows, and has an accumulated deficit. The company is currently pursuing efforts to increase revenue, reduce expenses and conserve cash in the near future, however can provide no assurances that these efforts will be successful. LTV CORP: Settles Disputes with USA, PA, Ohio, Indiana & Chicago ---------------------------------------------------------------- The LTV Steel Debtors, represented by Leah J . Sellers, Esq., and Nicholas M. Miller, Esq., at Jones Day in Cleveland, bring a Motion asking Judge Bodoh's blessings on an agreed stipulation, order and release among: (1) all of the LTV Debtors, including LTV Steel Corp., Jones & Laughlin Steel Incorporated, The LTV Corporation, and VP Buildings, Inc., but excluding any of the Copperweld Debtors; (2) the United States of America in the form of the Environmental Protection Agency; (3) the Commonwealth of Pennsylvania through The Pennsylvania Department of Environmental Protection, The Pennsylvania Fish and Boat Commission, and The Pennsylvania Game Commission; (4) the State of Ohio; (5) the State of Indiana through the Indiana Department of Environmental Management, and Indiana Department of Natural Resources; (6) the City of Chicago; and (7) Travelers Indemnity Company and Travelers Casualty and Surety Company. The US EPA is represented in this Stipulation by Thomas L. Sansonetti, Esq., Assistant Attorney General, and Steven R. Baer, Esq., Senior Counsel, in Washington, and by Gregory A. White, Esq., United States Attorney in Cleveland. These attorneys are joined by John Peter Suarez, Esq., Assistant Administrator for Enforcement and Compliance Assurance, and by John H. Wheeler, Esq., Senior Attorney with the Office of Enforcement and Compliance Assurance in Washington. The Commonwealth of Pennsylvania is represented by Michael D. Bedrin, Esq., Chief Counsel, Gail A. Myers, Esq., and Diana J. Stares, Esq., Department of Environmental Protection, by Dennis T. Guise, Esq., and Laurie E. Shepler, Esq., at The Pennsylvania Fish and Boat Commission, and by Vernon R. Ross, Executive Director, and William R. Pouss, Esq., Chief Counsel, for The Pennsylvania Game Commission. The City of Chicago participates through N. Marcia Jimenez, Commissioner, and Diane M. Pezanoski, Esq., Deputy Corporation Counsel, while the State of Indiana is represented by Steve Carter, Esq., as Attorney General, and Timothy J. Junk, Esq., Trial Counsel and Deputy Attorney General. The Indiana Department of Environmental Management appeared through Lori Kaplan, Commissioner, and the Indiana Department of Natural Resources through John M. Davis, Deputy Director. The State of Ohio participated through John K. McManus, Esq., Assistant Attorney General, Environmental Enforcement Division of the office of Jim Petro, Esq., Attorney General. The Travelers Insurers are represented by Lee D. Powar, Esq., at Hahn Loeser & Parks LLP in Cleveland, and by Lyndall J. Huggler, Esq., and Thomas M. Ferguson, Esq., at Blumling & Gusky LLP in Pittsburgh. The Environmental Claims The Governments have asserted that the LTV Debtors bear legal responsibility to the Governments under various federal, state and local environmental statutes, rules, regulations and ordinances for liquidated and non-liquidated, contingent and non-contingent, general unsecured, priority and administrative environmental clams and may, in the future, assert that the LTV Debtors bear legal responsibility to the Governments under those statutes, rules, regulations and ordinances for additional environmental claims. The Governments have asserted that the Environmental Claims total in excess of several hundred million dollars. The Governments further assert that the Environmental Claims include priority and administrative claims against the LTV Debtors' estates. They have also asserted that many of such claims are entitled to superpriority status under the reasoning of "Midlantic Nat'l Bank v. New Jersey Dept of Envtl. Prot.," 474 U.S. 494 (1986). Potential Means of Redress for the Environmental Claims Certain limited sources of funds are available to satisfy the Environmental Claims. First, on June 30, 2000, Travelers, LTV and LTV Steel entered into a Settlement, Compromise and Release Agreement that provides that Travelers will make certain funding available to reimburse LTV Steel and certain affiliates over time, subject to specified funding caps, for certain environmental expenditures at facilities formerly owned and operated by Republic Steel and its subsidiaries. Second, LTV Steel has insurance and reinsurance from carriers other than Travelers that cover environmental liabilities at facilities formerly owned and operated by Jones & Laughlin, YS&T and Republic and their subsidiaries. LTV Steel presently is engaged in and intends to initiate additional discussions with these carriers to determine the possibility of settling environmental claims that the Debtors have and anticipate having against these insurers and reinsurers. Third, as part of the APP, a Government Regulation Reserve in the amount of $25 million was established. The purpose of the GRR has been to provide a source of funds for satisfying governmental requirements not specifically contemplated in connection with the implementation of the APP, including any environmental expenditures not anticipated in the APP budget. By an order of the Court, an amount of $2,187,570.00 has been withdrawn from the GRR in connection with a settlement entered into with the New York State Department of Environmental Conservation, the City of Buffalo, New York and the City of Buffalo Urban Renewal Agency, leaving a balance in the GRR of $23,188,010.21, including interest, as of April 30, 2003. The Stipulation The Stipulation fully resolves, compromises and settles the disputes and claims between the Debtors and the Governments relating to the Environmental Claims and the parties' respective rights and obligations under the Travelers Agreement. The principal terms of the Stipulation are: (a) Transfer of Certain GRR Funds. In accordance with certain written instructions from the Governments, LTV Steel shall transfer from the GRR the sum of $14,146,253.00 to the Governments. The balance of funds in the GRR will then revert to the LTV Steel estate to be available to satisfy winddown expenses and the claims of LTV Steel's administrative claimants; (b) Assignment of Insurance Settlement Discussions Proceeds. The LTV Debtors shall assign to the Governments all net proceeds to which the LTV Debtors become entitled pursuant to the Insurance Settlement Discussions or, if the Insurance Settlement Discussions are not successful, the net proceeds to be paid to the LTV Debtors as a result of any ensuing coverage litigation; (c) Payment by Travelers. Travelers shall pay the sum of $15,400,000.00 to the Governments; (d) Transfer of Certain Property. LTV Steel shall transfer to Pennsylvania, free and clear of all liens, LTV Steel's entire interest in the mine properties; (e) Resolution of Environmental Claims. Upon approval of the Stipulation, each of the Governments shall be deemed to have compromised, settled and fully resolved the Environmental Claims against the LTV Debtors; (f) Covenants of the United States. (i) The United States covenants not to sue and agrees to forebear from bringing any civil administrative or judicial proceeding against the LTV Debtors (and certain persons and entities related to the LTV Debtors) relating to certain Environmental Claims; (ii) The United States will not initiate or pursue any other civil administrative or judicial proceeding against the LTV Debtors pursuant to laws having to do with the protection of public health, natural resources and/or the environment; (iii) The United States covenants not to sue and will not bring any civil administrative or judicial proceeding against Travelers (and certain persons and entities related to Travelers) relating to the Travelers Agreement, insurance policies, or surety bonds issued by Travelers for the account of any of the LTV Debtors and relating to the alleged liability of the LTV Debtors under environmental laws. This covenant not to sue extends to any insurer or reinsurer that settles with the LTV Debtors pursuant to the Insurance Settlement Discussions; (g) Covenants of the LTV Debtors. The LTV Debtors will not bring any claims against the United States with respect to sites referred to in the Stipulation; (h) Covenants of Travelers. Travelers will not bring any claims against the United States based on the Travelers Agreement or the LTV Policies with respect to sites referred to in the Stipulation. (i) Release by Pennsylvania, Ohio, Indiana and Chicago. Same as United States. (j) Preservation of Certain Rights. The Stipulation will not affect the rights that the LTV Debtors and the Governments may have to seek and obtain payment for the full amount of the Environmental Claims from any insurer that fails to settle with the Debtors through the Insurance Settlement Discussions. The Stipulation also shall not affect any rights that the LTV Debtors may have against any third parties. Emphasizing the importance of this global settlement, the Debtors argue that it's clear the applicable standards for judicial approval of settlements plainly are met here. Ms. Sellers comments wryly that it cannot reasonably be disputed that litigation involving environmental claims in bankruptcy is extraordinarily complex and time-consuming. For the Debtors to challenge the priority and amount of each of the Environmental Claims individually would drain enormous resources from LTV Steel's limited estate. This outcome "benefits no one and potentially poses grievous harm to LTV Steel's administrative creditors by further diluting their recoveries -- perhaps substantially." The Debtors believe that, without the settlement of the Environmental Claims memorialized in the Stipulation, their estates would be mired in contentious and expensive litigation for years to come, with no guarantee of any better outcome than that already achieved consensually in the Stipulation. During that time, the Debtors would have to continue expending hundreds of thousands of dollars per month on environmental demands such as the pumping and treating of acid mine drainage at the Pennsylvania coal mines. Moreover, the aggregate amounts to be paid to the Governments under the Stipulation are significantly less than the amount of the Environmental Claims as asserted by the Governments. Further, pursuant to the Stipulation, the Governments have provided covenants not to sue and released the LTV Debtors (and, hence, their estates) from any further liability relating to the Environmental Claims. Accordingly, the Stipulation benefits the creditors of the LTV Debtors' estates. Finally, the Debtors have shared the terms of the Stipulation as it has evolved over time with the advisors to the Committees, and the Debtors believe that the settlement embodied in the Stipulation is acceptable to the Committees. Accordingly, the Debtors believe that the Stipulation represents a favorable result for their estates and that its terms are fair, reasonable and appropriate. (LTV Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 609/392-00900) MAJESTIC STAR: Planned Debt Refinancing Prompts Ratings Watch ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B' corporate credit rating for Majestic Star Casino LLC on CreditWatch with positive implications following the company's announcement that it plans to refinance the existing debt at both Majestic Star and at its unrestricted subsidiary, Majestic Investor Holdings LLC. Standard & Poor's has determined that if the transaction closes under terms substantially in line with those described, the corporate credit rating for Majestic Star will be raised to 'B+'. At the same time, Standard & Poor's assigned its 'BB-' rating to Majestic Star's proposed $80 million four-year senior secured credit facility, and a 'B' rating to its proposed $270 million senior secured notes due 2010. Gary, Indiana-based Majestic Star is a casino owner and operator. Pro forma for this transaction, Standard & Poor's expects that total debt outstanding at June 30, 2003, would have been $306 million. Most of the note proceeds, along with some cash on hand and expected borrowings under the new credit facility, will be used to redeem Majestic Star's existing $130 million 10.875% senior secured notes due 2006 and to tender for the existing $152.6 million 11.653% senior secured notes due 2007 outstanding at Majestic Investor, with the remaining proceeds to be used to pay fees and expenses. Standard & Poor's expects that upon closing of the transaction it will withdraw its corporate credit rating for Majestic Investor as well as the ratings on the issues that will be refinanced. "The expected upgrade reflects a change in the company's financing strategy such that the funding for all major subsidiaries will flow through the parent, with such loans in turn guaranteed by each major subsidiary," said Standard & Poor's credit analyst Peggy Hwan. As a result, lenders and bondholders will rely on a more diversified pool of assets (three casinos instead of one) for repayment. The Las Vegas-based property, Fitzgerald's Las Vegas, which was formerly part of the Majestic Investor financing group, is now expected to be an affiliated company rather than a direct subsidiary within the Majestic Star family of companies. This property has historically been an insignificant contributor to cash flow, and is now expected to meet any funding needs on its own, or through the support of the ultimate owner of Majestic Star, Don Barden Development, Inc. Restrictions are expected to exist in the bond and bank facility that limit the funding of this entity by Majestic Star. MALDEN MILLS: Massachusetts Court Confirms Reorganization Plan -------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts confirmed Malden Mills Industries, Inc.'s Plan of Reorganization after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) the Plan does not provide for any change in rates over which a governmental regulatory commission has jurisdiction; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Plan provides for the continuation of all retiree benefits in compliance with 11 U.S.C. Sec. 1114. The Plan provides for the establishment of a Creditor Trust to which certain property of the Debtors will be assigned or transferred on or after the Effective Date. The Creditor Trust will be responsible for liquidating and reducing to cash the Trust Assets and making distributions of cash to General Unsecured Creditors in accordance with the Plan. Any executory contracts or unexpired leases which have not expired by their own terms are deemed rejected by the Debtors on the Effective Date. Malden Mills Industries, Inc., a worldwide producer of high- quality branded fabric for apparel, footwear and home furnishings, filed for chapter 11 protection on November 29, 2001 (Bankr. Mass. Case No. 01-47214). Richard E. Mikels, Esq., and John T. Morrier, Esq., at Mintz, Levin, Cohn, Ferris represent the Debtors in their restructuring efforts. MARINER POST-ACUTE: Wants Approval of Indiana Family Settlement --------------------------------------------------------------- The Mariner Post-Acute Network Debtors ask the Court to approve a settlement agreement with the Indiana Family and Social Services Administration. Before the Petition Date, Etta R. Wolfe, Esq., at Richards, Layton, & Finger, PA, in Wilmington, Delaware, relates, that the Debtors' subsidiary, Evergreen Healthcare LTD, filed a reimbursement complaint against (1) Cheryl Sullivan, Individually, in her capacity as Secretary of the Indiana Office of the Secretary of Family and Social Services, (2) James M. Verdier, Individually, in his capacity as assistant Secretary for the Indiana Office of Medicaid Policy and Planning, (3) the Indiana Office of the Secretary of Family and Social Services, and (4) the Indiana Office of Medicaid Policy and Planning. Evergreen commenced the lawsuit before the Hamilton County Superior Court in the State of Indiana. On November 15, 1995, the Hamilton Court entered judgment in Evergreen's favor. However, an issue remained unsettled as to the amount, if any, that Indiana Family owed for certain reimbursement requests Evergreen submitted for the period of December 1, 1993 through February 1994. Before the Petition, the Indiana Family and the Debtors did not resolve the issue. In the Debtors' bankruptcy cases, the Indiana Family filed three claims: Claim No. Amount --------- ------ 9500 $9,145,984 4680 1,164,347 1033 1,164,347 The parties now wish to resolve all issues relating to the Lawsuit and the Indiana Family Claims by entering into a Settlement Agreement. Accordingly, Indiana Family agrees to withdraw all its three claims. In turn, the Debtors will dismiss with prejudice four pending actions for administrative review in Claim Nos. 1033 and 4680: (a) Willow Ridge Healthcare Provider No. 100274830 Cause No. S9901-006 (b) Pine Tree Healthcare Center Provider No. 100274950 Cause No. S99-007 (c) Evergreen Healthcare Ltd. Cause No. A9611-247 (d) Evergreen Healthcare Ltd. Cause No. A9604-76 The Debtors will also release the Indiana Family from any and all claims, demands, causes of actions and judgments with respect to the Lawsuit. Ms. Wolfe asserts that the Agreement represents a fair compromise and maximizes value to the Debtors' estate by reducing risks and attorneys' fees inherent in litigating these issues. (Mariner Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 609/392-0900) MIDWEST EXPRESS: Bank Credit Facility Extended Until November 26 ---------------------------------------------------------------- Midwest Express Holdings, Inc. (NYSE: MEH) has amended the agreement relating to its bank credit facility to extend the existing credit facility on a short-term basis to November 26, 2003. The amendment gives the company additional time to seek and obtain long-term financing, while maintaining existing letters of credit issued under the credit facility. As of August 29, 2003, the company had repaid all borrowings under the bank credit facility, and had outstanding letters of credit totaling approximately $15.8 million. The letters of credit are primarily used to support financing of the company's maintenance facilities. Midwest Airlines features nonstop jet service to major destinations throughout the United States. Skyway Airlines, Inc. - its wholly owned subsidiary - operates Midwest Connect, which offers connections to Midwest Airlines as well as point-to-point service between select markets on regional jet and turboprop aircraft. Together, the airlines offer service to 50 cities. More information is available at http://www.midwestairlines.com As reported in Troubled Company Reporter's August 26, 2003 edition, Midwest Express Holdings reached labor and aircraft financing restructuring agreements with its unions and aircraft lessors and lenders have been fully documented and finalized on terms that the company had anticipated. The company expects these restructuring measures to reduce costs by approximately $20 million annually going forward. The negotiation of these agreements enabled the company to avert the necessity of filing for reorganization under Chapter 11 of the Bankruptcy Code. Outlining the next step for the company, Robert S. Bahlman, Midwest's