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/raid1/www/Hosts/bankrupt/TCR_Public/030908.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, September 8, 2003, Vol. 7, No. 177 Headlines ACTRADE: Brings-In John Fioretti as Chief Restructuring Officer ALASKA AIR: S&P Ratchets Corp. Credit Rating Down a Notch to BB- ALLIED HOLDINGS: Amends Senior Secured Credit Facility AMERALIA: Extends Short-Term Financing Due Date to September 30 ANC RENTAL: Posts Distribution of Asset Sale Proceeds ANTARES PHARMA: Reports Development of New Device Portfolio ATLANTIC COAST: Posts 14.8% Increase in August 2003 Traffic ARMSTRONG HLDGS: Asbestos Panel Seeks Disclosure of ADR Ruling BUDGET: Courts Stretches Solicitation Exclusivity Until Dec. 1 CALPINE: Closes $86M Auburndale Plant Interest Sale to Pomifer CARECENTRIC: Closes Merger Transaction with Borden Associates CASUAL MALE: Files Liquidating Plan and Disclosure Statement CHOICE ONE: Extends Buffalo Bills Partnership for Five Years CKE RESTAURANTS: Will Publish Q2 Results on September 17 COEUR D'ALENE: Commences Public Offering of 20.6 Million Shares COM21: Court OKs Sale of Video Product Line and Remaining Assets CONCERT IND: Canadian Court Extends CCAA Protection Until Oct. 3 CREDIT SUISSE: S&P Assigns Prelim. Ratings to Ser. 2003-4 Notes CROWN CASTLE: Will Present at Morgan Stanley Conference Today DELTA AIR LINES: Reports Declining August 2003 Traffic Results DOMAN INDUSTRIES: Court-Appointed Monitor Files August Report DVI: Seeks to Continue Employing Ordinary Course Professionals EAGLEPICHER: Confirms No Cash Dividend on Preferred Stock EL PASO CORP: Director Thomas R. McDade Resigns from Board ENCOMPASS SERVICES: Selling 16 Non-Core Business Operations ENRON CORPORATION: Wants Plan Voting Procedures Established EQUIFIN: Elects Not to Proceed with Proposed Celtic Merger EXEGENICS: AVI BioPharma Terminates Exchange Offer & Merger Plan FASTNET CORP: Chapter 11 Filing Raises Going Concern Uncertainty FERRELLGAS PARTNERS: Acquires Bud's Propane Service in Oregon FLEXTRONICS: Reports Final Results of Sr. Sub Notes Tender Offer FRONT PORCH: Recurring Losses Raise Going Concern Uncertainty FRIENDLY ICE CREAM: Amends By-Laws' Advance Notice Requirements GAP INC: Hires Nicholas Severino as Divisional CFO for Gap Brand GAP INC: August 2003 Net Sales Climb 5% to $1.22 Billion GENCORP INC: Revises Earnings Guidance for Third Quarter GENSCI REGENERATION: Publishes Info Circular on IsoTis Merger GENTEK INC: Court Okays Solicitation and Tabulation Protocol GENUITY INC: Chapter 7 Liquidation as Alternative to Chapter 11 INTERNATIONAL POWER: Releases Half Year 2003 Interim Results IPC ACQUISITION: Completes Refinancing of Sr. Credit Facilities KEY COMPONENTS: S&P Affirms & Revises Ratings Outlook to Stable KM LOGISTICS: CEO Convicted of Fraud Scheme, US Attorney Reports LASERSIGHT: Delays SEC Report Filing & Extends GE Loan Agreement LASERSIGHT INC: Files for Chapter 11 Reorganization in Florida LOGOATHLETIC: Files Plan and Disclosure Statement in Delaware LUCENT TECH: Ratings Affirms & Removes Watch on Lower-B Ratings MCMS INC: Files Liquidating Plan and Disclosure Statement MGM MIRAGE: Ratings Dive After Continuing of Share Repurchase MICHAELS STORES: August 2003 Sales Jump-Up 7% to $186 Million NAT'L BENEVOLENT: Fitch Hatchets Rating on $149-Mill Bonds to B- NET2000 COMMS: Trustee Employs Parente Randolph as Accountants NETMEASURE TECH: Amisano Replaces Grant Thornton as Accountant NORTEL: S&P Changes Outlook on Affirmed Low-B Ratings to Stable NUCENTRIX BROADBAND: Files for Chapter 11 Protection in Texas ORION REFINING: Sept. 22 is Prepetition & Admin. Claims Bar Date OWENS & MINOR: Converts $2.6875 TECONS into Common Stock PENN TRAFFIC: Names James Demme As New Chairman of the Board PETROLEUM GEO: Fitch Withdraws D Ratings PG&E NATIONAL: Turns to Deloitte & Touche for Tax Advice PHILIP SERVICES: Court Fixes September 23, 2003 Claims Bar Date PRIMEDEX HEALTH: Files Prepack. Chapter 11 Petition in Calif. PRIME RETAIL: Amends Merger Agreement with Lightstone Group PRIMUS TELECOM: Commences $75MM Convertible Sr. Debt Offering QWEST: Files Long-Distance Application With FCC for Arizona ROWE INT'L: Case Summary & 20 Largest Unsecured Creditors ROYAL & SUNALLIANCE: Insurer Fin'l Strength Rating Dives to BB- SILICON GRAPHICS: Losses & Liquidity Issues Prompt Neg. Outlook SK GLOBAL: Wants Schedules Filing Deadline Moved to September 30 SPIEGEL: Unsecured Panel Brings-In McMillan as Canadian Counsel SPIEGEL GROUP: Records $104.4 Million Net Sales for August SR TELECOM: Completes Acquisition of Netro Corporation TOP FLITE: Court Okays Callaway Golf's Offer to Acquire Assets TWINLAB CORP: Case Summary & 17 Largest Unsecured Creditors UNITED AIRLINES: August Revenue Passenger Miles Tumble 8.1% US AIRWAYS: Enters Pact Settling Claims with Bombardier et al. US FLOW: Court OKs The Garden City as Claims and Noticing Agent USG CORP: Wants Exclusive Period Extended Until March 1, 2004 VALLEY MEDIA: Wants to Stretch Exclusivity through November 10 WEIRTON STEEL: Court Approves CIBC's Retention as Fin'l Advisors WESTPOINT STEVENS: Gets Okay to Assume 5 Alabama Gas Contracts WHEELING-PITTSBURGH: Dispute Settlement with BOC Gets Court Nod WORLD HEART: Lenders Further Stretch Loan Maturities Until Fri. * Cambridge Credit Launches GoodPayer.com for Consumers * BOND PRICING: For the week of September 8 - 12, 2003 ********* ACTRADE: Brings-In John Fioretti as Chief Restructuring Officer --------------------------------------------------------------- Actrade Financial Technologies Ltd. has hired John Fioretti to serve as the Company's Chief Restructuring Officer. As previously announced, the Company has ceased writing new business and will shortly be conducting an auction sale of its operating assets. Accordingly, as the Company moves to a new phase, Mr. Fioretti will replace the Company's Chief Executive Officer, Richard McCormick, who will be leaving the Company and transitioning his responsibilities to Mr. Fioretti over the coming weeks. Mr. Fioretti has thirteen years of restructuring experience acting as an interim crisis manager, financial advisor, and portfolio manager of troubled debt. He has worked with both creditors and debtors in several different industries, including finance, real estate, healthcare and transportation as well as with various manufacturing, wholesale and service companies. Mr. Fioretti has extensive experience with bankruptcy matters (restructurings and liquidations) and out of court settlements. Mr. Fioretti's prior employment also includes three years with National Westminster Bank as a Vice President in its Special Loan & Real Estate Division and five years with Marine Midland Bank as a middle market commercial loan officer and completing its formal one-year credit training program. He graduated from Lehigh University in 1986 with a B.S. in Accounting. Actrade is a publicly traded holding company incorporated in the State of Delaware. Its business operations are conducted through its subsidiaries that provide payment technology solutions that automate financial processes and enhance business-to-business commerce relationships. Actrade filed for Chapter 11 protection on December 12, 2002, (Bankr. S.D.N.Y. Case No. 02-16212). ALASKA AIR: S&P Ratchets Corp. Credit Rating Down a Notch to BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Alaska Air Group Inc. and subsidiary Alaska Airlines Inc., including lowering the corporate credit rating on both to 'BB-' from 'BB.' Ratings were removed from CreditWatch, where they were placed March 18, 2003. The outlook is negative. "The downgrade is based on the company's weakened financial profile," said Standard & Poor's credit analyst Betsy Snyder. "Although Alaska Air continues to have an above-average financial profile among U.S. airlines, its credit ratios have suffered from losses incurred since 2000, and are not expected to improve significantly over the near term," the credit analyst continued. The ratings on Alaska Air Group Inc. reflect a medium-sized route network serving competitive markets, and the inherent riskiness of the airline industry, offset somewhat by relatively low operating costs and good liquidity. Alaska Air Group is the holding company for Alaska Airlines Inc., its major operating subsidiary, and Horizon Air Industries Inc. Alaska Airlines operates hubs at Seattle, Wash., Portland, Oregon, and Anchorage, Alaska, primarily serving destinations in Alaska from the lower 48 states, as well as destinations along the West Coast of the U.S., Canada (Vancouver), and Mexico. More recently, the company has begun to serve East Coast destinations from Seattle--including Washington, D.C., Newark, New Jersey, Boston, and Miami. Despite significant competition from Southwest Airlines and United Air Lines, Alaska Airlines has a substantial market share on many of the routes it serves along the West Coast. It also benefits from alliance relationships with a number of airlines, including American Airlines, Continental Airlines, and Northwest Airlines. Horizon Air is a commuter airline that operates out of hubs at Seattle and Portland. Although Alaska Air Group's financial profile is among the best in the airline industry, its credit ratios have weakened since 2000, due primarily to losses incurred from weak operating conditions throughout the industry. While the company's earnings are expected to recover in 2004, its credit ratios are not expected to return to previous levels over the near term. Alaska Air's lease-adjusted debt to capital, while elevated, is among the lowest in the industry--79% at June 30, 2003. Ratings could be lowered if the continuing weak airline environment prevents an anticipated gradual improvement in earnings and liquidity. ALLIED HOLDINGS: Amends Senior Secured Credit Facility ------------------------------------------------------ Allied Holdings, Inc. (Amex: AHI) has successfully completed an amendment to its senior secured credit facility to extend the maturity, increase liquidity, and adjust financial covenants among other changes. The amendment provides Allied with a $190 million senior secured facility consisting of a $100 million term loan and a $90 million revolving credit facility. The amendment extends the final maturity date of the entire facility from February 2005 to September 2007. Ableco Finance LLC and Wells Fargo Foothill, Inc., a wholly-owned subsidiary of Wells Fargo & Company (NYSE: WFC), remain as agents of the amended facility. The $100 million term loan will bear interest in a range between 8.5% and 11.5% to be determined based solely on the Company's leverage as defined in the agreement. The interest rates on the previous term loans were based solely on a spread over the prime rate. The weighted average rate of interest on the prior term loans before the amendment was 10.0%. Interest rates under the amended revolving credit facility will remain unchanged from the prior facility at the prime rate plus 1.5% with a minimum interest rate of 6.5%. Prior to the amendment, the senior credit facility consisted of a $120 million revolving credit facility and $82.75 million of term loans. Prior to the amendment the unpaid balance of the term loans was $66.0 million and outstanding borrowings under the revolving credit facility were $36.5 million. As a result of the amendment, the outstanding balance of the term loans will be increased to $100 million with a corresponding reduction to the outstanding borrowings under the revolving credit facility. This change will provide additional liquidity under the revolving credit facility. The amended facility also reduces the minimum EBITDA covenant, as defined in the agreement, to $50 million for a rolling twelve- month period. The amended facility continues to be secured by all assets of the Company and its subsidiaries (other than its captive insurance company). Allied's $150 million of 8 5/8% senior unsecured notes due in 2007 will continue as a part of the Company's capital structure. Commenting on the announcement, Hugh E. Sawyer, Allied's President and Chief Executive Officer, said, "The amended facility provides Allied with more favorable financial covenants, additional availability and extends the maturity date of the facility for an additional two and a half years. More flexible covenants and additional availability will facilitate opportunities for investments in the equipment and technology that supports outstanding customer service. Although we will continue to face challenging external events in this transition year of the turnaround, this amendment to our senior secured credit facility is clearly another positive step in the revitalization of Allied Holdings." * * * As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its 'B' corporate credit rating on automobile transporter Allied Holdings Inc., and at the same time, removed the ratings from CreditWatch. The action reflected Allied Holdings' announcement that it had refinanced an unrated $230 million revolving credit facility and $40 million in unrated subordinated debt. Allied Holdings, based in Decatur, Ga., is the largest North American motor carrier of new and used automobiles and light trucks. The company has about $370 million in debt and operating leases. AMERALIA: Extends Short-Term Financing Due Date to September 30 --------------------------------------------------------------- On February 20, 2003, AmerAlia, Inc., through its indirect, wholly-owned subsidiary, Natural Soda, Inc. (formerly named "Natural Soda AALA, Inc."), purchased the assets of White River Nahcolite Minerals Ltd. Liability Co. and certain related contracts held by IMC Chemicals Inc. with short-term financing provided by funds associated with The Sentient Group of Grand Cayman. Natural Soda, Inc. is owned by Natural Soda Holdings, Inc. (formerly "Natural Soda, Inc."). AmerAlia owns 100% of the outstanding stock of Natural Soda Holdings, Inc. White River Nahcolite Minerals is an indirect, wholly-owned subsidiary of IMC Global, Inc. IMC Chemicals is a subsidiary of IMC. The original terms of the short-term financing required repayment on March 24, 2003, however, the parties extended the repayment date to April 17, 2003, then to May 31, 2003, then to June 30, then to July 31 and then again until August 31, 2003. Certain of the conditions precedent have not been met and the parties have agreed to extend the due date of the short-term financing until September 30, 2003. The company's March 30, 2003, balance sheet discloses a net capital deficit of about $723,000. ANC RENTAL: Posts Distribution of Asset Sale Proceeds ----------------------------------------------------- Judge Walrath approves the sale of substantially all of ANC Rental Corporation's assets to Cerberus Capital Management free and clear of all Claims, Liabilities and Encumbrances, except for the Assumed Liabilities and Permitted Encumbrances. The Court also authorizes the Debtors to assume and assign the Assigned Contracts to Cerberus. The proceeds of the Sale will be distributed in this manner: 1. an amount to be agreed upon, not to exceed $6,800,000, will be placed in an interest-bearing escrow to provide for the payment of ad valorem tax liens; 2. in accordance with the prior Court Orders, to Congress Financial Corporation, as agent under a June 30, 2000 Amended and Restated Credit Agreement, in payment in full of the secured claim against the Debtors arising under the June 30, 2000 credit agreement; 3. to Lehman Commercial Paper, Inc., as agent under the Supplemental Facility, in full payment of its secured claim against the Debtors arising under the Supplemental Facility; 4. the balance will be paid over to Lehman on account of its $180,000,000 secured claim. Lehman will retain a deficiency claim to the extent the proceeds are less than $180,000,000. To the extent any funds remain in the Professional Fee Reserve or the Ad Valorem Tax Reserve at the earlier of (i) June 30, 2004, (ii) the effective date of a reorganization plan for the Debtors, or (iii) when all amounts to be paid out of the reserves have been paid, the funds will be paid to Lehman on that date. Lehman has agreed to allocate, out of its recovery on account of its secured claim: -- an amount to be agreed upon, not to exceed $8,500,000, that will be placed in an interest-bearing escrow for the payment of Bankruptcy Related Professional Fees accrued and unpaid up to and including the later of the Closing Date of the sale or confirmation of a reorganization plan, the balance of the reserve to be returned at that time; and -- $250,000, which will be reserved to the estate and will be deposited into a liquidating trust, and all the distributions to creditors will be indefeasible. The distribution to Lehman on account of its $180,000,000 secured claim will not be indefeasible if there is a dispute by Liberty Mutual Insurance Company whether there was a closing in compliance with the Sale Order and the Letter Agreement, which dispute has not been resolved by either the parties' consent or a final Court order. Liberty will have no liens, security interests or claims in or to any assets remaining in the Debtors' estates after the Closing except for: 1. Liberty's lien on, pledge of and claim to the stock of ANC's foreign subsidiaries that were not part of the sale; and 2. upon foreclosure of the stock, the assets of the Non- Acquired Foreign Subsidiaries. Liberty's lien, security interest and claim in or to the stock of the Non-Acquired Foreign Subsidiaries will continue to be a pledge of, and a perfected first priority security interest in the Non-Acquired Foreign Subsidiaries Stock. The pledge and security interest will continue to stand as collateral for the performance of all obligations owed to, and rights of, Liberty under the Liberty Orders and Liberty will retain its claims against the Debtors' estates, but with recourse being limited solely to the Non-Acquired Foreign Subsidiaries and their stock. Liberty will retain all of its rights and remedies with respect to its interests in the Non-Acquired Foreign Subsidiaries, including the proceeds derived from the sale or other disposition of the collateral. Liberty will be entitled to receive and hold the proceeds as additional cash collateral for any and all rights of, and obligations owing to, Liberty under certain orders granting Liberty superpriority status on the Debtors' assets. Liberty's rights under the Letter Agreement will not be prejudiced by the Sale. If the Debtors submit a qualifying bid in connection with the St. Louis Concession Bid Rights that results in a new concession agreement between the City of St. Louis, Missouri and ANC prior to the closing of the Sale, Judge Walrath authorizes ANC to assign the concession agreement to Cerberus without the consent of the City of St. Louis, Missouri. The hearing regarding the assumption and assignment of certain insurance policies Liberty issued and with regard to Liberty's objection to the assignments, and the assumption and assignment of certain insurance policies issued by ACE Insurance Company or its affiliates is adjourned until September 8, 2003. Judge Walrath further orders Cerberus to pay to DaimlerChrysler Corporation all amounts outstanding under a Loan and Security Agreement, dated March 17, 2003, between ANC, certain guarantors and DaimlerChrysler. Cerberus has agreed to assume and satisfy Lehman's obligation to pay the Sale Proceeds Bonus to certain ANC employees pursuant to the Court order approving the Sale Proceeds Bonus Program. In the event that Cerberus fails to make the payments, Lehman will satisfy the Bonus Plan Obligations. No transfer or assignment of any of the New Vehicles Transaction Documents, including the New Master Lease Agreement and the Existing Master Lease Agreement will occur without the express prior written consent of MBIA Insurance Corporation. (ANC Rental Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) ANTARES PHARMA: Reports Development of New Device Portfolio ----------------------------------------------------------- Antares Pharma, Inc. (OTC Bulletin Board: ANTR) has completed preliminary clinical testing on several of its new device products, and these devices are now available for licensing for use with specific products. These device products include: -- The next generation of re-usable needle-free injector, Valeo(TM), a smaller and more portable system than current needle-free injectors, designed for use with drugs in cartridge containers, rather than vials, a format that has become more widely used for several patient self-administered products. -- The Vibex(TM), a pre-filled, single-use device incorporating Antares Pharma's proprietary mini-needle technology. The Vibex(TM) is designed to deliver products for shorter-term use, intermittent need, or for emergency situations. -- The Ventrix(TM), a variant of Vibex(TM), designed specifically for physician office based administration of vaccines. Commenting on the progress of these device products, Peter Sadowski, Ph.D., Vice President of the Devices Group, said, "We are very pleased that our efforts over the past two years have led to the establishment of three additional device products in our portfolio. Our clinical studies and those performed by potential business partners have confirmed the performance of these devices. The next stage in development will be scale-up associated with specific product and customer needs." Mike Kasprick, Executive Director for Business Development, added, "These new devices are positioned to meet the drug delivery requirements of several current and emerging products from the biotechnology and pharmaceutical industry. They offer enhanced patient ease of use, reduced cost, and protection from accidental needle-stick injuries. Additionally, we believe that these devices will further interest our pharmaceutical partners who recognize that compliance with patient self-injection therapy regimens is linked to positive treatment outcomes." He further commented that Antares Pharma believes that several products of biotechnology research may only reach their full commercial potential when patients have alternatives to conventional injection systems. Antares Pharma develops pharmaceutical delivery systems, including needle-free and mini-needle injector systems and transdermal gel technologies. These delivery systems are designed to improve both the efficiency of drug therapies and the patient's quality of life. The Company currently distributes its needle-free injector systems in more than 20 countries. In addition, Antares Pharma conducts research and development with transdermal gel products and currently has several products in clinical evaluation with partners in the US and Europe. The Company is also conducting ongoing research to create new products that combine various elements of the Company's technology portfolio. Antares Pharma has corporate headquarters in Exton, Pennsylvania, with manufacturing and research facilities in Minneapolis, Minnesota, and research facilities in Basel, Switzerland. * * * Balance Sheet Cash and cash equivalents at December 31, 2002, and June 30, 2003, were approximately $268,000 and $305,000, respectively. Assets at December 31, 2002, and June 30, 2003, were $6.409 million and $5.869 million, respectively, and net shareholders' equity (deficit) at December 31, 2002, and June 30, 2003, was approximately $655,000 and ($5.828) million, respectively. The decrease in net shareholders' equity reflects the effects of operations continuing at a loss and a non-cash mark-to-market accounting charge relating to warrants classified as debt. ATLANTIC COAST: Posts 14.8% Increase in August 2003 Traffic ----------------------------------------------------------- Atlantic Coast Airlines (Nasdaq: ACAI) reported preliminary consolidated passenger traffic results for August 2003. Systemwide, the company generated 301.0 million revenue passenger miles, a 14.8 percent increase over the same month last year, while available seat miles rose to 403.6 million, an 8.1 percent increase. Load factor was 74.6 percent versus 70.3 percent in August 2002. For the month, 754,828 passengers were carried, a 12.4 percent increase over the same month last year. For the eight months ended August 31, 2003, compared to the same period in 2002, RPMs grew to 2.2 billion, an increase of 19.8 percent, while ASMs were 3.0 billion, a 5.8 percent increase. The company carried 5,630,223 passengers during the eight months ended August 31, 2003, compared to 4,559,743 in 2002, an increase of 23.5 percent on a year-over-year basis. ACA currently operates as United Express and Delta Connection in the Eastern and Midwestern United States as well as Canada. The company also operates charter flights as ACA Private Shuttle. ACA has a fleet of 146 aircraft-including 118 jets-and offers over 830 daily departures, serving 84 destinations. On July 28, 2003, ACA announced it anticipates that its longstanding relationship with United Airlines will end, and that it will establish a new, independent low-fare airline to be based at Washington Dulles International Airport. Atlantic Coast Airlines (S&P/B-/Negative) employs over 4,800 aviation professionals. The common stock of parent company Atlantic Coast Airlines Holdings, Inc. is traded on the Nasdaq National Market under the symbol ACAI. For more information about ACA, visit its Web site at http://www.atlanticcoast.com ARMSTRONG HLDGS: Asbestos Panel Seeks Disclosure of ADR Ruling -------------------------------------------------------------- The Official Committee of Asbestos Claimants and Dean M. Trafelet, the Legal Representative for Future Asbestos Claimants in the Chapter 11 cases of Armstrong Holdings, Inc. and its debtor- affiliates, ask Judge Newsome to: -- force the Debtors to disclose an arbitration appellate panel ruling regarding the Debtors' insurance assets, and -- prevent Liberty Mutual from stopping that disclosure. The Asbestos Claimants and Mr. Trafelet believe that the appellate ruling may affect -- perhaps dramatically -- the ultimate recovery available from the contribution of certain insurance assets to the asbestos trust established under the Bankruptcy Code and the Debtors' Plan of Reorganization. As the amounts of the distribution available to asbestos claimants are dependent on the amount of insurance proceeds recovered by or on behalf of the Trust, simple fairness dictates that the asbestos constituents should have access to information that is relevant to the value of the insurance at issue. The Asbestos Committee is represented by Aileen F. Maguire, Esq., at Campbell & Levine LLC, in Wilmington, Delaware, while Mr. Trafelet is represented by Maribeth L. Minella, Esq., at Young Conaway Stargatt & Taylor LLP, in Wilmington, Delaware. Why It's Necessary In 1996, the Debtors and Liberty Mutual became involved in an alternative dispute resolution proceeding to resolve a question about whether a majority of the asbestos personal injury claims asserted against the Debtors constituted "non-product" or general liability claims under the terms of certain insurance policies. The Liberty Mutual policies that were in effect from 1973 through 1976 provide $40,000,000 in coverage, plus defense costs, for settlements and judgments incurred in connection with non-products claims. The Liberty Mutual policies in effect for the period from 1977 through 1981 have no aggregate limit for non-product claims. On January 29, 2002, a final judgment was entered in the Debtors' favor at the conclusion of the trial phase of the ADR. Liberty Mutual appealed the Final Judgment pursuant to the Wellington Agreement's ADR rules. Oral argument on the appeal was heard on March 11, 2003. The Debtors recently notified counsel for the Asbestos Claimants and Mr. Trafelet that the appellate panel entered a decision reversing the Final Judgment. The Asbestos Claimants and Mr. Trafelet believe that the Appellate Ruling, arguably, could adversely impact the recoverability of insurance assets available to the Trust. Accordingly, the Asbestos Claimants and Mr. Trafelet seek to review the arbitration papers so they can better understand the proposed contribution of insurance assets to the trust. The Debtors' Confidentiality Agreement On August 8, 2003, counsels for the Asbestos Claimants and Mr. Trafelet sent a letter to the Debtors demanding copies of the Appellate Ruling, the underlying judgment, and any briefs that the Debtors and Liberty Mutual filed in connection with Liberty Mutual's appeal from the underlying judgment. The Debtors responded to the Demand Letter and asserted that under the provisions of the Wellington Agreement, and pursuant to a Confidentiality Agreement between Liberty Mutual and the Debtors, they are prohibited from releasing the Appellate Ruling, the underlying judgment, or any attendant briefing. The Debtors have previously attempted to disclose the Final Judgment as well as the briefing papers submitted to the appellate panel. On July 1, 2002, the Debtors filed a complaint in Pennsylvania seeking a declaratory judgment with respect to certain issues concerning the Liberty Mutual policies in effect from 1977 through 1981 that were not resolved in the pending ADR. These issues included: (1) Liberty Mutual's effort to obtain reformation of the deductible and aggregate limit provisions for policies in effect from 1977 through 1981 to make them apply to all asbestos claims, and not only products and completed operations hazard claims; and (2) Liberty Mutual's assertion that all asbestos claims constitute a single occurrence for purposes of per- occurrence limits. On July 18, 2002, Liberty Mutual asked the Bankruptcy Court to modify the automatic stay so that it could file counterclaims against the Debtors in the pending Pennsylvania Litigation. Liberty Mutual's request has not yet been decided by the Court. In response, the Debtors proposed to disclose some aspects of the ADR to demonstrate that Liberty Mutual was merely attempting to re-litigate already resolved issues. But Liberty Mutual sought a protective order to prevent the Debtors' disclosure. On August 1, 2002, the Court granted Liberty Mutual's request and issued a protective order. The Protective Order provided that any confidential information identified in the confidentiality agreement should remain confidential until further Court order. However, the Court's order also provided that the provision only applied to matters that were pending before the Court regarding Liberty Mutual's request for relief from stay. The order further provided that Debtors' counsel "shall promptly notify the Court" when the arbitration appeal "has been adjudicated by final order." Entry of Final ADR Ruling Reopens Disclosure Issue The Asbestos Claimants and Mr. Trafelet do not know whether the Debtors have so notified the Court about the Appellate Ruling. It is apparent from the order that the Court was merely trying to preserve the confidentiality of the arbitration proceedings until they reached a final conclusion. Once a final ruling was entered, the Court was prepared to revisit the issue of confidentiality concerning the ADR. The importance of allowing the arbitration process to play itself out is further underscored by the fact that the parties continued to adjourn argument on Liberty Mutual's motion to lift stay and proceed with counterclaims in the Pennsylvania Litigation until the arbitration panel ruled. Now that the Appellate Ruling has been entered, the Court seemingly finds itself in a position to consider not only Liberty Mutual's motion to lift stay, but also the Debtors' proposal to disclose some aspects of the ADR to demonstrate that Liberty Mutual's counterclaims are repetitive. Relevance of Needed Documents At a minimum, the papers at issue are among the type of relevant information that is routinely made available to creditors pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure. Granting the Asbestos Claimants and Mr. Trafelet access to these papers is also entirely consistent with the spirit of the Bankruptcy Code's disclosure statement requirements -- to provide affected constituencies with material information. In Armstrong's case, there can be no serious question that the Asbestos Claimants and Mr. Trafelet are entitled to review the Final Judgment, the Appellate Ruling and the briefing papers that preceded the Appellate Ruling. First, neither the Debtors nor Liberty Mutual can provide any evidence that the underlying judgment, Appellate Ruling or briefs contain: (1) any trade secret or confidential research, development or commercial information, or (2) any scandalous or defamatory matter within the meaning of Section 107(b)(2) of the Bankruptcy Code and Rule 9018 of the Federal Rules of Bankruptcy Procedure. Indeed, the Debtors themselves filed a declaration in July 2002 identifying in exhaustive detail the nature of the information contained in the trial phase and Final Judgment of the arbitration. Most of the information concerned material that the Debtors had before the arbitration or that the Debtors disclosed to the insurers in the arbitration, including Liberty Mutual. It is also clear that the briefing papers prepared by Liberty Mutual on appeal to the arbitration panel contain almost no information that the Debtors did not already have. The Debtors, and by extension, Liberty Mutual Insurance Company, cannot offer a compelling reason for continuing to shroud the arbitration documents in secrecy, especially when those documents may shed substantial light on the insurance recoveries. Indeed, neither the Debtors nor Liberty Mutual can demonstrate that the arbitration documents contain trade secrets, confidential research or defamatory matters -- the statutory touchstones for keeping papers under seal. Moreover, the Appellate Ruling could affect certain ongoing litigation between the Debtors and