chief financial officer, noted, "Now we are in a better position to secure additional financing to complete our restructuring program." MILACRON INC: Sells Minnesota Twist Drill to MTD Acquisition Inc ---------------------------------------------------------------- Milacron Inc. (NYSE: MZ), a leading supplier of plastics processing equipment and supplies and industrial fluids, announced the sale of its Minnesota Twist Drill business to MTD Acquisition Inc., a newly formed company that includes a few employees of Minnesota Twist Drill and a private investment group. With about 50 employees, Minnesota Twist Drill manufactures drills for wood and soft-metal applications and markets them mainly through private branding for commercial and industrial markets and the do-it-yourself consumer. The unit, based in Chisholm, Minnesota, had 2002 sales of approximately $10 million and was acquired by Milacron in 1997. "Our intention is to operate Minnesota Twist Drill and continue to serve our customers," said Scott Allison, President of MTD Acquisition Inc. "The economic downturn coupled with increased foreign imports has squeezed margins in recent years, so we need to trim costs and increase productivity. We feel that our hard working and experienced employee base will enable us to do just that. If we are competitive, the sales should come our way," he added. Sale price and other specific terms of the transaction were not disclosed. The transaction is not expected to have a material effect on Milacron's sales, earnings or cash flow in 2003. Milacron continues to operate its other round tool units in Pittsfield, Massachusetts and Millersburg, Pennsylvania. "We wish the entire team at Minnesota Twist Drill a successful future," said Ronald D. Brown, Milacron chairman and chief executive officer. "Their contributions and years of dedication to Milacron are very much appreciated." First incorporated in 1884, Milacron is a leading global supplier of plastics-processing technologies and industrial fluids, with about 3,500 employees and major manufacturing facilities in North America, Europe and Asia. For further information, visit http://www.milacron.com * * * Update on Revolving Credit Facility As reported in Troubled Company Reporter's August 18, 2003 edition, Milacron reached an agreement with its principal bank group, amending certain terms of its revolving credit facility. The purpose of the amendment is to relax certain financial covenants through the end of 2003 in light of the extended downturn in the plastics industries and to allow Milacron to execute its recently announced initiatives to return to profitability. In the newly amended agreement, the covenant specifying minimum levels of cumulative EBITDA (earnings before interest, taxes, depreciation and amortization - including adjustments as defined in the agreement) has been relaxed for the third and fourth quarters. In addition, the limit on restructuring expenses has been raised to allow Milacron to move forward with profit- improvement initiatives designed to save the company approximately $20 million annually. The facility is now capped at $65 million, of which $54 million is currently utilized. The availability of the remaining $11 million is subject to certain new restrictions based on the company's cash position. MIRANT CORP: Pepco Balks at Move to Cancel Power Purchase Pacts --------------------------------------------------------------- On Thursday, Aug. 28, 2003, Mirant Corporation filed with the U.S. Bankruptcy Court for the Northern District of Texas a motion for an order authorizing the rejection by Mirant of its contractual commitment to reimburse Potomac Electric Power Company for the cost of the electricity supplied to Pepco under the terms of power purchase contracts with third parties. Mirant's commitment to reimburse Pepco was made in 2000 as part of Mirant's agreement to buy Pepco's power plants. The motion, filed by Mirant with the Bankruptcy Court on Aug. 28, did not seek to reject the transition power agreements under which Mirant supplies Pepco's Standard Offer Service obligations. In a press release issued Aug. 28, Mirant announced that it is attempting to renegotiate the terms of the TPAs with Pepco. Also on Aug. 28, the Bankruptcy Court, in an ex parte proceeding, issued a temporary restraining order that temporarily enjoins Pepco from initiating or continuing any proceedings, or encouraging any person or entity from initiating or continuing, any proceedings before the Federal Energy Regulatory Commission that seek to require Mirant to continue to perform its obligations under its contract with Pepco. It also temporarily enjoins FERC from taking any action to require or coerce Mirant to abide by the terms of its commitments. A preliminary injunction hearing has been scheduled for Sept. 10 at which Pepco will request that the injunction be vacated. According to Mirant's filing with the Bankruptcy Court, Mirant sought the TRO in an effort to preempt FERC from taking action, either on its own or as requested by others, to require Mirant to comply with its contractual obligations, as FERC had done in an earlier case involving NRG Energy, Inc. In response to these events, Dennis R. Wraase, President and Chief Executive Officer of Pepco Holdings, Inc. (NYSE: POM), Pepco's parent company, said, "Mirant's attempt to prevent Pepco from advocating for its customers and to circumvent FERC's jurisdiction is unprecedented. As we have stated previously, we intend to oppose Mirant's legal maneuvers to avoid its financial responsibilities to Pepco and Pepco's customers through all legally available avenues." Pepco Holdings, Inc. is a diversified energy company with headquarters in Washington, D.C. Its principal operations consist of Pepco and Conectiv Power Delivery, which deliver 50,000 gigawatt-hours of power to more than 1.8 million customers in Washington, Delaware, Maryland, New Jersey and Virginia. PHI engages in regulated utility operations by delivering electricity and natural gas, and provides competitive energy and energy products and services to residential and commercial customers. MIRANT: Cleco to Seek Damages if Perryville Tolling Pact Rejected ----------------------------------------------------------------- Cleco Corp. (NYSE:CNL)(PCX:CNL) announced its Perryville Energy Partners LLC subsidiary intends to seek damages against Mirant Corp., and its affiliates if a bankruptcy court overseeing the company's Chapter 11 filing approves a request from Mirant's energy marketing subsidiary to reject its tolling agreement with PEP. Mirant America's Energy Marketing L.P., holds a 20-year tolling agreement for the entire output of the 725-megawatt Perryville Power Station. MAEM filed the request to reject the agreement as part of its bankruptcy proceedings. While PEP plans to seek damages against Mirant Corp. and other affiliates through bankruptcy court, PEP also intends to pursue options to realize the value of the plant either through marketing the plant's output or selling the facility. Cleco Corp. is an energy services company headquartered in Pineville, La. It operates a regulated electric utility that serves 260,000 customers across Louisiana. Cleco also operates a wholesale energy business that has approximately 2,100 megawatts of generating capacity. For more information about Cleco, visit http://www.cleco.com MIRANT CORP: Gets Interim Nod to Hire Blackstone as Advisors ------------------------------------------------------------ On an interim basis, the U.S. Bankruptcy Court authorizes the Mirant Debtors to employ Blackstone Group LP, effective July 14, 2003; provided however, that the Indemnification Provisions and the Success Bonus will not become effective until the Debtors make a sufficient showing that: (a) Blackstone requires terms substantially similar to the Indemnification Provisions and Success Bonus in connection with its employment by clients other than the Debtors; and (b) the Debtors, after a diligent investigation, were unable to find a person or entity who was willing to be employed on terms less onerous than those set forth in the Indemnification Provisions. * * * Pursuant to an agreement dated June 1, 2003, Blackstone agreed to: (a) assist in the evaluation of the Debtors' businesses, operations and prospects, including evaluation of proposed divestitures and other strategic transactions; (b) assist in the development, review and analysis of the Debtors' long-term business plan and related financial projections, including the development of a detailed financial model of the Debtors and the assessment of the restructuring objectives developed by the Debtors; (c) assist in the development of financial data and presentations to the Debtors' Boards of Directors -- or committees thereof -- various creditors, any official committees formed in a Chapter 11 proceeding, and other third parties; (d) analyze the Debtors' financial liquidity and evaluate alternatives to improve such liquidity; (e) analyze various restructuring scenarios and the potential impact of these scenarios on the value of the Debtors and the recoveries of those stakeholders impacted by the Chapter 11 proceeding; (f) assist in the development of a restructuring plan and provide strategic advice with regard to restructuring or refinancing the Debtors' obligations; (g) evaluate and assist in the determination of the Debtors' liquidity needs, debt capacity and alternative capital structures; (h) render financial advice to the Debtors and participate in meetings or negotiations among the Debtors and their creditors, suppliers, lessors and other interested parties with respect to any of the transactions contemplated in the Blackstone Agreement; (i) value securities offered by the Debtors in connection with a restructuring and determine a range of values of the Debtors on a going concern basis; (j) advise the Debtors and participate in negotiations with lenders with respect to potential waivers or amendments of various credit facilities; (k) advise the Debtors on the timing, nature and terms of new securities, other consideration and other inducements to be offered to creditors pursuant to the restructuring; (l) assist the Debtors in matters related to the Debtors' proposed DIP financing, and any other financing in these cases, including identifying potential sources of capital, assisting in the due diligence process, and negotiating the terms of any proposed financing, as requested; (m) provide testimony in any Chapter 11 case concerning any of the subjects encompassed by Blackstone's financial advisory services, if appropriate and as required; (n) assist the Debtors and the Debtors' counsel in preparing documentation required in connection with the restructuring; (o) assist the Debtors in the preparation of a liquidation analysis in connection with any proposed plan of reorganization; (p) assist and advise the Debtors concerning the terms, conditions and impact of any transaction; (q) provide advice to and attend meetings of the Board of Directors of the Debtors, and any relevant committees thereof; and (r) provide other advisory services as are customarily provided in connection with the analysis and negotiation of a restructuring as requested and mutually agreed. In connection with its employment, Blackstone will charge the Debtors in accordance with this Fee Structure: (a) A $225,000 monthly non-refundable advisory fee in cash with the first two Monthly Fees payable on the execution of the Blackstone Agreement by both parties and additional installments of the Monthly Fee payable in advance on each monthly anniversary of the Effective Date until the earlier of the completion of the Restructuring or the termination of Blackstone hereunder. Blackstone agrees that if during any period its activity in connection with its retention is de minimis, the Blackstone will reduce the Monthly Fee for the period to reflect the lack of activity; (b) A Restructuring Fee equal to $7,000,000. The Restructuring Fee will be deemed earned when the Company first sends definitive offer documents seeking to refinance, restructure, repurchase, modify or extend in a material respect a substantial portion of its existing credit facilities, existing notes, bonds or debentures, which mature prior to 2006 pursuant to terms approved by the Board of Directors. The Restructuring Fee will be payable upon the consummation of a plan of reorganization; and (c) Reimbursement of all necessary, reasonable and documented third party out-of-pocket expenses incurred during its engagement, including but not limited to, travel and lodging, direct identifiable data processing, word processing and communication charges, courier services, working meals, and other necessary expenditures, payable upon rendition of invoices setting forth in reasonable detail the nature and amount of such expenses. In connection therewith, the Debtors will maintain a $25,000 expense advance for which Blackstone will account upon termination of the Agreement. (Mirant Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392- 0900) MOBILE COMPUTING: June 30 Net Capital Deficit Balloons to $10MM --------------------------------------------------------------- Mobile Computing Corporation (TSX:MBL) reported financial results for the second quarter ended June 30, 2003. The Company continues to negotiate definitive agreements with respect to its previously announced restructuring. In conjunction with these negotiations, The VenGrowth Investment Fund Inc. and The VenGrowth II Investment Fund Inc. have agreed to extend the maturity date of the Company's convertible debentures due August 8, 2003 until September 3, 2003. The restructuring transaction is described in further detail below. Second Quarter Results Review of Operations The second quarter of 2003 showed a marked improvement from the first quarter of the year as we successfully completed an m-LINX pilot at Sheetz Inc. and rolled out the balance of the products in the second quarter. We also continued the delivery of products to Ultramar under a contract signed in 2002. This substantially completes the current Ultramar contract. Although there are a number of positive signs in the markets for our products, we still see market weaknesses that continue to delay purchases and lengthen sales cycles for at least the balance of 2003. During the second quarter we announced a contract with Grand & Toy to equip its fleet of office supply delivery vehicles with Perfect Delivery, MCC's mobile route delivery solution. We are scheduled to roll out test units in the third quarter with a full roll out to follow. Review of Financial Results Consolidated sales for the three months ended June 30, 2003 were $3,138,000, an increase of $733,000 or 30% from the consolidated sales of $2,405,000 for the same period in 2002. The increase is attributable to the roll out of a major sale to Sheetz Inc. and the continued fulfillment of a contract signed in the fall of 2002 with Ultramar Limited in the Mobile Systems division, offset by lower revenues in the Distribution Systems division due to lower sales of Perfect Pic and reduced support and programming revenue. Consolidated sales for the first half of fiscal 2003 were $5,022,000 compared to $6,145,000 for the first half of 2002, a decrease of $1,123,000. The decrease was due to lower consolidated revenue in the first quarter of 2003 related to the difficult economy which lengthened sales cycles and lengthened pilots in both divisions and the lower US dollar relative to the Canadian dollar. Consolidated gross margin for the three months ended June 30, 2003 was $1,260,000, an increase of $513,000 from the same period in 2002. This increase was due to increased sales levels in 2003, a decrease in costs as a result of the reorganization undertaken by the Company in May of 2002 and an increased portion of higher margined software sales in 2003. In percentage terms, the gross margin for the three months ended June 30, 2003 was 40% of consolidated sales compared to 31% for the same period in 2002. The consolidated gross margin for the first half of 2003 was $1,829,000 compared to $2,042,000 in 2002. The gross margin percentages increased to 36% in the first half of 2003 compared to 33% in for the same period in 2002. This increase was attributable to the improvement in gross margins in the second quarter of 2003 compared to the same period in 2002 Operating expenses, excluding foreign exchange and restructuring charges decreased by 49% in the second quarter of 2003 to $1,153,000 from $2,240,000 the same period last year. The decrease was as a result of the reorganization that we undertook in May 2002 and continued stringent cost controls. For the first half of 2003, operating expenses decreased by 46% to $2,513,000 from $4,678,000 in the same period in 2002. The Company reported an EBITDA loss of $339,000 before depreciation, amortization, interest expense and income taxes for the three months ended June 30, 2003, compared to an EBITDA loss of $3,280,000 for the same period in 2002. Excluding foreign exchange losses and the 2002 reorganization charge, the EBITDA for the second quarters of 2003 and 2002 was a profit of $107,000 and loss of $1,493,000, respectively. The improvement in the second quarter EBITDA, excluding foreign exchange losses and reorganization charge is attributable to increased sales and margins in 2003 compared to 2002 and the reduction of operating costs of approximately $1,087,000 in 2003 as a result of the May 2002 reorganization and other cost cutting measures. EBITDA loss excluding foreign exchange losses and reorganization charges for the six months ended June 30, 2003 was a loss of $684,000 compared to a loss of $2,636,000 in the same period in 2002. The Company incurred a consolidated loss for the three months ended June 30, 2003 of $988,000, a decrease of $3,176,000 when compared to a loss of $4,164,000 (including a restructuring charge of $1,575,000) for the same period in 2002. The loss for the first half of 2003 was $2,723,000, compared to the loss of $6,208,000 (including a restructuring charge of $1,575,000) for the same period in 2002 Restructuring Transaction Notwithstanding several months of discussions with the holders of the Company's First and Second Debentures and an examination of various strategic alternatives, the Company has been unable to refinance the debentures. The Company announced on July 28, 2003 that it has agreed to enter into a series of transactions with The VenGrowth Investment Fund Inc. (holder of 20% of the common shares of the Company and $500,000 of its convertible debentures) and The VenGrowth II Investment Fund Inc. (holder of $9.5 million of the Company's convertible debentures) and NBC Canada West Capital Inc. for a significant restructuring of the Company. In connection with these events, VenGrowth has agreed to extend the maturity date of the First Debentures to September 3, 2003. The Company has entered into a letter of intent with VenGrowth which contemplates that the Company will sell its existing business and operating assets to a newly incorporated entity wholly owned by VenGrowth and issue of common shares to VenGrowth in exchange for the assumption by New MCCco of the Company's outstanding indebtedness including obligations under the Company's outstanding convertible debentures. New MCCco will assume all the liabilities of the Company, excluding certain tax and other liabilities. This sale will comprise substantially all of the Company's business, including all of its intellectual property and the shares of its wholly owned subsidiary, Mobile Computing Corporation (USA). VenGrowth will also cancel its outstanding warrants and options to acquire an aggregate of 7 million shares of the Company. The agreement with Nova provides for the issue of a significant number of common shares of the Company to Nova. Nova has stated that it intends to implement a new business plan to maximize shareholder value. The plan will include hiring a new management team, raising additional capital and having the Company develop a merchant banking activity. The transactions are subject to the completion and execution of definitive agreements between the Company and VenGrowth and the Company and Nova. The transactions are also subject to shareholder approval and the receipt of all necessary regulatory approvals, including the approval of the Toronto Stock Exchange. Accordingly, there can be no assurance that the transactions will be completed as proposed or at all Going Concern and Basis of Presentation The consolidated financial statements of the Company for the three months ended June 30, 2003 have been prepared on a going concern basis, which assumes the realization of assets and liquidation of liabilities in the normal course of business. The Company has sustained substantial losses in recent years and its ability to continue as a going concern is dependent on the Company's ability to generate future profitable operations, obtain additional financing, and/or complete the restructuring transactions described above and in note 5 to the Company's interim consolidated financial statements for the three months ended June 30, 2003. The Company has funded operations primarily through public and private offerings of common shares and the issue of convertible debentures and warrants. The consolidated financial statements of the Company do not reflect adjustments that would be necessary if the "going concern" assumption were not appropriate for these financial statements. In that case, adjustments would be necessary to the carrying value of assets and liabilities, the reported revenues and expenses, and balance sheet classification used. A discussion of the Company's liquidity and capital resources is set out below. Liquidity and Capital Resources During the three months and six months ended June 30, 2003, the Company used $1,287,000 and $1,309,000, respectively, in operations. At June 30, 2003, the Company had unrestricted cash and cash equivalents on hand totaling $304,000 and a net working capital deficiency of $10,565,000, which includes amounts payable on the outstanding convertible debentures of the Company in the amount of approximately $11,807,000, including interest thereon ($6,035,000 due on September 3, 2003, after giving effect to an extension of the maturity date of such convertible debentures, and $5,772,000 due on November 30, 2003) in the absence of conversion to common shares of the Company. The Company believes that its current cash, cash equivalents and cash flow from operations will be sufficient to meet its other liquidity needs through to September 3, 2003, when the Company's 10% convertible debentures in an aggregate principal amount of $5 million plus accrued and unpaid interest thereon become due and payable. At June 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $10 million. The Company believes that the amount of its outstanding indebtedness, its capital structure and the proposed transactions described below limits its ability to borrow additional funds. Subsequent to the end of the quarter ended June 30, 2003, the Company announced transactions which will result in a significant restructuring of the Company's business. However, there can be no assurance that these transactions will be completed. In the event that the transactions are not completed we believe that it is unlikely that the Company will be able to raise additional funds and that our cash and cash equivalents will not be sufficient to repay the Company's outstanding debentures when due. Failure to repay any of the Company's outstanding convertible debentures when due would result in an event of default under the terms of all of the Company's outstanding debentures, which, if not cured or waived, would have a material adverse effect on the Company's business, financial condition, liquidity and results of operations. In particular, any such failure could results in the loss of some or all of the Company's assets to foreclosure or sale. In such event, there can be no assurance that the Company's assets would be sufficient to repay in full that indebtedness. Mobile Computing Corporation -- http://www.mobilecom.com-- is a supplier of wireless information solutions for mobile workers. These systems enable companies to communicate with, monitor and manage the activities of their vehicles and field personnel. MCC solutions enable improved management of the movement and delivery of goods and services, improving productivity and profitability. MCC specializes in delivering fully integrated solutions that link mobile workers with corporate information systems utilizing wireless data communications services. Mobile Computing Corporation trades on the Toronto Stock Exchange under the symbol "MBL" and has approximately 45 million shares outstanding. MORGAN STANLEY: Fitch Affirms Low-B Ratings on 3 Note Classes ------------------------------------------------------------- Fitch Ratings has affirmed 13 classes on the following Morgan Stanley Capital, Inc. Securitizations. Morgan Stanley Capital, Inc. Mortgage Pass-Through Certificates, Series 1996-1: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'A'; -- Class B4 affirmed at 'BB'; -- Class B5 affirmed at 'B'. Morgan Stanley Capital, Inc. Mortgage Pass-Through Certificates, Series 1998-1: -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 affirmed at 'AAA'; -- Class B4 affirmed at 'AA-'; -- Class B5 affirmed at 'BBB-'; -- Class B6 affirmed at 'BB+'. These actions are taken due to the level of losses incurred and the delinquencies in relation to the applicable credit support levels as of the August 25, 2003 distribution. MOSAIC: KPMG Appointed Receiver and CCAA Stay Extended to Dec 15 ---------------------------------------------------------------- Mosaic Group Inc. (TSX:MGX) announced that under the terms of the order granted by the Ontario Superior Court of Justice, the Company and certain of its Canadian subsidiaries and affiliated companies were granted an extension of protection under the Companies' Creditors' Arrangement Act (Canada) to and including December 15, 2003. The Company also announced that KPMG Inc. has been appointed as interim receiver of the Company and its subsidiaries pursuant to an order of the Ontario Superior Court of Justice under the Bankruptcy and Insolvency Act (Canada). KPMG Inc. was appointed as interim receiver to assist in the realization process of the Company's remaining assets. In December, 2002, the Company and certain of its Canadian subsidiaries and affiliated companies obtained an order from the Ontario Superior Court of Justice under the CCAA to initiate the restructuring of its debt obligations and capital structure. Additionally, certain of the Company's US Subsidiaries commenced proceedings for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Texas in Dallas. Pursuant to these filings and the Interim Receivership Order, the Company and its relevant subsidiaries continue to operate under a stay of proceedings. NATIONAL EQUIPMENT: Taps Carl Marks to Assist in Reorganization --------------------------------------------------------------- National Equipment Services, Inc. (OTC Bulletin Board: NEQS), a leading provider of specialty and general equipment to construction and industrial end-users, announced that Joseph M. Gullion, President, Chief Executive Officer and Director has left the organization to pursue other interests. Mr. Gullion joined NES in October 2002 to begin a turnaround effort that included the current debt restructuring under Chapter 11 of the U.S. Bankruptcy Code. No decision has been made on a permanent replacement. The Company has retained Carl Marks Consulting Group LLC, one of the country's leading turnaround and corporate revitalization firms, to implement the company's pending reorganization. Duff Meyercord, Partner at Carl Marks, will be appointed as Chief Restructuring Officer and Douglas Booth, a Managing Director at the same firm will be filling the role of interim Chief Operating Officer. During this interim period, it will be business as usual in terms of NES' operations with customers and vendors. "We are working closely with NES as it reduces its debt and strengthens its competitive position. Our goal is to help guide the company through this reorganization process and produce a stronger entity upon its emergence back into the market," stated Duff Meyercord, Chief Restructuring Officer. NES is the fourth largest Company in the $25 billion equipment rental industry. The Company focuses on renting specialty and general equipment to industrial and construction end-users. It rents more than 750 types of machinery and equipment, and distributes new equipment for nationally recognized original equipment manufacturers. NES also sells used equipment as well as complementary parts, supplies and merchandise, and provides repair and maintenance services to its customers. In addition to the rental business NES is the second largest supplier of traffic and safety services to the construction industry. The company is a leading competitor in each geographic market it reaches, from its approximately 180 locations in 34 states and Canada. Carl Marks Consulting Group LLC is a full-service advisory firm, dedicated to helping businesses effectively manage change and strengthen their organizations for long-term success. The firm is an affiliate of Carl Marks & Co., a leading merchant bank founded in 1925 in New York as a foreign exchange dealer. Since 1960, Carl Marks & Co. has held equity positions in more than 300 companies and currently has more than $1.5 billion of assets under management. For more information, please visit the company's Web site at http://www.carlmarks.com NORSKE SKOG: Extends Exchange Offer for Sr. Notes Until Tomorrow ---------------------------------------------------------------- Norske Skog Canada Limited (TSX: NS) is extending the expiration date for its offer to exchange U.S.$400,000,000 aggregate principal amount of its 8-5/8% Series D Senior Notes Due 2011, which have been registered under the Securities Act of 1933, as amended, for U.S.$250,000,000 aggregate principal amount of its 8-5/8% Senior Notes Due 2011 and U.S.$150,000,000 aggregate principal amount of its 8-5/8% Series C Senior Notes Due 2011 until 5:00 p.m. New York City time tomorrow, unless further extended by Norske Skog Canada Limited prior to such time. The expiration date for the Exchange Offer was 5:00 p.m., New York City time, on August 29, 2003, at which point, approximately U.S.$248,200,000 of the U.S.$250,000,000 aggregate principal amount of the outstanding 8-5/8% Senior Notes Due 2011 and U.S.$150,000,000 of the U.S.$150,000,000 aggregate principal amount of the outstanding 8-5/8% Series C Senior Notes Due 2011 had been tendered for exchange. The extension is intended to allow additional time for the holders of the remaining outstanding Old Notes to tender in exchange for the New Notes. As a result of the extension, tenders of the Old Notes, received to date, may continue to be withdrawn at any time on or prior to the new expiration date. There can be no assurance that Norske Skog Canada Limited will further extend the Exchange Offer. Consequently, holders of Old Notes that do not tender their notes for exchange may be left with an illiquid investment. The Company therefore urges holders of Old Notes to tender their notes for exchange as soon as possible. This announcement shall serve to amend and supplement the Prospectus, dated June 18, 2003, relating to the Exchange Offer, and the related letter of transmittal and other documentation, solely with respect to the extension of the expiration date referred to herein. All other terms of the Exchange Offer Prospectus, the letter of transmittal and other documentation shall remain in full force and effect. Capitalized terms used herein which are not otherwise defined shall have the meanings given to them in the Exchange Offer Prospectus. Holders of Old Notes can obtain copies of the Exchange Offer Prospectus, and the related letter of transmittal and other documentation from the exchange agent, Wells Fargo Bank Minnesota, National Association, attention: Joseph O'Donnell at (860) 704- 6217. * * * In February 2003, Standard & Poor's lowered its credit rating of the Company's long-term corporate and senior unsecured debt by one level, from BB+ to BB, and affirmed its existing debt on its senior secured debt as BB+. S&P's outlook for the Company's business is stable. O-CEDAR HOLDINGS: Delaware Claims Appointed as Noticing Agent ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware gave its nod of approval to O-Cedar Holdings, Inc., and its debtor- affiliates' request to employ Delaware Claims Agency, LLC as the official Claims and Noticing Agent in their chapter 11 cases. In this engagement, Delaware Claims, at the request of the Debtors or the Clerk's Office, will: a) prepare and serve certain required notices in these chapter 11 cases, including: i) notice of the commencement of these chapter 11 cases and the initial meeting of creditors under section 341 (a) of the Bankruptcy Code; ii) notice of the claims bar date; iii) notice of objections to claims; iv) notice of any hearings on a disclosure statement and confirmation of a plan of reorganization; and v) other miscellaneous notices to any entities, as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b) within 5 days after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes a copy of the notice involved, an alphabetical list of persons to whom the notice was mailed and the date of mailing; c) maintain copies of all proofs of claim and proofs of interest filed; d) maintain official claims registers by docketing all proofs of claim and proofs of interest on claims registers, including the following information: i) the name and address of the claimant and any agent thereof, if the proof of claim or proof of interest was filed by an agent; ii) the date received; iii) the claim number assigned; and iv) the asserted amount and classification of the claim; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) regularly transmit to the Clerk's Office a copy of the claims registers requested by the Clerk's Office on a more or less frequent basis; g) maintain an up-to-date mailing list for all entities that have filed a proof of claim or proof of interest, which list shall be available upon request of a party in interest or the Clerk's Office; h) provide access to the public for examination of copies of the proofs of claim or interest without charge during regular business hours; i) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e); j) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; k) provide temporary employees to process claims, as necessary; and l) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe. Ty S. Workman, Vice President of Delaware Claims reports that the professionals' hourly rates of the firm are: Senior Consultants $130 per hour Technical Consultants $115 per hour Associate Consultants $100 per hour Processors and Coordinators $50 per hour Headquartered in Springfield, Ohio, O-Cedar Holdings, Inc., through its debtor-affiliate, manufactures brooms, mops, and scrub brushes for household and industrial use. The Company filed for chapter 11 protection on August 25, 2003 (Bankr. Del. Case No. 03- 12667). John Henry Knight, Esq., at Richards, Layton & Finger, P.A., and Adam C. Harris, Esq., at O'Melveny & Myers LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed over $50 million in both assets and debts. OGLEBAY NORTON: Continues to Defer 10% Bond Interest Payment ------------------------------------------------------------ Oglebay Norton Company (Nasdaq: OGLE) did not make the interest payment due August 1, 2003, on its 10% 2/1/09 Senior Subordinated Notes before the expiration of the 30-day grace period. The company said it remains in active negotiations with its bank group and senior secured note holders to reach amendments to the various agreements. Once these amendments are entered into, the company intends to pay the deferred interest as soon as practicable, subject to notice and new record date requirements under the indenture governing the notes. "Despite the best efforts of all parties, we have not yet been able to reach agreements with our bank group and senior secured note holders; however we continue to make progress," said Oglebay Norton President and Chief Executive Officer Michael D. Lundin. Lundin said the company continues to operate with cash flow from operations while it negotiates with the senior secured lenders. "Although the company's ability to draw on its credit availability is at the discretion of the syndicated banking group until an amendment is executed, this does not affect our immediate ability to pay our employees or vendors and serve our customers," he said. "This is the time of year when we are busiest, and our cash flow is the strongest." Pending completion of these negotiations, the company intends to provide no further comment beyond what is contained in this news release. Oglebay Norton Company, a Cleveland, Ohio-based company, provides essential minerals and aggregates to a broad range of markets, from building materials and home improvement to the environmental, energy and metallurgical industries. The company's Web site is located at http://www.oglebaynorton.com PACIFIC GAS: ACWA Files Comments in PG&E Settlement Proceedings --------------------------------------------------------------- Citing growing demands for water and the impacts of climate change, the Association of California Water Agencies (ACWA) is urging the California Public Utilities Commission to keep open the option of expanding water storage capacity on key watersheds in the state. In comments filed August 28 in bankruptcy settlement proceedings for Pacific Gas & Electric Co., ACWA called on the CPUC to leave open the possibility of increasing water storage capacity at existing facilities owned by PG&E. The CPUC is reviewing a proposed settlement agreement in which PG&E would maintain ownership of its hydroelectric facilities, but provide conservation easements for 140,000 acres of land in important watersheds around the facilities. The land also could be donated to public agencies or non-profit resource conservation districts. In a show of solidarity surrounding this issue, ACWA has teamed up with the environmental group California Hydropower Reform Coalition and the Regional Council of Rural Counties to submit joint comments, which emphasize the need for protection of watershed lands. Noting that most of the surface water in Northern and Central California flows through PG&E facilities, ACWA said any decision regarding their operation