Liberty Mutual in the United States District Court for the Eastern District of Pennsylvania captioned "Armstrong World Industries, Inc., v. Liberty Mutual Ins. Co." By keeping the Appellate Ruling and related papers under seal, the Asbestos Claimants and Mr. Trafelet are handcuffed in trying to assess the likely course of that litigation, which may also result in diminishing the ultimate size of the insurance asset. Lastly, to the extent that Liberty Mutual asserts it is entitled to the benefits of a Section 524(g) injunction -- an assertion that the Asbestos Claimants and Mr. Trafelet intend to vigorously oppose, Liberty Mutual cannot have it both ways -- obtaining the benefits of a Section 524(g) injunction, while refusing to share with asbestos claimants information that may affect their recovery from the Trust. For all of these reasons, the Debtors should be required to provide the Asbestos Claimants and Mr. Trafelet with the Appellate Ruling, the underlying judgment, and the briefing papers that were submitted to the appellate panel. London Market Insurers Objects -- No Disclosure! John S. Spadaro, Esq., at Murphy Spadaro & Landon, in Wilmington, represent certain underwriters at Lloyd's, London and certain London Market Companies, who or which severally subscribed policies of excess liability insurance in AWI's favor and who were defendants in an arbitration proceeding captioned "Armstrong World Industries Inc. v. Aetna Casualty and Surety Co., et al." These Underwriters object vociferously to the request made by the Asbestos Claimants and Mr. Trafelet. In particular, the London Market Insurers object to that portion of the Joint Motion which seeks the disclosure of Judge Bua's Phase I Decision from the AWI ADR proceeding and any briefs, orders and other submissions by, relating to or referencing London Market Insurers, to the extent any of those documents are attached as exhibits to the briefs which are the subject of the Joint Motion. The London Market Insurers and AWI, among other parties, participated in the arbitration pursuant to the Wellington Agreement, a confidential agreement between insurers and insured entities that governs the handling of asbestos-related claims. During this arbitration, the London Market Insurers produced documents and deposition testimony that were deemed confidential under the rules governing the arbitration. Witnesses testified on the London Market Insurers' behalf at the Phase I trial of the arbitration. The London Market Insurers also filed numerous trial-related motions and summary judgment motions in connection with the arbitration. Judge Bua discussed certain of these materials in the Phase I decision that the Asbestos Claimants and Armstrong now seek to disclose. The London Market Insurers' participation in the AWI ADR proceeding ceased when the parties settled their dispute. London Market Insurers Materials Are Subject To Confidentiality Provisions Which Protect Their Disclosure In "Non-Wellington" Proceedings Among the materials that the Asbestos Committee demands is Judge Bua's Phase I decision in the arbitration between AWI and the London Market Insurers, which AWI apparently attached to its submission to the Court for an in camera review. The London Market Insurers object to the disclosure of the decision because it contains confidential information concerning the London Market Insurers that the parties to the AWI arbitration agreed to keep confidential. Further, to the extent the materials the Asbestos Committee seeks may also include other briefs, orders or any other pleadings or submissions by, relating to or referencing the London Market Insurers from Phase I of the AWI Arbitration, the London Market Insurers ask the Court to deny the Joint Motion. As signatories to the Wellington Agreement, the London Market Insurers have a significant interest in precluding any parties to that agreement from violating its terms. As one of the parties to the confidential Wellington-authorized arbitration between AWI and certain of its insurers, London Market Insurers have a specific concern about the disclosure of any materials relating to this arbitration. The London Market Insurers should be able to rely on AWI's promise, as a fellow signatory to the Wellington Agreement, and as a party to the AWI arbitration, to keep any materials relating to the arbitration confidential. AWI now improperly seeks to give access to these materials to the Asbestos Committee, the Representative for Future Asbestos Claimants and "other parties to this case, and the public." According to Mr. Spadaro, there are several problems with the Asbestos Committee and AWI's claim that the AWI arbitration materials should be disclosed. The Asbestos Committee seeks to introduce these decisions in litigation that is not governed by the Wellington Agreement, an act prohibited by the Agreement and the confidentiality stipulations entered in the AWI arbitration. The London Market Insurers agreed to be bound by the Wellington Agreement and agreed to enter a private arbitration with AWI on the condition that the information that it disclosed during that proceeding would remain out of the hands of third parties. Disclosure of these materials would render meaningless the Agreement and the specific confidentiality stipulations entered in the arbitration. AWI's claim that the Confidentiality Stipulation entered in the AWI arbitration gives it the right, in its sole discretion, to disclose information that it had before the arbitration began or that it developed from other sources is inapplicable to the pleadings that mention, refer or were submitted by the London Market Insurers, as well as to Judge Bua's Phase I decision. AWI specifically obtained that information through discovery against the London Market Insurers during the arbitration at issue. Significantly, AWI concedes that Judge Bua's Phase I decision contains information obtained from the insurers in the AWI arbitration. As such, London Market Insurers, as a party to the Confidentiality Stipulation that AWI refers to, must consent to the disclosure of the information before the Asbestos Committee, a non-party to the arbitration as well as a non-signatory to the Wellington Agreement, can obtain these documents. A Private Proceeding The fact that the Armstrong arbitration is a private proceeding highlights another problem with the Asbestos Committee's and AWI's proposed disclosure of materials relating to that matter. Under the terms of the Wellington Agreement and the confidentiality stipulations entered in the AWI arbitration, the decisions from these matters cannot be used as precedent in other matters. Thus, the Asbestos Committee's and AWI's arguments as to how "instructive" the decision from the private proceeding will be on Armstrong's case fail to justify why materials relating to the arbitration should be disclosed. At the time it entered the Wellington Agreement and submitted its claims to arbitration pursuant to that agreement, AWI thought it convenient to keep these materials confidential. Permitting AWI and the Asbestos Committee to now use the AWI arbitration materials in a non-Wellington proceeding violates the intent of the parties to that proceeding and threatens the practice of submitting disputes to private arbitrations to resolve them amicably and efficiently. For these reasons, the London Market Insurers ask the Court to deny the Joint Motion. AWI Supports the Joint Motion AWI believes that the Joint Motion should be granted. All parties should have access to the ADR documents so that they will be able to make their own assessment about the value of an important asset of the Debtor's estate -- namely AWI's claim against Liberty Mutual for insurance coverage without aggregate limit for a substantial majority of the costs incurred in connection with asbestos-related bodily injury claims. Liberty Mutual Doesn't Like It At All Charlene D. Davis, Esq., at The Bayard Firm, in Wilmington, Delaware, tells Judge Newsome that the pleadings and decision from the ADR are protected from disclosure by a Confidentiality Stipulation to which AWI and Liberty and Mutual are parties. In addition, AWI and Liberty Mutual agreed to preserve the confidentiality of decisions from the ADR by signing an Agreement Concerning Asbestos-Related Claims. This Wellington Agreement, to which numerous asbestos producers and insurers became parties in 1985, establishes a comprehensive alternative dispute resolution framework for the resolution of disputes involving insurance coverage for asbestos-related bodily injury claims. The Disclosure Statement Information Is Enough The Debtors' Fourth Amended Disclosure Statement provides information about the status of the ADR as of June 2, 2003. The information about the ADR in the Disclosure Statement was satisfactory to the Asbestos Claimants and Mr. Trafelet at the time the Court approved the contents of the Disclosure Statement. The Disclosure Statement did not forecast the ultimate result of the ADR or project recoveries from the Debtors' insurance assets. If the Asbestos Claimants and Mr. Trafelet had needed any additional information about the ADR as of June 2, 2003, for their analysis of the value of the potential insurance asset, they certainly would have objected to the Disclosure Statement and requested more information. Since the approval of the Disclosure Statement, the only change in the status of the ADR has been the issuance of a 34-page Appellate Ruling on July 30, 2003. In the Appellant Ruling, the ADR appellate panel reversed the trial-level ADR judgment in AWI's favor. The ADR appellate panel ruled on one dispositive issue, which it decided in Liberty Mutual's favor, and found it unnecessary to reach five additional issues decided by the trial judge. AWI asserts that the Appellate Award makes clear that its ruling on the Dispositive Issue does not bar coverage that is potentially available under the policies issued for the period of 1977 through 1981. With all due respect to AWI's reading of the Appellate Award, Ms. Davis argues that AWI is wrong. AWI has applied for rehearing of the Appellate Ruling. The ADR appellate panel has granted Liberty Mutual until September 1, 2003 to respond to AWI's application. Thus, the Appellate Ruling is not yet a final order. Virtually all of the Appellate Ruling concerns the Dispositive Issue, but also contains five short, single-sentence descriptions of the five trial-level issues on which the ADR appellate panel did not base its decision, but which had been addressed during the trial-level ADR proceedings. Once the Appellate Ruling becomes a final order, Liberty Mutual, as a matter of compromise with the Asbestos Claimants and Mr. Trafelet, will have no objection to disclosure of the Appellate Ruling in a form that redacts the five sentences which have nothing to do with the grounds on which the ADR appellate panel based its decision -- but Liberty Mutual objects to any disclosure of the underlying trial-level ADR judgment and the briefing papers that were submitted to the ADR appellate panel. These materials are protected from disclosure by the Confidentiality Stipulation and the Wellington Agreement. They existed before the dissemination and approval of the Disclosure Statement, which the Asbestos Claimants and Mr. Trafelet supported, and which the Court has already approved as a sufficient disclosure. (Armstrong Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 609/392-0900) BUDGET: Courts Stretches Solicitation Exclusivity Until Dec. 1 -------------------------------------------------------------- Budget Group Inc., and its debtor-affiliates sought and obtained Judge Walrath's approval to extend their Exclusive Filing Period through and including September 2, 2003 and their Exclusive Solicitation Period through and including December 1, 2003. (Budget Group Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 609/392-0900) CALPINE: Closes $86M Auburndale Plant Interest Sale to Pomifer -------------------------------------------------------------- Calpine Corporation (NYSE: CPN) announced that it has completed the sale of a 70-percent interest in its Auburndale Power Plant to Pomifer Power Funding, LLC, a subsidiary of ArcLight Energy Partners Fund I, L.P. for $86 million in cash. Calpine will hold the remaining interest in the facility and will continue to provide operations and maintenance services. The 150-megawatt, natural gas-fired cogeneration facility is located in Auburndale, Fla. approximately 50 miles east of Tampa. This sale represents another planned liquidity-enhancing transaction involving Calpine's Qualifying Facilities. With the Auburndale sale, Calpine has completed or announced nearly $2 billion of liquidity- enhancing transactions this year. "The Auburndale transaction enhances Calpine's liquidity while sustaining the company's long-term commitment to provide clean, reliable electricity to Florida power customers. ArcLight and Calpine both benefit from co-owning a strong operating facility with an attractive, long-term source of cash flow," said Calpine Senior Vice President Carolyn Marsh. The Auburndale Power Plant entered commercial operation in 1994. Calpine acquired a 50-percent share of the energy center in 1997 and the remaining interest in 2000. Calpine sells the majority of the facility's electricity output to Florida Power Corporation under a long-term power purchase contract that expires in 2013. As a cogeneration facility, it also sells approximately 190,000 pounds of steam per hour to Florida Distillers and Cutrale Citrus Juices under long-term contracts that expire in 2009 and 2013, respectively. In addition to maintaining an ownership interest in and managing operations of the Auburndale cogeneration facility, Calpine will continue to help meet Florida's electricity demand through its Auburndale Peaking unit, which entered commercial operation in August 2002, and its Osprey Energy Center, a 590-megawatt combined-cycle generating facility currently under construction. Upon completion of the Osprey Energy Center in 2004, Calpine will supply power to Seminole Electric Cooperative under a 20-year power sales agreement. Both facilities are fueled by clean natural gas and are located at Calpine's Auburndale, Florida energy campus. Calpine Corporation is a leading North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and it owns approximately one trillion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit http://www.calpine.com * * * As previously reported, Standard & Poor's Ratings Services assigned its 'B' rating to Calpine Corp.'s $3.3 billion second- priority senior debt. The $3.3 billion includes: a $750 million term loan due 2007, $500 million floating rates notes due 2007, $1.15 billion 8.5% secured notes due 2010, and $900 million secured notes due 2013. The notes carry the same rating as other Calpine senior secured debt and are rated two notches higher than the 'CCC+' rated senior unsecured debt. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on Calpine, its 'B' rating on Calpine's secured debt, its 'CCC+' rating on Calpine's senior unsecured bonds, and its 'CCC' rating on Calpine's preferred stock. The 'BB-' rating on the existing $950 million secured term loan and the $950 million secured revolver are withdrawn, as this debt was refinanced with the proceeds of the recent $3.8 billion financing. CARECENTRIC: Closes Merger Transaction with Borden Associates ------------------------------------------------------------- CareCentric, Inc. (OTC Bulletin Board: CURA), a leading provider of management information systems to the home health care community, announced that its shareholders approved, and the Company subsequently completed, a merger with an investor group (Borden Associates, Inc.) led by its major stockholder, John Reed, and his son, Stewart Reed, that is expected to have the effect of taking the company private. The completed merger transaction has the following effects: - The number of record holders of CareCentric common stock was reduced from approximately 5,500 to less than 200 record holders; - CareCentric is eligible to terminate the registration of its common stock under the Securities Exchange Act of 1934, as amended; - If the termination of the registration of the common stock is completed, the common stock will no longer be quoted on the OTC Bulletin Board. "We are pleased to announce the closing of the merger transaction," stated John R. Festa, CareCentric's President and Chief Executive Officer. "A de-registration from the SEC and elimination of ongoing reporting requirements will significantly reduce our annual administrative expenses and free our team to focus more effectively on managing the Company's future." CareCentric provides information technology systems and services to over 1,500 customers. CareCentric provides freestanding, hospital-based and multi-office home health care providers (including skilled nursing, private duty, home medical equipment and supplies, IV pharmacy and hospice) complete information solutions that enable these home care operations to generate and utilize comprehensive and integrated financial, operational and clinical information. With offices nationwide, CareCentric is headquartered in Atlanta, Georgia. At June 30, 2003, the Company's balance sheet shows a working capital deficit of about $9 million, and a total shareholders' equity deficit of about $15 million. CASUAL MALE: Files Liquidating Plan and Disclosure Statement ------------------------------------------------------------ Casual Male Corp., and its debtor-affiliates together with the Official Committee of Unsecured Creditors, delivered their Joint Chapter 11 Liquidating Plan and an accompanying Disclosure Statement to the U.S. Bankruptcy Court for the Southern District of New York. Full-text copies of the documents are available for a fee at: http://www.researcharchives.com/bin/download?id=030904014043 and http://www.researcharchives.com/bin/download?id=030904013906 The Plan provides for the treatment of each class of claims and interests. Each class has an estimated recovery of: Class Description Recovery Treatment ----- ----------- -------- --------- 1 Secured Claims 100% Entitled to vote; Shall receive either: i) Cash equal to 100% of the Allowed Claim amount; ii) the net proceeds of the Collateral sale up to the Allowed Claim amount; iii) the Collateral securing the Allowed Claim; iv) such treatment that leaves unaltered the legal, equitable and contractual rights of the holder; or v) such other treatment as the Bankruptcy Court shall approve 2 Priority Non-Tax 100% Not entitled to vote; Paid Claims in full 3A General Unsecured 37.7% Entitled to vote; Pro Rata Claims against the Share of the Class 3 Cash Parent Debtor Pool allocated to Parent Debtor 3B General Unsecured 93.1% Entitled to vote; Pro Rata Claims against any Share of the Class 3 Cash of the Casual Male Pool allocated to Casual Debtors Male Debtors 3C General Unsecured 36.2% Entitled to vote; Pro Rata Claims against any Share of the Class 3 Cash of the Shoe Debtors Pool allocated to Shoe Debtors 3D General Unsecured 5.2% Entitled to vote; Pro Rata Claims against the Share of the Class 3 Cash Repp Debtor Pool allocated to the Repp Debtor 3E General Unsecured 5.2% Entitled to vote; Pro Rata Claims against the Share of the Class 3 Cash Work n' Gear Debtor Pool allocated to Work 'n Gear Debtor 3F General Unsecured 5.2% Entitled to vote; Pro Rata Claims against the Share of the Class 3 Cash Loss Prevention Pool allocated to Loss Debtor Prevention Debtor 4 Convenience Claims 100% Entitled to vote; Paid in full 5 Subordinated None Deemed to reject the Plan; Claims No distribution 6 Equity Holders None Deemed to reject the Plan; No distribution Casual Male Corp. with its debtor-affiliates filed for chapter 11 protection on May 18, 2001. Adam C. Rogoff, Esq., at Cadwalader, Wickersham & Taft represents the Debtors as they wind-down their assets. When the Company filed for protection from its creditors, it listed $299,341,332 in total assets and $244,127,198 in total debts. The Debtors anticipate that the Estates may have in excess of $70 million to be distributed to creditors under a chapter 11 plan. CHOICE ONE: Extends Buffalo Bills Partnership for Five Years ------------------------------------------------------------ Choice One Communications (OTC Bulletin Board: CWON), an Integrated Communications Provider offering facilities-based voice and data telecommunications services, including Internet solutions, to businesses in 29 Northeast and Midwest markets, announced a five-year extension to its existing telecommunications service and marketing agreement with the Buffalo Bills. As part of the agreement, Choice One will remain the official telecommunications provider for the Buffalo Bills and Ralph Wilson Stadium. Additionally, the Buffalo Bills and Choice One have agreed to extend the existing marketing sponsorship to promote Choice One's association with the team, which includes in-stadium signage, naming rights to the Choice One Club, business-to- business marketing, game tickets, special events and community outreach programs. Also as part of the marketing sponsorship, Choice One is a major corporate sponsor for the Buffalo Bills Training Camp, which is held in Rochester, New York. "The Buffalo Bills enter this new agreement with Choice One with great excitement and anticipation," commented Tom Donahoe, Buffalo Bills President and General Manager. "The two organizations have enjoyed a successful partnership for the past five years and we are confident our new commitment will be beneficial to our fans as well as the Buffalo Bills and Choice One." "Buffalo is one of our most mature and most successful markets," commented Phil Yawman, Choice One's Executive Vice President, Corporate Development. "Our partnership with the Buffalo Bills has had a significant impact on our visibility and brand in Buffalo and throughout western New York. We are very pleased to extend our partnership with the Buffalo Bills and are proud to remain the official telecommunications provider for the Buffalo Bills and Ralph Wilson Stadium." Choice One also has multi-year agreements with the Green Bay Packers and Pittsburgh Steelers. Terms of the agreement were not disclosed. Headquartered in Rochester, New York, Choice One Communications Inc. (OTC Bulletin Board: CWON) -- whose June 30, 2003 balance sheet shows a total shareholders' deficit of $576 million -- is a leading integrated communications services provider offering voice and data services including Internet solutions, to businesses in 29 metropolitan areas (markets) across 12 Northeast and Midwest states. Choice One reported $290 million of revenue in 2002, has more than 100,000 clients and employs approximately 1,400 colleagues. Choice One's markets include: Hartford and New Haven, Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield and Worcester, Massachusetts; Portland/Augusta, Maine; Grand Rapids and Kalamazoo, Michigan; Manchester/Portsmouth, New Hampshire; Albany (including Kingston, Newburgh, Plattsburgh and Poughkeepsie), Buffalo, Rochester and Syracuse (including Binghamton, Elmira and Watertown), New York; Akron (including Youngstown), Columbus and Dayton, Ohio; Allentown, Erie, Harrisburg, Pittsburgh and Wilkes- Barre/Scranton, Pennsylvania; Providence, Rhode Island; Green Bay (including Appleton and Oshkosh), Madison and Milwaukee, Wisconsin. The company has intra-city fiber networks in the following markets: Hartford, Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield, Massachusetts; Grand Rapids and Kalamazoo, Michigan; Albany, Buffalo, Rochester and Syracuse, New York; Columbus, Ohio; Pittsburgh, Pennsylvania; Providence, Rhode Island; Green Bay, Madison and Milwaukee, Wisconsin. For further information about Choice One, visit http://www.choiceonecom.com CKE RESTAURANTS: Will Publish Q2 Results on September 17 -------------------------------------------------------- CKE Restaurants, Inc. (NYSE: CKR) announced details relating to its Second Quarter Fiscal 2004 conference call and webcast for the quarter ended August 11, 2003. CKE Restaurants, Inc. will release Second Quarter results on Wednesday, September 17, 2003 when a summary press release will be issued and its Report on Form 10-Q will be filed with the Securities and Exchange Commission. A conference call and webcast with management will be held the following morning -- on Thursday, Sept. 18, 2003 at 11:30 a.m. Eastern Time (8:30 a.m. Pacific Time) For the webcast, dial 913-981-5520 (no confirmation code required) or listen live over the Internet at http://www.shareholder.com/cke/medialist.cfm Contact: Christie Cooney, Manager, Corporate Communications, CKE Restaurants, Inc., 805-898-8505 A replay will be made available for one week beginning two hours after the end of the live call. To access the replay, dial 888- 203-1112 in the U.S. or 719-457-0820 outside of the U.S. (access code: 771530) or go to http://www.shareholder.com/cke/medialist.cfm CKE Restaurants, Inc. (S&P, B Corporate Credit Rating, Negative), through its subsidiaries, franchisees and licensees, operates over 3,200 restaurants, including 1,000 Carl's Jr. restaurants, 2,181 Hardee's restaurants, and 97 La Salsa Fresh Mexican Grills in 44 states and in 14 countries. For more information, go to http://www.ckr.com COEUR D'ALENE: Commences Public Offering of 20.6 Million Shares --------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE) will be filing a preliminary prospectus supplement with the Securities and Exchange Commission relating to a proposed public offering of 20,635,000 shares of its common stock. Coeur has also granted the underwriters a 30-day option to purchase up to an additional 3,095,250 shares of common stock at the public offering price to cover over allotments, if any. The offering is being managed by CIBC World Markets. A copy of the prospectus related to the offering can be obtained, when available, from CIBC World Markets by e-mail: useprospectus@us.cibc.com or fax: 212-667-6136. The net proceeds will be used for exploration and development activities, debt reduction, acquisitions, and general corporate purposes. Coeur d'Alene Mines Corporation is the world's largest primary silver producer, as well as a significant, low-cost producer of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. * * * Going Concern Uncertainty In the Company's 2002 Annual Report filed on SEC Form 10-K, the Company's independent auditors, KPMG LLP, issue the following statement, dated February 28, 2003: "We have audited the 2002 financial statements of Coeur d'Alene Mines Corporation (an Idaho Corporation) and subsidiaries (the Company) as listed in the accompanying index. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The 2001 and 2000 financial statements of Coeur d'Alene Mines Corporation, as listed in the accompanying index, were audited by other auditors who have ceased operations and whose report, dated February 15, 2002, expressed an unqualified opinion on those financial statements and included an explanatory paragraph that stated that the Company had suffered recurring losses from operations, had a significant portion of its convertible debentures that needed to be repaid or refinanced in June 2002 and had declining amounts of cash and cash equivalents and unrestricted short-term investments, all of which raised substantial doubt about its ability to continue as a going concern." COM21: Court OKs Sale of Video Product Line and Remaining Assets ---------------------------------------------------------------- Com21, Inc. (OTC Bulletin Board: CMTO), announced that a hearing was held on August 27, 2003, to obtain approval from the US Bankruptcy Court (in and for the Northern District of California, San Jose Division) for Com21's proposed sale of its remaining operating assets as well as substantially all of its remaining miscellaneous personal property assets in liquidation sales. The approved sales were for Com21's video product line assets, for its DOCSIS modem test equipment assets, for its ATM modem inventory assets, and for the remaining miscellaneous personal property assets of Com21. Com21 reiterated that proceeds received to date and those expected from the remaining liquidation sales will not be sufficient to pay the approximately $25,000,000 in creditor claims that Com21 believes are outstanding, and that Com21 continues to stress that its outstanding stock is without value. On July 15, 2003 Com21 announced that it had filed a Voluntary Chapter 11 Petition under Chapter 11 of the U.S. Bankruptcy Code with the U.S. Bankruptcy Court for the Northern District of California [Case No. 03-54533 MM]. Com21 has since been operating as a debtor-in-possession pursuant to Sections 1107 and 1108 of the Bankruptcy Code. On August 1, 2003, Com21 announced that it had reached agreement to sell its key DOCSIS product line assets. No overbids were received and on August 7, 2003, the Bankruptcy Court approved the sale. Com21's creditors committee opposed the use of proceeds from the sale to fund any ongoing operations and Com21 received purchase offers for its video product line assets, its DOCSIS modem test equipment assets, and its ATM modem inventory, the sales of which have been approved. On August 31, 2003, Com21 terminated substantially all employees and on September 5, 2003, Com21 plans to surrender its remaining premises. Thereafter, Com21's activities will be limited to collection of receivables, resolution of disputed creditor claims, and other administrative tasks necessary to bring the bankruptcy case to conclusion. No distribution to holders of Com21 common stock is contemplated or anticipated. Since it's founding in 1992, Com21, Inc. -- http://www.com21.com -- became a global supplier of system solutions for the broadband access market. The company's DOCSIS, EuroDOCSIS, and ATM -based products have enabled cable operators and service providers to deliver high-speed, cost-effective Internet, telephony, and video applications to corporate telecommuters, small businesses, home offices, and residential users. Com21 has shipped over two million cable modems and over 2,000 headend controllers worldwide. CONCERT IND: Canadian Court Extends CCAA Protection Until Oct. 3 ---------------------------------------------------------------- Concert Industries Ltd. (TSX: CNG) has received from the Quebec Superior Court an extension of its initial order under the Companies' Creditors Arrangement Act to October 3, 2003. The Company continues to work towards tabling a Plan of Arrangement. Further information on Concert Industries restructuring efforts may be obtained from the Company's Web site at http://www.concert.ca Concert Industries Ltd. is a company specializing in the development and manufacture of airlaid materials using advanced technology to process cellulose fiber. 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. The Company has manufacturing facilities in Canada, in Gatineau and Thurso, Quebec, and in Germany, in Falkenhagen, Brandenburg. CREDIT SUISSE: S&P Assigns Prelim. Ratings to Ser. 2003-4 Notes --------------------------------------------------------------- Standard & Poor's Rating Services assigned its preliminary ratings to Credit Suisse First Boston Mortgage Securities Corp.'s $1.34 billion commercial mortgage pass-through certificates series 2003- C4. This presale report is based on information as of Sept. 4, 2003. The ratings shown are preliminary. This report does not constitute a recommendation to buy, hold, or sell securities. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property type diversity of the loans. Classes A-1, A-2, A-3, A-4, B, C, D, and E are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage ratio of 1.69x, a beginning loan-to-value ratio of 85.4%, and an ending LTV of 72.4%. Unless otherwise indicated, all calculations in the presale report, including weighted averages, include only the senior portion of the Mayfair Mall loan and A notes of three A/B loans. PRELIMINARY RATINGS ASSIGNED Credit Suisse First Boston Mortgage Securities Corp. Commercial mortgage pass-thru certificates series 2003-C4 Class Rating Amount ($) A-1 AAA 66,934,000 A-2 AAA 118,226,000 A-3 AAA 89,652,000 A-4 AAA 508,497,000 A-1-A AAA 326,302,000 B AA 36,765,000 C AA- 16,711,000 D A 33,422,000 E A- 16,711,000 F BBB+ 21,724,000 G BBB 15,040,000 H BBB- 16,711,000 J BB+ 15,040,000 K BB 8,355,000 L BB- 6,685,000 M B+ 10,026,000 N B 5,014,000 O B- 1,671,000 P N.R. 23,395,695 MM* BBB 2,491,998 A-X* AAA 1,336,881,695 A-SP* AAA 588,037,000 Classes A-1 through E are offered publicly. * Interest-only class. Notional amount. N.R. - Not rated. CROWN CASTLE: Will Present at Morgan Stanley Conference Today ------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) announced that the Company will participate in the Morgan Stanley Global Media & Communications Conference to be held at the Sheraton Boston Hotel in Boston on September 8-9, 2003. W. Benjamin Moreland, Crown Castle's Chief Financial Officer, is scheduled to present on Monday, September 8, 2003 at 4:15 p.m. eastern time. Mr. Moreland's presentation will be broadcast live over the Internet and is expected to last approximately 30 minutes. The live audio web cast link and presentation for the conference will be available on the Company's Web site at http://www.crowncastle.comwhere it will also be archived for replay. Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near-universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 United States markets, to more than 95 percent of the UK population and to more than 92 percent of the Australian population. The company owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle visit: http://www.crowncastle.com As reported in Troubled Company Reporter's July 11, 2003 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to the $230 million convertible senior notes issued by wireless tower operator Crown Castle International Corp. Simultaneously, Standard & Poor's affirmed its 'B-' corporate credit rating on the Houston, Texas-based Crown Castle. The outlook remains negative. The company had total debt of about $3.2 billion at March 31, 2003. DELTA AIR LINES: Reports Declining August 2003 Traffic Results -------------------------------------------------------------- Delta Air Lines (NYSE: DAL) reports traffic results for the month of August 2003. System traffic for August 2003 decreased 3.7 percent from August 2002 on a capacity decrease of 7.2 percent. Delta's system load factor was 80.1 percent in August 2003, up 2.9 points from the same period last year. Domestic traffic in August 2003 decreased 1.9 percent year over year on a capacity decrease of 5.7 percent. Domestic load factor in August 2003 was 79.2 percent, up 3.1 points from the same period a year ago. International traffic in August 2003 decreased 9.4 percent year over year on a 12.2 percent decrease in capacity. International load factor was 83.2 percent, up 2.6 points from August 2002. During August 2003, Delta operated its schedule at a 99.1 percent completion rate, compared to 99.4 percent in August 2002. Delta boarded 9,451,018 passengers during the month of August 2003, a decrease of 3.7 percent from August 2002. Detailed traffic and capacity are attached. DOMAN INDUSTRIES: Court-Appointed Monitor Files August Report ------------------------------------------------------------- Doman Industries Limited announces that KPMG Inc., the Monitor appointed by the Supreme Court of British Columbia under the Companies Creditors Arrangement Act has filed with the Court its report for the period ended August 18, 2003. The report -- a copy of which may be obtained by accessing the Company's Web site at http://www.domans.comor the Monitor's Web site at http://www.kpmg.ca/doman-- contains selected unaudited financial information prepared by the Company for the period. DVI: Seeks to Continue Employing Ordinary Course Professionals -------------------------------------------------------------- DVI, Inc., and its debtor-affiliates ask for authority from the U.S. Bankruptcy Court for the District of Delaware to continue employing the professionals they turn to in the ordinary course of their businesses. The Debtors report that prior to the Petition Date, in the ordinary course of business, they employed various professionals providing: i) various legal services in connection with, but not limited to, routine litigation, collection matters, various corporate matters, sales, purchases, and real estate issues; ii) tax and accounting services; and iii) various other matters requiring the expertise and assistance of professionals. The Debtors extend credit and leases to various entities making it necessary for them to utilize numerous professionals to provide the Services required on a day-to-day basis to manage the affairs and deal with numerous legal, tax and other issues that arise in the ordinary course of businesses. In light of the costs associated with the preparation of numerous employment applications for such professionals who will, in most cases, receive relatively small fees, the Debtors submit that it is impractical and cost inefficient for the Debtors to prepare and file individual applications and proposed retention orders for each such professional. Accordingly, the Debtors request the Court not to require the preparation and filing of individual employment applications and retention orders with respect to each Ordinary Course Professional hereinafter employed by the Debtors. Rather, the Debtors propose that instead of the preparation and filing of an employment application for such Ordinary Course Professional, an Affidavit pursuant to Section 327(e) of the Bankruptcy Code, setting forth that such professional does not represent or hold any interest adverse to the Debtors or to their respective estates with respect to the matters for which such professional is to be employed will be filed with the Court within 45 days of the Debtors' engagement of such professional. This procedure, the Debtors point out, will save the estates the costs associated with the preparation of individual employment applications and retention orders for professionals employed in the ordinary course of business. Accordingly, the Debtors further ask the Court that they be permitted to pay each Ordinary Course Professional, without prior application, 100% of the fees and disbursements incurred, upon the submission of an appropriate invoice setting forth in reasonable detail the nature of the services rendered and disbursements actually incurred; provided, however, that: i) total fees and disbursements must not exceed $7,500 per month; and ii) Fleet National Bank and U.S. Bank National Association, the Committee or the United States Trustee for the District of Delaware may, at any time, make a motion, on appropriate notice to the Debtors and any other parties, to modify or terminate the these procedures. 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. EAGLEPICHER: Confirms No Cash Dividend on Preferred Stock --------------------------------------------------------- EaglePicher Holdings, Inc., confirms that it did not declare or pay a cash dividend on its Series B 11.75% Cumulative Redeemable Exchangeable Preferred Stock on September 2, 2003. EaglePicher Incorporated, EP Holding's wholly-owned and only subsidiary, is a party to a senior secured credit facility that prohibits EPI from declaring or paying cash dividends unless the ratio of its total debt to earnings before interest, taxes, depreciation and amortization would be less than 3.0:1 on a pro forma basis after giving effect to any such dividend. At September 2, 2003, EPI would not be permitted to pay a dividend under this test. EP Holdings conducts all of its operations through EPI and EPI is its only source of funds for dividends on the Preferred Stock. Granaria Holdings B.V., the controlling shareholder of EP Holdings, controls approximately 78.6% of the outstanding preferred stock. Granaria Holdings has informed EP Holdings that entities controlled by it may purchase additional shares of Preferred Stock in the future. EP Holdings also stated that it had a deficit in its current earnings and profits account (as determined according to Internal Revenue Service regulations) for its fiscal year ended November 30, 2002 and that it had a deficit in its accumulated earnings and profits account for the period from December 14, 2001 to November 30, 2002. Holders of Preferred Stock are advised to consult their tax advisors regarding the tax treatment of accretion of the liquidation preference of the Preferred Stock for such period. EaglePicher Incorporated, founded in 1843 and headquartered in Phoenix, Arizona, is a diversified manufacturer and marketer of innovative, advanced technology and industrial products and services for space, defense, environmental, automotive, medical, filtration, pharmaceutical, nuclear power, semiconductor and commercial applications worldwide. The company has 4,000 employees and operates more than 30 plants in the United States, Canada, Mexico, the U.K. and Germany. Additional information on the company is available on the Internet at http://www.eaglepicher.com EL PASO CORP: Director Thomas R. McDade Resigns from Board ---------------------------------------------------------- El Paso Corporation (NYSE: EP) announced that Thomas R. McDade has resigned from the El Paso Corporation board of directors effective August 31, 2003. McDade's decision will allow him to devote more time to his law practice at McDade, Fogler, Maines, L.L.P., where he is a senior partner. McDade became an El Paso director in January 2001 following the company's merger with The Coastal Corporation. He was a director of The Coastal Corporation from 1993 until that time. "Tom has been an active and insightful director, and the board greatly appreciates his many contributions to El Paso," said Ronald L. Kuehn, Jr., chairman of the El Paso board of directors. "We will miss Tom's perspective and wish him well in his future endeavors." With the departure of Mr. McDade, El Paso's board now has 12 members. Douglas L. Foshee joined the board when he became president and chief executive officer on September 2, 2003. He is the only member of management serving on the company's board. El Paso Corporation (S&P, B+ L-T Corporate Credit Rating, Negative) is the leading provider of natural gas services and the largest pipeline company in North America. The company has core businesses in pipelines, production, and midstream services. Rich in assets, El Paso is committed to developing and delivering new energy supplies and to meeting the growing demand for new energy infrastructure. For more information, visit http://www.elpaso.com ENCOMPASS SERVICES: Selling 16 Non-Core Business Operations ----------------------------------------------------------- Encompass Services Corporation and its debtor-affiliates' smaller business units experienced significant erosion in value since the Petition Date. To minimize the deterioration and maximize the value of these businesses, the Debtors engaged in marketing efforts for the sale of the business units. Subsequently, the Debtors sought and obtained the Court's authority to sell 16 business operations free and clear of all liens, claims, encumbrances, and other interests: A. Encompass Electrical Technologies - Rocky Mountains, Inc. to IES ENC, Inc. for $3,850,000 cash. The sale includes the Debtors' assumption and assignment to IES of certain Assigned Contracts; B. Encompass Electrical Technologies - Florida, LLC to New Tri- City Electrical Contractors, Inc. for $9,500,000. New Tri-City will pay $7,000,000 in immediately available funds before the Closing Date or Payment Date, and will issue a Promissory Note for the remaining $2,500,000. The assets do not include any items previously owned by Encompass, which are otherwise subject to the Purchase and Sale Agreement by and among Encompass and Pomeroy Electric Incorporated. The assigned contracts also do not include contracts subject to the Pomeroy Transaction; C. Watson Electrical Construction Co. to Watson Electrical Acquisition Co., LLC for $3,000,000 cash; D. Encompass Constructors, Inc. to Atlantic Constructors, Inc. for $2,750,000 in cash and notes; E. Encompass Electrical Technologies Southeast, Inc., Encompass Electrical Technologies North Florida, Inc., Encompass Electrical Technologies Georgia, Inc., Encompass Electrical Technologies - Western Tennessee, Inc., and Encompass Electrical Technologies - Projects Group, Inc. to Regency Acquisition I Corp. for $2,400,000 cash; F. Encompass Capital, Inc. to Compass Electrical Technologies, Inc. for $1,000,000 in cash and notes. The Assets included in the Sale are limited to Encompass Capital's operations in Northern Virginia, formerly known as Tower Electric Incorporated and Walter C. Davis & Sons Incorporated; G. Encompass Electrical Technologies South Carolina, Inc. to Atlantic Electric, LLC for $250,000 cash; H. Encompass Electrical Technologies of Nevada, Inc. to BMB Electric for $250,000, payable 30 days after Closing; I. Encompass Electrical Technologies Central Tennessee, Inc. to Enterprise Electric, LLC for $150,000; J. Air Systems, Inc. to Air Systems Acquisition, Inc. for $3,625,028; K. The Farfield Company to Sun Capital Partners Inc. or an entity to be formed by it for $3,100,000; and L. L.T. Mechanical, Inc. to Thomas M. Almond and Larry W. Oehler or an entity to be formed by them for $326,584 cash. The sale transactions include the Buyers' assumption of the Debtors' liabilities in each business operation at the time of Closing, including certain prepetition liabilities. The Buyers will pay the outstanding trade payables to maintain satisfactory business relationships with the vendors, which are valuable to the business operations going forward. Judge Greendyke also authorizes the Debtors' assumption and assignment of Assigned Contracts to the Buyers pursuant to Section 365 of the Bankruptcy Code. Regarding the sale of Air Systems, Inc. to Air Systems Acquisition, Inc., Shayne H. Newell, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that pursuant to a prepetition indemnification agreement between Air Systems, Encompass, and John W. Davis, both Encompass and Air Systems indemnified Mr. Davis for any liabilities arising in connection with certain licenses held under Mr. Davis' name and used by Air Systems in the operation of its business. The scope of the Indemnification Agreement is limited to third party property damage caused by Air Systems' negligent or willful actions or omissions in connection with Air Systems' work under the applicable licenses, where the work was performed pursuant to Air Systems contracts completed prior to the closing date. In the amended Indemnification Agreement, Mr. Davis may assert a claim only with respect to third party property damage that is covered by and will be paid from the Debtors' insurance policies. To the extent the Debtors become liable for any loss or claim under the Amended Indemnification Agreement and there is a deductible, (a) Mr. Davis may look to the estate only for a maximum of $250,000; and (b) the Lenders will pay from the sales proceeds of the sale or otherwise sufficient funds to cover the loss or claim up to a maximum of $250,000, provided that any payment by the Lenders will not be deemed to be construed as a surcharge or implicit consent to a surcharge, without prejudice to any right of the Committee to bring a surcharge action or otherwise assert that the net sales proceeds that are to be paid to the Lenders under the final order approving the Debtors' postpetition financing have been accordingly reduced. Accordingly, the Debtors, their estates, and the Lenders will have no further liability to Mr. Davis under the Amended Indemnification Agreement in excess of $250,000 plus any proceeds of insurance in a maximum amount not to exceed the total amount of any actual damages, liabilities, losses, claims, deficiencies, penalties, interest, expenses, fines, assessments, charges and costs actually incurred by Mr. Davis. Mr. Newell contends that the sales are warranted since: (a) the purchased prices are the highest and best offers the Debtors received for the Assets; (b) the divesture of non-core business units enable the Debtors to streamline their business operations; (c) the Sales are the result of extended arm's-length, good faith negotiations; (d) the Buyers are "good-faith" purchasers within the meaning of Section 363(m) of the Bankruptcy Code; (e) the Buyers have the financial capability to close on the purchase of the Assets; (f) except for the Lenders, there are no known liens on the Assets; and (g) any monetary defaults under the Assigned Contracts will be cured immediately. (Encompass Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORPORATION: Wants Plan Voting Procedures Established ----------------------------------------------------------- Enron Corporation and its debtor-affiliates have been conducting a comprehensive review and reconciliation of over 23,000 proofs of claims filed against them to eliminate any improper recoveries. Despite the Debtors' best efforts to review and analyze claims, there are approximately 4,000 to 6,000 claims filed or scheduled as contingent or unliquidated. Additionally, there are over 1,000 claims that are the subject of a pending objection the Debtors filed. The Debtors also anticipate filing additional objections to several thousand claims on or before September 30, 2003. Given the volume and complexity of these claims, Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that the Debtors are unable to reconcile all of these claims prior to the Debtors' expected solicitation of votes on the Plan later this year. To clearly set forth how creditors will be entitled to vote their claims, ensure that creditors are afforded an opportunity to address any disagreement with the classification and treatment of their claim for voting purposes, reduce the burdens on the Debtors' estates and streamline the reconciliation process, the Debtors seek the Court's authority, pursuant to Sections 105(a), 502, 1125 and 1126 of the Bankruptcy Code and Rules 3003, 3017 and 3018 of the Federal Rules of Bankruptcy Procedure, to implement a process for addressing the temporary allowance of contingent, unliquidated and disputed claims for voting purposes. The Debtors propose these procedures: A. If a claim is deemed allowed under the Plan, then this claim is allowed for voting purposes in the deemed allowed amount set forth in the Plan; B. Unless temporarily allowed for voting purposes in accordance with the proposed procedures, if a filed proof of claim asserts a claim the amount of which is wholly unknown or unliquidated, then the claim is allowed for voting purposes only for $1; C. Unless temporarily allowed for voting purposes only, if a filed proof of claim asserts a claim the amount of which is partially unknown or unliquidated, then the claim is allowed for voting purposes only in the amount of the known or liquidated portion of the claim; D. If a claim has been estimated and allowed by a Court order, then the claim will be allowed for voting purposes in the amount the Court approved, provided that the order is entered on or before November 20, 2003; E. If a claim is listed in the Schedules as contingent, unliquidated, or disputed and a proof of claim was not (i) filed by the applicable Bar Date for the filing of proofs of claim established by the Court, or (ii) deemed timely filed by a Court order prior to the Record Date, unless the Debtors consented in writing, then the claim will be disallowed for for voting purposes; F. If (i) the Debtors served an objection to the entirety of a claim on or before September 30, 2003 or, solely for those Debtors whose Bar Date occurs on September 30, 2003, on or before October 3, 2003; and (ii) the claim has not been temporarily allowed for voting purposes in accordance with the proposed procedures, then the claim will be disallowed for voting purposes; G. If (i) the Debtors served an objection to a portion of a claim on or before September 30, 2003 or, solely for those Debtors whose Bar Date occurs on September 30, 2003, on or before October 3, 2003; and (ii) the claim has not been temporarily allowed for voting purposes, then the claim will be allowed for voting purposes only in the amount that is not the subject of the pending objection; H. Unless temporarily allowed for voting purposes, any claim docketed in BSI's database for $0 will be allowed for voting purposes for $1; I. Unless otherwise temporarily allowed for voting purposes, if one proof of claim asserts the same claim against multiple Debtors, then the claim will be allowed for voting purposes only against the Debtor as docketed in BSI's claims database; J. Unless otherwise provided, the allowed amount of any proof of claim for voting purposes will be the amount as docketed in BSI's claims database; K. Unless otherwise provided, for purposes of determining eligibility to vote, the classification of a claim will be determined based on the classification as docketed in BSI's claims database; provided, however, that any claims for which BSI was unable to identify the classification will be classified as general unsecured claims; L. If a creditor opts into or out of the convenience class, then any election will be binding on that creditor regardless of whether the claim is ultimately allowed against a different Debtor or in a different amount; M. If a claim is allowed pursuant to a Court-approved settlement on or before November 20, 2003, then that claim will be entitled to vote on the Plan in accordance with the terms of the settlement; N. Unless temporarily allowed for voting purposes, if a proof of claim asserts a claim that is not in U.S. dollars, the claim will be treated as unliquidated and allowed for voting purposes only for $1; O. Unless temporarily allowed for voting purposes only, if (i) a proof of claim was filed after the applicable Bar Date, (ii) the creditor did not obtain leave to file late, and (iii) the proof of claim is not docketed in BSI's database as an amendment of a timely filed claim, then the claim will be disallowed for voting purposes only; and P. Unless otherwise temporarily allowed for voting purposes, if a claim does not list a Debtor or is docketed as "unknown" in BSI's database, then that claim will be allowed for voting purposes only against Enron Corp. To the extent that a creditor seeks to have its claims temporarily allowed for voting purposes for any reason, then the Debtors want these procedures adopted to insure an orderly process: (a) All motions to seek temporary allowance of a claim for voting purposes must be filed with the Court on or before October 24, 2003; (b) The Debtors may file a reply to all Temporary Allowance Motions on or before November 3, 2003; (c) The creditors may file a response to the Debtors' reply on or before November 10, 2003; (d) A hearing must be held on the Temporary Allowance Motions on or before November 13, 2003; and (e) Orders temporarily allowing claims must be entered by the Court on or before November 20, 2003. The Debtors and creditors may file with the Court stipulated settlements for the treatment of claims for voting purposes under a notice of presentment in lieu of the Debtors' filing of Temporary Allowance Motions or other pleadings to reduce the creditor's claim amount for voting purposes. The Debtors further propose that the time period for the presentment of the Stipulations be shortened to 10 days. To the extent that a creditor has a question on how its claim is docketed by BSI, Mr. Rosen says that that creditor may access publicly available information via the Internet by accessing BSI's website at http://www.bsillc.com BSI will continue to update the database on its website through October 1, 2003. Mr. Rosen contends that the Court should approve the proposed procedures because: (i) it eliminates the costs associated with filing objections to contingent and unliquidated claims prior to September 30, 2003; (ii) it allows certain creditors to vote on the Plan when they might not otherwise be entitled to vote; (iii) it provides recourse to creditors that disagree with the classification and treatment of their claim for voting purposes via a formal procedure to address their disagreement; and (iv) the proposed deadlines allow sufficient time to resolve the Temporary Allowance Motion, provide each creditor with a temporary allowed claim with a Solicitation Package and tabulate the creditor's vote to accept or reject the Plan prior to a hearing to consider Plan confirmation. (Enron Bankruptcy News, Issue No. 78; Bankruptcy Creditors' Service, Inc., 609/392-0900) EQUIFIN: Elects Not to Proceed with Proposed Celtic Merger ---------------------------------------------------------- EquiFin, Inc. (AMEX:II and II,WS) a commercial finance company which provides structured credit to small and mid-size business enterprises, has discontinued its discussions to attempt to merge Celtic Capital Corp., a private west coast asset-based finance company, into the Company. In addressing this decision, Walter Craig, EquiFin's President and Chief Executive Officer, stated that "although a foundation for the merger of Celtic into EquiFin was established, the capital necessary to effectuate the proposed plan of merger was not available on what we felt were commercially reasonable terms. We are continuing our discussions with various parties to secure capital which would enable us to continue to expand our business through the many opportunities, currently available to us, to finance the small, mid-size business." EXEGENICS: AVI BioPharma Terminates Exchange Offer & Merger Plan ---------------------------------------------------------------- On September 2, 2003, eXegenics Inc. (Nasdaq: EXEG) received notice that AVI BioPharma had terminated the Agreement and Plan of Merger with eXegenics. The termination of the Agreement and Plan of Merger also served to terminate AVI's previously announced exchange offer for all shares of capital stock of eXegenics. The initial offer period, as extended, expired at midnight, Aug. 29, 2003. Ronald L. Goode, President and Chief Executive Officer of eXegenics said, "The AVI transaction was the result of a comprehensive search to find a merger partner that would leverage our remaining assets and offer eXegenics stockholders broader opportunities to grow their investment. AVI had offered eXegenics stockholders the equivalent of approximately $.65 per share for common stock and approximately $.97 per share for preferred stock, based on the closing price of AVI common stock on August 29, 2003. The transaction would have given stockholders the option to exchange eXegenics shares for the stock of a company with a far more advanced product development portfolio and better recognition in the investment community." A second competing offer by Foundation Growth Investments remains open to eXegenics stockholders. The offer period has been extended three times. The offer is highly conditional. Foundation is offering to purchase both eXegenics common and preferred stock for $.60 per share. A third group, including Bruce Meyers, one of eXegenics' founding investors, has filed proxy materials to solicit consents from eXegenics stockholder to remove all of the members of eXegenics' Board of Directors and to elect a new slate of directors. At a meeting held on September 2, the Board of Directors of eXegenics set a record date in response to the Meyers group's request in connection with the consent solicitation. In accordance with eXegenics' bylaws and applicable law, the Board has set September 5, 2003 as the record date. The Board of Directors of eXegenics is, and has always been, committed to increasing value for eXegenics' stockholders. In light of this goal, eXegenics' management, Board of Directors and professional advisors will evaluate the Meyers group's consent solicitation materials, as well as other strategic alternatives, and the Board will advise eXegenics' stockholders of its response in the coming days. In the interim, eXegenics respectfully requests that its stockholders defer making any determination with respect to the consent solicitation until they have been advised of eXegenics' position. * * * LIQUIDITY AND CAPITAL RESOURCES In its Form 10-Q for the quarter ended March 31, 2003, the Company reported: "At March 31, 2003, we had cash and cash equivalents of approximately $15,476,000. Since our inception, we have financed our operations from debt and equity financings as well as fees received from licensing and research and development agreements. During the three months ended March 31, 2003, net cash used in operating activities was $1,236,000, the largest elements of which were one-time payments of approximately $541,000 related to the termination of scientific programs. In addition, during the three months ended March 31, 2003, we received $10,000,000 from investing activities, from a maturing investment security. The latter funds were reinvested in short-term money market instruments. "We believe that we have sufficient cash and cash equivalents on hand at March 31, 2003 to finance our plan of operation through December 31, 2003. We currently have no new material commitments to purchase capital assets through December 31, 2003. However, we expect to incur new liabilities related to the in-licensing and clinical development of compounds as outlined in our business strategy. We anticipate that we may not have sufficient capital resources to complete new programs prior to product commercialization. There can be no assurance that any required financings will be available, through bank borrowings, debt or equity offerings on acceptable terms or at all." FASTNET CORP: Chapter 11 Filing Raises Going Concern Uncertainty ---------------------------------------------------------------- FASTNET Corporation and its subsidiaries have been providing Internet access and enhanced products and services to its customers since 1994. The Company is an Internet services provider to businesses and residential customers located in selected primary and secondary markets in the mid-Atlantic region of the United States. The Company complements its Internet access services by delivering a wide range of enhanced products and services that are designed to meet the needs of its target customer base. On June 10, 2003, FASTNET Corporation and on June 13, 2003, each of its subsidiaries (excluding the Company's wholly-owned subsidiary "DASLIC", a Delaware Holding Company) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code, in the United States Bankruptcy Court for the Eastern District of Pennsylvania (Jointly Administered Case No.: 03-23143). These entities comprise substantially all of the operations of the Company. Each of the Debtors continues to manage its properties and operate its business as "Debtors-In-Possession" under the jurisdiction of the Bankruptcy Court and in accordance with Sections 1107(a) and 1108 of Chapter 11. The Company continues to negotiate with its creditors and with potential investors to reach agreement on a plan to be filed with the Bankruptcy Court under Section 1121 of the Bankruptcy Code, which may include a sale of part or all of the Company's assets. The Company's Chapter 11 filing raises substantial doubt about its ability to continue as a going concern. During the pendency of the Chapter 11 bankruptcy proceedings involving the Debtors, the Company may sell or otherwise dispose of assets and liquidate or settle liabilities for amounts other than those reflected in its consolidated financial statement. A proposed plan filed in the Chapter 11 proceedings could materially change the amounts reported in the consolidated financial statements, which do not give effect to any adjustments of the carrying value of assets or liabilities that might be necessary as a consequence of a proposed plan. The Company's ability to continue as a going concern is dependent upon, among other things, the proposal, funding and confirmation of a plan of reorganization, future profitable operations, favorable resolution of the rejection of leases and network costs, and the ability to generate sufficient cash from operations and/or financing arrangements to meet its obligations. FASTNET has incurred operating losses in each year since its inception and expects its losses to continue for the foreseeable future as it operates under Chapter 11 of the Bankruptcy Code. The Company's operating losses were $16,664,495, $14,135,388, and $32,044,023 for the years ended December 31, 2002, 2001 and 2000, respectively, and $23,691,508 for the six months ended June 30, 2003. FERRELLGAS PARTNERS: Acquires Bud's Propane Service in Oregon ------------------------------------------------------------- Ferrellgas Partners, L.P. (NYSE: FGP), one of the nation's largest propane retailers, announced the acquisition of Bud's Propane Service, Inc. of Portland, Oregon. The acquisition represents Ferrellgas' 63rd since becoming a publicly traded company in 1994. "Ferrellgas is excited about the addition of Bud's Propane to the Ferrellgas family," said Senior Vice President of Corporate Development Kenneth A. Heinz. "With this acquisition, we are able to further enhance our strong local presence in the Portland area and position ourselves for continued growth." Ferrellgas Partners, L.P., through its operating partnership, Ferrellgas, L.P., currently serves more than 1 million customers in 45 states. Ferrellgas employees indirectly own more than 17 million units of the partnership through an employee stock ownership plan. Ferrellgas trades on the New York Stock Exchange under the ticker symbol FGP. * * * As previously reported in Troubled Company Reporter, Ferrellgas Partners, L.P.'s $170 million 8.75% senior notes due June 15, 2012, issued jointly and severally with its special purpose financing subsidiary Ferrellgas Partners Finance Corp., was rated 'BB+' by Fitch Ratings. FGP's 'BB+' rating recognizes the subordination of its debt obligations to approximately $547 million unsecured debt of Ferrellgas, L.P., the operating limited partnership of FGP, including the OLP's $534 million 'BBB' rated senior notes. In addition, Fitch's assessment incorporates the underlying strength of FGP's retail propane distribution network. Positive qualitative credit factors include FGP's extensive geographic reach, track record of customer retention, a proven ability to maintain consistent gross profit margins even during past run-ups in spot propane prices and strong internal operating, pricing, and financial controls. FLEXTRONICS: Reports Final Results of Sr. Sub Notes Tender Offer ---------------------------------------------------------------- Flextronics International Ltd. (Nasdaq: FLEX) (S&P, BB+ Corporate Credit Rating, Stable), announced the final results of its tender offer for any and all of its outstanding 9-7/8% senior subordinated notes due 2010, which expired at 12:00 midnight, New York City time, on September 3, 2003. Based on a final count by Global Bondholder Services, the Depositary for the offer, $492,313,000.00 in aggregate principal amount of the notes, representing 98.5% of the aggregate principal amount of notes outstanding, were tendered and not withdrawn before the expiration of the tender offer. The aggregate consideration paid by Flextronics for the notes was $582,579,919.68, which included accrued and unpaid interest. Citigroup Global Markets Inc. served as Dealer Manager for the tender offer. Headquartered in Singapore, Flextronics is the leading Electronics Manufacturing Services provider focused