could affect water users throughout California. "What happens to these projects, and these lands, could have significant impacts on water quality and quantity in the state," ACWA said in its written comments. With state officials predicting future water shortages and potential changes in rainfall patterns due to global warming, ACWA called for any land transfers or easements to "expressly reserve the ability to increase or otherwise modify the water storage capacities of existing licensed facilities." The bottom line for water agencies, ACWA said, is that "watershed lands not be so constrained as to prevent potential increases in storage at existing facilities." The Association also recommended that a representative from the water supply community be appointed to the governing board of the new non-profit corporation that would oversee the affected land and any environmental enhancements. The settlement agreement calls for PG&E to establish the corporation and provide $70 million for its operation over a 10-year period. "Water agencies (and their customers) have the most to directly lose if the watershed lands are not managed and maintained properly," ACWA wrote in making the recommendation. ACWA is a statewide non-profit organization whose 448 public agency members are collectively responsible for 90% of the water delivered in California for residential and agricultural use. PCNET INT'L: Enters Pact to Merge Operations with Technovision -------------------------------------------------------------- Technovision and PC Net have entered into a final amalgamation agreement dated August 14, 2003 regarding the amalgamation announced April 4, 2003. The Company has reserved the symbol UCC to be used on completion of the amalgamation. Upon closing, Uniserve will be the largest independent internet service provider in Western Canada. The economies and efficiencies expected from the transaction will result in significantly higher operating margins in the combined company and provide a platform for future growth. Amalgamation The companies have been valued as a result of arm's length negotiations on the basis of their recurring revenues adjusted for non redundant assets and liabilities based on results from operations for February, 2003, and an assessment of risks related to each company. The resulting ratio of shares to be received by the shareholders of each company on the amalgamation is as follows Amalgamating Pre Amalgamation Post Amalgamation Corporation Shares Shares ----------------------------------------------------------- Technovision 1 common share 1.00 PC Net 1 common share 0.7296 Based on the number of shares of the each company issued and outstanding as at August 14, 2003, the amalgamated company will have a total of 40,181,668 issued and outstanding following the amalgamation, which shares will be held as follows: Number of Percentage Common Shares of Class Technovision former shareholders 23,415,577 58.3 PC Net former shareholders 16,766,091 41.7 Fully diluted share capital post amalgamation will be as follows: ---------------------------------------------------------------- Number of Percentage of Securities Total ---------- -------------- To be Issued to Technovision Shareholders 23,415,577(i) 53.8% To be issued to PC Net Shareholders 16,766,091 38.5% To be reserved for issuance on exercise of existing rights and options for Technovision 2,487,021 5.7% To be reserved for issuance on exercise of existing rights and options for PCNET 876,000 2.0% TOTAL 43,544,689 100% (i) 2,923,688 of these shares are held in trust by Montreal Trust Company, of which 1,419,475 are the subject of an arbitration claim and the remainder will be canceled. Operations Merger Agreement Coincident with the execution of the amalgamation agreement, Technovision and PC Net entered into an operations merger agreement and have proceeded with merging the operations in order to gain the advantage of merger efficiencies prior to completion of the amalgamation. Technovision is to provide all of the services of an internet service provider to the customers of PC Net and to pay the operating costs of PC Net without assuming PC Net's contractual obligations. Technovision will provide all of the employees to operate. Pursuant to this agreement, Technovision has loaned PC Net $706,586, and has entered into a credit facility letter to support negotiations to enter into an agreement with their telecommunications service provider referred to below, which will allow PC Net to meet its obligations to its creditors under the plan of arrangement with respect to its restructuring under the Companies Creditors Arrangement Act. In consideration of the loan and guarantee of PC Net's obligations to its telecommunications service provider PC Net will grant to Technovision a general security agreement with respect to the loan and all other amounts that may be owed from time to time under the agreement. Proposed Agreement Among PC Net, Technovision and their telecommunications service provider Coincident with the execution of the amalgamation agreement, the telecommunications service provider, Technovision and PC Net propose to enter into an agreement to provide for the settlement of $1,200,000 owed by PC Net and the account arrears of Technovision to the telecommunications service provider . As security PC Net will grant a general security agreement providing a charge over the assets of PC Net and its subsidiaries that will rank before that granted to Technovision. Technovision will also grant a guarantee and general security agreement providing a charge over all of its assets that shall rank behind its existing secured creditors. Completion of the Amalgamation is subject to shareholder approval by special resolution anticipated to be held in early October, 2003. The amalgamation is also subject to approval by the Supreme Court of British Columbia, acceptance for filing by the TSX Venture Exchange and approval certain creditors of Technovision. William Spratt, the President of Technovision is to be Chief Executive Officer and President of the new company, and Brad Williams President and Chief Financial Officer of PC Net is to be Chief Operating Officer and Chief Financial Officer. The board of directors will include William Spratt, Brad Williams, Maurice Lees, Praveen Varshney, Denise Page and Peter Casson. PCNET CCAA Status PCNET has already caused its required creditor payments under the Plan of Arrangement to be made to the Monitor. Once the transaction with the major telecommunications supplier is completed -- which is to occur on or before September 15, 2003 -- the Monitor will be in a position to make the distributions to the creditors, subject to any delays in the distributions to some of the unsecured creditors caused by the need to resolve the quantum of one unsecured claim. PG&E NATIONAL: Seeks Open-Ended Lease Decision Period Extension --------------------------------------------------------------- Section 365(d)(4) of the Bankruptcy Code provides, in relevant part, that if the PG&E National Energy Group Debtors fail to assume or reject a non-residential real property unexpired lease "within 60 days after the [Petition] date . . . or within such additional time as the court, for cause, within such 60-day period, fixes, then such lease is deemed rejected. . . ." Due to the extensive nature of the NEG Debtors' operations, the Debtors find it necessary to carefully review and investigate their records to identify the various prepetition nonresidential real property leases that are critical to their restructuring. The review may take some time, however, as they are still transitioning their business operations to Chapter 11. The Debtors could not make it within the 60-day deadline imposed by the Bankruptcy Code. In this regard, the NEG Debtors ask the Court for additional time to make lease determinations. The Debtors ask the Court for an open-ended extension of their Lease Decision Period to the effective date of their reorganization plan. Martin T. Fletcher, Esq., at Whiteford, Taylor & Preston, in Baltimore, Maryland, tells the Court that the NEG Debtors intend to remain current on their postpetition obligations to any lessor under the Leases. Moreover, the requested extension will be sufficient to complete a thorough and proper evaluation of any Lease before making a decision assuming, assigning or rejecting the Lease. (PG&E National Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) PILLOWTEX CORP: Duke Energy Demands Payment of about $1.6 Mill. --------------------------------------------------------------- Duke Energy Royal LLC, successor-in-interest to Duke Solutions, Inc., asks the Court to: -- compel the Pillowtex Debtors to comply with the Consent Order and Judgment entered on June 18, 2003, by immediately paying the full amount of its Allowed Class 4, Division 4G Secured Claim; and -- hold the Debtors in contempt pursuant to Rule 9020 of the Federal Rules of Bankruptcy Procedure. Brett D. Fallon, Esq., at Morris, James, Hitchens & Williams LLP, in Wilmington, Delaware, explains that the Debtors and Duke were parties to a Master Energy Services Agreement dated June 3, 1998, under which Duke provided and installed equipment designed specifically to reduce the energy consumption and operating costs at the Debtors' production facilities. The Debtors' May 1, 2002 Confirmation Order provides that if the Master Agreement is determined to be a financing arrangement, the Court will determine the allowed amount of the Secured Claim. Subsequently, the Court entered an Order on June 4, 2002, holding that the Master Agreement constituted a financing arrangement. Mr. Fallon adds that under the Plan, Duke was the holder of: -- an Allowed Division 4G Secured Claim up to the value of its collateral; and -- an Unsecured Claim for the remainder of its allowed claim amount. Consequently, the Debtors and Duke reached a settlement as to the value of the secured portion of Duke's Claim. However, Mr. Fallon recounts that Duke agreed to the settlement due to the assurance that payment would be made within a relatively short period of time. Pursuant to the Settlement Agreement, backed up by a Consent Order and Judgment on June 18, 2003, Judge Walsh awarded Duke $1,584,000, payable by the Debtors in accordance with the terms of the Settlement Agreement. The Consent Order and Judgment acknowledges that the Debtors and Duke agree that the payment is necessary to carry out the provisions of the Plan. The terms of the Settlement Agreement likewise provided for full cash payment of Duke's secured claim. The Debtors were to remit payment to Duke no later than July 3, 2003. However, Mr. Fallon informs the Court that no payment has been made to date. Mr. Fallon argues that the Debtors are in violation of the Plan, the Consent Order and the Confirmation Order. Thus, the Debtors must be held in contempt pursuant to Bankruptcy Rule 9020, and awarded with sanctions for failing to comply with the Court Orders. (Pillowtex Bankruptcy News, Issue No. 49; Bankruptcy Creditors' Service, Inc., 609/392-0900) POLAROID CORP: Perry Mandarino Files Polaroid Examiner's Report --------------------------------------------------------------- Perry Mandarino, CPA, the court-appointed examiner in Polaroid Corporation Chapter 11 cases, conducted a comprehensive analysis of Polaroid's accounting practices, procedures and financial reports, including the review of 300,000 pages of documents. In addition, Mr. Mandarino examined 13 individuals, engaged in informal meeting or discussions with 17 more individuals, met and conferred with the Debtors, the Creditors' Committee and other parties-in-interest that requested for meetings. During the course of the Investigation, Mr. Mandarino obtained information from several sources, including: * the Debtors, including their counsel, Skadden, Arps, Slate, Meagher & Flom; * New Polaroid, including its counsel, O'Melveny & Myers LLP; * the Creditors' Committee, through its counsel, Akin, Gump, Strauss, Hauer & Feld, LLP and its financial advisor, HLHZ; * JPMorgan Chase Bank, as agent including its counsel, Davis Polk & Wardwell, for the Lenders; * KPMG, LLP, Polaroid's auditor; * FTI Consulting, Inc., advisors to Davis Polk & Wardwell, counsel to the Lenders; * Kroll Zolfo Cooper, financial advisors to the Debtors; * Dresdner Kleinwort Wasserstein and Miller Buckfire Lewis Ying & Co., financial advisors to the Debtors; and * OEP, including its counsel, Dechert LLP. Mr. Mandarino finds and concludes that the accounting methods, accounting practices or accounting irregularities, and those additional matters revealed by the Investigation, did not materially undervalue or result in an inappropriate liquidation of the Debtors' assets. The Investigation did not uncover evidence indicating that the accounting treatment accorded to some items in Polaroid's financial statements failed to satisfy the requirements of the United States generally accepted accounting principles applied on a consistent basis -- GAAP. An overriding theme that appeared to be central to the matters was that Polaroid's financial condition in the months prior to the Filing Date was sufficient to sustain the Debtors as a going concern without the need for commencing their Chapter 11 Cases. The Investigation uncovered no support for the view of the Debtors' prepetition financial condition. To the contrary, the Investigation uncovered evidence indicating that Polaroid's financial condition at and after December 31, 2000, through July 31, 2001, actually may have been more negative than as reflected in its SEC public filings. Mr. Mandarino submitted his Examiner's Report on August 22, 2003, discussing 13 topics: A. Deferred Taxes It is alleged that Polaroid's $53,000,000 write-off in the second quarter of 2001 resulted in an increase in the valuation allowance against deferred tax assets that must not have been taken until the fourth quarter of 2001. Mr. Mandarino disagrees with the allegation and states that an increase in the valuation allowance against deferred taxes must have been taken no later than the end of the fourth quarter of 2000. Polaroid's failure to do so led to its filing of financial statements at December 31, 2000, April 1, 2001 and July 1, 2001 that were inconsistent with the evidence uncovered in the Investigation. B. Restructuring Reserves It is alleged that Polaroid's $80,000,000 write-off for restructuring and other charges in the first quarter of 2001 was overstated, and the charges must have been treated as deferred assets. Mr. Mandarino found that the accounting treatment described by Mr. Lockwood did not result in a material undervaluation of the Debtors' assets: (a) The recording of the $80,000,000 restructuring reserve in the first quarter of 2001 was appropriate; and (b) Placing the $80,000,000 in a deferred asset account and amortizing or reducing it as actual costs were incurred would not have been consistent with GAAP. Mr. Mandarino uncovered facts indicating that a later-than- appropriate reversal of restructuring charges in the fourth quarter of 2000 may have occurred. As a result, the reversal may have enabled Polaroid to report its compliance at December 31, 2000 with some financial convenants in the Credit Agreement. C. Debt Reclassification It is alleged that Polaroid's reclassification of approximately $500,000,000 of long-term debt as short-term debt in its July 1, 2001 Form 10-Q was done solely to enable the Debtors to file the Voluntary Petitions. Mr. Mandarino disagrees with the allegation and states that the reclassification of all of Polaroid's long-term debt must have been reflected in its April 1, 2001 Form 10-Q. Some evidence appear to indicate that the reclassification might have been appropriate as early as December 31, 2000. Polaroid' failure to reclassify its long-term debt appears to have been a significant factor contributing to the issuance of the auditor's opinion with respect to Polaroid's financial statements as of December 31, 2000 that did not contain a going concern qualification. The reclassification of some debt as short-term debt had no bearing on the Debtors' ability to file their Voluntary Petitions. D. Gain on Sale of Real Estate The assertion that Polaroid failed to record as accrued revenue $22,000,000 of a $40,000,000 gain on a certain sale-leaseback transaction in the second quarter of 2001, resulting in an understatement of second quarter profit is incorrect. The allegation proposes a treatment of matters in manner inconsistent with GAAP. In fact, Mr. Mandarino found out, Polaroid's treatment of the sale-leaseback transaction appears to have been in accordance with GAAP. The net present value of the minimum lease payments over the seven-year lease term entered into by Polaroid was $22,000,000. Mr. Mandarino found that it was appropriately deferred by Polaroid to be recognized ratably over the term of the lease as required by GAAP. The excess of the total gain of $40,000,000 over the net present value of the minimum lease payments, $18,000,000 was appropriately recognized in the second quarter of 2001, the period when the sale-leaseback transaction was consummated. E. Gross Margin Decline It is alleged that Polaroid's lower gross margin as a percentage of sales in the second quarter of 2001 as compared to the second quarter of 2000, mandated that Polaroid file additional Forms 10-Q subsequent to July 1, 2001. Mr. Mandarino disagrees that Polaroid's failure to file additional Forms 10-Q was indicative of its manipulation of gross margin, and its lack of disclosure adversely affected the ability of prospective bidders to value Polaroid's manufacturing operations. Although the reduction in gross margin in the second quarter of 2001 as compared to the second quarter of 2000 was significant, the decrease in gross margin actually commenced in the fourth quarter of 2000 and continued throughout all of 2001. The Investigation uncovered no evidence of manipulation of gross margins, or that the lack of any public disclosure after July 1, 2001 concerning gross margins adversely affected the ability of prospective bidders to value Polaroid's manufacturing operations. F. Failure to Submit SEC Reports It is alleged that Polaroid's failure to file quarterly and annual SEC Reports after July 1, 2001 concealed the true value of its operations from potential bidders, and prevented investors from making knowledgeable decisions. Mr. Mandarino disagrees and explains that while Polaroid may have not obtained a waiver from the SEC with respect to the filing of quarterly and annual reports, it did file with the SEC, under Form 8-K, each monthly operating report filed by the Debtors in the Chapter 11 Cases. The lack of filing of SEC documents did not result in a material undervaluation or inappropriate liquidation of the Debtors' assets because qualified prospective bidders appeared to have had access to a comprehensive data room, as well as some of Polaroid's management, employees, advisors and facilities. There was adequate disclosure to qualified prospective bidders related to Polaroid's financial condition. G. Reported Book vs. Market Value of Debtors' Assets It is alleged that Polaroid's failure to report the fair market value of its assets in its Voluntary Petitions and other bankruptcy filings, instead reporting only the "deflated" book values of assets, was not intentional, nor it limited the number of bidders and negatively affected the quality of bids. The Voluntary Petitions may not have reflected the market value of certain domestic and foreign assets, but due to mitigating factors, the disclosure did not result in an inappropriate liquidation of the Debtors' assets. H. Inconsistency It is alleged that the amounts listed as Polaroid's assets and liabilities decreased by a net of $1,240,000,000 when comparing Polaroid's Voluntary Petition and the Debtors' schedules of assets and liabilities dated December 2001. Furthermore, it is also alleged that fraud is the only plausible explanation for a change of this magnitude. Mr. Mandarino disagrees with these allegations and says that the Debtors were not required to report identical information respecting their assets and liabilities on their Voluntary Petitions and schedules of assets and liabilities. These documents were filed several months apart, and presented information on assets and liabilities as of different points in time. I. Issues Concerning Certain Contingent and intangible Assets It is alleged that the Debtors concealed from the Bankruptcy Court and from the potential bidders the material cash value of contingent or intangible assets. Mr. Mandarino discovers that contingent or intangible assets, like deferred taxes and prepaid expenses, were disclosed. Since the Sale was structured as a taxable sale of assets, none of Polaroid's tax attributes passed to the Purchaser. The remaining prepaid expenses and other assets primarily consisted of the prepayment of items like rent, advertising, marketing that have little likelihood of a cash refund. It is reasonable to expect little, if any, subsequent cash from the cancellation of the various agreements, since the Sale occurred more than one year after the July 1, 2001 financial statements where the prepaid expenses were included. By their nature, these prepaid expenses most likely have been fully realized and amortized to expense before the Sale occurred. J. Accounting for Treasury Stock It is alleged that Polaroid perhaps must have used the par value method, rather than the cost method, in accounting for treasury stock. Allegations were also raised that an additional tax liability could have been avoided if treasury stock had been expensed differently, and that, while Polaroid's use of the cost method had adverse tax consequences, other uses of treasury stock by Polaroid were questionable. According to Mr. Mandarino, Polaroid's accounting of treasury stock was in accordance with GAAP. Other allegations respecting treasury stock were outside the scope of the Investigation. K. No Need for Chapter 11 Filing Based on Projected 2001 Cash Flow It is alleged that based on Mr. Lockwood's projected cash flow for Polaroid for the period from July 1, 2001 through December 31, 2001, Polaroid had no need to default on the interest payments for the Notes or to file the Voluntary Petitions. Mr. Mandarino disagrees with this allegation and says that Polaroid did not need to default on the Notes to file the Voluntary Petitions. The Investigation indicates that Polaroid's $350,000,000 senior bank debt under the Credit Agreement was to mature on December 31, 2001, and $150,000,000 of Notes were to mature in early 2002. Polaroid was unsuccessful in its efforts to refinance the debt. L. Other Allegations Contained in the Requests The Requests allege other improprieties in connection with Polaroid's corporate governance, financial strategies, including utilization of borrowing, treasury stock transactions and dividend policies; and management incentive programs. According to Mr. Mandarino, these allegations were outside the scope of the Investigation and are not addressed in the Report. M. Certain Other Issues Identified by the Examiner The Investigation noted additional matters with respect to: (i) certain payments to Polaroid's former Chairman and CEO, and (ii) disclosure of Polaroid management's restricted equity ownership in the Purchaser. A full-text copy of the Polaroid Examiner's Report is available for free at: http://bankrupt.com/misc/2934ExaminersReport.pdf (Polaroid Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 609/392-0900) PREMCOR INC: Extends Exchange Offer for 7.50% Sr Notes to Friday ---------------------------------------------------------------- Premcor Inc.'s (NYSE: PCO) wholly owned subsidiary, The Premcor Refining Group Inc., is extending the expiration date of its offer to exchange all of its outstanding 7-1/2% Senior Notes due 2015 for new 7-1/2% Senior Notes due 2015, which have been registered under the Securities Act of 1933. The offer, which was scheduled to expire at 5:00 p.m., New York City time, on August 28, 2003, is now scheduled to expire at 5:00 p.m., New York City time, on September 5, 2003. As of 5:00 p.m. August 28, 2003, of the $300,000,000 principal amount of Senior Notes outstanding, $299,900,000 had been tendered. Premcor Inc. is one of the largest independent petroleum refiners and marketers of unbranded transportation fuels and heating oil in the United States. As previously reported, Standard & Poor's Ratings Services assigned its 'BB-' rating to independent petroleum refiner Premcor Refining Group Inc.'s new $250 million senior unsecured notes due 2015. At the same time, Standard & Poor's affirmed its ratings on Premcor and parent Premcor USA Inc. The outlook was revised to negative from stable. PROTARGA INC: Taps Fish & Richardson as Transactional Counsel ------------------------------------------------------------- Protarga, Inc., seeks permission from the U.S. Bankruptcy Court for the District of Delaware to retain Fish & Richardson, PC as Special Corporate and Transactional Counsel. The Debtor reports that before filing for chapter 11 petition, it engaged Fish & Richardson in connection with the negotiation and documentation of a potential sale of the Debtor's assets. In this engagement, the professionals services that Fish & Richardson will render to the Debtor include representation with respect to the negotiation and sale of the Debtor's assets, documenting any sale transactions, and providing the Debtor with continued advice with respect to certain corporate issues. Roger D. Feldman, Esq., a principal of Fish & Richardson assures the Court that his firm has no connection with any of the Debtor's creditors or any other parties in interest. Fish & Richardson's current hourly rates range from: Principals $390 to $600 per hour Associates $195 to $355 per hour Legal Assistants $90 to $190 per hour The professionals expected to be designated in this retention and their current hourly rates are: Roger D. Feldman Principal $565 per hour Jennifer Godsil Associate $330 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. RADIO UNICA: Makes $9.3 Million Interest Payment on 11.75% Notes ---------------------------------------------------------------- Radio Unica Communications Corp. (OTC Bulletin Board: UNCA), the nation's only Spanish language radio network, has paid the $9,287,670 interest payment with respect to its 11-3/4% Senior Discount Notes due 2006 issued under an Indenture dated July 27, 1998. Under the Indenture pursuant to which the Senior Discount Notes were issued, the Company had until September 2, 2003 to make such interest payment before an event of default would occur. Radio Unica Communications Corp. -- whose December 2002 balance sheet shows a total shareholders' equity deficit of about $18 million -- based in Miami, Florida, is the only national Spanish- language radio network in the country and reaches approximately 80% of Hispanic USA through a group of owned and operated stations and affiliates located nationwide. The Company's operations include the Radio Unica Network and an owned and/or operated station group covering the top U.S. Hispanic markets including Los Angeles, New York, Miami, San Francisco, Chicago, Houston, San Antonio, McAllen, Dallas, Fresno, Phoenix, Sacramento, and Tucson. RESMED INC: S&P Ups Corporate Credit Rating a Notch to BB- ---------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on ResMed Inc. to 'BB-' from 'B+', and raised its senior subordinated debt rating on the company to 'B' from 'B-'. The upgrade reflects ResMed's extended favorable operating performance and Standard & Poor's increased confidence in the company's ability to build its market presence. At the same time, the ratings were removed from CreditWatch, where they were placed June 2, 2003. The outlook is stable. ResMed had approximately $113 million of debt outstanding as of June 30, 2003. "The speculative-grade ratings on ResMed Inc. reflect the niche medical equipment supplier's fast growth as it capitalizes on the emerging market for sleep apnea treatment," said Standard & Poor's credit analyst Jordan Grant. "This growth is offset by the company's still-limited size and resources." San Diego, California-based ResMed is the second-largest manufacturer/distributor of products for the diagnosis and treatment of obstructive sleep apnea and other forms of sleep- disordered breathing. The company produces continuous positive airway pressure equipment that offers therapy to sufferers of SDB and provides diagnostic equipment for use with sleep apnea patients. The mostly untapped OSA and SDB markets offer significant growth opportunities for ResMed. As the company has capitalized on this market potential, its revenue has grown by more than 30% in each of the past two years. The company has also entered partnerships to conduct sleep apnea research, but it will continue to face the challenge of raising physician and consumer awareness of the need for treatment. While ResMed has steadily increased its market share through product innovation and strategic acquisitions, it remains subject to technology risk, as the medical treatment of sleep apnea continues to evolve. The company faces competition in its principal geographic markets from larger competitors such as Respironics Inc. and Nellcor Puritan Bennett (a division of Tyco Inc.), both of which have greater financial capabilities than ResMed. Although the company does not bill third-party payors directly, the end users ultimately seek health care provider reimbursement, thus making reimbursement risk a factor that could potentially affect demand. SHILOH INDUSTRIES: Will Publish Third Quarter Results Tomorrow -------------------------------------------------------------- Shiloh Industries, Inc. (Nasdaq: SHLO), a leading manufacturer of blanks, engineered welded blanks, engineered stampings and modular assemblies for the automotive, light truck and heavy truck industries, will announce earnings for the third quarter ended July 31, 2003 on Wednesday, September 3, 2003. A conference call to discuss the results will be held on Wednesday, September 3, 2003 at 11:00 a.m. (EDT). To listen to the conference call, dial (800) 374-0915 approximately five minutes prior to the start time and request the Shiloh Industries third quarter conference call. A replay of the conference call will be available from 2:00 p.m., Wednesday, September 3, 2003, through 5:00 p.m., September 10, 2003. To access the replay, call (800) 642-1687 and enter conference code 2583968. As reported in Troubled Company Reporter's July 21, 2003 edition, Standard & Poor's Ratings Services raised its corporate credit rating on Shiloh Industries Inc. to 'B' from 'CCC+'. At the same time, Standard & Poor's raised its bank loan rating on Shiloh's $260 million secured revolving credit facility to 'B' from 'CCC+'. The outlook is stable on the Cleveland, Ohio-based manufacturer of steel blanks and stamped components for the automotive industry. The company had total balance-sheet debt of about $196 million at April 30, 2003. Shiloh sells into highly competitive, cyclical, and seasonal markets, since the vast majority of its customers are original equipment manufacturers (OEM) in the automotive industry. The company lacks geographic and customer diversity, as all of its manufacturing capacity resides in North America and more than 50% of its revenues are generated from the three U.S. OEMs. Shiloh's products range from simple blanks, which are commodity in nature, to engineered laser-welded blanks, which require a higher degree of technological expertise. The company expects to expand its higher-margin laser-welded blanks segment, where Shiloh holds the largest market share, through new business awards. Under the direction of Shiloh's new management team, which has been in place since early 2002, the company's growth should be organically driven. SHOLODGE INC: Completes Tender Offer for 7.50% Conv. Debentures --------------------------------------------------------------- ShoLodge, Inc. (Nasdaq: LODG) (S&P, CCC Corporate Credit Rating) has completed its tender offer to purchase 7.5% Convertible Subordinated Debentures, due May 2004, at a purchase price of $730 per $1,000 principal amount. The Company received and accepted tenders for $1,631,000 in principal amount of the debentures. ShoLodge is primarily an owner, franchisor, and operator of Shoney's Inns. The Shoney's Inn brand consists of around 70 hotels operating in the limited service, economy price segment. ShoLodge also constructs lodging facilities for third parties and offers reservation system services to third parties. At the end of 2001, ShoLodge's owned hotel portfolio, consisting of 14 hotels in eight states. SNOW LEOPARD: Resources Insufficient to Continue Business Plan -------------------------------------------------------------- Snow Leopard Resources Inc. announces its results for the second quarter ended June 30, 2003. Six months ended June 30 2003 2002 % Change ($ thousands except per share data) Revenue from continuing operations $ - $ - - Earnings from discontinued operations 84 31 171 Fuel cell research and development expenses 1 179 n/a General and administrative expenses 383 218 (76) Loss from continuing operations 433 472 8 Net loss 349 441 21 Total assets 98 89 10 Weighted average number of shares 65,927 65,927 - Diluted average number of shares 65,927 65,927 - On May 13, 2003 Snow Leopard announced the termination of its efforts to reach a definitive agreement with Eltron Research, Inc. of Boulder, Colorado with respect to the acquisition of world-wide licensing rights encompassing both catalytic membrane reactor and hydrogen sulphide solid oxide fuel cell technology. The negotiations with Eltron failed because Snow Leopard was unable to meet the Letter of Intent's requirements with respect to the purchase of intellectual property rights. At this time, the Company does not have sufficient financial resources to complete the research and development required to commercialize its wholly-owned Proton Exchange Membrane Fuel Cell technology. In light of these events and actions, the Board of Directors began considering strategic alternatives available to the Company. To conserve its financial resources, the Company terminated all staff effective June 19, 2003. At the Annual General Meeting on June 18, 2003, because of the failure to attract investors and the inability of the Directors to continue funding ongoing Company operation, the Board of Directors announced that it would seek buyers for the Company. These efforts have not yet produced any tangible result. At the AGM Mr. Verne Lyons, Mr. Lauchlin Lyons, Mr. Morris Pryde, Mr. David Ross and Mr. Gregor White were re-elected as Directors of the Company. Mr. Wade and Mr. Vidalin did not stand for re-election. The Directors note with regret that Mr. Pryde passed away on August 3, 2003. On June 26, 2003 the Listings Committee of Toronto Stock Exchange suspended trading of the Company's common shares. The suspension was imposed for failure by the Company to meet the continued listing requirements of TSX, as detailed in Part VII of the TSX Company Manual, including and more particularly Sections 709 and 710(a)(i) relating to financial condition and/or operating results, Section 710(a)(ii) regarding cease to be actively engaged in ongoing business, Section 710(b) relating to total assets of $3.0 million or annual revenue from ongoing operations of $3.0 million in the most recent year, Section 710(b) relating to $1.0 million on acceptable research and development in the most recent year, Section 711 relating to public distribution, price, or trading activity of the company's securities has been so reduced as to not warrant continued listing and Section 712(b) relating to market value of publicly held listed securities of $2.0 million for 30 previous consecutive trading days. Securities which have been suspended from trading for a period of one year and which have not been approved for reinstatement by TSX are automatically delisted at that time. Unless the Company obtains such approval within the one-year suspension period, its common shares will be delisted as at the close of business on June 25, 2004. SR TELECOM: Second-Quarter Net Loss Balloons to $5 Million ---------------------------------------------------------- SR Telecom Inc. (TSX: SRX) reported its results for the second quarter and six months ended June 30, 2003. Consolidated revenues for the second quarter, which include its Chilean telecommunications operating subsidiary, CTR, totaled $30.6 million compared to $49.0 million in the second quarter of 2002. For the six-month period ended June 30, 2003, consolidated revenues reached $60.2 million, compared to $94.5 million during the same period last year. The second quarter operating loss was $5.6 million, compared to a loss of $339 thousand during the same quarter in 2002. For the six-month period ended June 30, 2003, the operating loss totaled $12.6 million versus operating earnings of $407 thousand in the corresponding period in 2002. Consolidated net loss was $5.0 million for the quarter and $11.7 million for the six months ended June 30, 2003, compared to a net loss of $3.4 million and $6.0 million in the corresponding periods last year. The decrease in revenues in the quarter was largely due to large sales to two customers in the second quarter of 2002 that were not replicated in the second quarter of 2003. For the first half of 2003, revenues were also directly affected by the conflict in Iraq and by delays in closing significant new orders. Core Wireless Solutions Segment Second quarter revenues in SR Telecom's core wireless solutions business were $27.0 million, compared to $45.3 million during the same period last year. For the six-month period, revenues reached $53.0 million, versus the $85.9 million reported in 2002. Operating losses in the SR Telecom's wireless segment totalled $4.3 million for the second quarter and $9.4 million for the first half, compared to operating earnings of $1.4 million and $3.4 million in the prior corresponding periods. Gross profit as a percentage of revenue increased to 50% for the second quarter, up from 48% in the same quarter in 2002. For the six-month period ended June 30, 2003, gross profit reached 48%, down marginally from the 49% reported in the prior year. CTR Revenues at CTR were $3.6 million in the second quarter, compared to $3.7 million in the same period last year. The slight decline is mainly due to the drop in value of the Chilean peso relative to the Canadian dollar. In peso terms, revenue was 1,791 million pesos in the second quarter of 2003 compared