on delivering supply chain services to technology companies. Flextronics provides design, engineering, manufacturing, and logistics operations in 29 countries and five continents. This global presence allows for supply chain excellence through a network of facilities situated in key markets and geographies that provide customers with the resources, technology, and capacity to optimize their operations. Flextronics' ability to provide end-to-end services that include innovative product design, test solutions, manufacturing, IT expertise, network services, and logistics has established the Company as the leading EMS provider with revenues of $13.4 billion in its fiscal year ended March 31, 2003. For more information, visit http://www.flextronics.com FRONT PORCH: Recurring Losses Raise Going Concern Uncertainty ------------------------------------------------------------- Front Porch Digital Inc. enables the conversion, preservation and management of analog and digital content, including text, images, audio, graphics, video and rich media. The Company develops proprietary software products and performs services that convert content into digital formats for subsequent storage and on-demand delivery in the same or other formats or digital platforms. The software, which is based on proprietary and patent-pending technology, enables a new paradigm in the way broadcasters, content owners and education and law enforcement personnel manage their workflow - - a shift from tape-oriented warehousing to a fully-digital, instant access automated archive. The Company's customers are located in the United States, Europe and Asia. The Company's consolidated financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and liabilities in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue in existence. The Company has incurred losses since commencement of operations in its current line of business. Although the Company's operating results have continued to improve in the first six months of 2003, and the Company has improved its overall financial position and liquidity during that period, there can be no assurance that the Company will not continue to sustain operating losses. In May 2003, the Company sold its DIVArchive Medical operations to Eastman Kodak Company and has accounted for the gain on the sale and the operations of the business as discontinued operations. As a result, the operating results of the DIVArchive Medical component are excluded from operating income and loss from continuing operations and are reported as a component of net income for the three and six months ended June 30, 2003. For the six months ended June 30, 2003, the Company generated a net loss of $3.5 million. Excluding the charge of $3.3 million for the impairment of goodwill and intellectual property related to the Company's media services business and net losses from discontinued operations of $164,000, net income for the six months ended June 30, 2003 was $35,000 (as compared to a loss of $1.6 million in the prior year period). Included in net income for the period was a non-recurring gain on the sale of discontinued operations of $587,000 related to the sale of the DIVArchive Medical business to Kodak. For the six months ended June 30, 2003, the Company generated negative cash flow from continuing operations of $0.9 million and had an ending cash balance at June 30, 2003 of $0.7 million (including restricted cash). FRIENDLY ICE CREAM: Amends By-Laws' Advance Notice Requirements --------------------------------------------------------------- On July 23, 2003 the Board of Directors of Friendly Ice Cream Corporation amended Sections 2.11 and 3.17 of its By Laws to increase the advance notice requirements for shareholders to submit shareholder proposals or Board of Director nominees to 120 days in advance of an annual meeting of shareholders, if such meeting is to be held on a day which is within 30 days preceding the anniversary of the previous year's meeting, or 150 days in advance of such meeting if such meeting is to be held on or after the anniversary of the previous year's meeting. * * * The Company has incurred significant losses from operating activities and, at April 30, 2003, has a working capital deficiency of $82,653. Management is of the opinion that sufficient working capital will be obtained from operations, external financing and restructuring to meet the Company's liabilities and commitments as they come due. GAP INC: Hires Nicholas Severino as Divisional CFO for Gap Brand ---------------------------------------------------------------- Gap Inc. (NYSE: GPS) announced that Nicholas A. Severino is joining the company as divisional Chief Financial Officer for Gap brand. Mr. Severino, 37, will oversee all financial aspects of Gap's U.S. business and report to both Lee Bird, executive vice president and chief operating officer of Gap's domestic division, and Byron Pollitt, CFO of Gap Inc. Mr. Severino joins Gap Inc. from Sears, Roebuck and Co., where he had worked since 1994 in various financial positions. He most recently was Vice President, Finance, Sears Retail and Related Services. In that role, Mr. Severino had financial responsibility for more than 2,800 stores, including Sears' full line, hardware, dealer and automotive locations. He also managed an $800 million annual capital budget. "I'm very excited to have Nick join our Gap team," Mr. Bird said. "Nick brings with him exceptional retail experience and will complement the brand's leadership with his financial management skills." In addition to his Sears experience, Mr. Severino has worked as a consultant for Arthur Andersen, with experience in financial, retail and insurance industry segments. He is a Certified Public Accountant and holds Bachelor of Science degrees in Accounting and Economics from Trinity University of Texas, as well as a M.B.A. from Northwestern University Kellogg Graduate School of Management. Gap Inc. (S&P, 'BB+' corporate credit and senior unsecured ratings, Negative) is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic and Old Navy brand names. Fiscal 2002 sales were $14.5 billion. As of August 30, 2003, Gap Inc. operated 4,212 store concepts (3,081 store locations) in the United States, the United Kingdom, Canada, France, Japan and Germany. In the United States, customers also may shop the company's online stores at gap.com, Banana Republic.com and oldnavy.com. GAP INC: August 2003 Net Sales Climb 5% to $1.22 Billion -------------------------------------------------------- Gap Inc. (NYSE: GPS) reported net sales of $1.22 billion for the four-week period ended August 30, 2003, which represents a 5 percent increase compared with net sales of $1.16 billion for the same period ended August 31, 2002. The company's comparable store sales for August 2003 increased 4 percent, compared with a 2 percent decrease in August 2002. Comparable store sales by division for August 2003 were as follows: -- Gap U.S.: positive 1 percent versus negative 4 percent last year -- Gap International: positive 1 percent versus negative 4 percent last year -- Banana Republic: positive 8 percent versus flat last year -- Old Navy: positive 6 percent versus flat last year "Back-to-school marketing helped drive strong sales of our featured Gap cords and Old Navy cargos," said Sabrina Simmons, senior vice president, Treasury and Investor Relations. "Banana Republic also had strong results as customers responded well to our wear-now Fall transitional merchandise." "While we're pleased with our positive comp performance, August sales overall were slightly below our beginning of month expectations," Ms. Simmons said. "Strong consumer response to advertised products was somewhat offset by weaker than expected demand for fleece activewear and long sleeve tops at Old Navy, and long sleeve tops and basic denim at Gap. Total company merchandise margins were in-line with last year." Year-to-date sales of $8.3 billion for the thirty weeks ended August 30, 2003 represent an increase of 13 percent over sales of $7.3 billion for the same period ended August 31, 2002. The company's year-to-date comparable store sales increased 10 percent compared to a decrease of 11 percent in the prior year. As of August 30, 2003, Gap Inc. operated 4,212 store concepts compared with 4,263 store concepts last year. The number of stores by location totaled 3,081 compared with 3,142 stores by location last year. Gap Inc. will announce September sales on October 9, 2003. GENCORP INC: Revises Earnings Guidance for Third Quarter -------------------------------------------------------- GenCorp Inc. (NYSE: GY) announced it expects third quarter earnings to be below previously issued guidance of $.04 to $.06 per share. GenCorp now expects earnings in the third quarter to be a loss in the range of $.04 to $.08 per share. This decline in forecasted results is due to poor performance at its GDX Automotive segment. The poor operating results at GDX were driven by lower volumes of Volkswagen products in North America and Germany, additional launch costs for the Volkswagen Golf A5 program and a reduction in volume at its French plants along with several unscheduled shutdowns due to OEM labor issues in Europe. GenCorp is taking actions to reduce its cost structure at GDX and improve operating efficiencies, and has recently taken several personnel actions at the GDX executive level. GenCorp expects the segment to return to profitability in the fourth quarter of 2003. On the positive side, GenCorp expects increased earnings in its Aerospace and Defense segment resulting from contract amendments and additional real estate sales. For the year, GenCorp anticipates earnings will be in the range of $.41 to $.46 per share. GenCorp is a multi-national, technology-based manufacturer with operations in the automotive, aerospace, defense and pharmaceutical fine chemicals industries. Additional information about GenCorp can be obtained by visiting the Company's Web site at http://www.GenCorp.com * * * As reported in Troubled Company Reporter's July 29, 2003 edition, Standard & Poor's Ratings Services assigned its 'B+' rating to GenCorp Inc.'s new $175 million senior subordinated notes due 2013. At the same time, Standard & Poor's affirmed its ratings, including the 'BB' corporate credit rating, on the propulsion and vehicle sealing system manufacturer. The outlook is stable. GENSCI REGENERATION: Publishes Info Circular on IsoTis Merger ------------------------------------------------------------- IsoTis S.A. (SWX/Euronext Amsterdam: ISON) and GenSci Regeneration Sciences Inc. (Toronto: GNS) announced the publication and mailing of the joint information circular in connection with the intended merger of IsoTis with GenSci OrthoBiologics, GenSci Regeneration's main subsidiary. In addition, IsoTis announced further steps to streamline its operations. The IC contains the full background and rationale for the merger and will be mailed out to shareholders. Other important developments IsoTis' management, in its continued effort to rationalize its operations and to fully focus on orthobiologics, intends to discontinue or spin-off all its cell biology programs. This would involve putting on hold the development of VivesCart, a long-term tissue engineered cartilage development program; the transfer of people employed in IsoTis' skin programs to a dedicated (cash flow neutral or positive) wound management subsidiary; the spin-off of IsoTis' basic research group; and further streamlining of the overall business. The intended restructuring will result in a reduction of the workforce by approximately 29%. IsoTis has notified its Swiss and Dutch employees and submitted a request for advice to IsoTis NV's works council. These measures will bring the positions of IsoTis' core business to approx 60 full time equivalents, compared to 85 today. Listings In the merger agreement with GenSci, IsoTis has committed to consider applying for a North American stock exchange listing within a certain period after the merger. At the same time, IsoTis wishes to streamline its various stock exchange listings. Management will examine which would be the optimal unique trading platform, considering the interests of its diversified shareholders base. In the interim, and until definitive decisions can be taken on a single platform, IsoTis intends to service its Dutch, Swiss, and (post-merger) Canadian and US shareholders base by maintaining listings on SWX, Euronext, and on TSX. Merger - next steps * EGM GenSci, 30 September in Vancouver * Main decision: shareholder approval of Plan of Arrangement (i.e.merger) * EGM IsoTis, 1 October in Lausanne * Main decision: shareholder approval of capital increase to finance acquisition of GenSci OrthoBiologics * Plan of Arrangement Hearing, October 6, Supreme Court of British Columbia * Approval of Plan of Arrangement * Confirmation Hearing, 14 October, California Bankruptcy Court * GenSci OrthoBiologics' emergence from Chapter 11 * Effective date, 27 October The "Effective date" is the date on which the business of GenSci OrthoBiologics is transferred to IsoTis. Three days later, 27,521,930 IsoTis shares (less the dissenting shareholders' entitlement) are delivered to the parent company GenSci Regeneration. The distribution of shares to GenSci Regeneration shareholders, after withholding to pay for Canadian taxes (see Note on Canadian Taxes), and listing of those shares on the SWX and Euronext, is expected to take place immediately thereafter. Jacques Essinger, Chief Executive Officer, IsoTis S.A. commented: "On both sides of the Atlantic our companies have been working very hard to bring this transaction to a successful conclusion. In the process, we have witnessed an enormous energy, creativity, and ambition to create the new IsoTis OrthoBiologics. The new company will be an innovative leader in its field, and has everything in place to outpace the market. It is rewarding to see the bond that has grown between the two companies over the past months, and given the considerable appreciation of both companies' stock it is rewarding to see that the market as well embraces the future of this new company. I am confident that our shareholders will continue to support us, and will give us their vote to allow us to seal the merger." James Trotman, MD, Chairman of the Board of Directors, GenSci said: "All of us at GenSci are very excited about forging the alliance with IsoTis and creating the new company. As the founder of GenSci, I am extremely gratified to have brought the company to this stage, and our whole team is eager for this new venture. The business case for the new company is compelling, and I have been particularly impressed with the numerous enthusiastic collaborative efforts that have taken shape between teams of GenSci and IsoTis in such a short time span. For me it is clear that the new company is ideally positioned to fulfill its promise, and I look forward to being a part of that and to work with my new colleagues on the Board of Directors and with the management." Outlook Assuming the consummation of the IsoTis/GenSci merger, and in light of recent revenue growth and market penetration trends of both companies' products, management expects that full-year 2003 sales of IsoTis/GenSci will slightly exceed 2002 combined sales of US$ 23 million. Management expects the Combination to become cash- flow break-even and profitable during 2005. For a better understanding of the financial situation of the Combination, attached are pro forma condensed combined financial statements in US GAAP as included on pages 22 and 23 of the IC.(2) Note on Canadian Taxes GenSci Regeneration may have to pay Canadian capital gains tax on the transaction, and Canadian withholding tax on the distribution of IsoTis shares to non-Canadian residents, due to the appreciation of the IsoTis shares since the merger between IsoTis and GenSci was announced on June 3, 2003. In order to generate the cash to pay these taxes, GenSci will withhold and sell in the open market the appropriate number of IsoTis shares, to be determined by GenSci's Board of Directors on the Effective Date. GenSci's shareholders may receive a lower number of shares than initially expected. Depending on the share price of IsoTis, the exchange ratio of GenSci Regeneration shares to IsoTis shares could fluctuate. Current estimates of the GenSci/IsoTis share exchange ratio are between 0.48 (with IsoTis share equal to or lower than 1,60 Swiss Francs ("CHF")) and 0.44 (with IsoTis share at 5 CHF) due to Canadian capital gains tax and (for non-Canadian resident shareholders) Canadian withholding tax. EGM dates, locations, & availability information circular The information circular will be made available in pdf format on genscimerger.isotis.com; www.gensciinc.com; www.sedar.com; and www.euronext.com. IsoTis' EGM will take place on October 1, at 9AM at the Musee Olympique in Lausanne, Switzerland. On September 15, at 7PM (19.00) an informative meeting for IsoTis shareholders will be held at the Rosarium, Europaboulevard, Amstelspark 1, Amsterdam/Buitenveldert, The Netherlands. The GenSci Regeneration Sciences EGM will take place on September 30 at 10AM, at the offices of McCullough O'Connor Irwin, 1100-888 Dunsmuir Street, Vancouver, British Columbia V6C 3K4, Canada. The IC is being mailed to shareholders over the next few days. GENTEK INC: Court Okays Solicitation and Tabulation Protocol ------------------------------------------------------------ Judge Walrath approves the solicitation and tabulation procedures in the Chapter 11 cases of GenTek Inc., and its debtor-affiliates, and establishes: * August 20, 2003, at 5:00 p.m., as the Voting Record Date; * September 23, 2003, at 4:00 p.m., as the Rule 3018 Motion Deadline; * September 30, 2003, at 4:00 p.m., as the Voting Deadline; * September 30, 2003, at 4:00 p.m., as the deadline for filing objections to confirmation of Plan; and * October 7, 2003, at 9:30 a.m., as the Plan Confirmation Hearing Date. (GenTek Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Chapter 7 Liquidation as Alternative to Chapter 11 --------------------------------------------------------------- If Genuity Inc.'s Chapter 11 liquidation plan is not confirmed, the only alternative available is a Chapter 7 liquidation. In the event of Chapter 7 conversion, the Debtors would cease their liquidation and distribution efforts, and one or more trustees would be appointed to litigate any remaining disputes between and among the Debtors and creditors. The appointed Trustee will then liquidate and distribute the remaining assets of the Debtors' estates in accordance with the priorities established by the Bankruptcy Code. The effect of a Chapter 7 liquidation on the recoveries of claimholders, Ira H. Parker, President of Genuity Inc., asserts is best explained by taking a closer look at Genuity's Chapter 11 Plan Recovery Analysis which sets forth the recoveries to Class 3 and Class 4 Claimholders: Plan Recovery Analysis (in millions) Recovery Range --------------- Assets Low High ----- ----- Cash-on-Hand $942 $942 Remaining Proceeds from Level 3 Sale (39) 24 Collections of A/R (net of setoffs) 21 74 Cash Repatriation fr. foreign affiliates 4 4 Recoveries from Causes of Action 1 3 Other Receipts 4 4 ----- ----- 933 1,051 100% Obligations Executory Contract Cure Costs 82 32 Administrative Claims 45 30 Estate Admin.Costs, Incl. Advisors 25 22 Employee Severance Costs 3 3 Secured and Priority Claims 53 33 ----- ----- 208 120 ----- ----- Total Cash Available 725 931 Class 3 Bank Lender Claims Bank Lender Claims 1,677 1,677 General Unsecured Claims BBN Bonds 8 8 Unsecured Claims, incl. trade claims 221 99 Contract Rejection Claims 559 297 ----- ----- 788 404 Recoveries Under Plan Cash to Bank Lenders 650 791 Bank Lender Claims 1,677 1,677 ----- ----- Bank Lender Recovery 39% 47% ===== ===== Cash to General Unsecured Creditors (net of expenses of $ 5M) 75 140 General Unsecured Creditor Claims 788 404 ----- ----- General Unsecured Creditor Recovery 10% 35% ===== ===== Comparing the recovery proposed for each creditor under the Plan with the recovery in a hypothetical Chapter 7 case requires examining three potential differences: -- total Cash available from the liquidation and prosecution of Causes of Action might be greater in the Chapter 11 Cases than in a Chapter 7 case; -- the total amount of Claims in a particular Class might be greater in a Chapter 7 case than in the Chapter 11 cases, thus diluting and reducing recoveries to individual creditors in that class; and -- the Plan in the Chapter 11 Cases proposes to allocate the Cash available for distribution among creditor classes in a way that may be more favorable to each Class than would occur in a Chapter 7 case. Mr. Parker points out that the total amount recovered for creditors will be greater in the Chapter 11 Cases than in a Chapter 7 case since a Chapter 7 case is run by an independent trustee who has no specific familiarity with the business. In contrast, the Liquidating Trust contemplates the retention of key employees and certain advisors who are intimately familiar with the remaining Claims and Causes of Action. The expertise of these professionals will provide some additional recovery for creditors that could not be obtained by outside trustees and professionals who are not familiar with the Debtors' business and history. More importantly, Mr. Parker continues, the aggregate amount of Cash available for distribution to creditors would be lower in a Chapter 7 case due to increased administrative costs because: -- an independent Chapter 7 trustee may receive a statutory fee on all distributions made; -- a Chapter 7 trustee and the trustee's attorneys and accountants would add costs above and beyond the costs likely to be incurred by professionals for the Liquidating Trust, which professionals are expected to be a combination of the Debtors' and the Creditors' Committee's current professionals. All of these fees and costs would be entitled to administrative priority; and -- a Chapter 7 trustee and professionals would have to expend tremendous amounts of effort just learning the matters already familiar to the professionals already involved in the Debtors' Chapter 11 Cases. This additional cost would reduce overall creditor recoveries. Furthermore, given the potential inter-creditor and debtor- creditor disputes, it is possible that one or more of the Debtors might require a separate Chapter 7 trustee. That trustee would then have to duplicate much of the efforts of the Debtors' and Creditors' Committee's professionals, as well as the efforts of the other Chapter 7 trustees. Each Chapter 7 trustee would be entitled to statutory fees and would retain separate attorneys and accountants, adding still more costs. The Plan proposes distributions to creditors based on a compromise and settlement of various inter-creditor and debtor- creditor disputes. One of the principal purposes of Chapter 11 plans is to facilitate complex compromises of inter-creditor disputes, like those the creditors and the Debtors face in these cases. This purpose would be thwarted by allowing creditors, under the guise of the best interests test, to insist that all possible litigation that might occur in a Chapter 7 case be incorporated into the confirmation of the Plan. Although a creditor might argue that, after final trials on the merits and any appeals, its distribution would be larger if all inter-creditor and debtor-creditor disputes were resolved in its favor, it is equally true that each creditor would be worse off if, instead of receiving the benefit of the compromise embodied in the Plan, all litigation were resolved against the creditor in a Chapter 7 case. The best interests test protects creditors only against results in a Chapter 11 plan that are worse than the worst possible case in Chapter 7. The Debtors' Plan proposes a compromise of massive amounts of litigation that would otherwise require an enormous amount of time and money to prosecute. The Debtors believe that these benefits outweigh the mere chance that the litigation might render any additional benefit to a particular creditor. Finally, Mr. Parker adds, the value of any distributions to each class of allowed claims in a Chapter 7 case, including all secured claims, would be less than the value of distributions under the Plan because the distributions in a Chapter 7 case would be delayed for a substantial period of time. There is a risk that distribution of the proceeds of a Chapter 7 liquidation might not occur for one or more years after the completion of the liquidation in order to resolve claims and prepare for distributions. In addition, recovery to creditors may be decreased by any litigation engendered by the claims allowance process. Incorporating the time value of distributions to the liquidation analysis contained here would further lower the estimated recoveries as presented. Accordingly, the Debtors' thorough consideration of these facts led them to conclude that the Plan, in comparison, provides a greater recovery to creditors on a more expeditious timetable and in a manner which minimizes inherent risks in any other course of action available to the Debtors. The Plan embodies the best method of resolving any remaining disputes between and among the Debtors and creditors, and completing the orderly liquidation and distribution of the Debtors' assets to creditors. Liquidation under Chapter 7 would add additional costs of at least several million dollars, reducing creditor recoveries than those provided for in the Joint Consolidated Plan of Liquidation because: (a) of the likelihood that other assets of Debtors would have to be sold or otherwise disposed of in a less orderly fashion; (b) additional administrative expenses attendant to the appointment of a trustee and the trustee's employment of attorneys and other professionals; and (c) additional expenses and claims, some of which would be entitled to priority, which would be generated during the liquidation and from the rejection of leases and other executory contracts in connection with a cessation of the Debtors' operations. (Genuity Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERNATIONAL POWER: Releases Half Year 2003 Interim Results ------------------------------------------------------------ International Power plc (NYSE:IPR) (Other OTC:IPRWF) announces its financial results for the six-month period ended 30 June 2003 and reports on key developments to date. "As expected, 2003 has been challenging, particularly in North America and the UK, where wholesale power prices and spark spreads remained low. However, the rest of our portfolio continued to perform well and we remain on track to deliver earnings in line with our guidance for this year," said Sir Neville Simms, Chairman of International Power. "In the first half of this year, we have been able to capitalise on the current market environment and have executed selected business and financial transactions that will enhance shareholder value," Sir Neville added. Highlights - Profit before interest and tax of GBP138 million (pre exceptional items) - Operating cash flow of GBP131 million - Earnings per share of 5.1p (pre exceptional items) - Successful placement of US$252 (GBP158) million senior convertible bond - US$1.77 billion financing of Umm Al Nar completed - Achieved exclusivity to acquire interest in 4,000 MW Drax power plant North America In North America, losses in the first quarter attributable to the unusual weather conditions in Texas and the high cost of gas transportation in New England, together with the continued weak pricing conditions in both markets in the second quarter, resulted in poor financial performance for the half year, with profit before interest and tax of GBP1 million. Due to improved plant availability, compensation for lost income from our main contractor (Alstom) was lower in the first half of 2003 compared to the equivalent period last year. In New England, power prices remained low during the third quarter due to soft demand and mild weather. In Texas, prices continued to be below expectations through August, notwithstanding a short period of record demand. Near-term improvement in power prices in both markets remains dependent on withdrawal of inefficient capacity in order to effect a fundamental shift in the supply-demand balance. A high degree of uncertainty continues to impact the generation sector in both of our North American markets, with four of the largest portfolio generators in New England in Chapter 11, and two of the largest generation companies in Texas in the process of being sold. As a result, a certain inertia has existed on the supply side in both markets since we last reported. In the absence of withdrawal of some existing capacity, current forward prices are likely to remain low for the foreseeable future. Europe & Middle East All contracted assets, namely Pego, EOP, Marmara and Al Kamil, delivered robust financial and operational performance, and the Europe and Middle East region generated profit before interest and tax of GBP49 million. Earnings are lower in comparison to the same period last year, primarily due to the termination of the tolling contract with TXU Europe at Rugeley in late November 2002, and weak wholesale power prices in the UK during the first half of this year. However, electricity prices in the UK have recently shown modest improvement, and although a portion of our UK generation capacity is contracted until March 2004, our uncontracted capacity remains well positioned to capture higher peak prices. We have entered into an exclusive arrangement with AES Drax Holdings Limited (Drax) to participate in Drax's restructuring in order to acquire debt and equity, for maximum total cash cost of GBP130 million. We look forward to a successful conclusion of this process and our eventual participation in the ownership and management of Drax. In Italy, our 800MW CCGT Paduli project near Naples, which is being developed in association with Ansaldo Energia, has received a key environmental authorisation (VIA) from the Italian Ministry of Environment. This authorisation is an important step towards obtaining complete approval to commence construction. Alongside the permitting process, we continue to work towards securing viable tolling or offtake contracts for Paduli and our other Italian projects. In the Middle East, despite the backdrop of uncertainty associated with the conflict in Iraq, together with our partners Tokyo Electric, Mitsui and ADWEA, we successfully secured a US$1.77 billion financing package for the acquisition and associated expansion of the Umm Al Nar power and water plant in Abu Dhabi. As the principal operator, we have taken over control of plant operations (both power and water desalination) and in the first month the plant has delivered good performance. Preliminary construction related work on the expansion site has also commenced. Our total equity commitment to Umm Al Nar is approximately GBP56 million for our 20% shareholding. With over 6,000 people working on site, construction of the Shuweihat S1 power and water plant in Abu Dhabi continues to make good progress. The first two (of a total of five) gas turbines have been successfully synchronised with the power grid and have been tested on full load. The plant is expected to commence commercial operation in Q3 2004. Australia Profit before interest and tax in Australia increased by 12% to GBP55 million from GBP49 million last year. This increase was attributable to a combination of the contractual prices secured together with tight control of operating expenditure. Looking ahead, although forward prices have weakened, we remain largely contracted through 2004 and moderately into 2005. Construction of the SEAGas pipeline (650 km gas pipeline from Victoria to South Australia) continues. Over 580 km of pipe has now been laid. Rest of the World (ROW) All assets in our ROW business segment performed well and generated profit before interest and tax of GBP46 million. We continue to monitor the value of all our investments in order to take advantage of opportunities to realise value as they arise. In line with this approach, we have monetised part of our investment in Hubco (in Pakistan) and have generated cash of GBP21 million and a profit of GBP8 million, through the sale of a 5% stake. Our equity interest in Hubco now totals 20.7%. Interest Interest at GBP50 million has benefited from a combination of lower interest rates on our floating debt and the impact of exchange translation gains on monetary assets. Tax The tax rate is 32%, compared to 30% last year, primarily reflecting the expiry of some overseas tax holidays. Capital Structure In July, we announced the successful issue of a US$252 million (GBP158 million) convertible bond, which has a minimum seven year term at a highly attractive coupon of 3.75%. We expect to use the proceeds from this bond to refinance in part the potential 'put' of the Company's 2% Convertible Bond in November 2003, and to repay the US$60 million Euro-Dollar Bond, due in December 2003. In May, we initiated a share buyback programme. To date we have purchased, for cancellation, 5.5 million shares at a total cost of GBP6.7 million at prices ranging from 114p per share to 132p per share. The share buyback programme remains in effect. In relation to the non-recourse US credit facility, which was raised to finance International Power's merchant power plant construction programme in the US, all technical defaults previously claimed by the US bank group were waived in May. The outstanding debt of GBP615 million has therefore been re- designated in the balance sheet from current debt to long term debt, reflecting its maturity date of June 2006. We have now completed the restructuring of the Rugeley credit facility, which was in default as a consequence of