to 1,583 million pesos in 2002. Similarly, for the first six months, revenues reached $7.2 million, compared to the $8.6 million reported in 2002. Net income from CTR increased to $2.2 million for the quarter and $3.4 million for the six-month period, a significant improvement compared to the losses of $896 thousand and $3.7 million in the corresponding periods in 2002 due to favorable currency gains with regard to the US denominated debt and reduced interest expense. CTR continues to focus on improving its operating performance and capitalizing on the benefits associated with the acquisition of the Gilat-to- Home S.A. network in Chile. With the integration of the satellite network with its core network operations completed, CTR is working to generate increased revenues, in part through its high-speed Internet offerings. Financial Position SR Telecom's cash position at the end of the second quarter was $6.0 million, compared to $20.3 million at December 31, 2002. The decline is primarily due to SR Telecom's repayment of $5 million of its operating line of credit and $4.5 million of its debt related to CTR. As previously announced, SR Telecom's merger with Netro, expected to close on September 4, 2003, is expected to significantly improve SR Telecom's consolidated cash position. Backlog Continued global economic uncertainty and the protracted slowdown in the telecommunications industry have affected the Company's order book. Backlog at June 30, 2003 stood at $52 million, down from $141 million at the end of the corresponding quarter in 2002. Recent Events - SR Telecom's proposed merger with Netro is approved by the Board of Directors of both companies and is approved by a majority of Netro's stockholders. The merger is expected to close on September 4, 2003, subject to customary closing conditions. - SR Telecom's registration statement filed with the U.S. Securities and Exchange Commission is declared effective. - SR Telecom completed a previously announced private placement of $6 million following the quarter, issuing 7,058,824 units at $0.85 per unit. On July 21, 2003, 5,280,000 units for aggregate gross proceeds of $4.5 million were issued; while the remaining 1,778,824 units for aggregate gross proceeds of $1.5 million was issued on August 27, 2003. Each unit consists of one Common Share and one-half of one Common Share purchase warrant. Each whole Common Share purchase warrant entitles the holder to acquire one Common Share of SR Telecom at a price of $1.00 per share until July 2008. - Board of Directors approved a one for 10 (1:10) consolidation of its common shares. SR Telecom expects the shares to be posted for trading on a consolidated basis at the market opening of September 3, 2003. SR Telecom shares will continue to be listed on the Toronto Stock Exchange under the symbol "SRX", and will begin trading on the NASDAQ National Market under the symbol "SRXA". - Empresa Publica Municipal de Telecomunicaciones selected SR Telecom technology to serve rural areas in Ecuador - first application of swing technology in Ecuador. - SR Telecom selected for network expansion in New Caledonia - France Telecom subsidiary chose swing solution. - SR Telecom registered in compliance with ISO 9001 - internationally recognized standard reflects reliable, value- driven processes and measurements. - SR Telecom joins WiMAX forum - standards adoption key to developing the broadband wireless market. - SR Telecom receives first commercial orders for stride2400 - Big Bend Telephone selects 2.4GHZ unlicensed solution after Successful field trial. - SR Telecom selected for Oil and Natural Gas Corporation Limited network expansion in India - SR500 will provide backbone for ONGC's Supervisory Control and Data Acquisition (SCADA) network. - China Unicom selects Netro's AirStar high-capacity broadband fixed wireless access solution to build high-performance networks in the capital, Beijing, Shenzhen and five other major cities in Eastern China. China Unicom will extend existing backbone networks to deliver voice, data and videoconferencing services to its subscribers in these markets. Outlook "The telecommunications industry continues to experience difficulties which have impacted our business in the short-term," said Mr. St-Arnaud. "Our actions over the past year, however, have enabled us to strengthen our position as the market leader in fixed wireless solutions. We have capitalized on our opportunities to deepen our product offering and to position SR Telecom for the future. Driven by expressed market needs, our technology acquisitions have allowed us to assemble the industry's most comprehensive portfolio of fixed wireless access solutions. We are convinced that our recent technology acquisitions and the new products we've developed and introduced will contribute to SR Telecom's growth going forward. We firmly believe that the expected addition of Angel and AirStar (upon the closing of the merger) will be a significant part of this growth." "While we expect that our revenue for the third quarter will be sequentially flat, we also expect that our backlog will improve in light of negotiations underway with customers in our traditional markets for SR Telecom and Netro solutions. This should lead to higher revenues in the fourth quarter, although we do not expect to reach our previously stated goal for the year of meeting 2002 revenue levels," concluded Mr. St-Arnaud. SR Telecom (S&P, B+ Corporate Credit and Senior Unsecured Debt Ratings) is a world leader and innovator in Point-to-Multipoint Wireless Access solutions, which include equipment, network planning, project management, installation and maintenance services. Its products, which are used in over 110 countries, are among the most advanced and reliable PMP wireless telecommunications systems available today. Serving telecom operators worldwide, SR Telecom's fixed wireless solutions provide high-quality voice and data for applications ranging from carrier class telephone service to high-speed Internet access. SYSTECH RETAIL: US Bankruptcy Court Confirms Reorganization Plan ---------------------------------------------------------------- Systech Retail Systems Corp., a leading provider of technology solutions for the retail industry, announced today that, following overwhelming approval by the Company's creditors, it and its subsidiaries' consolidated amended plan of reorganization, as modified was confirmed by the United States Bankruptcy Court for the Eastern District of North Carolina - Raleigh Division. On or about September 9, 2003, the Company will be asking the Ontario Superior Court of Justice to sanction and approve its amended plan of compromise and arrangement under the Companies' Creditors Arrangement Act. The Plan, when confirmed by the Ontario Court, will become effective and binding. Following approval of the Ontario Court, the Plan is expected to become effective, and the Company is expected to successfully emerge from Chapter 11 and CCAA protection, on or about September 10, 2003. At the confirmation hearing on August 28, 2003, the Bankruptcy Court concluded and ruled that the Company had satisfied all of the necessary requirements for confirmation of the Plan. The Company's secured and unsecured creditors voted overwhelmingly in favor of confirmation of the Plan and supported the Company in its efforts therein. Upon emergence from Chapter 11 and CCAA protection, the Company will have 1,944,975,507 common shares issued and outstanding and outstanding warrants exercisable for up to 136,148,285 common shares of the Company. The warrants of Systech have been approved for listing and posting for trading on the Toronto Stock Exchange under the symbol "SYS.WT" upon their issuance. When the Plan becomes effective, the senior secured lenders of the Company, Park Avenue Equity Partners, L.P. and Integrated Partners Limited Partnership One, will own 80% of the post-reorganization common shares of the Company and will nominate four members to the board of directors of the Company. In addition, Systech will be indebted to its senior secured lenders: (a) in a principal amount not to exceed CDN$2,000,000 in respect of a debtor- in-possession loan, which loan will be secured and repaid in over a period of three years after implementation of the Plan with interest at an annual rate paid monthly in arrears of no more than twelve percent (12%), provided that, should Systech make any prepayments allowed under the minimum interest and prepayment section of the exit financing loan described below, the debtor-in- possession loan will receive a pro rata prepayment of principal in proportion to the amount of each loan of Systech outstanding; and (b) in the amount of CDN$10,000,000, which new debt will be secured and repaid over a period of five years after implementation of the Plan at an annual interest rate of twelve percent (12%) as follows: (i) interest shall accrue and not be payable for the first 18 months after implementation of the Plan; (ii) monthly interest shall be payable on the next succeeding 12 months; and (iii) equal payments of principal and interest shall be paid over the next succeeding 30 months, calculated on a 60 month amortization with a balloon payment in the 60th month after implementation of the Plan of all amounts then due and owing under such restructured debt, provided however, that the principal shall be repaid quarterly from the cash flow sweep, if any, of Systech. The Company is working to conclude its exit financing arrangements required by the terms of the Plan. Proceeds from the exit financing totaling CDN$5.0 million are expected to be made available to the Company concurrent with its emergence from Chapter 11 and CCAA protection on September 10, 2003. "Completion of the financing is an essential part of the reorganization process" said Randy W. Harris, President and Chief Operating Officer of the Company. In connection with the closing of the exit financing, the Company will issue warrants to the lender entitling the lender the purchase up to 69,630,123 common shares of the Company. With emergence, the Company's new board of directors will initially consist of the following members: Richard D. Adair - Interim Chief Financial Officer of the Company George J. Engman - of Integrated Asset Management Corp. Douglas A. Harris - of Integrated Asset Management Corp. Russell F. Peppet - of Park Avenue Equity Partners, L.P. William E. Mayer - of Park Avenue Equity Partners, L.P. During the restructuring process, Systech closed a number of its offices and consolidated operations, rationalized aged inventory and made significant reductions in the number of its employees. "We are excited to move past the restructuring phase and focus on providing advanced services to our customers" said Randy W. Harris. Systech is expected to emerge from creditor protection with a strengthened financial position and the necessary tools and capital structure to grow the Company's existing franchise in the retail technology sector. Systech is the retail industry's premier independent developer and integrator of retail technology, including software, systems and services to supermarket, general retail and hospitality chains throughout North America. Its open architecture solutions enable e-commerce and other powerful new technology to be applied in the retail environment. The Company's significant cross-platform capability and considerable technical service force allow it to address any in-store systems requirements regardless of project size or scope. The common shares of Systech Retail Systems Corp. are traded on the Toronto Stock Exchange under the symbol "SYS". TCW LINC III: S&P Keeps Watch on 4 BB/CCC- Note Class Ratings ------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1L, A-1F, A-1, A-2L, A-2, A-3A, and A-3B notes issued by TCW LINC III CBO Ltd., an arbitrage CBO transaction originated in July 1999, on CreditWatch with negative implications. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the transaction was last reviewed in April 2003. At that time, the rating on the class A-1L notes was affirmed, and the ratings on the other classes were lowered. Standard & Poor's noted that defaults within the collateral pool supporting the notes went up to $166.5 million from $143.1 million at the time of the last rating actions. Meanwhile, the class A and B overcollateralization ratios dropped by more than 10% each. The class A ratio fell to 86.2% from 96.0%, and the class B ratio dropped to 81.7% from 91.0%. This places both measures of performance well below their respective minimum requirements of 110% and 103%. Standard & Poor's will review the results of current cash flow runs generated for TCW LINC III CBO Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results 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 PLACED ON CREDITWATCH NEGATIVE TCW LINC III CBO Ltd. Rating Class To From Balance (mil. $) A-1L AAA/Watch Neg AAA 113.8 A-1F A+/Watch Neg A+ 15.0 A-1 A+/Watch Neg A+ 96.0 A-2L BB/Watch Neg BB 21.5 A-2 BB/Watch Neg BB 82.0 A-3A CCC-/Watch Neg CCC- 34.0 A-3B CCC-/Watch Neg CCC- 45.0 TRANSTEXAS GAS: Emerges from Chapter 11 Bankruptcy Proceedings -------------------------------------------------------------- TransTexas Gas Corporation (OTCBB:TTXGQ) and its subsidiaries, Galveston Bay Processing Corporation and Galveston Bay Pipeline Company, have emerged from their joint Chapter 11 proceedings, effective yesterday, Aug. 28, 2003, pursuant to the Confirmation Order of the United States Bankruptcy Court for the Southern District of Texas, Corpus Christi Division and the Plan of Reorganization proposed by Thornwood Associates LP, an entity affiliated with Carl C. Icahn. Distributions and payments will be made as contemplated in Thornwood's Plan of Reorganization. Certain matters with respect to the Plan are summarized below. Reference is made to the Plan for a complete statement of those and other matters. Thornwood's Plan of Reorganization provides that, on the Effective Date, which is Aug. 28, 2003, all of the Company's Senior Preferred Stock and Common Stock was cancelled, without payment or any interest in Reorganized TransTexas being given to existing shareholders. TransTexas' $200,000,000 15% Senior Secured Notes due 2005 were also cancelled on the Effective Date. However, pursuant to the Confirmation Order, holders of the Notes who each held, in the aggregate, more than 1% of the total outstanding amount of $200,000,000, as of the Distribution Record Date of Aug. 18, 2003, will receive their pro-rata allocation of 120,000 shares of new stock to be issued by Reorganized TransTexas. Holders of the Notes who each held, in the aggregate, less than 1% of the total outstanding amount, as of the Distribution Record Date of Aug. 18, 2003, will receive their pro rata allocation of $1,000,000 in cash, as soon as is practicable, distributed through the Indenture Trustee, U.S. Bank, N.A., acting as Disbursing Agent. Holders of unsecured claims are entitled to their pro rata share of $400,000 cash, net of expenses, to be distributed by the Post-Confirmation Committee of unsecured creditors. In connection with the consummation of the Plan of Reorganization, the Company has filed a Form 15 with the Securities and Exchange Commission, thereby electing to terminate its reporting obligations under Section 12(g) of the Securities Exchange Act of 1934. Effectively, TransTexas will cease to exist as a public reporting company. The Company has notified the Depository Trust Company and the OTC Bulletin Board of the Effective Date. Pursuant to Thornwood's Plan of Reorganization, there will be a fundamental change in the management of the Company. Reorganized TransTexas has entered into a management agreement with National Energy Group Inc., an entity in which Carl C. Icahn owns a significant interest, which will operate the Company and its oil and gas properties. National Energy Group, based in Dallas, has substantial oil and gas experience and a large number of producing wells that it currently manages in Texas, Oklahoma and Louisiana. The Company is engaged in the exploration, production and transmission of natural gas and oil, primarily in South Texas, including the Eagle Bay field in Galveston Bay and the Southwest Bonus field in Wharton County. Information on the Company, including the Company's filings with the Securities and Exchange Commission may be found on the internet at http://www.transtexasgas.com TRISM: Missouri Court Confirms Joint Chapter 11 Liquidating Plan ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Missouri confirmed Trism, Inc.'s Plan of Reorganization after finding that the Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan identifies the individuals who will serve as officers and directors post-emergence; (6) the Debtors are not subject to any governmental regulation of any rates; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) retiree benefits is not applicable under the Plan, making Section 1129(a)(13) inapplicable. All executory contracts or unexpired leases which have not expired by their own terms are deemed rejected by the Debtors on the Effective Date. All executory contracts and unexpired leases listed in the Schedule of Assumed and Assumed and Assigned Executory Contracts and Unexpired Leases, shall be deemed assumed by the Debtors on the Effective Date. On the Effective Date all of the property of the Debtors' Estates is vested in the Plan Trust. The Plan Trust shall be responsible for the winding up and dissolution of the Debtors' Estates, for liquidating the assets of the Plan Trust in accordance with the Trust Agreement, for making distributions to holders of Allowed Claims against the Debtors and for settling, resolving and objecting to Claims against the Debtors. Trism, Inc., the nation's largest trucking company that specializes in the transportation of heavy and over-dimensional freight and equipment, as well as material such as munitions, explosives and radioactive and hazardous waste, filed for chapter 11 protection on December 18, 2001 (Bankr. W.D. Mo. Case No. 01- 31323). Laurence M. Frazen, Esq., at Bryan Cave LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $155 million in assets and $149 million in debts. TSI TELSYS: June Quarter Balance Sheet Upside-Down by $521,000 -------------------------------------------------------------- TSI TelSys Corporation (TSX Venture Exchange "TSI") announced the results of operations for the second quarter and for the first six months of FY2003. FY 2003 second quarter revenues totaled $1.3 million, with a gross margin of 38% of revenues. This compares with revenues of $1.6 million and a gross margin of 37% in the same period in FY2002. Deliveries made during the quarter included a high rate TSI TelSys front end processor to a NASA center, the delivery of a taxi funnel simulation unit to a major U.S. aerospace customer, and the delivery of several telemetry systems and spare parts to support the U.S. Department of Defense's Space Based Infrared Systems (SBIRS) program. Orders received in the second quarter of FY2003, which ended June 27, 2003 equaled $2.2 million as compared with $1.7 million for the same period in FY2002. At the end of the second quarter of FY2003, orders backlog stood at US$1.8 million, as compared with an orders backlog of $2.4 million at the end of the second quarter of