the collapse of TXU Europe. The revised terms include a reduction in debt from GBP160 million to GBP90 million, through a GBP70 million repayment by International Power, offset by the cancellation of a GBP70 million letter of credit that we had previously provided. Balance Sheet Net assets at 30 June 2003 have increased by GBP100 million since 31 December 2002. This increase is due to the profitability of the group in the period, of GBP65 million, together with exchange gains of GBP35 million reflecting the impact of foreign exchange on the net investment in foreign entities and their related borrowings. Corporate Social Responsibility Pego (600MW coal fired plant) in Portugal, has for the sixth consecutive year received a gold award from the Royal Society for the Prevention of Accidents (ROSPA) for continuous improvement in occupational safety management. Hub (1,290MW oil fired plant) in Pakistan, which is operated and maintained by International Power, has also received an award from ROSPA for outstanding performance in the area of health and safety. Outlook The lack of liquidity in our markets in the US means that current forward prices cannot be relied upon to predict the ultimate level of future prices. In the UK wholesale prices over the short term have shown some signs of improvement. Nonetheless, we believe that it is still too early to make any solid assumptions regarding prices in 2004. We can, however, reaffirm our stated earnings per share guidance for 2003 of 9p to 11p. While these uncertain conditions prevail in two of our key markets, we continue to focus on maximising value from our existing asset base and pursuing a wide range of new investment opportunities within our existing markets. International Power plc is a global independent power producer with 10,990MW (net) in operation and 610MW (net) under construction. Among the countries where International Power has facilities in operation are Australia, the United States, the United Kingdom, the Czech Republic, Oman, the UAE, Portugal, Turkey, Malaysia, Pakistan, and Thailand. International Power was created in October 2000 and its shares are traded on the London Stock Exchange, and as ADRs on the New York Stock Exchange under the ticker symbol "IPR". IPC ACQUISITION: Completes Refinancing of Sr. Credit Facilities --------------------------------------------------------------- IPC Acquisition Corp., the specialist the global financial community depends on for world class trading floor solutions, has successfully completed refinancing its senior secured credit facilities. The new facilities consist of a $55 million term loan and a $25 million revolving credit facility. IPC and its subsidiaries will use the new facilities primarily to repay existing senior debt and for general corporate purposes. The new facilities will reduce borrowing costs, and IPC expects interest savings in excess of $1 million over the next 12 months. The terms of the new facilities provide greater covenant flexibility than the previous terms, and the maturity has been reset to five years. GE Media and Communications Finance is administering the new senior credit facilities. Goldman Sachs Credit Partners L. P. acted as sole bookrunner and sole lead arranger on the transaction. IPC Acquisition Corp. (Bloomberg: IPCACQ), through its wholly owned subsidiary IPC Information Systems Inc., is the specialist the global financial community depends on for world class trading floor solutions. For 30 years, IPC's trading systems have been a mainstay on the desktops of 100,000+ traders worldwide. IPC's extensive list of trading technology innovations includes the newly released Enterprise configuration that makes geographically dispersed trading operations a reality using Voice over Internet Protocol (VoIP)-based solutions like the IQMXT trading desktop and the ICMXT Intercom Module. IPC has offices throughout the Americas, Europe, and the Asia Pacific region. For more information, visit http://www.ipc.com As reported in the Troubled Company Reporter's February 17, 2003 edition, Standard & Poor's Ratings Services affirmed its 'B+' corporate credit rating and other ratings on IPC Acquisition Corp. and revised the company's outlook to stable from positive. The outlook revision reflects Standard & Poor's expectation that credit protection measures will not improve over the near term. KEY COMPONENTS: S&P Affirms & Revises Ratings Outlook to Stable --------------------------------------------------------------- Standard & Poor's revised its outlook on Key Components, LLC to stable from positive. At the same time the 'B+' corporate credit and 'B-' senior unsecured debt ratings on the company were affirmed. As of June 30, 2003, Key Components, a manufacturer of custom-engineered components, had approximately $146 million of debt outstanding. "The outlook revision is based on the reduced likelihood of Key Components' credit protection measures improving in the intermediate term to a level supportive of a higher rating, as a result of weaker-than-anticipated cash generation," said Standard & Poor's credit analyst Eric Ballantine. In addition, there is a high likelihood that the company may violate bank covenants in the near term, which would require it to obtain either a wavier or amendment to its bank credit facility. Standard & Poor's expects that if Key Components does violate bank covenants, the company will be able to obtain a wavier or amendment. The ratings reflect the company's respectable positions in niche markets and an aggressive financial profile. Tarrytown, New York- based Key is a leading manufacturer of custom-engineered essential components for application in a diverse array of end-user products. Key Components' products include medium-security locks, flexible shafts for power transmissions, and turbocharger actuators and related accessories. In addition, through its electrical components segment, the company produces battery chargers, wiring for uninterruptible power supplies, and other specialty electrical components. As of June 30, 2003, Key Components had approximately $24 million of availability under its $25 million revolving credit facility. The company was in compliance with its bank covenants at quarter end, although room under them was limited. In both the third and fourth quarters of 2003 the company's bank covenants step down, leaving very little cushion. Key faces meaningful debt amortization payments over the next 12 months of approximately $7 million. The company had about $3.5 million of cash on its balance sheet at June 30, 2003. Providing modest financial flexibility is the company's ability to sell discrete business segments if needed. KM LOGISTICS: CEO Convicted of Fraud Scheme, US Attorney Reports ---------------------------------------------------------------- The CEO of a Randolph company pleaded guilty in federal court to mail fraud, wire fraud, and bankruptcy fraud. United States Attorney Michael J. Sullivan and Kenneth W. Kaiser, Special Agent in Charge of the Federal Bureau of Investigation in New England, announced that WILLIAM J. FINDLEY, III, age 57, of 5 Stuart Road, Rochester, Massachusetts, pleaded guilty before Senior U.S. District Judge Morris E. Lasker, to an information charging him with stealing money from the escrow account of KM Logistics, Inc. which held customer funds. At the plea hearing, the prosecutor told the Court that, had the case proceeded to trial, the evidence would have proven that FINDLEY was the Chief Executive Officer, Treasurer, Chief Financial Officer, and sole stockholder of KM Logistics, Inc., located at 83 York Avenue in Randolph, Massachusetts. From at least May, 1997 through November, 2001, FINDLEY, embezzled more than $1.6 million Enter details and dates of the allegations in customer funds that KM Logistics was supposed to use for shipping costs on behalf of its customers. KM Logistics was in the freight forwarding business. Thus, on behalf of its customers, KM Logistics negotiated contracts with freight carriers, selected the proper and most cost effective type of transportation, and paid customers' freight bills to the carriers. KM Logistics was entrusted with customer funds which it was obligated to use to pay for shipping costs on behalf of those customers. Instead of using customer funds for the agreed upon purpose, FINDLEY wrote numerous checks and instructed the wire transfer of funds out of the escrow account. The stolen funds were principally used by FINDLEY for stock day trading. FINDLEY's theft from the KM Logistics customer escrow account drove the business into bankruptcy. The prosecutor also told the Court that FINDLEY appeared at a bankruptcy proceeding and testified falsely under oath regarding whether he had taken funds from the KM Logistics escrow account for personal use. Judge Lasker scheduled sentencing for December 1, 2003 at 2:15 PM. FINDLEY faces up to 5 years' imprisonment, to be followed by 3 years of supervised release, and a $250,000 fine. The case was investigated by Special Agents of the Federal Bureau of Investigation. It is being prosecuted by Assistant U.S. Attorney Diane C. Freniere in Sullivan's Economic Crimes Unit. LASERSIGHT: Delays SEC Report Filing & Extends GE Loan Agreement ---------------------------------------------------------------- LaserSight, Incorporated (OTC Bulletin Board: LASE and LASEE) has failed to timely file its second quarter SEC Form 10-Q due on August 14, 2003. The Company did file a Form 12b-25 on August 14, 2003 advising that the Company was still working to put together the necessary data to file the quarterly report. As a late filer, the Company had a fifth character "E" added to its security trading symbol to denote securities delinquent in their required filings. Securities so denoted will be removed from the OTC Bulletin Board after the applicable 30-day grace period expires. The Company must file the Form 10-Q by September 24, 2003 to remain on the OTC Bulletin Board. If the Company is removed from OTC Bulletin Board, it will be traded in the over-the- counter (OTC) market via the "Pink Sheets". As previously announced on June 20, 2003, the Company had been advised by GE Healthcare Financial Services, Inc., as successor- in-interest to Heller Healthcare Finance, Inc., that its loans to the Company were in default due to an adverse material change in the financial condition and business operations of the Company. The Company executed a new agreement with GE on August 28, 2003 providing for an extension of its loans through January 2005. As previously disclosed in its most recently filed 10-Q Quarterly Report (Q1, May 15, 2003), the Company had entered into new discussions related to the payment terms of it's License and Royalty Agreement covering its keratome products. The licensors issued a third notice of default to the Company on May 6, 2003 and served legal action against the Company on August 12, 2003 for the entire balance of approximately $3.3 million under the License Agreement. The Company has continued its discussions, but as indicated in the 10-Q report, the Company may have to seek judicial reorganization to effect relief from this accelerated license payment or other pressing matters outlined below. Further, as previously disclosed in the 10-Q report, in order to conserve cash, the Company has only been funding vendor payments necessary to support ongoing manufacturing operations. As a result, the Company has been the defendant of two additional lawsuits for unpaid obligations aggregating approximately $250,000. Although the Company is in discussions with the plaintiffs on these lawsuits, there is no guarantee that the Company can satisfactorily resolve these issues and as mentioned above, may have to see judicial reorganization to effect relief. As previously announced on June 24, 2003 the Company executed an agreement with Shenzhen New Industries Medical Development Co., Schenzhen, The People's republic of China and its Hong Kong based- affiliate New Industries Investment Consultants (H.K.) LTD. Shenzhen New Industries is a company that specializes in advanced medical treatment services, medical device distribution and medical project investment and New Industries Investment Consultants is the holder of Lasersight's Series H Convertible Preferred Stock issued during 2002. As announced on August 16, 2002, LaserSight and Shenzhen New Industries entered into a strategic relationship that included the purchase of at least $10 million worth of LaserSight products during a twelve month period ending in August of 2003, distribution of LaserSight products in mainland China, Hong Kong, Macao and Taiwan, and a $2 million equity investment in LaserSight Incorporated by New Industries Investment Consultants. The investment in LaserSight was in the form of the purchase of Convertible Preferred Stock, the Series H Stock that, subject to certain restrictions, is convertible into approximately 40% of LaserSight's Common Stock. Prior to the execution of the June agreement, Shenzhen New Industries had purchased approximately $4.5 million worth of LaserSight products through May 15, 2003 and an additional $700,000 prior to the execution of the agreement for a total of $5.2 million. As previously announced in its most recent 10-Q Quarterly Report, the Company had minimal cash and was unable to manufacture products due to limited inventories and unfavorable financial relationships with its vendors. Since the June 24, 2003 announcement, Shenzhen New Industries has purchased approximately $1.0 million worth of Lasersight products. Although the original $10 million worth of Lasersight products was not delivered during the twelve-month period, approximately $6.2 million of Lasersight product was delivered and Lasersight and Shenzhen expect the balance of the $10 million to be purchased and shipped during the remainder of 2003. The Company's efforts to control costs continue to move forward with the resultant payroll and overhead savings eventually bringing the company closer to a positive cash flow environment. However, the Company must continue to deal with the keratome license issue, potential additional unpaid supplier lawsuits; for without a successful resolution to each of these issues, the company will exhaust its cash reserves and may have to seek judicial reorganization. As previously disclosed in its most recently filed SEC Form 10-Q Quarterly Report (Q1, May 15, 2003) and Form 10-K Annual Report, the Company indicated that it had suffered recurring losses from operations and has a significant accumulated deficit that raises substantial doubt about its ability to continue as a going concern. The financial statements included in the previously filed SEC reports do not include any adjustments that might result from the outcome of these uncertainties, including judicial reorganization. LASERSIGHT INC: Files for Chapter 11 Reorganization in Florida -------------------------------------------------------------- LaserSight Incorporated (OTC Bulletin Board: LASEE) announced that on September 5, 2003, due to the Company's continued cash flow issues it was forced to file for Chapter 11 bankruptcy protection and reorganization in the United States Bankruptcy Court, Middle District of Florida, Orlando Division. LaserSight Incorporated, Case No. 03-10371-6B1; LaserSight Technologies, Inc. Case No. 03- 10370-6B1; LaserSight Patents, Inc. Case No. 03-10369-6B1. LaserSight(R) is a leading supplier of quality technology solutions for laser vision correction and has pioneered its patented precision microspot scanning technology since it was introduced in 1992. LOGOATHLETIC: Files Plan and Disclosure Statement in Delaware ------------------------------------------------------------- LogoAthletic, Inc., and its debtor-affiliate filed their Chapter 11 Liquidating Plan and an accompanying Disclosure Statement with the U.S. Bankruptcy Court for the District of Delaware. Full-text copy of the documents are available for a fee at: http://www.researcharchives.com/bin/download?id=030903032431 and http://www.researcharchives.com/bin/download?id=030903032227 The Plan provides for the treatment of creditors' claims. The Plan delineates 5 classes of claims: Class Description Value of Claim Treatment ----- ----------- -------------- --------- n/a Administrative $2,950,000 Payment in full from Claims, incl. available cash, Professional except as otherwise Fees agreed. n/a Priority Tax $650,000 Payment in full in Claims six years, bearing interest at 4% per annum 1 Other Priority $166,000 Payment in full from Claims available cash, except as otherwise agreed 2 Secured Claims Zero Payment in full from available cash, except as otherwise agreed 3 Subordinated Zero Pro Rate Share of Secured Claims Available Cash after payment of Allowed Administrative Claims, Other Priority Claims and Secured Claims 4 General $69,600,000 Pro Rate Share of Unsecured Available Cash after Claims payment of Allowed Administrative Claims, Other Priority Claims and Secured Claims 5 Interests None Cancelled without distributions The Debtors are separate legal entities. Notwithstanding, the plan proposes to treat the estates of the Debtors as a single, consolidated estate for the purpose of distribution. LogoAthletic, Inc. made NFL-, MLB-, NBA-, NCAA- and NHL-licensed sports apparel (pants, jackets, shirts, shorts, and caps). The Company filed for chapter 11 protection on November 6, 2000. Christopher James Lhulier, Esq. at Pachulski Stang Ziehl Young Jones & Weintraub PC represents the Debtors in their restructuring efforts. LUCENT TECH: Ratings Affirms & Removes Watch on Lower-B Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services removed its ratings on Lucent Technologies Inc. from CreditWatch, including the 'B-' corporate credit rating. All ratings were affirmed; the outlook is negative. Murray Hill, New Jersey-based Lucent, a major supplier of communications equipment for service providers, had $8.4 billion of debt, capitalized operating leases, and debt-like preferred stock outstanding at June 30, 2003. The ratings were placed on CreditWatch with negative implications July 15, 2003, following the company's announcement that it expected to report a revenue shortfall in its June and September 2003 quarters, and would not become profitable on an adjusted net income basis in the September quarter as had previously been anticipated. "The CreditWatch removal reflects Standard & Poor's assessment that Lucent's recent and expected near-term revenue shortfall and operating losses are not indicative of a deterioration in its overall business position, but rather reflect issues related to two key customers," said credit analyst Bruce Hyman. Ratings reflect continued substantial uncertainty as to the pace of growth and technological direction in the global telecommunications industry, Lucent's relatively narrow technology focus, its high debt level, and negative free cash flows, in part offset by sufficient liquidity to fund its operations over the intermediate period. The negative outlook recognizes potential revenue and earnings volatility resulting from Lucent's substantial reliance on a narrow customer base, and its continued dependence on the lower-margin and lower-growth North American wireline business, compared with some industry peers. These factors could still impede the company's ability to achieve positive net income during the fiscal year ending September 2004 despite continued cost-reduction efforts, notwithstanding Standard & Poor's view that overall industry conditions have largely reached a cyclical low point. Cash balances were $4.9 billion at June 30, 2003. However, proceeds of a $1.6 billion debt financing in the quarter are targeted largely to repay or possibly repurchase certain short- and medium-term obligations, and for other corporate purposes, and do not materially benefit intermediate-term liquidity. Debt maturities and potential puts of preferred stock total $1.3 billion over the coming three years. Still, ratings anticipate that Lucent will use common equity, rather than cash, to meet possible preferred stock repurchases. Financial flexibility, beyond cash on hand, is limited. The company does not have a revolving credit agreement, while asset sales, if any, are not expected to be a material source of cash. MCMS INC: Files Liquidating Plan and Disclosure Statement --------------------------------------------------------- MCMS, Inc., and its debtor-affiliates filed with the U.S. Bankruptcy Court for the District of Delaware, their Consolidated Liquidating Chapter 11 Plan and the accompanying Disclosure Statement. The documents are available for a fee at: http://www.researcharchives.com/bin/download?id=030903040216 and http://www.researcharchives.com/bin/download?id=030903035807 The Plan provides for the substantive consolidation of all the various Debtors, their estates and assets, and the liquidation and distribution of all of the Debtors' Assets and the distribution of funds received from the Avoidance Actions to Creditors. Distributions to Creditors holding Allowed Secured Claims against the Debtors' Assets will be made to such Creditors in order of lien priority, except as otherwise agreed. Except as otherwise agreed, Allowed Administrative Claims, Allowed Priority Claims and Allowed Secured Claims will be paid in full in cash on the Effective Date. The Plan provides for the classification of claims and interests into 5 Classes. The treatment of the 4 classes are: Class Description Treatment ----- ----------- --------- n/a Administrative Claims paid in full in cash within 30 days after such Professional Fees are approved by the Court 1 Priority Claims paid in full in cash on the Effective Date 2 Lehman Secured Claim the Debtors shall transfer, assign, distribute or convey to Lehman or its designee: i) any and all rights and interests in the Nokia Litigation; ii) the Shared Assets, exclusive of the Liquidation Trust Carveout; iii) the Remaining Assets; and iv) all cash held by the Debtors in the Operating Account and the Professional Escrow Account 3 Other Secured at the option of the Debtors, Claim holders will receive: a) payment of the full amount of the respective holder's Allowed Secured Claim; or b) all collateral in the possession of the Debtors securing the holder's Allowed Secured Claim 4 Allowed Unsecured will receive their Pro Rata Claims portion of such portion of the Liquidation Trust Assets 5 Equity Interests extinguished as of the Effective Date and will not receive or retain any property on account of their Interests in the Debtors Following the sale of its business and associated trade names and trade marks, MCMS, Inc., changed its name to Custom Manufacturing Services, Inc. Debtor MCMS Customer Services, Inc., has also changed its name to CMS Customer Services, Inc. The Debtors filed for Chapter 11 protection on September 18, 2001 and converted these cases under Chapter 7 Liquidation of the Bankruptcy Code on May 13, 2002. Eric D. Schwartz, Esq., and Donna L. Harris, Esq., at Morris, Nichols, Arsht & Tunnell represent the Debtors as they wind-up their assets. Francis A. Monaco, Jr., at Monzack & Monaco, P.A., and Charles L. Glerum, Esq., at Choate, Hall & Stewart serves the Committee's counsel. When the company filed for protection from its creditors, it listed $173,406,000 in assets and $343,511,000 in debt. MGM MIRAGE: Ratings Dive After Continuing of Share Repurchase ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on MGM MIRAGE, including its corporate credit rating to 'BB+' from 'BBB- ', following the company's announcement that it has continued to repurchase shares of its common stock in its third quarter, prolonging the time frame in which credit measures will remain weak for the rating. Las Vegas, Nevada-based MGM MIRAGE is one of the world's largest gaming companies. The outlook is stable. About $5.1 billion of debt was outstanding as of June 30, 2003. "The company has balanced share repurchases with debt reduction, having repaid $106 million in debt during the first six months of 2003. However, the timing for reducing debt leverage has been extended beyond Standard & Poor's previous expectations," said Standard & Poor's credit analyst Craig Parmelee. While economic conditions appear to be improving and the operating environment in the gaming industry is expected to be better in 2004, the new rating level provides MGM MIRAGE with additional debt capacity to accomplish its growth objectives or to repurchase additional shares of its stock. MGM MIRAGE is one of the leading companies in the industry and is likely to participate in industry consolidation and/or expansion opportunities. Ratings for MGM MIRAGE reflect its high-quality, relatively new, and well-located assets on the Las Vegas Strip, experienced management team, and leadership position in the high-end segment of the gaming industry. These factors are offset by its high reliance on one market, and the likelihood that cash flow available for debt reduction will be reduced by the company's investment opportunities, including possible share repurchases, during the next few years. MICHAELS STORES: August 2003 Sales Jump-Up 7% to $186 Million ------------------------------------------------------------- Michaels Stores, Inc. (NYSE: MIK) reported that total sales for the month of August increased 7% to $185.7 million from $174.2 million for the same period last year. Same-store sales for the month increased 1%. Year-to-date sales of $1.459 billion for fiscal 2003 increased 8% from $1.354 billion for the same period last year while same-store sales were up 2% year-to-date. For the month, customer traffic was flat and average ticket was up 1%. Michael Rouleau, Chief Executive Officer, stated, "With income tax rebates and tax-free holidays spurring back-to-school shopping at discount retailers and department stores, we are satisfied with our sales performance for August, traditionally not a significant month for us. Our best performing departments were Ready-made Frames, Seasonal, General Crafts, and Ribbon and our strongest sales were in our Northeast, Mid-Atlantic and Southeast zones. We continue to expect third quarter diluted earnings per share to be in the $.46 to $.50 range and full year diluted earnings per share to be between $2.40 and $2.45." Michaels Stores, Inc. (S&P, BB+ Corporate Credit Rating, Stable) is the world's largest retailer of arts, crafts, framing, floral, wall decor, and seasonal merchandise for the hobbyist and do-it- yourself home decorator. The Company owns and operates 777 Michaels stores in 48 states and Canada, nine Village Crafts stores across the U.S., 158 Aaron Brothers stores, located primarily on the West Coast, one ReCollections store in Frisco, Texas, and two wholesale operations in Dallas, Texas and Atlanta, Georgia. For more information, visit http://www.michaels.com NAT'L BENEVOLENT: Fitch Hatchets Rating on $149-Mill Bonds to B- ---------------------------------------------------------------- Fitch Ratings downgrades National Benevolent Association, MO's $149 million outstanding debt to 'B-' from 'BB-'. A rating in the 'B' category is highly speculative and indicates that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met: however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. The bonds remain on Rating Watch Negative. NBA's total outstanding debt is approximately $210 million, of which approximately $63 million in variable-rate demand bonds are backed by a letter of credit from KBC Bank (Fitch does not rate this debt). All outstanding debt is on parity and governed by a MTI dated Feb. 1, 1990 along with additional supplements. This is Fitch's fourth public comment on NBA since May 21, 2003. Since our last press release dated August 27, Fitch has been in contact with members of NBA's legal counsel and financial consultants. Fitch has been unable to speak with contacts from KBC Bank or UMB (Bond Trustee). Fitch has received the notice of mandatory purchase and a continuing disclosure document, which was distributed by UMB and contains information concerning ongoing discussions and other additional information. Since our last press release, KBC has decided not to extend NBA's existing letter of credit. Therefore, the bonds are subject to mandatory tender on Sept. 10, 2003 and the letter of credit will expire on Sept. 15, 2003. NBA is still negotiating with KBC Bank, however, no negotiations to date have resulted in any substitution plan. Unless otherwise notified, Fitch expects that KBC Bank will either demand immediate payment or according to the reimbursement agreement, negotiate a payment plan over a period not to exceed 24 months. Either of these scenarios would obviously severely stress the credit and would result in another downgrade. UMB has notified bondholders that NBA has not filed for bankruptcy, but 'that such a filing remains under consideration by NBA if a material creditor accelerates its indebtedness and initiates collection activity.' Fitch notes that all debt payments have been made to date and there have not been any draws on existing reserve funds. In addition to the expiration of the LOC there are other concerns regarding the outstanding amount of a line of credit with First Bank (up to $11.5 million) and a petition by Bank of America for failure to pay a swap termination payment ($5.8 million). Furthermore, Fitch's ability to obtain information regarding current operational performance and future plans has been difficult. NBA's consultants have stated that six month interim statements for June 30, 2003 will be issued on or before Sept. 30. Additionally, NBA has provided its strategic financial plan to parties who have agreed to sign a confidentiality agreement, including UMB and certain institutional investors. Based on three-month interim statements from March 31, 2003, NBA had approximately $82 million in unrestricted cash, which translates into 212 days cash on hand. NBA's liquidity has fallen considerably compared to 1999 when NBA had approximately $144 million in unrestricted cash and investments. Fitch will continue to monitor NBA as information becomes available. Headquartered in St. Louis, MO NBA provides services to the elderly, children, and the developmentally disabled in 22 facilities. The National Benevolent Association was created in 1887 and currently operates 94 facilities and programs. NBA programs provide housing, care and other services for the elderly in nursing homes, assisted-living units and independent-living units. In addition, they serve at-risk children, youth and families, as well as individuals with disabilities, through residential and community-based programs. The Obligated Group includes 22 operating facilities located in 13 states that care for approximately 9,000 individuals, accounting for the vast majority of consolidated financial operations. Outstanding Debt: -- $9,650,000 Jacksonville Health Facilities Authority industrial development revenue bonds (NBA--Cypress Village Florida Project), series 2000A; -- $10,080,000 Colorado Health Facilities Authority revenue bonds (NBA--Village at Skyline Project), series 2000C; -- $9,390,000 Colorado Health facilities Authority revenue bonds (NBA-Village at Skyline Project), series 1999A -- $3,980,000 Oklahoma County Industrial Authority health care revenue bonds (NBA - Oklahoma Christian Home Project), series 1999; -- $2,695,000 Health and Educational Facilities Authority of the State of Missouri health facilities refunding and improvement revenue bonds (NBA - Central Office Project), series 1999; -- $15,145,000 Colorado Health Facilities Authority Health Facilities revenue bonds (NBA - Village at Skyline Project), series 1998B; -- $10,715,000 Colorado Health Facilities Authority health facilities refunding revenue bonds (NBA - Multi-state Issue), series 1998A; -- $5,935,000 Iowa Finance Authority health facilities revenue bonds (NBA - Ramsey Home Project), series 1997; -- $2,235,000 Oklahoma County Industrial Authority health care refunding revenue bonds (NBA - Oklahoma Christian Home Project), series 1997 -- $2,160,000 Health and Educational Facilities Authority of the State of Missouri health facilities revenue bonds (NBA - Woodhaven Learning Center Project), series 1996A; -- $625,000 Colorado Health Facilities Authority Tax-Exempt health facilities revenue bonds (NBA - Colorado Christian Home Project), series 1996A; -- $2,650,000 Illinois Development Finance Authority health facilities revenue bonds (NBA - Barton W. Stone Christian Home Project), series 1996; -- $4,485,000 Colorado Health Facilities Authority Health Facilities Authority tax-exempt health facilities revenue bonds (NBA - Village at Skyline Project), series 1995A; -- $4,655,000 Jacksonville (FL) health facilities authority industrial development revenue bonds (NBA - Cypress Village Florida Project), series 1994; -- $3,645,000 Health and Educational Facilities Authority of the State of Missouri health facilities revenue bonds (NBA - Lenoir Retirement Community Project), series 1994; -- $8,015,000 Jacksonville (FL) Health Facilities Authority industrial development revenue bonds (NBA - Cypress Village Florida Project), series 1993; -- $23,950,000 Jacksonville (FL) Health Facilities Authority revenue refunding bonds (NBA - Cypress Village Florida Project), series 1992; -- $22,590,000 City of Indianapolis, Indiana economic development refunding and improvement revenue bonds (NBA - Robin Run Village Project), series 1992; -- $4,485,000 Industrial Development Authority of Cass County, Missouri industrial revenue refunding bonds (NBA - Foxwood Springs Living Center Project), series 1992; -- $1,850,000 Bexar County (TX) Health Facilities Development Corp. tax-exempt health facilities revenue bonds (NBA - Patriot Heights Project), series 1992B. NET2000 COMMS: Trustee Employs Parente Randolph as Accountants -------------------------------------------------------------- Michael B. Joseph, the Chapter 7 Trustee overseeing the liquidation of Net2000 Communications, Inc., sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain Parente Randolph, LLC as his Accountants. Prior to the Petition Date, Wagner & Duys, an accounting firm, prepared a consolidated 2001 federal tax return and 96 separate state tax returns for the Debtors. In addition, the same accounting firm prepared a consolidated federal tax return and a state tax return for the state of Virginia for the tax year 2002. Upon information and belief, letters which comply with Section 505(b) of the Internal Revenue Code must be prepared for the year 2001 tax returns. In addition, the Trustee has received information, subsequent to the Conversion Date, that reflects that certain dividend income was not included in the prepared year 2002 returns. Consequently, the Trustee wishes to engage accountants to (a) prepare the Section 505(b) letters, and verify final return documentation for the 2001 year, and (b) prepare corrected year 2002 tax returns. Parente Randolph is an accounting firm with expertise in tax and other areas. In consideration for the services to be provided by Parente Randolph, the Trustee proposes to pay the firm its standard hourly rates, which range from $70 to $380 per hour, depending upon an individual's level of expertise. It is anticipated that the aggregate fees for the services to be performed will not exceed $13,000 Howard S. Cohen, a principal of Parente Randolph assures the Court that the firm represents no interest adverse to the Net2000 Estates in the matters upon which it will be engaged. Net2000 Communications, Inc., providers of state-of-the-art broadband telecommunications services to high-end customers, obtained Court approval to convert these cases to chapter 7 Liquidation proceedings on May 13, 2002 (Bankr. Del. Case No. 01- 11324). Michael G. Wilson, Esq. and Jason W. Harbour, Esq. at Morris, Nichols, Arsht & Tunnell represent the Debtors as they wind up their operations. Raymond H. Lemisch, Esq., at Adelman Lavine Gold and Levin serves as the Chapter 7 Trustee's counsel. NETMEASURE TECH: Amisano Replaces Grant Thornton as Accountant -------------------------------------------------------------- On August 21, 2003, the Board of Directors of NetMeasure Technology, Inc. dismissed Grant Thornton, the Company's independent auditors. Grant Thornton audited the Company's consolidated financial statements for its two most recent fiscal years ended December 31, 2002. The report of Grant Thornton accompanying the audit for the Company's two most recent fiscal years ended December 31, 2002 contained a modification with regards to the Company's ability to continue as a going concern. On August 21, 2003, the Board of Directors of the Company appointed Amisano Hanson as the Company's new independent accountants. NORTEL: S&P Changes Outlook on Affirmed Low-B Ratings to Stable --------------------------------------------------------------- Standard & Poor's Rating Services said it affirmed its ratings on telecommunication equipment company Nortel Networks Ltd., including its 'B' long-term corporate credit rating. At the same time, it revised the outlook to stable from negative. "The ratings on Brampton, Ontario-based Nortel Networks reflect challenging end-markets, ongoing weakness in macroeconomic conditions in the highly competitive telecommunication equipment- manufacturing sector, its high debt level, and negative free cash flows," said Standard & Poor's credit analyst. These factors are partially offset by company's strong position in its market segments, its improving operating performance, and its liquidity position that should provide adequate financial flexibility to weather the current industry environment. The market conditions for companies in the telecommunication equipment-manufacturing sector remain challenging as customers continue to defer spending. Weakness in the sector led to a 3% decrease in Nortel Networks' revenue for second-quarter 2003 to US$2.3 billion from US$2.4 billion in the previous quarter, and a 16% year-over-year decline from revenue generated in second- quarter 2002. Following two years of double-digit decline in revenue, Standard & Poor's expects that demand for networking equipment, while depressed, will begin stabilizing in 2004. Nevertheless, Nortel Networks will continue to face pricing pressure due to intense competition from a number of competitors with global reach. In response to the challenging industry environment, Nortel Networks initiated a restructuring program in 2001. This program is almost complete and Standard & Poor's believes that the restructuring has repositioned the company's business and aligned its cost structure to the current sector conditions. Nortel Networks' focus on improving operating efficiency and its commitment to cost-cutting measures has helped the company improve its operating performance in the first half of 2003. Despite lower revenues, EBITDA improved to US$201.4 million in second-quarter 2003 from US$163.4 million in the previous quarter. Operating margins (adjusted to exclude the bad debt recovery) improved to 9.5% in the first half of 2003 from negative 11% in the first half of 2002. Nortel Networks' debt remains high. Standard & Poor's expects debt to EBITDA to be about 9x for the full year ending December 2003, and improving significantly thereafter. Nortel Networks also has significant liabilities related to its pension and postretirement plans. At Dec. 31, 2002, the company's unfunded pension obligation was US$1.8 billion and its unfunded postretirement employee benefit obligation was US$527 million. The company's full-year 2003 minimum funding requirement is US$75 million. Barring a dramatic improvement in investment returns on plan assets, ongoing cash funding of the plans is expected to be required for the foreseeable future. The stable outlook is based on the expectation that there will be no material degradation in end-market demand and that the restructuring activities undertaken by Nortel Networks have lowered the company's cost base, enabling it to improve its operating results. These measures, in addition to managements' apparent focus on improving working capital are expected to translate into positive free operating cash flow in 2004 and improved credit protection measures in time. NUCENTRIX BROADBAND: Files for Chapter 11 Protection in Texas ------------------------------------------------------------- Nucentrix Broadband Networks, Inc., a provider of broadband wireless services in medium and small markets, has reached an agreement with a wholly owned subsidiary of SBC Communications Inc., for the sale of the Company's FCC licenses for MMDS and WCS spectrum, certain leases of ITFS and MMDS spectrum, transmission tower leases and equipment, and other related assets, for $15 million, subject to certain adjustments. The consummation of the sale is subject to Bankruptcy Court approval, as discussed below, and certain closing conditions, including approval of the Federal Communications Commission. The Company also announced that the Company and certain of its subsidiaries have filed petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. In connection with the bankruptcy filing, the Company intends to file a motion with the bankruptcy court seeking the court's approval of the asset purchase agreement with SBC under Section 363 of the Bankruptcy Code, which approval will be subject to completion of a competitive auction process. The consummation of a sale of the Company's assets to SBC or any other party will require the Company to obtain financing to fund its operations as a debtor in possession under the Bankruptcy Code through the closing, which is expected to occur in the second or third quarter of 2004. The Company's financial advisors, Houlihan Lokey Howard & Zukin Capital, Inc., will represent the Company during the reorganization process, including the competitive auction process. Nucentrix Broadband Networks, Inc. provides broadband wireless Internet and multichannel video services using radio spectrum licensed by the Federal Communications Commission at 2.1 GHz and 2.5 GHz. This spectrum commonly is referred to as MMDS (Multichannel Multipoint Distribution Service) and ITFS (Instructional Television Fixed Service). Nucentrix currently offers high-speed wireless Internet services in Austin and Sherman-Denison, Texas. Nucentrix holds the rights to an average of approximately 128 MHz of MMDS and ITFS spectrum, covering an estimated 8.2 million households, in over 90 primarily medium and small markets across Texas, Oklahoma and the Midwest. Nucentrix also holds licenses for 20 MHz of WCS (Wireless Communications Services) spectrum at 2.3 GHz covering over 2 million households, primarily in Texas. ORION REFINING: Sept. 22 is Prepetition & Admin. Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware fixes September 22, 2003, as the Prepetition and Administrative Bar Dates for creditors of Orion Refining Corporation to file their proofs of claim or requests for payment of administrative expenses against the Debtor or be forever barred from asserting their claims. Requests for Payment and proof of claim forms are to be filed with the Claims Agent, Bankruptcy Services LLC, before 4:00 p.m. on Sept. 22. If filed by US Mail, forms must be sent to: Bankruptcy Services LLC PO Box 5011 FDR Station New York, NY 10150-5011 Attn: Orion Refining Corp. Claims If by hand, courier or overnight service, to: Orion Refining Corp. Claims c/o Bankruptcy Services LLC 757 Fifth Avenue, 35th Floor New York, NY 10017 Orion Refining Corporation filed for chapter 11 protection on May 13, 2003 (Bankr. Del. Case No. 03-11483). Robert J. Dehney, Esq., at Morris, Nichols, Arsht & Tunnel represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million each. OWENS & MINOR: Converts $2.6875 TECONS into Common Stock -------------------------------------------------------- Owens & Minor, Inc. (NYSE: OMI) announced that 99.97% of the outstanding $2.6875 Term Convertible Securities, Series A (TECONS) issued by Owens & Minor Trust I, a business trust owned by the Company, were converted into common shares of the Company as of September 3, 2003 at the conversion rate of 2.4242 common shares for each TECONS (equal to a conversion price of $20.625 per common share). The remaining TECONS were redeemed on September 4, 2003, the redemption date, at a redemption price of 102.0156% of the liquidation amount (or $51.01 per $50 TECONS) thereof, plus accumulated and unpaid distributions to September 4, 2003. As of August 4, 2003, there was an aggregate of 2,087,306 TECONS outstanding (or $104,365,300 aggregate liquidation amount). The Company funded the redemption of the TECONS not converted to common shares from its available cash. Owens & Minor, Inc. (S&P/BB+/Stable), a Fortune 500 company headquartered in Richmond, Virginia, is the nation's leading distributor of national name brand medical/surgical supplies. The company's distribution centers throughout the United States serve hospitals, integrated healthcare systems and group purchasing organizations. In addition to its diverse product offering, Owens & Minor helps customers control healthcare costs and improve inventory management through innovative services in supply chain management and logistics. The company has also established itself as a leader in the development and use of technology. For more information about Owens & Minor, and virtual warehouse tours, visit the company's Web site at http://www.owens-minor.com PENN TRAFFIC: Names James Demme As New Chairman of the Board ------------------------------------------------------------ The Penn Traffic Company (OTC: PNFTQ.PK) has appointed James A. Demme as its new Chairman of the Board, effective upon bankruptcy court approval, which is expected on September 16. Mr. Demme, known in the supermarket industry for guiding Bruno's Inc. and Homeland Stores through successful reorganizations, will replace Peter L. Zurkow, who will remain as a Director of the Company. "Jim Demme has a proven track record in generating positive sales growth and improving the profitability of the supermarkets he has led," said Mr. Zurkow. Syracuse-based Penn Traffic, which operates 211 supermarkets in six northeastern states, announced that for the first five months of his appointment, Mr. Demme will work on a full-time basis in Syracuse and be responsible for strategic planning, operational improvements and the business planning process; Mr. Demme will also help the Board of Directors to identify and screen candidates for a permanent CEO. "During the first phase of his work for Penn Traffic, Jim will be actively and aggressively involved in leading and shaping our Company," said Mr. Zurkow. "After that initial period, Mr. Demme will take a more traditional Chair role and work with the Company on a part-time basis." "I am excited to be joining the Penn Traffic team," said Mr. Demme. "Strong core operations, solid brand names, enviable market share in most of its markets, 17,000 dedicated employees and a seasoned management team-these are major advantages Penn Traffic enjoys as we seek to return the Company to a growth path. I am very confident that we will be able to develop and implement a business plan enabling Penn Traffic to exit reorganization as a stronger, more competitive company." Jim Demme joined Bruno's as Chairman and CEO in 1997, engineering the Alabama-based supermarket company's successful reorganization. After four years of steady growth under Mr. Demme, Bruno's was sold to Royal Ahold in 2001 and Mr. Demme retired a year later after leading a successful transition program. Since leaving Ahold, Mr. Demme has served as an Investment Principal for Sterling Capital Management, Inc., a Birmingham, Alabama-based investment management and venture capital firm. Prior to his stint at Bruno's, Mr. Demme was Chairman, Chief Executive Officer and President of Homeland Stores, Inc, an Oklahoma-based supermarket company, which he also guided through a successful reorganization. He has also held senior management positions at the Scrivner Company and served as President & Chief Operating Officer of Shaw's Supermarkets. Mr. Demme spent 20 years with the Great Atlantic and Pacific Tea Company, where he progressed through all store positions including Store Manager to the position of Division Manager. The Penn Traffic Company operates 211 supermarkets in Ohio, West Virginia, Pennsylvania, upstate New York, Vermont and New Hampshire under the Big Bear, Big Bear Plus, BiLo, P&C and Quality trade names. Penn Traffic also operates a wholesale food distribution business serving 77 licensed franchises and 53 independent operators. PETROLEUM GEO: Fitch Withdraws D Ratings ---------------------------------------- Fitch Ratings has withdrawn the 'D' rating of Petroleum Geo- Services' senior notes and trust preferred securities. The withdrawal was initiated by Fitch in accordance with established procedures regarding companies that file for bankruptcy under Chapter 11. PG&E NATIONAL: Turns to Deloitte & Touche for Tax Advice ------------------------------------------------------------ The Court grants the PG&E National Debtors' request to employ Deloitte & Touche LLP as their independent auditors, accountants and tax advisors. Deloitte & Touche is a national professional services firm that possesses particular expertise in the energy industry. Deloitte & Touche's services to the NEG Debtors include: (a) Auditing the consolidated annual financial statements for the years ending December 31, 2003 and after; (b) Performing timely limited reviews of the quarterly financial information to be included in reports filed with the United States Securities and Exchange Commission; (c) Assisting with the federal, state and local tax matters, including assisting the NEG Debtors in responding to tax audits and preparing the tax returns; (d) Advising the NEG Debtors in their preparation of monthly operating and other reports or schedules and their development of financial or related information; and (e) Providing additional advice, assistance and services as the NEG Debtors may request from time to time and as agreed to by Deloitte & Touche. The NEG Debtors will pay Deloitte & Touche its normal hourly rates and reimburse costs in the customary terms. Deloitte & Touche's hourly rates range: Position Rate -------- ---- Partners, Principals and Directors $500 - 750 Senior Managers 270 - 590 Managers 240 - 520 Senior Accountants/Consultants 150 - 410 Paraprofessionals 50 - 100 Deloitte & Touche is a "disinterested person" as defined in Section 101(14) of the Bankruptcy Code, and does not hold or represent an interest adverse to the NEG Debtors' estates as required by Section 327(a) of the Bankruptcy Code. Deloitte & Touche has been the independent auditor of the NEG Debtors since 1999. Deloitte & Touche has also provided tax or other services to the NEG Debtors or their non-filing affiliates for four years. (PG&E National Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHILIP SERVICES: Court Fixes September 23, 2003 Claims Bar Date --------------------------------------------------------------- By Order of the U.S. Bankruptcy Court for the Southern District of Texas, September 23, 2003, is set as the deadline for all creditors of Philip Services Corporation and its debtor-affiliates to file their proofs of claim against the Debtors or be forever barred from asserting their claims. Proof of Claim forms must be received by the Court-approved Claims Agent, Logan & Company, on or before 4:30 p.m. on Sept. 23, at: Logan & Company, Inc., as Agent for the United States Bankruptcy Court Attn: Philip Services Corporation Claims Processing Dept. 546 Valley Road Upper Mountain, New Jersey 07043 Proofs of claim are not required at this time if they are on account of: 1. Claims not listed as contingent, unliquidated or disputed; 2. Claims already properly filed with the Bankruptcy Court; 3. Administrative Expense Claims against the Debtors; 4. Intercompany debts; 5. Claims due to a debt of one debtor against another Debtor; or 6. Claims allowed by Order of the Court. Philip Services Corporation, a holding company which owns directly or indirectly a series of industrial and metals services companies that operate throughout North America, filed for chapter 11 protection with its debtor-affiliates on June 2, 2003 (Bankr. S.D. Tex. Case No. 03-37718). John F. Higgins, IV, Esq., at Porter & Hedges LLP, represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $613,423,000 in total assets and $686,039,000 in total debts. PRIMEDEX HEALTH: Files Prepack. Chapter 11 Petition in Calif. ------------------------------------------------------------- Primedex Health Systems, Inc., Los Angeles, California (OTCBB:PMDX), owner and operator of 57 California medical diagnostic imaging facilities, has filed a Chapter 11 proceeding in the Bankruptcy Court in Los Angeles for the sole purpose of restructuring its outstanding 10% Convertible Subordinated Debentures due June 30, 2003. Ballots sent to the holders of the $16.3 million of outstanding debentures resulted in approval from holders of 94% in number of those responding and 96% in amount of those responding to extend the term of the Debentures through 2008, increase the interest rate to 11.5%, reduce the conversion price to $2.50 per share with an agreement by PMDX not to redeem for two years. To be successful, Primedex needed to only receive approval from a majority of those responding and 66-2/3% in amount of those responding. As a result, PMDX believes the restructuring of the Debentures by the Bankruptcy Court will be quickly approved. PMDX reiterated that the bankruptcy filing should have absolutely no other impact on PMDX other than restructuring of the debentures and should be concluded before October 31, 2003, the PMDX fiscal year end. PRIME RETAIL: Amends Merger Agreement with Lightstone Group ----------------------------------------------------------- Prime Retail, Inc. (OTC Bulletin Board: PMRE, PMREP, PMREO) and The Lightstone Group, LLC, a New Jersey-based real estate company, amended the merger agreement entered into on July 8, 2003 between Prime Outlets Acquisition Company, LLC, a Delaware limited liability company which is an affiliate of Lightstone, and the Company, which provides for the Company to be merged with the Buyer. The amendment increases the aggregate consideration payable to the Company's shareholders and unit holders from $115,000,000 to $115,514,000 and reflects a revised allocation of the consideration among the Company's classes of capital stock. The revised allocation provides that each holder of the Company's Series A preferred stock will receive cash in the amount of $18.400 per share, each holder of the Company's Series B preferred stock will receive cash in the amount of $8.169 per share, and each holder of the Company's common stock will receive cash in the amount of $0.170 per share. Compared to the allocation initially announced by the Company on July 8, 2003, the revised allocation results in an increase of $2.15 per share to the series A preferred stockholders and a decrease of $0.491 and $0.01 per share to the series B preferred stockholders and the common stockholders, respectively. In connection with the amendment to the Merger Agreement, the Company's senior management and Houlihan Lokey Howard & Zukin Capital, the Company's financial advisor, agreed to forego fees and benefits in the amount of $409,000 and $105,000, respectively, payable to them in connection with the closing of the transaction. Houlihan Lokey Howard & Zukin Financial Advisors, Inc., an affiliate of Houlihan Lokey, has provided an opinion to the special committee and the Company's board of directors that the consideration to be received pursuant to the amended Merger Agreement by each of the classes of the Company's stock, considered independently, is fair to such respective classes, from a financial point of view. On August 29, 2003, the Company received notice of a purported class action lawsuit against the Company, the Company's board of directors and Lightstone filed by four related series A preferred stockholders in the Circuit Court for Baltimore City, Maryland on August 12, 2003. The lawsuit alleges, among other things, that the Company's directors breached their fiduciary duties in approving the proposed merger, that the consideration payable in respect of the series A preferred stock is unfair and inadequate and that the information made available by the Company in connection with the transaction is deficient. The plaintiffs are seeking, among other things, that the transaction contemplated by the Merger Agreement be enjoined or, in the event such transaction is consummated, that it be rescinded and damages be awarded to the series A preferred stockholder class members. The Company believes the lawsuit is without merit and intends to respond accordingly. The Company submitted revised preliminary proxy materials concerning the Acquisition to the Securities and Exchange Commission on September 3, 2003. These materials are available free of charge at the Web site maintained by the SEC at http://www.sec.gov Founded in 1988, The Lightstone Group has become one of the largest, private real estate companies in the industry. The Company owns/manages a diversified portfolio of 15,000 apartments as well as office, industrial and retail properties totaling more than 8.5 million square feet of space in 16 states and Puerto Rico. Headquartered in Lakewood, New Jersey, The Lightstone Group employs over 400 professionals and maintains offices in Maryland, Virginia, California, and New York. The Lightstone Group is currently embarked on an aggressive acquisition and expansion program throughout the United States. For additional information, visit The Lightstone Group's Web site at http://www.lightstonegroup.com Prime Retail is a self-administered, self-managed real estate investment trust engaged in the ownership, leasing, marketing and management of outlet centers throughout the United States. Prime Retail currently owns and/or manages 36 outlet centers totaling approximately 10.2 million square feet of GLA. Prime Retail also owns 154,000 square feet of office space. Prime Retail has been an owner, operator and a developer of outlet centers since 1988. For additional information, visit http://www.primeretail.com * * * As reported in the Troubled Company Reporter's August 18, 2003 edition, the Company's liquidity depends on cash provided by operations and potential capital raising activities such as funds obtained through borrowings, particularly refinancing of existing debt, and cash generated through asset sales. Although the Company believes that estimated cash flows from operations and potential capital raising activities will be sufficient to satisfy its scheduled debt service and other obligations and sustain its operations for the next year, there can be no assurance that it will be successful in obtaining the required amount of funds for these items or that the terms of the potential capital raising activities, if they should occur, will be as favorable as the Company has experienced in prior periods. During 2003, the Company's first mortgage and expansion loan (the "Mega Deal Loan") is anticipated to mature with an optional prepayment date on November 11, 2003. The Mega Deal Loan, which is secured by a 13 property collateral pool, had an outstanding principal balance of approximately $262.1 million as of June 30, 2003 and will require a balloon payment of $260.7 million at the anticipated maturity date. If the Mega Deal Loan is not satisfied on the optional prepayment date, its interest rate will increase by 5.0% to 12.782% and all excess cash flow from the 13 property collateral pool will be retained by the lender and applied to principal after payment of interest. Certain restrictions have been placed upon the Company with respect to refinancing the Mega Deal Loan in the short term. If the Mega Deal Loan is not refinanced, the loss of cash flow from the 13 property collateral pool would eventually have severe consequences on the Company's ability to fund its operations. Based on the Company's discussions with various prospective lenders, it believes a potential shortfall will likely occur with respect to refinancing the Mega Deal Loan as the Company does not currently intend to refinance all of the 13 assets. Nevertheless, the Company believes this shortfall can be alleviated through potential asset sales and/or other capital raising activities, including the placement of mezzanine level debt and mortgage debt on at least one of the assets the Company does not currently plan on refinancing. The Company cautions that its assumptions are based on current market conditions and, therefore, are subject to various risks and uncertainties, including changes in economic conditions which may adversely impact its ability to refinance the Mega Deal Loan at favorable rates or in a timely and orderly fashion and which may adversely impact the Company's ability to consummate various asset sales or other capital raising activities. As previously announced, on July 8, 2003 an affiliate of The Lightstone Group, LLC, a New Jersey-based real estate company, and the Company entered into a merger agreement. In connection with the execution of the Merger Agreement, certain restrictions were placed on the Company with respect to the refinancing of the Mega Deal Loan. Specifically, the Company is restricted from negotiating or discussing the refinancing of the properties securing the Mega Deal Loan with any lenders until September 15, 2003, at which time the Company is only able to enter into refinancing discussions with certain enumerated lenders. After November 11, 2003, the Company may seek refinancing from other lenders. In addition, the Company is precluded from closing any loans relating to the Mega Deal Loan until November 11, 2003. This November 11, 2003 date may be extended until January 11, 2004, at the election of Lightstone, if Lightstone elects prior to September 15, 2003 to (i) pay (A) one-half of the additional interest incurred by the Company between November 11, 2003 and December 31, 2003, and (B) all of the additional interest incurred by the Company between January 1, 2004 and January 11, 2004, if so extended, in respect of the Mega Deal Loan and (ii) loan the Company any shortfall in cash flow that results from the excess cash flow restrictions (all excess cash flow from the 13 property collateral pool will be retained by the lender and applied to principal after payment of interest) under the Mega Deal Loan that become effective on November 11, 2003 and thereafter until the Mega Deal Loan is paid in full. In addition to the restrictions with respect to the refinancing of the Mega Deal Loan, pursuant to the terms of the Merger Agreement, the Company has also agreed to certain conditions pending the closing of the proposed transaction. These conditions provide for certain restrictions with respect to the Company's operating and refinancing activities. These restrictions could adversely affect the Company's liquidity in addition to its ability to refinance the Mega Deal Loan in a timely and orderly fashion. If the Merger Agreement is terminated under certain circumstances, the Company would be required to make payments to Lightstone ranging from $3.5 million to $6.0 million which could adversely affect the Company's liquidity. In connection with the completion of the sale of six outlet centers in July 2002, the Company guaranteed to FRIT PRT Bridge Acquisition LLC (i) a 13% return on its $17.2 million of invested capital, and (ii) the full return of its invested capital by December 31, 2003. As of June 30, 2003, the Mandatory Redemption Obligation was approximately $14.9 million. The Company continues to seek to generate additional liquidity to repay the Mandatory Redemption Obligation through (i) the sale of FRIT's ownership interest in the Bridge Properties and/or (ii) the placement of additional indebtedness on the Bridge Properties. There can be no assurance that the Company will be able to complete such capital raising activities by December 31, 2003 or that such capital raising activities, if they should occur, will generate sufficient proceeds to repay the Mandatory Redemption Obligation in full. Failure to repay the Mandatory Redemption Obligation by December 31, 2003 would constitute a default, which would enable FRIT to exercise its rights with respect to the collateral pledged as security to the guarantee, including some of the Company's partnership interests in the 13 property collateral pool under the aforementioned Mega Deal Loan. Because the Mandatory Redemption Obligation is secured by some of the Company's partnership interests in the 13 property collateral pool under the Mega Deal Loan, the Company may be required to repay the Mandatory Redemption Obligation before, or in connection with, the refinancing of the Mega Deal Loan. Additionally, any change in control with respect to the Company accelerates the Mandatory Redemption Obligation. In connection with the execution of the Merger Agreement, Lightstone has agreed to provide sufficient financing, if necessary, to repay the Mandatory Redemption Obligation in full at its maturity. The new financing would be at substantially similar economic terms and conditions as those currently in place for the Mandatory Redemption Obligation and would have a one-year term. The Company has fixed rate tax-exempt revenue bonds collateralized by properties located in Chattanooga, Tennessee which contain (i) certain covenants, including a minimum debt-service coverage ratio financial covenant and (ii) cross-default provisions with respect to certain of its other credit agreements. Based on the operations of the collateral properties, the Company was not in compliance with the Financial Covenant for the quarters ended June 30, September 30 and December 31, 2002. In the event of non-compliance with the Financial Covenant or default, the holders of the Chattanooga Bonds had the ability to put such obligations to the Company at a price equal to par plus accrued interest. On January 31, 2003, the Company entered into an agreement with the Bondholders. The Forbearance Agreement provides amendments to the underlying loan and other agreements that enable the Company to be in compliance with various financial covenants, including the Financial Covenant. So long as the Company continues to comply with the provisions of the Forbearance Agreement and is not otherwise in default of the underlying loan and other documents through December 31, 2004, the revised financial covenants will govern. Additionally, certain quarterly tested financial covenants and other covenants become effective June 30, 2004. Pursuant to the terms of the Forbearance Agreement, the Company was required to fund $1.0 million into an escrow account to be used for conversion of certain of the retail space in the collateral properties to office space and agreed that an event of default with respect to the other debt obligations related to the property would also constitute a default under the Chattanooga Bonds. The Company funded this required escrow in February 2003. The outstanding balance of the Chattanooga Bonds was approximately $17.9 million as of June 30, 2003. With respect to the Chattanooga Bonds, based on the Company's current projections, it believes it will not be compliance with certain quarterly tested financial covenants when they become effective on June 30, 2004 which would enable the Bondholders to elect to put the Chattanooga Bonds to the Company at their par amount plus accrued interest. The Company continues to explore opportunities to (i) obtain alternative