FY2002. The second quarter order total included an order placed by a major aerospace firm on behalf of NASA's Marshall Space Flight Center for 12 Functionally Distributed Processors for the International Space Station Downlink Enhancement Architecture Project. This order represents the first multi-unit placement of TSI TelSys' new CPCI telemetry gateway product line. The order total also included several additional orders for telemetry systems, spare parts and maintenance to support the SBIRS program. Operating expenses were $0.6 million in the second quarter of FY2003 as compared with $0.8 million in the same period in FY2002. The decline in operating expenses was due to a decrease in sales, general and administrative costs. Research and development expense, on the other hand, was relatively steady at $0.2 million. The Company recorded a net loss of $0.1 million (net loss of $0.02 per share - basic and diluted) in the second quarter of FY2003, as compared with a net loss of $0.2 million (net loss of $0.04 per share - basic and diluted) in the same period in FY2002. Current assets totaled $1.3 million at the end of the second quarter of FY2003, which included cash and cash equivalents of $32,000. This compares with current assets at the end of the preceding year of $1.3 million, which included $0.7 million in cash and cash equivalents. At the end of the second quarter of FY2003, total assets stood at $1.8 million, total liabilities stood at $2.3 million and stockholders' deficit was $0.5 million. At the end of the preceding year, total assets stood at $1.8 million, total liabilities at $2.1 million and stockholders' deficit was $0.3 million. Jim Chesney, TSI TelSys' President and CEO, said, "While still in the process of rebuilding and expanding our business and technology base, I am very pleased with the order received for 12 FDPs for Marshall Space Flight Center and our continued sales to the SBIRS program." Headquartered in Columbia, Maryland, TSI TelSys design, manufactures and markets high-performance data acquisition, simulation and communication systems for the aerospace industry and provides related engineering services. The Company has been a pioneer in utilizing reconfigurable architectures (Adaptive Computing) for communications and data processing, and has incorporated this technology into its product line since 1996. The Company is a leader in providing multi-mission satellite communications systems adaptable to virtually any protocol format and that support data rates up to a gigabit per second. At June 27, 2003, the company's balance sheet discloses a working capital deficit of about $991,000 and net capital deficit of about $521,000. UNIGLOBE.COM INC: June 30 Net Capital Deficit Narrows to $3 Mil. ---------------------------------------------------------------- Online cruise specialist Uniglobe.com Inc. (TSX Venture:UTO.B) announced its second quarter 2003 financial results in Canadian GAAP. Uniglobe.com altered its business model earlier this year when it outsourced its fulfillment activities for the www.uniglobe.com web site to OneTravel.com. Uniglobe.com now receives a revenue share on business that OneTravel.com fulfills for Uniglobe.com customers rather than collecting the entire revenue related to a travel product sale. The Company is reporting the following results for the second quarter of 2003: - Revenues were US$8,514 in the second quarter of 2003 compared with US$362,703 in the second quarter of 2002. - Expenses were US$142,283 in the second quarter of 2003 compared with US$865,966 in the second quarter of 2002. - The net loss was US$133,849 in the second quarter 2003 compared with US$546,497 in the second quarter of 2002. Total assets of the Company at June 30, 2003 are US$175,092 and liabilities are US$3,473,311 with a total capital deficiency of US$3,298,219. The Company continues to negotiate with its creditors and is looking at reorganization alternatives at this time. Uniglobe.com Inc. (TSX Venture:UTO.B ) offers leisure and business travelers direct access to air, car, hotel, cruise and vacation products through its Web site at http://www.uniglobe.com Uniglobe.com operates independently and has no operational or financial impact on Uniglobe Travel (International) Inc., the global travel agency franchisor, or any of its member franchises. US AIRWAYS: Nason & Cullen Demands Payment of Cure Obligations -------------------------------------------------------------- Nason & Cullen ask Judge Mitchell for a determination of standing to enforce and receive cure obligations arising from the US Airways Debtors' assumption of a Facilities Sublease from the Philadelphia Airport for Industrial Development. Nason & Cullen also ask for Summary Judgment on their entitlement to an administrative priority claim for the Cure Amount. Neal D. Colton, Esq., at Cozen O'Connor, tells the Court that on November 8, 2002, Nason filed Proof of Claim No. 2612 for $1,752,663. On November 4, 2002, PAID filed Proof of Claim No. 3300 for $1,837,877, of which $1,752,663 was expressly attributed to the Nason Claim. Nason completed work on a Hangar at the Philadelphia Airport in March of 2001. Despite repeated efforts to authorize payment for the work, US Air did not pay Nason for its construction efforts. Nason requested a meeting with US Air and its construction manager, but received no response. During this time, Nason was forced to make large payments to its subcontractors. The Nason Claim is entitled to administrative priority status based on two legal theories. First, under constructive trust, Nason held an interest in the PAID bond proceeds that were placed into an account under the Trust Indenture that were earmarked for payment to contractors like Nason that performed work on the Airport Facilities for US Air. Second, pursuant to Section 365 of the Bankruptcy Code, Nason is entitled to have its Claim paid as a cure obligation arising from the assumption by US Air of certain of its lese and sublease agreements with PAID. (US Airways Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) US FLOW: US Trustee Appoints Official Creditors' Committee ---------------------------------------------------------- The United States Trustee for Region 9 appointed a 7-member Official Committee of Unsecured Creditors in US Flow Corporation's Chapter 11 case: 1. Michael Klofas Massachusetts Mutual Life Insurance Co. c/o David L. Babson & Company 1500 Main Street, Suite 2200 Springfield Massachusetts 01115 Tel: (413) 226-1621 Fax: (413) 226-2621 2. Allan K. Michalski Felker Brothers Corporation 22 N. Chestnut Avenue Marshfield Wisconsin 54449 Tel: (715) 384-3121 Ext. 352 Fax: (715) 486-2132 3. Ed Bray Metso Automation 44 Bowditch Drive Shrewbury, Massachusetts 01545 Tel: (508) 852-0200 Fax: (508) 595-5024 4. Frank Perry Anvil International, Inc. 110 Corporate Drive, Suite 10 Portsmouth NH 03801 Tel: (603) 422-8027 Fax: (603) 422-8022 5. Jeffrey E. Thompson The William Powell Company 2503 Spring Grove Avenue Cincinnati, Ohio 45214 Tel: (513) 852-2088 Fax: (513) 852-2007 or 854-2999 6. Tome Eisele NIBCO, Inc. 1516 Middlebury Street Elkhart, Indiana 46516 Tel: (574) 295-3347 Fax: (574) 295-3307 7. Peter A. Frisina Zurn Plumbing Products Group 1801 Pittsburgh Avenue Erie, Pennsylvania 16502 Tel: (814) 875-1250 Fax: (814) 871-6142 Official creditors' committees have the right to employ legal and accounting professionals and financial advisors, at the Debtors' expense. They may investigate the Debtors' business and financial affairs. Importantly, official committees serve as fiduciaries to the general population of creditors they represent. Those committees will also attempt to negotiate the terms of a consensual chapter 11 plan -- almost always subject to the terms of strict confidentiality agreements with the Debtors and other core parties-in-interest. If negotiations break down, the Committee may ask the Bankruptcy Court to replace management with an independent trustee. If the Committee concludes reorganization of the Debtors is impossible, the Committee will urge the Bankruptcy Court to convert the Chapter 11 cases to a liquidation proceeding. Headquartered in Grand Rapids, Michigan, US Flow Corporation filed for chapter 11 protection on August 12, 2003 (Bankr. W.D. Mich. Case No. 03-09863). Robert F. Wardrop, II, Esq., at Wardrop & Wardrop, P.C., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $69,056,000 in total assets and $123,461,000 in total debts. VIEWPOINT CORP: Eliminates over 20 Positions in Line with Plan -------------------------------------------------------------- Viewpoint Corporation (Nasdaq:VWPT) conducted a reduction of force in line with its plan to achieve a flatter, more nimble business infrastructure. The exercise resulted in the elimination of more than 20 positions, 50 percent of which were senior positions of vice president or higher. Senior staff reductions included Mark Gray, executive vice president of sales. Michael Hoydich, vice president of sales, will assume Mark Gray's responsibilities as manager of the direct sales force. Viewpoint thanks Mark for his contributions to the Company during his tenure and wishes him well. "This is the first step in achieving our goal of driving a flat, focused and accountable organization," said CEO Jay Amato. "Moving forward, we expect to realize cost savings, but more importantly, we will focus on driving a proactive organization to aggressively address market needs with superior leadership and technology innovation." Viewpoint Corporation (Nasdaq:VWPT) is a leading provider of interactive media technology and services for online advertising, website marketing and enterprise applications. Industry leading and Fortune 500 companies worldwide currently license its interactive media platform, Viewpoint Media Player. The Viewpoint platform enables marketers to evoke response with greater visual realism, engage users with superior interactivity and educate consumers through product interaction to convey a compelling, consistent brand story across their media mix. Headquartered in New York, the Company also has offices in Los Angeles, London and San Francisco and sales presence in Chicago and Detroit. Visit Viewpoint at http://www.viewpoint.com Viewpoint Corporation (Nasdaq:VWPT) in the first quarter of this year received Event of Default notices from Smithfield Fiduciary LLC and Portside Growth & Opportunity Fund, which alleged that the Company was in breach of its representations and warranties that were contained in the securities purchase agreement. Smithfield and Portside are two of the three investors who purchased a portion of the Company's 4.95 percent convertible notes due December 31, 2007. WEIRTON STEEL: Wants Nod to Reimburse Union's Fees and Expenses --------------------------------------------------------------- Weirton Steel Corporation anticipates that a longer-term collective bargaining agreement with the Independent Steelworkers Union will be necessary for any feasible business plan. The current collective bargaining agreement between the Debtor and the Union will expire in March 2004. The Union sought, and the Debtor agreed to provide, due diligence information to the Union in preparation for future collective bargaining agreement modification negotiations. The Union also requested that the Debtor bear the cost of legal counsel and the investment banker to the Union relating to the due diligence and collective bargaining agreement modification negotiations. The Debtor agreed to reimburse the Union for reasonable fees and expenses of the Union professionals, including the law firm of Pietragallo, Bosick & Gordon and the investment banking firm of McDonald Investments, Inc., d/b/a KeyBanc Capital Markets, subject to certain terms and conditions. The Debtor agree to pay Peitragallo's reasonable and necessary fees, nunc pro tunc to the Petition Date, conditioned on : (a) Court approval, and (b) the resignation of Robert D'Anniballe from Weirton's Board of Directors. Pietragallo will be subject to the same fee and expense review process as counsel to Fleet Capital Corporation, JP Morgan Trust Company, N.A. and the Unofficial Committee of Noteholders in accordance with the Final DIP Order. Similarly, the Debtor agrees to pay McDonald's fees in accordance with an Engagement Letter calling for: (a) $150,000 per month for the first three months of the engagement, commencing July 2003; (b) $125,000 per month for the fourth month through and including the sixth month of the engagement; and (c) $100,000 per month for each month after the sixth month of the engagement. The Debtor will also reimburse McDonald for all reasonable, necessary and documented out-of-pocket costs and expenses. The payments of McDonald's fees and expenses will be subject to Section 328(a) of the Bankruptcy Code. Moreover, McDonald's services are for the exclusive benefit of the Union. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, asserts that the Union's request for due diligence is reasonable because: (a) it is customary in the Union contract negotiations to provide the due diligence to the Union; (b) the Debtor permitted the Union to conduct due diligence in a similar context prior to its Chapter 11 case; and (c) absent the Union's ability to conduct the due diligence, the Union would not be in a position to evaluate the Debtors' proposals and respond to them in an informed manner. Given the comprehensive nature of the due diligence that the Union must perform, Mr. Freedlander points out, it is appropriate and necessary to defray certain of the reasonable costs that the Union will incur in connection with the negotiation of any modification to the Debtors' collective bargaining agreements and retiree benefits. (Weirton Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLD AIRWAYS: Provides Update on Insider Stock Selling ------------------------------------------------------- World Airways, Inc. (Nasdaq: WLDA) discussed its position regarding the recent insider stock trading and announced that Hollis Harris, chairman and CEO, has completed his selling for this trading period. After the 2003 second quarter financial results were made public and the 10-Q Report was filed with the Securities and Exchange Commission, the Company noted that it was within "trading window" guidelines established by the Company for insiders to sell some of their stock. The Company expected that some members of the board, management and employees would sell some of their stock for several reasons: * Insiders have done virtually no selling for the last three years. * The Company had instituted a salary exchange program, in which employees, including senior management, took a 10% pay cut to support World's restructuring and rebuilding efforts. * World's board of directors did not want to disallow employees from receiving some benefit from the recent stock price increase, especially in light of the pay cuts and the lack of selling over the last three years. In order to ensure that any insider stock sales were handled in an orderly way, the board of directors requested that directors and executives limit their sales to no more than 20% of their individual holdings. To date, directors and executives have honored that request, and not all Company directors and executives have traded shares of World stock during this period. The Company stated that directors, executives and employees are free to trade shares of World stock until September 16, 2003, the date that the current trading window will be closed, unless they have any material, non-public information. Prior to this trading period, Harris owned approximately 1.33 million shares of World Airways stock and stock options. This included 1,062,498 vested stock options and 269,715 shares of common stock. A Form 144 was filed with the Securities and Exchange Commission on August 25, 2003, noting Harris' intent to sell 251,309 shares of World Airways stock. From August 19, 2003, until August 28, 2003, Harris sold 87,309 shares of World Airways stock -- a total of less than 7% of his total holdings. He now has a total of about 1,245,000 shares of Company stock and vested options. Harris announced that he will not engage in any further trading of World Airways stock for this trading period. According to Harris, "I have been an active buyer of World Airways stock since I joined the Company. However, I found it necessary to liquidate some of my holdings to satisfy some personal obligations. This is the first time I have sold any of my shares, and I will not engage in any additional trading of Company stock for this trading window. I believe there is strong up-side potential in our market value, as we continue to expand our current business base and add new and diverse customers. "Our position with regard to the recent trading is that our employees have helped turn this Company around and gotten us back on track to long-term profitability," he continued. "Due to our financial circumstances, we have not been able to give cost-of- living increases, or make substantial monetary awards. It is only appropriate for members of senior management to take advantage of the stock options and holdings they have accumulated over time and share the benefits of the recent stock price increase." He added, "It is important to maintain a balance between supporting employees' periodic needs to sell their stock and raise cash for their personal needs with maintaining a strong insider position in the stock. Even factoring in the recent sales, company insiders hold approximately 19% of World Airways stock." Utilizing a well-maintained fleet of international range, wide- body aircraft, World Airways, Inc. has an enviable record of safety, reliability and customer service spanning more than 55 years. The Company is a U.S. certificated air carrier providing customized transportation services for major international passenger and cargo carriers, the United States military and international leisure tour operators. Recognized for its modern aircraft, flexibility and ability to provide superior service, World Airways, Inc. meets the needs of businesses and governments around the globe. For more information, visit the Company's Web site at http://www.worldair.com World Airways Inc.'s March 31, 2003 balance sheet shows a working capital deficit of about $22 million, and a total shareholders' equity deficit of about $22 million. WORLDCOM INC: Appoints 5 New Members to Board of Directors ---------------------------------------------------------- MCI (WCOEQ, MCWEQ) appointed five new members to its board of directors, increasing the total number of directors to nine. The new members include: former Touche Ross Chairman W. Grant Gregory, retired Bell Atlantic executive Judith Haberkorn, Patton Boggs Partner Laurence Harris, former U.S. Deputy Attorney General Eric Holder, and MatlinPatterson Global Advisers LLC CEO David Matlin. "The appointment of our newest board members is yet another positive step in the rebuilding of our company," said MCI Chairman and CEO Michael D. Capellas. "By attracting a broad range of talent on the board as well as the management team, we will continue to chart a new course for MCI, one in which our customers, employees and stakeholders can be proud." The new board appointments will become effective on the day MCI formally emerges from Chapter 11 protection. The first order of