financing from other financial institutions, (ii) sell the properties securing the Chattanooga Bonds and (iii) explore other possible capital transactions in order to generate cash to repay the Chattanooga Bonds. There can be no assurance that the Company will be able to complete any such activity sufficient to repay the amount outstanding under the Chattanooga Bonds in the event the Bondholders are able and elect to exercise their put rights. These conditions raise substantial doubt about the Company's ability to continue as a going concern. PRIMUS TELECOM: Commences $75MM Convertible Sr. Debt Offering ------------------------------------------------------------- PRIMUS Telecommunications Group, Incorporated (Nasdaq:PRTL), a global telecommunications services provider offering an integrated portfolio of voice, Internet, data and hosting services, today announced it intends to offer, subject to market conditions and other factors, $75 million of convertible senior notes due 2010. The Company intends to use $43.6 million of the net proceeds from the offering to redeem the Company's existing 11 3/4% senior notes due 2004 and to use the remaining net proceeds to repay or repurchase other long-term obligations or for working capital and general corporate purposes. The Notes will be general unsecured obligations of the Company and will rank equal in right of payment with its existing and future senior indebtedness and senior in right of payment to all of its existing and future subordinated debt. The Notes will be convertible at the option of the holder under certain circumstances prior to maturity into shares of PRIMUS common stock at a conversion price to be determined. The Company expects to grant the initial purchasers in this offering a 30-day option to purchase up to an additional $15 million of Notes. The offer will only be made to qualified institutional buyers pursuant to Rule 144A of the Securities Act of 1933, as amended. The Notes and the shares of PRIMUS common stock issuable upon conversion of the Notes will not be registered under the Securities Act and may not be offered or sold in the United States or to a United States person absent registration or an applicable exemption from registration requirements. PRIMUS Telecommunications Group, Incorporated (NASDAQ:PRTL) is a global facilities-based telecommunications services provider offering international and domestic voice, Internet, data and hosting services to business and residential retail customers and other carriers located primarily in the United States, Canada, Australia, the United Kingdom and western Europe. PRIMUS provides services over its global network of owned and leased transmission facilities, including approximately 250 points-of-presence (POPs) throughout the world, ownership interests in over 23 undersea fiber optic cable systems, 19 carrier-grade international gateway and domestic switches, and a variety of operating relationships that allow it to deliver traffic worldwide. PRIMUS also has deployed a global state-of-the-art broadband fiber optic ATM+IP network and data centers to offer customers Internet, data, hosting and e-commerce services. Founded in 1994, Primus is based in McLean, VA. News and information are available at PRIMUS's Web site at http://www.primustel.com. QWEST: Files Long-Distance Application With FCC for Arizona ----------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) filed an application with the Federal Communications Commission (FCC) for authority to provide long-distance service to nearly 2.8 million customer lines in Arizona. Arizona is the final state in Qwest's 14-state local service territory to apply to the FCC for authority to provide long-distance service. "This application is the culmination of years of effort by our Qwest employees and the Arizona Corporation Commission. Arizona's local telephone market is one of the most competitive in the nation, and now it's time for Arizona customers to receive the benefits of real long-distance competition," said Pat Quinn, Qwest president for Arizona. "FCC approval of this application is the final step in our effort to offer long-distance service to customers throughout our local service territory." Consumer Savings, Benefits With Qwest's long-distance offerings, the company continues to deliver the Spirit of ServiceT through simple pricing, the convenience of one bill and additional savings for customers who purchase a package of Qwest communications services. Qwest's residential and business customers in Arizona could save an estimated $189 million annually with Qwest's re-entry into the regional long-distance business, based on a study by Professor Jerry A. Hausman, director of the Massachusetts Institute of Technology Telecommunications Research Program. Customers in Arizona will soon enjoy the convenience of having all their voice, data, video and wireless services on one bill. In less than six months more than 1.1 million in-region customers have signed up for Qwest long- distance service. Qwest residential customers have been particularly responsive to the Qwest Preferred Unlimited PlanT, which includes unlimited direct dialed long- distance service for only $20 per month for the first 12 months when purchased with a Qwest bundle of services. Qwest has invested more than $3 billion to open its markets to competitors and comply with the Telecommunications Act of 1996. Today's filing contains extensive evidence that demonstrates Qwest has met all the market-opening and performance requirements of the act. The FCC must issue a decision on Qwest's application by December 3, 2003. Qwest discussed its intention to file its FCC application with the Arizona Corporation Commission (ACC) at its August 21, 2003, open meeting and the ACC expressed no objection to the filing schedule. The ACC will send its recommendation to the FCC within the next 20 days. Systems Tests Qwest's Arizona application includes data from an extensive third- party test of Qwest's systems and performance that demonstrates Qwest's excellence in providing wholesale services. A test focusing on Arizona operations and support systems was conducted by Cap Gemini Ernst & Young and the ACC. During the test, tens of thousands of transactions were monitored to confirm Qwest's ability to facilitate orders, installation, repair, billing and other services ordered by competitive local telephone companies. Qwest has also passed a separate and comparable systems test that was conducted collaboratively by regulators from the other 13 states in its territory. Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 49,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com ROWE INT'L: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------- Debtor: Rowe International, Inc. 1500 Union Ave SE Grand Rapids, Michigan 49507-1884 Bankruptcy Case No.: 03-10537 Type of Business: The Debtor is a manufacturer of commercial and home CD jukeboxes. Chapter 11 Petition Date: August 29, 2003 Court: Western District of Michigan (Grand Rapids) Judge: Jeffrey R. Hughes Debtor's Counsel: Thomas P. Sarb, Esq. Miller, Johnson, Snell & Cummiskey 250 Monroe Avenue 800 Calder Plaza Bldg. Grand Rapids, MI 49503 Tel: 616-459-8311 Estimated Assets: $10 Million to $50 Million Estimated Debts: More than $100 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Tri-Links Investment Trust/Nomura Holdings $19,478,782 2 World Financial Center Building B, 17th Floor New York, NY 10281 Attn: Kyle Elliot Stuart Simon Tel: 212-667-9300 Fax: 212-667-1861 Citibank N.A. $17,385,138 250 West Street 8th Floor New York, NY 10013 Attn: Carlton Klien Tel: 212-723-3261 Fax: 212-723-3899 Summit Investment Management LLC $12,098,422 Wells Fargo Center 1700 Lincoln Street Suite 2540 Denver, Colorado 80203 Attn: Robert Ekback Richard Horrigan Steven Petrie Tel: 303-830-6786 Fax: 303-830-9538 Bear Stearns & Co. Inc. $4,718,294 383 Madison Avenue 8th Floor New York, NY 10179 Attn: Laura Torrado Paul Marhan Tel: 212-272-2811 Fax: 212-272-8629 Goldman Sachs Credit Partners LP $4,362,046 c/o Goldman Sachs & Co. 85 Broad Street New York, NY 10004 Attn: Barbara Aaron Bradley Bennett Tel: 212-357-3111 Fax: 212-357-6861 Credit Suisse First Boston $4,271,847 11 Madison Avenue New York, NY 10010-3629 Attn: Neel Doshi 5th Floor Tel: 212-357-3111 Fax: 212-448-3313 Paladin Industries, Inc. $211,878 Ecast, Inc. $169,643 Merkle-Korff Industries $146,400 Lone Star Circuits $124,824 De Wys Manufacturing $112,472 Mars Electronics, Inc. $105,364 ELO Touchsystems, Inc. $96,950 Arrow Electronics $94,968 Avnet Applied Computing $89,656 Future Electronics Corp. $82,348 Kimball Electronics Group $76,195 Sharp Images Electronics $73,627 Light Metals Corporation $71,912 Acro-Fab, Inc. $67,237 ROYAL & SUNALLIANCE: Insurer Fin'l Strength Rating Dives to BB- --------------------------------------------------------------- Fitch Ratings has downgraded the insurer financial strength ratings of the Royal & SunAlliance USA insurance subsidiaries to 'BB-' from 'BBB+'. The companies represent the U.S. insurance operations of Royal & Sun Alliance Insurance Group plc. The ratings were also placed on Rating Watch Negative. The rating action follows various announcements related to RSA USA including likely reserve strengthening in third quarter 2003 in the range of $900 million and RSA USA's announcement that it has sold the renewal rights for its commercial and standard personal lines businesses, effectively placing a majority of the RSA USA book of business into run-off. Additionally, RSA has indicated that it will infuse capital into RSA USA only to the extent needed to maintain minimum statutory requirements from the proceeds of a fully underwritten rights offering of GBP 960 million ($1.5 billion). The rating action reflects Fitch's concerns about the level of capitalization at RSA USA following the above actions, as well as the adequacy of recorded insurance liabilities even after the strengthening planned for third quarter. Fitch no longer views the U.S. operations as being core or strategic to RSA for ratings purposes, and is adjusting RSA USA's rating to more closely reflect its stand alone profile. Additionally, Fitch estimates that RSA USA's pro-forma capitalization ratios will no longer meet standards to support a 'secure' rating. Additionally, Fitch believes the planned run-off of such a significant portion of the book increases reinsurance collectability risk, particularly because reinsurance disputes often arise in the absence of a continuing business relationship. Fitch also considered RSA USA's potential exposure under various legal actions surrounding insurance policies it wrote covering student loan securitizations. Ratings Affected American and Foreign Insurance Co. Atlantic Indemnity Company Atlantic Security Ins. Co. Carolina American Ins. Co. The Connecticut Indemnity Company Financial Structures Ins. Co. Financial Structures Ltd. The Fire & Casualty Ins. Co. of CT Globe Indemnity Company Grocers Ins. Co. Guaranty National Ins. Co. Guaranty National Ins. Co. of CT Landmark American Ins. Co. Marine Indemnity Ins. Co. of America Orion Insurance Co. Peak Property & Casualty Ins. Co. Royal Indemnity Company Royal Insurance Co. of America Royal Surplus Lines Insurance Co. Safeguard Insurance Co. Security Ins. Co. of Hartford Unisun Ins. Co. Viking County Mutual Ins. Co. Viking Ins. Co. of Wisconsin -- Insurer financial strength rating Downgrade 'BB-'; -- Rating Watch Placed on Negative. SILICON GRAPHICS: Losses & Liquidity Issues Prompt Neg. Outlook --------------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on Mountain View, California-based Silicon Graphics Inc. to negative from positive. At the same time, Standard & Poor's affirmed its 'CCC-' corporate credit and senior debt ratings, as well as its 'CC' subordinated debt rating on the company. The outlook revision reflects recent losses, limited liquidity, and a significant debt maturity in September 2004. "While SGI has a good technology position in high-end computing and graphics solutions, the company has been struggling to establish revenue stability and restore profitability in the highly competitive technical workstation and server markets," said credit analyst Martha Toll-Reed. "The company's efforts have been hampered by economic weakness and reduced levels of information technology spending." Near-term liquidity is adequate, but limited. Cash and marketable investment balances (excluding restricted cash) were $141 million as of June 27, 2003. The company expects to use about $40 million of cash to support operations in the September 2003 quarter. Required debt amortization in fiscal 2004 is modest at about $17 million. The company has fully utilized its available capacity under its secured $50 million credit facility expiring in April 2005 to secure letters of credit. The facility is secured by U.S. accounts receivable and inventory, the pledge of certain intellectual property, and cash deposits. In addition, the facility is subject to acceleration if SGI does not successfully extend the maturity of its senior convertible notes on or before March 5, 2004. In August 2003, SGI announced the withdrawal of its exchange offer with respect to its $230 million of outstanding 5.25% senior convertible notes due September 2004. SK GLOBAL: Wants Schedules Filing Deadline Moved to September 30 ---------------------------------------------------------------- To assist in the preparation of its Schedules of Assets and Liabilities, Statement of Financial Affairs, and other financial reporting requirements imposed on a debtor-in-possession in Chapter 11, the SK Global America Inc. employed KPMG LLP as its accountants and financial advisors, which the Court approved on August 21, 2003. Since then, Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York, relates that the Debtor worked diligently with KPMG in gathering and organizing information required for the Schedules. Significant progress has been made. However, the recent power outage in the Northeast and the ensuing communication problems after the power was restored, together with the computer viruses of the past couple of weeks, delayed and hindered the Debtor's ability to convey information to KPMG. Accordingly, the Debtor needs additional time to complete the Schedules. Therefore, the Debtor asks Judge Blackshear to further extend the time within which it may file its schedules of assets and liabilities and statement of financial affairs to September 30, 2003. At this juncture, Mr. Ratner asserts that a 20-day extension will provide sufficient time within which to prepare, review and file the Schedules. The accuracy of the Schedules will, among other things, allow the Debtor to send notice of the claims bar date the Court will set to the Debtor's creditors shortly after the filing of the Schedules. The Foreign Bank Steering Committee and the U.S. Trustee do not oppose the proposed extension. (SK Global Bankruptcy News, Issue No. 4; Bankruptcy Creditors' Service, Inc., 609/392-0900) SPIEGEL: Unsecured Panel Brings-In McMillan as Canadian Counsel --------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of The Spiegel Group and its debtor-affiliates needs a Canadian counsel to provide advice concerning legal issues affecting the Canadian proceedings initiated by certain of the Debtors' subsidiaries under the Companies' Creditors Arrangement Act. The Committee believes that McMillan Binch LLP has considerable experience in rendering services to debtors, creditors and other parties in numerous Canadian and cross-border bankruptcy cases. Thus, the Committee maintains, McMillan Binch is well qualified to perform the work required in these cases in an efficient manner. McMillan Binch has represented the Committee since July 7, 2003. Accordingly, the Committee seeks the Court's authority to retain McMillan Binch to provide professional services in connection with the Debtors' Canadian proceedings under the CCAA. Specifically, McMillan will: (a) advise the Committee regarding their rights and obligations under Canadian law; (b) prepare pleadings under the CCAA necessary to protect the Committee's interests; (c) appear and represent the Committee's interests in the CCAA proceedings; (d) advise the Committee on the coordination of the CCAA proceedings and these Chapter 11 cases; and (e) take other action and perform other services as the Committee may require. Jeffrey B. Gollob of McMillan Binch attests that the firm does not represent any interest adverse to the Committee in matters upon which it will be engaged. Mr. Gollob states that McMillan Binch is unable to determine with certainty whether one of its clients or an affiliated entity holds a claim or otherwise is a party-in-interest in these Chapter 11 cases. However, McMillan Binch assures the Court that if it discovers any information that is contrary to or pertinent to its disclosures, it will file a supplemental disclosure with the Court. McMillan Binch will render services to the Committee at its regular hourly rates, plus reimbursement of actual, necessary expenses and other charges incurred. The professionals who will be working on Spiegel's case and their current hourly rates, subject to adjustments, are: Jeffrey B. Gollob Partner $625 Paul G. Macdonald Partner 550 Ajay K. Singh Associate 325 Sermina Rizvic Law Clerk 120 Accordingly, Judge Blackshear permits the Committee to retain McMillan Binch. (Spiegel Bankruptcy News, Issue No. 11; Bankruptcy Creditors' Service, Inc., 609/392-0900) SPIEGEL GROUP: Records $104.4 Million Net Sales for August ---------------------------------------------------------- The Spiegel Group (Spiegel, Inc.) reported net sales of $104.4 million for the four weeks ended August 23, 2003, a 30 percent decrease from net sales of $149.6 million for the four weeks ended August 24, 2002. For the 34 weeks ended August 23, 2003, net sales declined 23 percent to $1.044 billion from $1.359 billion in the same period last year. The company also reported that comparable-store sales for its Eddie Bauer division decreased 7 percent for the four-week period and 8 percent for the 34-week period ended August 23, 2003, compared to the same periods last year. Eddie Bauer's comparable- store sales reflect a low single-digit comparable-store sales decline in its apparel stores, combined with weaker comparable- store sales in its home and outlet stores. The Group's net sales from retail and outlet stores fell 18 percent compared to last year, primarily reflecting the impact of store closings as well as the decline in comparable-store sales. The company has reduced its store base by 18 percent, operating 467 stores at the end of August 2003 compared to 569 stores at the end of August 2002. Most of the store closings resulted from actions taken as part of the company's ongoing reorganization process. Direct net sales (catalog and e-commerce) for the Group decreased 42 percent compared to last year, primarily due to lower customer demand, a planned reduction in catalog circulation and the ongoing negative effect of the discontinuation in early March of the company's private-label credit cards issued by First Consumers National Bank to customers of its merchant companies. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, specialty retail and outlet stores, and e- commerce sites, including eddiebauer.com , newport-news.com and spiegel.com . The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SR TELECOM: Completes Acquisition of Netro Corporation ------------------------------------------------------ SR Telecom(TM) Inc. (TSX: SRX; Nasdaq: SRXA), a world leader in fixed wireless access solutions, completed the acquisition of Netro Corporation (Nasdaq: NTRO), a leading provider of fixed wireless broadband access. Netro stockholders of record as at the close of business on September 4, 2003 will be entitled to receive the merger consideration of SR Telecom Common Shares and a cash dividend payout paid by Netro. Based on SR Telecom's recently declared 1:10 share consolidation, holders of Netro common stock will receive 0.104727 shares of SR Telecom common stock for every share of Netro common stock that they hold. Netro stockholders will also receive an aggregate of US$100 million cash dividend equivalent to US$2.523554 per share, which is expected to be treated as a tax- free return of capital, subject to the conditions described in the proxy statement. Netro's common stock will be delisted from the Nasdaq National Market and will be deregistered under the Exchange Act. "The transaction is a win-win situation. We will be able to leverage our global client base and distribution network to deploy and provision revenue-generating broadband technology solutions to service providers. The addition of Netro enables us to deliver end-to-end broadband wireless solutions, making broadband data and high-speed Internet access deployable in areas xDSL and cable cannot reach or are not economically viable or efficient," said Pierre St-Arnaud, SR Telecom's President and CEO. The addition of Netro's 3.5GHz angel(TM) product and the airstar(TM) high-capacity fixed broadband access solution complements SR Telecom's product portfolio in terms of both frequency and applications. These additions, combined with SR Telecom's turnkey solutions capabilities and extensive distribution network, position SR Telecom to aggressively pursue a number of identified opportunities within its existing customer base and compete for significant new contracts that it would not otherwise be in a position to pursue. "Over the last two years, SR Telecom has fundamentally reshaped itself through a series of complementary technology acquisitions that have significantly improved its competitive stature in the telecom industry. The completion of the Netro transaction is a key strategic event for SR Telecom, creating a much stronger company that is well positioned for revenue growth through an industry- leading portfolio of broadband technologies that meet the expressed requirements of our customers," said St-Arnaud. "By complementing our market-leading fixed wireless access solutions with Netro's carrier-class broadband products, we have strengthened our position as the world leader in fixed wireless services and solutions and established one of the industry's most advanced point-to-multipoint telecommunications portfolios." The broadband fixed wireless access market is anticipated to grow considerably as service providers seek to deploy this technology in areas not reached by traditional wireline access networks. According to Ovum research, the worldwide market is expected to grow from 1 million lines today to 16 million lines in 2008. To date, licenses for 3.5GHz technology have been allocated in Europe, China and Latin America. SR Telecom has already begun to see benefits from the transaction with airstar orders being booked from China and Mexico, along with a high level of bidding activity for both the angel and airstar products. A further benefit of this transaction is that SR Telecom will improve its net liquidity. SR Telecom expects that immediately following the merger, the combined company will have approximately CDN$67 million in cash. Netro's fixed broadband wireless systems are used by telecommunications service providers to deliver voice and high- speed data services for business and residential, access and mobile infrastructure applications. Netro was incorporated in the US with headquarters in San Jose, California, Redmond, Washington, and offices in Europe, Asia and South America. The Company's airstar and angel products have an impressive track record of performance and stability worldwide. SR TELECOM (TSX: SRX, Nasdaq: SRXA) (S&P, B+ Corporate Credit and Senior Unsecured Debt Ratings) is a world leader and innovator in Fixed Wireless Access technology, which links end-users to networks using wireless transmissions. SR Telecom's solutions include equipment, network planning, project management, installation and maintenance services. The Company offers one of the industry's broadest portfolio of fixed wireless products, designed to enable carriers and service providers to rapidly deploy high-quality voice, high-speed data and broadband applications. These products, which are used in over 110 countries, are among the most advanced and reliable available today. TOP FLITE: Court Okays Callaway Golf's Offer to Acquire Assets -------------------------------------------------------------- Callaway Golf Company (NYSE:ELY) announced that the U.S. Bankruptcy Court in Wilmington, Delaware, has approved its offer to purchase substantially all of the assets of the Top-Flite Golf Company for $174.4 million in cash and assumption of debt, plus the assumption of certain operating liabilities. The acquired assets will include working capital (inventory and accounts receivable) of approximately $100 million at closing, fixed assets of approximately $44 million at closing, and all golf patents, trademarks and intellectual property. Callaway Golf expects to close the transaction in mid to late September. Callaway Golf's proposal calls for the purchase of the Top-Flite, Strata and Ben Hogan brands, as well as the manufacturing facilities in Chicopee, Massachusetts, Gloversville, New York, and Fort Worth, Texas, and the assets of Top-Flite's subsidiaries in Canada, the United Kingdom, Sweden, Australia and New Zealand. Callaway Golf will offer employment to Top-Flite golf employees, and accepted virtually all of Top-Flite's 43 endorsement contracts with tour professionals, including those of U.S. Open Champion Jim Furyk, Ryder Cup Captains Hal Sutton and Bernhard Langer, Justin Leonard, Lee Trevino, and other high profile professional golfers. "This is an attractive and exciting acquisition for Callaway Golf and will create substantial value for our shareholders. The transaction will combine Callaway Golf's position as #1 in woods, irons and putters with Top-Flite's position as the #2 manufacturer and seller of golf balls worldwide," said Ron Drapeau, Chairman, President and CEO of Callaway Golf. "We fully expect our combined golf ball business to be profitable going forward, ending the profit drain we have experienced from our own golf ball operations since start up. In addition, we feel the integration of Callaway Golf and Top-Flite golf ball R&D and patents, combined with low cost, efficient manufacturing operations, should energize both golf ball brands and provide us with opportunities for growth. We also see other opportunities to leverage the Top-Flite and Callaway Golf assets and the talents of all of our employees around the world to grow Callaway Golf, Odyssey, Top-Flite and Ben Hogan sales. This transaction will give us improved access to categories and channels in the U.S. where we have been absent, while also adding size and strength to our international operations in Europe, Canada, Australia and New Zealand." The Company will provide more details upon the closing of the transaction, and plans to hold a conference call with securities analysts later in September. Callaway Golf Company makes and sells Big Bertha(R) Metal Woods and Irons, including Great Big Bertha(R) II Titanium Drivers and Fairway Woods, Big Bertha Steelhead(TM) III Stainless Steel Drivers and Fairway Woods, Hawk Eye VFT Tungsten Injected(TM) Titanium Irons, Big Bertha Stainless Steel Irons, Steelhead X- 16(TM) and Steelhead X-16 Pro Series Stainless Steel Irons, and Callaway Golf Forged Wedges. Callaway Golf Company also makes and sells Odyssey(R) Putters, including White Hot(R), TriHot(R), DFX(TM) and Dual Force(R) Putters. Callaway Golf Company makes and sells the Callaway Golf(R) HX(R) Blue and HX Red balls, the CTU 30r Blue and CTU 30 Red balls, the HX 2-Piece Blue and HX 2-Piece Red balls, the CB1(R) Blue and CB1 Red balls, and the Warbird(TM) golf balls. For more information about Callaway Golf Company, visit the company's Web sites at http://www.callawaygolf.comand http://www.odysseygolf.com TWINLAB CORP: Case Summary and Largest Unsecured Creditors ---------------------------------------------------------- Lead Debtor: Twinlab Corporation 150 Motor Parkway Suite 210 Hauppauge, New York 11788 Bankruptcy Case No.: 03-15564 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Twin Laboratories (UK) Ltd. 03-15563 Twin Laboratories Inc. 03-15566 Type of Business: Manufacturer and marketer of high quality, science-based, nutritional supplements. Chapter 11 Petition Date: September 4, 2003 Court: Southern District of New York (Manhattan) Judge: Cornelius Blackshear Debtors' Counsel: Michael P. Kessler, Esq. Weil, Gotshal & Manges, LLP 767 Fifth Avenue New York, NY 10153 (212) 310-8000 Fax : (212) 310-8007 Estimated Assets: Estimated Debts: ----------------- ---------------- Twinlab Corporation $0 to $500K $50MM to $100MM Twin Laboratories Inc. $50MM to $100MM More than $100MM Twin Laboratories (UK) Ltd. $100K to $500K $10MM to $50MM Twinlab Corporation's 17 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Corporate Trust Guarantee of Twin Labs $39,915,000 Services, as Indenture Inc.'s obligations under Trustee Indenture related to P.O. Box 778 10-1/4% Sr Sub. Notes Boston, MA 02102-0778 due May 2006 Elizabeth C. Hammer Tel: 860-241-6817 Citigroup Guarantee of Twin Labs $19,195,000 333 West 34th St, Inc.'s obligations 3rd Fl under Indenture related NY, NY 10001 to 10-1/4% Sr Sub John Andropoli Notes due May 2006. Reorganization Dept. Tel: 212-615-9346 ABN AMRO Guarantee of Twin Labs $5,779,000 499 Washington Blvd. Inc.'s obligations 14th Fl under Indenture related Jersey City, NJ 07310 to 10-1/4% Sr. Sub. Richard Leung, Notes due May 2006. Corporate Actions Tel: 201-427-4261 National Fin'l Services Guarantee of Twin Labs $5,121,000 200 Liberty St. Inc.'s obligations NY, NY 10281 under Indenture related Tom Torillo, to 10-1/4% Sr. Sub. Reorganization Dept Notes due May 2006. Tel: 877-612-2047 Bear Stearns Guarantee of Twin Labs $2,780,000 One Metrotech Center N., Inc.'s obligations 4th Fl under Indenture related Brooklyn, NY 11201-3859 to 10-1/4% Sr. Sub. Greg Schron Notes due May 2006. Tel: 347-643-2340 State Street Bank & Trust Guarantee of Twin Labs $2,200,000 1776 Heritage Dr., A4 N.W. Inc.'s obligations Brian Port, under Indenture related Corporate Actions to 10-1/4% Sr. Sub. N Quincy, MA 02171 Notes due May 2006. Tel: 617-985-1143 Morgan Stanley Guarantee of Twin Labs $1,877,000 1 Pierrepont Plaza, 7th Fl Inc.'s obligations Brooklyn, NY 11201 under Indenture related Richard Garaventa, to 10-1/4% Sr. Sub. Reorganization Dept Notes due May 2006. Tel: 718-754-5676 Merrill Lynch Guarantee of Twin Labs $1,220,000 Professional Clearing Inc.'s obligations Corp. under Indenture related 20 Broad St, 13th Fl to 10-1/4% Sr. Sub. NY, NY 10005 Notes due May 2006. Robert Santangelo, Reorganization Dept Tel: 212-558-0677 Bank One Trust Guarantee of Twin Labs $650,000 340 S. Cleveland, Inc.'s obligations Building 350 under Indenture related Westerville, OH 43081 to 10-1/4% Sr. Sub. Minnie Robinson, Notes due May 2006. Corporate Actions Tel: 614-217-8753 RBC Dain Rauscher Guarantee of Twin Labs $427,000 510 Marquette Ave SW Inc.'s obligations 8th Fl., 11Q6 under Indenture related Minneapolis, MN 55440 to 10-1/4% Sr. Sub. Kirk Fox Notes due May 2006. Tel: 612-607-8603 UBS Paine Webber Guarantee of Twin Labs $299,000 Newport Center 3, 499 Inc.'s obligations Washington Blvd, 14th Fl under Indenture related Jersey City, NJ 07302-4844 to 10-1/4% Sr. Sub. John Cavin, Notes due May 2006. Reorganization Dept Tel: 201-352-4844 Pershing / Donaldson Guarantee of Twin Labs $143,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Merrill Lynch Safekeeping Guarantee of Twin Labs $75,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Comerica Bank Guarantee of Twin Labs $51,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. PNC Bank, N.A. Guarantee of Twin Labs $50,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Northern Trust Guarantee of Twin Labs $33,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Fiserv Securities Guarantee of Twin Labs $15,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Twin Laboratories (UK) Ltd.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Corporate Trust Guarantee of Twin Labs $39,915,000 Services, as Indenture Inc.'s obligations Trustee under Indenture related P.O. Box 778 to 10-1/4% Sr. Sub. Boston, MA 02102-0778 Notes due May 2006. Elizabeth C. Hammer Tel: 860-241-6817 Citigroup Guarantee of Twin Labs $19,195,000 333 West 34th St, 3rd Fl Inc.'s obligations NY, NY 10001 under Indenture related John Andropoli to 10-1/4% Sr. Sub. Reorganization Dept. Notes due May 2006. 333 West 34th St, 3rd Fl New York, NY 10001 Tel: 212-615-9346 ABN AMRO Guarantee of Twin Labs $5,779,000 499 Washington Blvd. - Inc.'s obligations 14th Fl under Indenture related Jersey City, NJ 07310 to 10-1/4% Sr. Sub. Richard Leung Notes due May 2006. Corporate Actions Tel: 201-427-4261 National Fin'l Services Guarantee of Twin Labs $5,121,000 200 Liberty St. Inc.'s obligations NY, NY 10281 under Indenture related Tom Torillo to 10-1/4% Sr. Sub. Reorganization Dept Notes due May 2006. Tel: 877-612-2047 Bear Stern Guarantee of Twin Labs $2,780,000 One Metrotech Center N., Inc.'s obligations 4th Fl under Indenture related Brooklyn, NY 11201-3859 to 10-1/4% Sr. Sub. Greg Schron Notes due May 2006. Tel: 347-643-2340 State Street Bank & Trust Guarantee of Twin Labs $2,200,000 1776 Heritage Dr., A4 N.W. Inc.'s obligations N Quincy, MA 02171 under Indenture related Brian Port to 10-1/4% Sr. Sub. Corporate Actions Notes due May 2006. Tel: 617-985-1143 Morgan Stanley Guarantee of Twin Labs $1,877,000 1 Pierrepont Plaza, Inc.'s obligations 7th Fl under Indenture related Brooklyn, NY 11201 to 10-1/4% Sr. Sub. Richard Garaventa Notes due May 2006. Reorganization Dept Tel: 718-754-5676 Merrill Lynch Guarantee of Twin Labs $1,220,000 Professional Clearing Inc.'s obligations Corp. under Indenture related 20 Broad St, 13th Fl to 10-1/4% Sr. Sub. NY, NY 10005 Notes due May 2006. Robert Santangelo Reorganization Dept Tel: 212-558-0677 Bank One Trust Guarantee of Twin Labs $650,000 340 S. Cleveland, Inc.'s obligations Building 350 under Indenture related Westerville, OH 43081 to 10-1/4% Sr. Sub. Minnie Robinson Notes due May 2006. Corporate Actions Tel: 614-217-8753 RBC Dain Rauscher Guarantee of Twin Labs $427,000 510 Marquette Ave SW Inc.'s obligations 8th Fl., 11Q6 under Indenture related Minneapolis, MN 55440 to 10-1/4% Sr. Sub. Kirk Fox Notes due May 2006. UBS Paine Webber Guarantee of Twin Labs $299,000 Newport Center 3, 499 Inc.'s obligations Washington Blvd, 14th Fl under Indenture related Jersey City, NJ 07302-4844 to 10-1/4% Sr. Sub. John Cavin Notes due May 2006. Reorganization Dept Tel: 201-352-4844 Pershing / Donaldson Guarantee of Twin Labs $143,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Merrill Lynch Safekeeping Guarantee of Twin Labs $75,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Comerica Bank Guarantee of Twin Labs $51,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. PNC Bank, N.A. Guarantee of Twin Labs $50,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Northern Trust Guarantee of Twin Labs $33,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Fiserv Securities Guarantee of Twin Labs $15,000 Inc.'s obligations under Indenture related to 10-1/4% Sr. Sub. Notes due May 2006. Ashby Accountants Trade Debt o14,863 Redhead Design Trade Debt o1,410 World Rugby Trade Debt o7,000 Twin Laboratories Inc.'s 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Corporate Trust Obligations under $39,915,000 Services, as Indenture Indenture related Trustee to 10-1/4% Sr Sub. P.O. Box 778 Notes due May 2006. Boston, MA 02102-0778 Elizabeth C. Hammer Tel: 860-241-6817 Citigroup Obligations under $19,195,0002 333 West 34th St, 3rd Fl Indenture related NY, NY 10001 to 10-1/4% Sr Sub. John Andropoli Notes due May 2006. Reorganization Dept. Tel: 212-615-9346 ABN AMRO Obligations under $5,779,000 499 Washington Blvd. - Indenture related 14th Fl to 10-1/4% Sr Sub. Jersey City, NJ 07310 Notes due May 2006. Richard Leung Corporate Actions Tel: 201-427-4261 National Fin'l Services Obligations under $5,121,000 200 Liberty St. Indenture related NY, NY 10281 to 10-1/4% Sr Sub. Tom Torillo Notes due May 2006. Reorganization Dept Tel: 877-612-2047 Bear Stearns Obligations under $2,780,000 One Metrotech Center N., Indenture related 4th Floor to 10-1/4% Sr Sub. Brooklyn, NY 11201-3859 Notes due May 2006. Greg Schron Tel: 347-643-2340 Century Foods Int'l Trade Debt $2,620,214 400 Century CT Sparta, WI 54656 Kim Downing Tel: 608-269-1900 State Street Bank & Trust Obligations under $2,200,000 1776 Heritage Dr., A4 N.W. Indenture related N Quincy, MA 02171 to 10-1/4% Sr Sub. Brian Port Notes due May 2006. Corporate Actions Tel: 617-985-1143 Morgan Stanley Obligations under $1,877,000 1 Pierrepont Plaza, Indenture related 7th Fl to 10-1/4% Sr Sub. Brooklyn, NY 11201 Notes due May 2006. Richard Garaventa Reorganization Dept Tel: 718-754-5676 Merrill Lynch Obligations under $1,220,000 Professional Clearing Indenture related Corp. to 10-1/4% Sr Sub. 20 Broad St, 13th Fl Notes due May 2006. NY, NY 10005 Robert Santangelo Reorganization Dept Tel: 212-558-0677 Anabolic Inc. Trade Debt $877,408 26021 Commerce Center Dr Lake Forest, Ca 92630 Linda Tel: 949-609-4011 Industrial Container and Trade Debt $845,059 Supply Co. 1865 S 4490 W Salt Lake City, Ut 84104 Dan Butters Tel: 801-972-1561 Cognis Corp Trade Debt $809,787 5051 Estecreek Dr Cincinnati, Oh 45232-1446 Mike Ellison Tel: 513-482-3000 Capsugel Trade Debt $734,750 201 Tabor Road Morris Plains, NJ 07950 Todd Reynolds Tel: 212-733-5169 Phoenix Labs Trade Debt $674,366 140 Lauman La Hicksville, NY 11801 Kathy Schmidt Tel: 516-822-1230 Bank One Trust Obligations under $650,000 340 S. Cleveland, Indenture related Building 350 to 10-1/4% Sr Sub. Westerville, OH 43081 Notes due May 2006. Minnie Robinson Corporate Actions Tel: 614-217-8753 World Triathlon Corp. Royalty Payouts $644,442 43309 Us Highway 19 N Tarpon Springs, Fl 34689 World Triathlon Corp. Tel: 727-942-4767 Lonza Group Trade Debt $520,130 17-17 Route 208 Fairlawn, NJ 07410 Brenda Villalona Tel: 201-794-2426 Kemin Foods LC Trade Debt $438,875 135 S Lasalle, Dept 2254 Chicago, Il 60674-2254 Phyllis Tel: 866-536-4666 RBC Dain Rauscher Obligations under $427,000 510 Marquette Ave SW Indenture related 8th Fl., 11Q6 to 10-1/4% Sr Sub. Minneapolis, MN 55440 Notes due May 2006. Kirk Fox Tel: 612-607-8603 American Media, Inc Trade Debt $404,255 P.O. Box 932296 Atlanta, Ga 31193-2296 Nicole Catazaro Tel: 561 998-7437 IBM Trade Debt $382,643 PO Box 7247-0276 Philadelphia, Pa 19170- 0276 Pam Medina Tel: 888-245-5572 x5726 UNITED AIRLINES: August Revenue Passenger Miles Tumble 8.1% ----------------------------------------------------------- United Airlines (OTC Bulletin Board: UALAQ) reports its traffic results for August 2003. United reported a passenger load factor of 82.5 percent, the second highest load factor in the airline's history, following last month's record load factor of 82.9 percent. Total scheduled revenue passenger miles (RPMs) declined in August by 8.1 percent on a capacity decrease of 12.2 percent. Pete McDonald, executive vice president-Operations, said, "United has enjoyed record load factors during the summer travel season, and our employees continue to deliver strong operational performance." United and United Express operate more than 3,300 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company's Web site at http://www.united.com US AIRWAYS: Enters Pact Settling Claims with Bombardier et al. -------------------------------------------------------------- On November 4, 2002, the following Claimants filed claims against the Reorganized US Airways Debtors in various liquidated and unliquidated amounts: -- Claim No. 2913 - Wilmington Trust Company, as Owner Trustee; -- Claim Nos. 2914 and 2915 - Bombardier Capital; -- Claim Nos. 2917 and 4984 - Bombardier; -- Claim Nos. 2918, 2919, 4982 & 4983 - Bombardier Services; -- Claim No. 3052 - Wells Fargo Bank Northwest. The Claims relate to 36 Bombardier Aircraft. The Stipulation settles the Claims as follows: a) Claim No. 2913 is allowed as a general unsecured Class Allegheny-6 claim for $4,745,891; b) Claim No. 2914 is allowed as a general unsecured Class Allegheny-6 claim for $2,363,660; c) Claim No. 2915 is allowed as a general unsecured Class Piedmont-6 claim for $2,622,989; d) Claim No. 2917 is allowed as a general unsecured Class Piedmont-6 claim for $1,659,847; e) Claim No. 2918 is allowed as a general unsecured Class Allegheny-6 claim for $955,282; f) Claim No. 2919 is allowed as a general unsecured Class Piedmont-6 claim for $8,244,431; g) Claim No. 3052 is allowed as a general unsecured Class Allegheny-6 Claim for $860,418; and h) Claim Nos. 4982, 4983 and 4984 are withdrawn. Thomas E. Pitts, Jr., Esq., at Sidley, Austin, Brown & Wood negotiated on behalf of Bombardier and others. (US Airways Bankruptcy News, Issue No. 37; Bankruptcy Creditors' Service, Inc., 609/392-0900) US FLOW: Court OKs The Garden City as Claims and Noticing Agent --------------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of Michigan gave its stamp of approval to US Flow Corporation, and its debtor- affiliates application to employ The Garden City Group, Inc., as Noticing and Claims Agent. The Debtors point out that the large number of creditors and other parties in interest in these cases may impose heavy administrative and other burdens on the Court and the Office of the Clerk of the Court. Employing Garden City will greatly relieve the Clerk's Office of these burdens, the Debtors say. In its capacity as Claims and Noticing Agent, Garden City will: a. prepare and serve 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 any 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) such other notices as Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b. after the mailing of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: i) a copy of the notice served, ii) an alphabetical list of persons to whom the notice was mailed and iii) the date and manner of mailing; c. maintain copies of all proofs of claim and proofs of interest filed herein; d. maintain official claims registers, including, among other things, the following information for each proof of claim or proof of interest: i) the Debtor against whom each claim or interest is asserted; ii) 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; iii) the date received; iv) the claim number assigned; and v) the asserted amount and classification of the claim; e. implement necessary security measures to ensure the completeness and integrity of the claims registers; f. transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless 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 to the Clerk's Office by any party in interest; 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. the preparation, mailing and tabulation of ballots for the purpose of voting to accept or reject any plans of reorganization proposed by Debtors in these chapter 11 cases; l. promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and m. provide such other claims processing, noticing and related administration services as may be required from time to time by Debtors or the Court. David Isaac, the President of The Garden City Group discloses his firm's professional rate in connection with the retention: Set Up Creditor File Creation $155 per hour Manual Entry $45 per hour Produce Schedules and SOFAs $125 - $250 per hour Document Management $35 to $75 per hour System Support Programmer $125 - $150 per hour Senior Programmer $150 - 175 per hour Reporting $65 per creation General Project Management Supervisor $75 - $90 per hour Project Manager $95 per hour Senior Project Manager $125 per hour Quality Assurance $70 - $100 per hour Assistant Vice President $150 per hour Senior VP Systems and Managing Director $250 per hour Ballot Processing $60 per hour Telephone Support Maintenance Fee $50 per month Operator Support $100 per hour Management Oversight $100 - $150 per hour 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., represents 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. USG CORP: Wants Exclusive Period Extended Until March 1, 2004 ------------------------------------------------------------- According to Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, under the unique circumstances of the USG Corporation Debtors' Chapter 11 cases, they should be permitted to continue leading the effort toward a consensual reorganization plan. Mr. Heath says that although the prerequisites to the formulation of a plan -- the resolution of the asbestos liability -- has been elusive, developments have occurred, which make the Debtors believe that further developments will take place during the next six months and that would enable them to structure a plan by the end of that period. The Debtors relate that for the past six months: (a) they have been persistent in their efforts before Judge Wolin to pursue the estimation of asbestos personal injury liability; (b) they have engaged in discussions with representatives of property damage asbestos claimants while, at the same time, analyzing the claims filed pursuant to the deadline in connection with the claims objection procedures that are about to get underway; and (c) they have been involved in proposed legislative action that could lead to a legislative solution of the asbestos problem, including the asbestos claim valuation issues that are central in these cases. Mr. Heath notes that the Debtors desire to emerge from Chapter 11 and to provide fair treatment to all constituencies. The Debtors point out that the asbestos problem is the only thing standing between them and their emergence, and that they have been intensely focused on attempting to establish the foundation for a resolution of this problem. Thus, the Debtors ask the Court to extend their exclusive period to file a plan until March 1, 2004 and their exclusive period to solicit acceptances of that plan until May 1, 2004. The Debtors ask Judge Newsome to recognize: (i) the difficult challenges that have faced them; (ii) that they remain in the best position to propose a reorganization plan as soon as developments allow and that no other party is in a position now to do the same thing; and (iii) that it is reasonable to anticipate progress over the next six months so that they would be placed in a position to begin structuring a plan at that time. Mr. Heath contends that the Debtors will be in a far better position to start moving forward on a plan six months from now because: * on February 19, 2003, Judge Wolin directed the parties to make preparations for the establishment of a bar date for cancer claimants; * additional discussions with property damage claims representatives are anticipated, and the property damage claims proceedings are set to begin this fall. The underlying foundation for a reorganization plan is absent until U.S. Gypsum's asbestos personal injury liability is either resolved, or at least estimated. Until then, the value of the estate cannot be allocated fairly among the stakeholders, including the asbestos claimants. For instance, the first step -- the estimation of cancer claims -- will, according to Judge Wolin, assist the Court in assessing whether or not the Debtors are solvent. In addition, an estimate of the asbestos liability is necessary to satisfy various confirmation standards pursuant to Section 1129 of the Bankruptcy Code. Mr. Heath adds that it is not possible to determine whether any proposed plan satisfies the requirements of Section 524(g) without a proper assessment of the claim amounts to be paid under the plan. Thus, as a result, the filing of any reorganization at this time would be premature and contentious, Mr. Heath says. In addition, if a bill like the FAIR Act were to pass, it would liquidate the Debtors' asbestos personal injury liability for current and future claims based on a specific formula by requiring that they pay a specified amount over an extended period of time into a national trust established by the FAIR Act. In doing so, it would resolve the asbestos personal injury liability in these cases. Mr. Heath notes that the Debtors' businesses continue to be profitable and to make progress in other areas. The Debtors also expect to continue building significant additional cash during the proposed extension of the Exclusive Periods. Furthermore, in support of the request for extension, the Debtors note that in the complexity and magnitude of the asbestos-related issues involved in these cases, either a consensual or litigated resolution of these issues will require a significant additional time. Judge Newsome will convene a hearing on September 30, 2003 at 10 a.m. to consider the Debtors' request. Pursuant to Rule 9006- 2 of the Local Rules of Bankruptcy Practice and Procedures of the Delaware Bankruptcy Court, the Debtors' Exclusive Plan Filing Period is automatically extended until the conclusion of that hearing. (USG Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 609/392-0900) VALLEY MEDIA: Wants to Stretch Exclusivity through November 10 -------------------------------------------------------------- Valley Media, Inc., is asking for an additional extension of its exclusive periods. The Debtor wants to extend its exclusive period to file its plan of reorganization through November 10, 2003, and the Company wants to retain, until January 12, 2004, the exclusively right to solicit acceptances of that plan from creditors. During the early stages of these proceedings, Morrison & Foerster, the Debtor's initial bankruptcy counsel, withdrew from this case. Morris, Nichols, Arsht & Tunnell did not begin representing the Debtor until January 11, 2002. Notwithstanding Morris Nichols' efforts, unavoidable delays resulted from the transition of counsel. The Debtor has been actively working to formulate a liquidating plan of reorganization in consultation with the Committee and its principal prepetition secured lender, Congress Financial Corporation. Consequently, the Debtor expects to file its liquidating plan and related disclosure statement shortly. The Debtor then expects to seek prompt approval of its disclosure statement and confirmation of its liquidating plan. The Debtor points out that it has made substantial progress in its case. In furtherance of the interests of its creditors and estate, the Debtor has undertaken and accomplished: -- significant progress in liquidating the estate for the benefit of creditors and hired FTI/Policano & Manzo as liquidation consultants, who has collected $54 million in accounts receivables and the liquidation of non- inventory assets; -- pursuant to the Private Sales Order, entered into and consummated agreements to sell the Debtor's inventory and has realized approximately $31.5 million for the benefit of its creditors and estate; -- successfully liquidated its remaining furniture, fixtures and equipment, with the exception of furniture, fixtures and equipment necessary for the wind-down of the Debtor's financial affairs; -- brought numerous preference, turnover and other actions against various defendants, seeking to bring more than $100.5 million into the estate; -- reviewed and analyzed the myriad of prepetition and administrative claims filed against the Debtor's estate; -- sought to identify and preserve estate assets and has worked to recover property of the estate, such as deposits and refundable prepayments; -- kept creditors updated and informed regarding the ongoing asset sales process; -- worked with the Committee and has responded to its requests for information necessary for the Committee to perform its fiduciary obligations; -- rejected numerous unexpired leases of personal and real property and unexpired contracts not essential to the winding down process and has coordinated the surrender of leased premises and equipment where appropriate; and -- worked with the Committee to identify assets that are potentially available for distribution to creditors and discussed with the Committee the best method for winding up this case. Accordingly, the substantial progress made by the Debtor in this proceeding thus far constitutes cause for the extension of the Debtor's Exclusive Proposal Periods. Valley Media Inc, a distributor of music and video entertainment products, filed for chapter 11 protection on November 20, 2002 (Bankr. Del. Case No. 01-11353). Robert J. Dehney, Esq., and Michael G. Busenkell, Esq., at Morris, Nichold, Arsht & Tunnel represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $241,547,000 in total assets and $259,206,000 in total debts. WEIRTON STEEL: Court Approves CIBC's Retention as Fin'l Advisors ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in Weirton Steel Corporation's Chapter 11 case sought the Court's authority to retain CIBC World Markets Corp. as its exclusive financial advisor effective as of May 28, 2003 in connection with a Restructuring Transaction with respect to the Debtor. The Committee and CIBC entered into an engagement letter dated June 2, 2003. Pursuant to the Engagement Letter, CIBC is: (a) assisting the Committee in analyzing and reviewing the acts, conduct, assets, liabilities and financial condition of the Debtor; (b) familiarizing itself to the extent appropriate with the operation of the Debtor's business; (c) advising the Committee as to the current state of the steel and restructuring markets; (d) advising the Committee as to potential restructuring alternatives and issues; (e) providing general strategic advice with respect to a plan of reorganization, sale of the Debtor or any other Restructuring Transaction; and (f) providing any other tasks as mutually agreed upon by CIBC and the Committee. CIBC proposes to be paid: (a) a $150,000 cash fee per month starting June 2, 2003 until the effective date of termination of the Engagement Letter; (b) a Success Fee equal to 100 basis points of the aggregate dollar amount of all claims of all classes whose interests are represented by the Committee. The Success Fee will be payable 50% in cash and 50% in the same kind of consideration delivered to the classes whose interests are represented by the Committee; and (c) periodic reimbursement by the Debtor when invoiced for all of its reasonable out-of-pocket expenses in connection with the performance of its services, regardless of whether a Restructuring Transaction occurs. * * * Judge Friend defers making any ruling on CIBC's entitlement to a Success Fee pending a Court hearing on September 15, 2003. (Weirton Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 609/392-0900) WESTPOINT STEVENS: Gets Okay to Assume 5 Alabama Gas Contracts -------------------------------------------------------------- WestPoint Stevens Inc., and its debtor-affiliates currently operate seven plant sites in the state of Alabama, which purchase natural gas from Alabama Gas Corporation. Before the Petition Date, the Debtors entered into contracts with Alagasco on behalf of each of the Plants. Each of the Plants is supplied with natural gas through four separate contracts between the Debtors and Alagasco that pertain solely to each of the individual Plants, as well as a fifth contract which applies generally to all of the Plants. The Contracts are executory in nature and govern the procurement and delivery of natural gas by Alagasco, as well as the related pricing and payment terms. Additionally, the Debtors are party to The Agency Agreement for Interstate Gas Customers with Alagasco. The Agency Agreement provides for Alagasco to serve as agent for the Debtors for the limited purposes of: (i) purchasing natural gas on the Debtors' behalf; (ii) arranging for the transportation of natural gas to delivery points on Alagasco's distribution system; and (iii) entering into agreements on the Debtors' behalf to effectuate the purchase and transportation of natural gas. The Agency Agreement does not have an expiration date, but instead continues until one party serves notice of termination on the other. The Agency Agreement is incorporated by reference in each of the individual Service Agreements. Because the Alagasco Contracts provide favorable rates to the Debtors for purchasing and receiving natural gas, the Debtors wanted to assume them. The Debtors believed that the Contracts will continue to provide substantial cost savings to their estates. The Debtors engaged in extensive, arm's-length negotiations with Alagasco. Subsequently, the parties reached an agreement pursuant to which Alagasco would continue acting as agent under the Agency Agreement, and would waive its demand for a security deposit under Section 366 of the Bankruptcy Code, in exchange for the Debtors' agreement to assume the Contracts and make semi- monthly prepayments, with monthly true-ups for all payments and charges actually accrued. * * * The debtors sought and obtained the Court's authority to assume the Alagasco Contracts in Alabama. (WestPoint Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) WHEELING-PITTSBURGH: Dispute Settlement with BOC Gets Court Nod --------------------------------------------------------------- Wheeling-Pittsburgh Steel Corporation has been working with its suppliers to determine the extent to which its existing contracts for products and services provide benefits to its estate, the extent to which such contracts require modification, and the extent to which these contracts may be assumed. One of these contracts is the Product Supply Agreement with BOC Group, Inc. dating from November 1999. The Agreement governs the purchase of oxygen, argon and nitrogen that are used in WPSC's manufacturing operations. WPSC and BOC have engaged in extensive discussions concerning possible modifications to the Product Supply Agreement and the disputes that have arisen under the existing Agreement, together with charges and payments. The Settlement The salient terms of the settlement, modification and assumption are: (1) The Product Supply Agreement will be modified to: (i) eliminate language concerning early termination; (ii) permit WPSC to dismantle the entire Oxygen Plant and Storage Facilities located in Mingo Junction without any contractual repercussions; (iii) eliminate a "virtual bullet" by permitting WPSC to suspend the minimum monthly charge six times for no more than one month each; and (iv) WPSC agrees to the minimums stated in the prepetition Agreement -- $300,000 -- with revised pricing; (2) WPSC will make six monthly payments of $329,654 per month to cover all obligations totaling $1,977,925, starting retroactively to July 2003; (3) WPSC awards BOC its Yorkville hydrogen business, and the requirements of this business will be included in meeting the contractually required minimums; (4) All payments to BOC post-confirmation will be made by check; (5) WPSC will dismiss the two pending adversary complaints against BOC with prejudice; (6) The parties exchange mutual releases of obligations other than in this Stipulation and the Product Supply Agreement as modified; and (7) WPSC assumes the Product Supply Agreement as amended. Hence, WPSC sought and obtained the Court's approval on its settlement with BOC. (Wheeling-Pittsburgh Bankruptcy News, Issue No. 45; Bankruptcy Creditors' Service, Inc., 609/392-0900) WORLD HEART: Lenders Further Stretch Loan Maturities Until Fri. --------------------------------------------------------------- World Heart Corporation's (OTCBB: WHRTF, TSX: WHT) lenders have agreed to a further extension of the maturity date of its senior and subordinated loans, from September 2, 2003 until September 12, 2003. The company is continuing to work toward completion of a financial transaction within this timeframe. World Heart Corporation, a global medical device company based in Ottawa, Ontario and Oakland, California, is currently focused on the development and commercialization of pulsatile ventricular assist devices. Its Novacor(R) LVAS (Left Ventricular Assist System) is well established in the marketplace and its next- generation technology, HeartSaverVAD(TM), is a fully implantable assist device intended for long-term support of patients with end- stage heart failure. * Cambridge Credit Launches GoodPayer.com for Consumers ------------------------------------------------------- Cambridge Credit Counseling Corp., a nonprofit credit counseling organization, announced today the launch of an educational Web site designed to inform and empower consumers with resources to help them achieve financial stability. Available at http://www.GoodPayer.comthe Web site teaches consumers about the importance of money management skills and provides tips, advice, financial calculators and timely information on a variety of personal finance topics. "The key to decreasing consumer debt in this country is through proper education of important personal finance issues," said Cambridge Credit General Manager, Chris Viale. "Through debt management seminars, monthly workshops for students, educational partnerships and now GoodPayer.com, Cambridge Credit is empowering consumers at all stages of their financial lives to practice good money management and minimize debt." The focal point of the Web site is an Educational Center where consumers can access a wealth of information on the following topics: * Budgeting Money Basics -- Calculates consumers' debt to income ratio, answers questions about taxes and offers steps to developing a spending budget for any day or around the holidays * Credit Basics -- Outlines strategies for establishing and maintaining good credit, describes credit reports and The Fair Debt Collections Practices Act and offers advice for how to communicate with credit card bill collectors * Credit Cards -- Offers definitions of credit terms, how credit works, outlines credit card protection fraud and advise for consumers looking for lower interest rates * Financial Crisis Center -- Offers resources for consumers dealing with bankruptcy, job layoffs or income reductions and for those who are having trouble making their debt payments * Kids and Money -- Gives advice for parents on how to teach their children positive money management as well as offers tips for expectant parents and those financing college educations * College Students -- Includes a link to a downloadable "College Student Debt Handbook" and highlights money saving tips, how to use credit responsibly, the basics of Federal Consolidation Loans, tips for managing your check book and how to budget * Mortgage -- Explains steps to refinance, tips for mortgage shopping, definition of Home Equity and how to prevent a foreclosure * Retirement -- Highlights how to properly plan for retirement, highlights retirement planning in your 20s, 30s and 40s, explains the definition of a Reverse Mortgage and a 401(k) Available on the Web site are financial calculators focusing on mortgages, loans, credit cards, debt retirement and other personal finance issues. In addition, GoodPayer.com houses information regarding health and auto insurance, the Soldiers and Sailors' Civil Relief Act, identity theft and car refinancing and loans. Consumers can also link to resources to help them deal with other problems that can come from the stress of excessive debt, such as Alcoholics Anonymous, Narcotics Anonymous, Gamblers Anonymous and the National Suicide Hotline. The Web site is named after Cambridge Credit's "Good Payer Program," which rewards Cambridge clients for sticking with a debt management program and consistently making payments on time. Funded with revenues called "fair share," realized by Cambridge Credit from creditors, the program has rebated over $11 Million since its inception in 1996 to clients who have maintained their monthly payments for six consecutive months. Where other credit counseling agencies keep 100 percent of fair share from credit card companies, department stores and other creditors as a source of revenue, Cambridge Credit and its affiliate companies are the only credit counseling agencies that split half, or 50 percent, of these revenues with its customers. A rebate counter is available in real-time on the site and details the total amount of money Cambridge Credit has given back to approximately 60,000 unique customers. "We are grateful to those participating creditors for their support in helping Cambridge Credit offer clients an unique incentive program such as Good Payer," said Chris Viale, General Manager of Cambridge Credit. "Our relationship with the creditor community has allowed us to maintain unprecedented client retention rates which are among the highest in the industry." GoodPayer.com plays an educational role in Cambridge Credit's "Debt Freedom Campaign," which was established in April 2003 and calls for industry leaders, trade associations, consumer groups and government to work together with the common goal of enacting pro-consumer legislation. Cambridge Credit Counseling Corp., a 501(C)(3) Not-for-Profit corporation, provides credit counseling, educational assistance and budget planning services to clients throughout the United States. Since its incorporation in 1996, Cambridge Credit has assisted over 180,000 consumers nationwide and enrolls approximately 6,000 consumers a month into its credit counseling program. Cambridge Credit is ISO 9001 registered and accepted worldwide. For more information about Cambridge Credit, visit http://www.cambridge-credit.org * BOND PRICING: For the week of September 8 - 12, 2003 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 9.875% 03/01/07 68 Adelphia Communications 10.875% 10/01/10 68 Advantica Restaurant 11.250% 01/15/08 46 American & Foreign Power 5.000% 03/01/30 65 American Airline 10.850% 03/15/08 65 American Airline 10.850% 03/15/08 64 AMR Corp. 9.000% 08/01/12 74 AMR Corp. 9.000% 09/15/16 73 AnnTaylor Stores 0.550% 06/18/19 68 Aurora Foods 9.875% 02/15/07 55 Burlington Northern 3.200% 01/01/45 53 Burlington Northern 3.800% 01/01/20 74 Calpine Corp. 7.875% 04/01/08 74 Cincinnati Bell Telephone 6.300% 12/01/28 74 Coastal Corp. 6.950% 06/01/28 71 Coastal Corp. 7.420% 02/15/37 74 Collins & Aikman 11.500% 04/15/06 74 Comcast Corp. 2.000% 10/15/29 30 Conseco Inc. 8.500% 10/15/49 42 Conseco Inc. 9.000% 10/15/06 43 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 33 Crown Cork & Seal 7.500% 12/15/96 74 Cummins Engine 5.650% 03/01/98 66 DDI Corp. 5.250% 03/01/08 6 Delta Air Lines 8.300% 12/15/29 67 Elwood Energy 8.159% 07/05/26 70 GB Property Funding 11.000% 09/29/05 66 Greyhound Lines 11.500% 04/15/07 69 Gulf Mobile Ohio 5.000% 12/01/56 64 IMC Global Inc. 7.300% 01/15/28 74 International Wire Group 11.750% 06/01/05 55 JL French Auto 11.500% 06/01/09 52 Level 3 Communications Inc. 6.000% 09/15/09 60 Level 3 Communications Inc. 6.000% 03/15/10 58 Liberty Media 3.500% 01/15/31 72 Liberty Media 3.750% 02/15/30 58 Liberty Media 4.000% 11/15/29 60 Lucent Technologies 6.450% 03/15/29 68 Lucent Technologies 6.500% 01/15/28 68 Mirant Americas 8.300% 05/01/11 74 Mirant Corp. 5.750% 07/15/07 46 Mission Energy 13.500% 07/15/08 58 Missouri Pacific Railroad 4.750% 01/01/20 74 Missouri Pacific Railroad 4.750% 01/01/30 70 Missouri Pacific Railroad 5.000% 01/01/45 62 NGC Corporation 7.125% 05/15/18 72 Northern Pacific Railway 3.000% 01/01/47 50 Northwest Airlines 7.875% 03/15/08 75 NTL Communications Corp. 7.000% 12/15/08 19 Redback Networks 5.000% 04/01/07 34 Salomon SB Holdings 0.250% 02/18/10 74 Spacehab Inc. 8.000% 10/15/07 62 US Timberlands 9.625% 11/15/07 57 US West Capital Funding 6.875% 07/15/28 74 Worldcom Inc. 6.400% 08/15/05 30 Worldcom Inc. 7.750% 04/01/07 29 Xerox Corp. 0.570% 04/21/18 65 ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***