business for the new board will be to elect a non-executive chairman among its independent directors. Once the non-executive chairman is named, Capellas, who supports the separation between chairman and CEO as an element of good governance, will retain the title of MCI's chief executive officer. Additionally, the company expects to name as many as three more board members prior to its emergence. "Michael and the entire management team are focused on restoring the company's credibility and they are making every effort to build a winning team," said Irwin Gold of Houlihan Lokey Howard & Zukin, financial advisors to MCI's Unsecured Creditors Committee. "The new board is a clear indication of the value the management team places on depth of experience and commitment to the company's values of integrity, customer service and innovation." The new directors satisfy the requirements of the company's new corporate governance standards announced this week by Corporate Monitor Richard Breeden. These new board members join Capellas and other previously existing MCI Board members, including former Financial Accounting Standards Board Chairman Dennis Beresford, former U.S. Attorney General and Undersecretary of State Nicholas Katzenbach, and former Equifax Chairman and CEO C.B. "Jack" Rogers. W. Grant Gregory, Chairman, Gregory & Hoenemeyer, Merchant Bankers Gregory, chairman and co-founder of Gregory & Hoenemeyer, Merchant Bankers, has served as chairman of audit, governance and nominating, Special Independent Directors and compensation committees for a number of NYSE member companies. He spent 24 years at Touche Ross & Co., serving from 1982 to 1986 as chairman. While at Touche Ross, Gregory became an internationally- acclaimed authority on tax policy and economic development and participated in a number of M&A transactions and restructurings. In the mid- 1980's, he served as a member of the U.S. Trade Representative's advisory committee on international trade in services. Gregory graduated with distinction from the University of Nebraska in 1964, where he was later awarded an Honorary Doctorate of Humane Letters, as well as the Builder Award, the University's highest non-academic recognition. Gregory completed advanced management studies at New York University and Harvard University's Graduate School of Business, and attended the Air Force War College. Judith Haberkorn, Retired president, Bell Atlantic, Consumer Sales & Service As one of the first women recruited in 1968 to participate in AT&T's executive management-training program, Haberkorn's telecommunications career has been marked by several accomplishments. Prior to her retirement in June 2000, Haberkorn was appointed in 1998 president of Bell Atlantic Consumer Sales & Service, managing a 20,000-employee team, covering 13 states and the District of Columbia. Haberkorn was appointed in 1990 as an officer of NYNEX Corporation, where she served as vice president of Materials Management for the company's Telesector Resources Group. Prior to that, in 1988 she became the first female general manager of Special Services, responsible for providing telecommunications services to New England's largest corporate customers. Later that same year, she was named general manager of Access Markets, Marketing and Technology, leading a billion-dollar business unit that provided the largest and most profitable customers with a range of regional, national and international telecommunications access services. Haberkorn is a member of several prominent national and international business groups and is a member of the visiting committee of the Harvard Business School. She is chair emerita for the Committee of 200. She holds a bachelor's from Briarcliff (N.Y.) College and completed Harvard Business School's Advanced Management Program. Laurence E. Harris, Partner, Patton Boggs Harris joined Patton Boggs in 2001 and concentrates his practice on legislative, regulatory, international and business issues. Prior to joining Patton Boggs, Harris was senior vice president and general counsel of Teligent, an international telecommunications company. In this position he developed and maintained the company's political relationships with the White House, Congress, and with state and federal regulators. He also oversaw international development activities. From 1992 to 1996 Harris was senior vice president for law and public policy for MCI. In this capacity, he was responsible for MCI's federal and state regulatory relationships. He was also responsible for MCI's political relationships with the White House, Congress and state and federal regulators. From 1982 to 1992 Harris served as president and chief executive officer for International Telecom Systems, Inc. and CRICO Communications and president and chief operating officer of Metromedia Telecommunications. Prior to Metromedia, Harris was chief of the FCC's Mass Media Bureau. From 1972 to 1982 Harris served as a vice president of law and public policy for MCI, managing corporate relations for the Federal Communications Commission (FCC) and the office of Telecommunications Policy at the White House. Harris was a Lieutenant in the U.S. Navy, serving in the destroyer fleet. He was admitted to the Pennsylvania Bar and is a member of the board of the Georgetown University Law School, his alma mater. His undergraduate degree is from Columbia University. Eric Holder, Former Deputy Attorney General of the United States Eric Holder, currently a partner at Covington & Burling, is the former Deputy Attorney General of the United States and U.S. Attorney for the District of Columbia. Confirmed in 1993 as the first African-American to serve as the U.S. Attorney for the District of Columbia, Holder, among other accomplishments, created a Domestic Violence Unit, implemented a community prosecution project for safer neighborhoods and supported a renewed enforcement emphasis on hate crimes. In 1997, President Clinton appointed Holder to serve as Deputy Attorney General, the number-two position in the United States Department of Justice. In his role, Holder supervised all of the Department's litigation, enforcement and administrative components in both civil and criminal matters. As Deputy Attorney General, Holder was at that time the highest- ranking African-American person in law enforcement in the history of the United States. He held the title until the transition to the Bush Administration and briefly served under President George W. Bush as Acting Attorney General pending the confirmation of Attorney General John Ashcroft. A graduate of Columbia College and Columbia Law, Holder began his legal career in 1976 at the Department of Justice as part of the Attorney General's Honors Program, where he was assigned to the newly formed Public Integrity Section. He investigated and prosecuted official corruption on local, state and federal levels. In 1988, President Ronald Reagan nominated Holder to become an Associate Judge of the Superior Court of the District of Columbia. The Senate confirmed Holder later that year and during his five- year term, he presided over hundreds of civil and criminal trials. David Matlin, CEO, global and domestic portfolio manager, MatlinPatterson Global Advisers LLC Matlin is CEO, global portfolio manager of MatlinPatterson Global Advisers LLC. Prior to July 2002, Matlin was responsible for the activities of the Credit Suisse First Boston Distressed Securities Group since its 1994 inception. Matlin has been an active participant in the distressed securities market for 17 years and has made investments in more than 25 countries in North America, Latin America, Asia, Europe and Australia. Prior to joining CSFB, Matlin was managing director of distressed securities and co- founder of Merrion Group, L.P., a successor to Scully Brothers & Foss L.P. from 1988 to 1994. From 1986 to 1988, he was a securities analyst at Halcyon Investments. Matlin earned a JD from the Law School of the University of California at Los Angeles and a bachelor's in economics from the Wharton School of the University of Pennsylvania. WorldCom, Inc. (WCOEQ, MCWEQ), which currently conducts business under the MCI brand name, is a leading global communications provider, delivering innovative, cost-effective, advanced communications connectivity to businesses, governments and consumers. With the industry's most expansive global IP backbone, based on the number of company-owned POPs, and wholly- owned data networks, WorldCom develops the converged communications products and services that are the foundation for commerce and communications in today's market. For more information, go to http://www.mci.com. WORLDCOM: CAGW Calls for MCI Debarment from Federal Contracts ------------------------------------------------------------- In light of the announcement by Oklahoma Attorney General Drew Edmondson that the state is filing criminal charges against MCI, formerly WorldCom, and six former executives, Citizens Against Government Waste (CAGW) once again called for the General Services Administration (GSA) to debar the company from all federal contracts. "This is just one more black cloud hanging over MCI," CAGW President Tom Schatz said. "Criminal charges pending against MCI are further evidence that the company is not qualified to do business with the U.S. government." On July 31, GSA announced it was suspending MCI and proposed debarment for its corporate misconduct and fraudulent accounting. The company's 30-day deadline to appeal is approaching, and if it does not appeal, the company could be barred from new contracts with the federal government for up to three years. However, the deadline for the appeal could be extended. "GSA has taken a step in the right direction to protect taxpayers' money by suspending MCI," CAGW President Tom Schatz continued. "Now, they need to act further by debarring the company. In the year since the Securities and Exchange Commission launched its initial investigation into what was then WorldCom, the government has awarded MCI more than $1.2 billion in contracts." CAGW has been calling for MCI's debarment from government contracts since November, 2002 on the basis that the Federal Acquisition Regulations required such a conclusion, as well as that the agreements unnecessarily put taxpayer dollars at risk and amounted to a hidden government bailout of the company. The taxpayer watchdog ran an ad campaign during the month of July, entitled "Crime Doesn't Pay," demanding debarment. "If and when MCI appeals, GSA needs to stick by its decision. With all of these proven and pending allegations of wrongdoing, one has to wonder what more MCI may be hiding," Schatz concluded. "The company has already demonstrated that it will engage in unacceptable, unethical, and fraudulent behavior in order to obtain federal contracts and abuse tax dollars. GSA needs to disconnect MCI through debarment." Citizens Against Government Waste is the nation's largest nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, abuse, and mismanagement in government. For more information, please visit http://www.cagw.org W.R. GRACE: Plan Filing Exclusivity Intact Until Feb. 1, 2004 ------------------------------------------------------------- Kathleen J. Campbell, Esq., at Campbell & Levine in Wilmington, reminds Judge Fitzgerald that, while the Bankruptcy Code provides that the Court may reduce or increase the 120-day or 180-day exclusive periods for a debtor to file and solicit acceptances of its reorganization plan if "cause" exists, the W.R. Grace Debtors are asking for an additional six months -- bringing the total extension to approximately two and a half years. In seeking the extension, the Debtors seek to retain total control over the plan process, unencumbered by any input from, and without any regard to, the interest of its creditors. Such a result is improper under Section 1121(d). Requests to extend or reduce a period of exclusivity should "be granted neither routinely nor cavalierly." In enacting Section 1121(d), Congress explicitly sought to achieve two goals: (1) grant the debtor a reasonable time to confirm a plan without the threat of a competing plan; and (2) at the same time, ensure that a debtor would not use Chapter 11 as a mechanism through which to operate indefinitely without attempting to reorganize. Section 1121(d) is an attempt to create a balance between the rights of debtors and creditors by allowing debtors sufficient time to negotiate a settlement, while at the same time avoiding undue delay for creditors. Long and numerous extensions of the exclusivity period upset that balance and should not be encouraged. This court should not extend Debtors' exclusivity periods and thereby allow the Debtors to retain control over the plan process while throughout the course of their four prior extensions Debtors failed to either propose, or even attempt to negotiate, a plan. Ms. Campbell believes that the Debtors have had plenty of time thus far and have failed to make any progress towards a confirmable plan of reorganization that would justify the requested extension. Size and Complexity Not Enough The Debtors' arguments in support of a finding of cause for this extension are insufficient. Size and complexity alone do not provide cause for extension of the exclusivity periods. If size and complexity alone were sufficient to find cause, then debtors in complex cases would have an unlimited right to exclusivity; Section 1121(d) would be rendered meaningless. Section 1121(d)'s "for cause" language requires the presence of factors in addition to timing, size, and complexity that are specific to the particular debtor and its reorganization to justify an extension of exclusivity. These factors include: (1) the likelihood of an imminent consensual plan if the debtor retains control; (2) no alternate substantial plan being held off by exclusivity; and (3) the general balancing analysis to avoid allowing the debtor to hold the creditors and other parties-in-interest "hostage" so that the debtor can force its view of an appropriate plan upon the other parties. Pending Litigation Not Enough The Debtors claim in their Motion that pending litigation regarding claims justifies a further extension of time. Where the need to conclude litigation does not appear to be critical to the debtor's efforts to propose a plan, the debtor should be able to "propose its plan taking into consideration the possible results of that action." Conversely, if a resolution of that litigation is crucial to any plan, no one, neither debtor nor creditor, will be able to propose such a plan until a conclusion is reached. Thus, while it may be more convenient to know the results of the litigation, it is not necessary for this Chapter 11 proceeding to be placed in limbo until that time. Denial of the Debtors' Motion will not end its chances for reorganization. "Denying such a motion only affords creditors their right to file the plan; there is no negative effect upon the debtor's co-existing right to file its plan." (B) Official Committee of Equity Security Holders Supports an Extension. Teresa K. D. Currier, Esq., at Klett Rooney Lieber & Schorling in Wilmington, contents herself with saying simply that the Committee has been monitoring the course of these chapter 11 cases and believes that the Grace Debtors are properly performing their DIP duties. Ms. Currier gives the Grace Debtors credit for the settlements of the Sealed Air and Fresenius adversary proceedings, and for preparation for the science trial in the ZAI litigation. Therefore, the Equity Committee supports the Debtors' request and thinks that six months is a reasonable extension. (C) The Debtors Respond: "The Best Hope" The "best hope of a prompt and successful chapter 11 Plan for these estates continues to lie with the Debtors." Paula A. Galbraith, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub PC in Wilmington points with pride to the Debtors' establishment of procedures and timetables to resolve its asbestos litigation and related claims as evidence of the Debtors' diligent efforts toward a plan. Judge Fitzgerald Approves Extension The important items of litigation in W.R. Grace's cases are on track to be determined soon, Judge Fitzgerald observes, and the Debtors haven't lost control of their restructuring. Judge Fitzgerald doesn't buy that the Asbestos Committee is in any better position to propose and file a plan than the Debtors. Judge Fitzgerald rules that the Debtors' Exclusive Plan Filing Period will remain intact through February 1, 2004, and the company's exclusive right to solicit acceptances of that plan runs through April 1, 2003. (W.R. Grace Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Large Companies with Insolvent Balance Sheets ----------------------------------------------- Total Shareholders Total Working Equity Assets Capital Company Ticker ($MM) ($MM) ($MM) ------- ------ ------------ ------- -------- Alliance Imaging AIQ (39) 683 43 Akamai Technologies AKAM (168) 230 60 Alaris Medical AMI (32) 586 173 Amazon.com AMZN (1,353) 1,990 550 Aphton Corp APHT (11) 16 (5) Arbitron Inc. ARB (100) 156 (2) Alliance Resource ARLP (46) 288 (16) Atari Inc. ATAR (97) 232 (92) Actuant Corp ATU (44) 295 18 Avon Products AVP (91) 3,327 73 Saul Centers Inc. BFS (13) 389 N.A. Caraco Pharm Lab CARA (20) 20 (2) Cincinnati Bell CBB (2,104) 1,467 (327) Cubist Pharmaceuticals CBST (7) 221 131 Choice Hotels CHH (114) 314 (37) Columbia Laboratories COB (8) 13 5 Campbell Soup Co. CPB (114) 5,721 (1,479) Caraco Pharm Labs CPD (20) 20 (2) Centennial Comm CYCL (470) 1,607 (95) Echostar Comm DISH (1,206) 6,210 1,674 D&B Corp DNB (19) 1,528 (104) Graftech International GTI (351) 859 108 Hollywood Casino HWD (92) 553 89 Hexcel Corp HXL (127) 708 (531) Integrated Alarm IASG (11) 46 (8) Imax Corporation IMAX (104) 243 31 Imclone Systems IMCL (186) 484 139 Gartner Inc. IT (29) 827 1 Journal Register JRC (4) 702 (20) KCS Energy KCS (30) 268 (16) Kos Pharmaceuticals KOSP (75) 69 (55) Lodgenet Entertainment LNET (101) 298 (5) Level 3 Comm Inc. LVLT (240) 8,963 581 Memberworks Inc. MBRS (21) 281 (100) Moody's Corp. MCO (327) 631 (190) McDermott International MDR (417) 1,278 154 McMoRan Exploration MMR (31) 72 5 Maguire Properti MPG (159) 622 N.A. MicroStrategy MSTR (34) 80 7 Northwest Airlines NWAC (1,483) 13,289 (762) ON Semiconductor ONNN (525) 1,243 195 Petco Animal PETC (11) 555 113 Primus Telecomm PRTL (168) 724 65 Per-Se Tech Inc. PSTI (39) 209 32 Qwest Communications Q (1,094) 31,228 (1,167) Rite Aid Corp RAD (93) 6,133 1,676 Revlon Inc. REV (1,641) 939 44 Ribapharm Inc RNA (363) 199 92 Sepracor Inc SEPR (392) 727 413 St. John Knits Int'l SJKI (76) 236 86 Solutia Inc. SOI (249) 3,342 (231) I-Stat Corporation STAT 0 64 33 Town and Country Trust TCT (2) 504 N.A. Tenneco Automotive TEN (75) 2,504 (50) Thermadyne Holding THMD (665) 297 139 TiVo Inc. TIVO (25) 82 1 Triton PCS Holdings TPC (36) 1,617 172 UnitedGlobalCom UCOMA (3,040) 5,931 (6,287) United Defense I UDI (30) 1,454 (27) UST Inc. UST (47) 2,765 829 Valassis Comm. VCI (33) 386 80 Valence Tech VLNC (17) 36 4 Ventas Inc. VTR (54) 895 N.A. Warnaco Group WRNC (1,856) 948 471 Western Wireless WWCA (464) 2,399 (120) Xoma Ltd. XOMA (11) 72 30 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. 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. 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