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/raid1/www/Hosts/bankrupt/TCR_Public/030922.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 22, 2003, Vol. 7, No. 187 Headlines ACTERNA: S.D.N.Y. Court Approves Sale of Itronix to Golden Gate ACTIVE LINK COMM: Voluntary Chapter 7 Case Summary AE SUPPLY: Pays Williams Initial $100M to Terminate Tolling Pact AIR CANADA: Discloses Compensation to Retained Professionals AK STEEL: Names James L. Wainscott Acting Chief Exec. Officer ALAMOSA: Sets Conference Call Today to Discuss Exchange Offer ALARIS MEDICAL: Signs New Five-Year Contract with Premier Inc. ALPHARMA: Court Backs Challenge to Competitive Product Claims AMERCO: U.S. Trustee Appoints Equity Security Holders Committee AMR CORP: S&P Assigns Junk CCC Rating to $300MM Sr. Unsec. Notes ANTARES PHARMA: Hosting Conference Call Today at 2:00 p.m. ARGO-TECH: Affirmed B+ Corp. Credit Rating Placed on Watch Neg. ARMSTRONG HLDGS: Wants Court Nod for Further DIP Loan Amendment AVOTUS: RoyNat Capital Acquires Additional 7.18% Equity Stake BAUSCH & LOMB: Zarrella Will Present at UBS Conference Today BETHLEHEM STEEL: Solicitation Exclusivity Extended to October 31 BEVERLY ENTERPRISES: Plans to Enter into $225MM Credit Facility BEVERLY ENTERPRISES: S&P Assigns BB Rating to $225M Secured Loan BEVERLY ENTERPRISES: Fitch Rates New Sr. Secured Facility at BB BIOMERICA INC: Needs Additional Financing to Continue Operations BNS CO.: Brings-In Legacy Partners as Investment Advisors CD WORLD: Trans World to Acquire Assets for $1.8 Million CHASE COMM'L: Fitch Affirms Various Series 1999-2 Note Ratings CHOICE ONE: Forms Multi-Year Agreement With New England Patriots COMMSCOPE INC: Introduces New Enterprise Design Guide CONE MILLS: Shareholders' Committee Wins ISS Support COPYTELE: Accumulated Deficit Raises Going Concern Uncertainty COVANTA ENERGY: Overview of Ogden's Joint Liquidating Plan CROWN CASTLE: Gets S&P's B- Rating for Planned $1.6B Facility ECHOSTAR COMMS: DBS Unit Commences $1.5BB Senior Note Offering ECHOSTAR DBS: S&P Rates Proposed $1.5 Bill. Senior Notes at BB- ELECTROPURE: July 31 Working Capital Deficit Tops $1.8 Million ENRON CORP: Court Clears ECT's $11.75M Aircraft Sale to JLT ENRON CORP: Files Amended Chapter 11 Plan with Bankruptcy Court EQUITY INNS: Declares Third Quarter Share & Preferred Dividends FIRST UNION: S&P Hatchets Three Note Classes to Default Level FIRST VIRTUAL COMMS: Hires David Weinstein as VP of Marketing GENESIS HEALTH: John Arlotta Named to Lead NeighborCare Inc. GENOIL INC: Issuing 686K Shares to Close Creditor Settlements GENTEK INC: Has Until October 8 to Solicit Acceptances of Plan GENUITY INC: Disclosure Statement Hearing Convening on Sept. 30 GILAT SATELLITE: Will Purchase All Shares of rStar Corporation GILAT SATELLITE: rStar Receives Notice of Gilat's Purchase Offer HANGER ORTHOPEDIC: Elects Cynthia L. Feldmann to Board of Direc. HARRAH'S: Fitch Affirms BB+ Rating over Horshoe Gaming Buy-Out HOLLYWOOD ENTERTAINMENT: Will Publish Q3 Results on October 13 IFCO SYSTEMS: Proposes Placement of 110 Million Euro Bond IMP INC: Files for Chapter 11 Protection in N. California Court IMP INC: Voluntary Chapter 11 Case Summary INFORMATION ARCHITECTS: Perceptre Independently Valued at $10MM INTEGRATED DEFENSE: S&P Affirms BB- Corporate Credit Rating INTERMET: Weaker-Than-Expected Cash Flow Spurs S&P to Keep Watch INTEGRATED HEALTH: Plan Declared Effective on September 9, 2003 INTERPOOL INC: Will Pay Cash Dividend on Common Stock on Oct. 15 KAISER ALUMINUM: Obtains Nod to Hire Charles River as Consultant LEGACY HOTELS: Will Participate in Scotia Conference on Wed. LENNOX INT'L: Will Present at Morgan Stanley Conference Tomorrow MAJESTIC STAR: Amends Consent Solicitation & Notes Tender Offer MARYLEBONE ROAD: Class A-3 Rating Cut to Speculative Grade Level MORRIS PUBLISHING: Reports Improved Second Quarter Performance MEDICALCV INC: Seeking Additional Financing to Fund Future Ops. MERITAGE CORP: Prices Add-On Offering of 9.75% Senior Notes MERRILL LYNCH: S&P Downgrades Class F Notes Rating a Notch to B- NAT'L CENTURY: Seeks Clearance for Garland Settlement Agreement NAT'L CONSTRUCTION: Feb. 28 Net Capital Deficit Widens to C$920K NEXTEL COMMS: Will Redeem All 9.75% and 12% Redeemable Notes N-VIRO INTERNATIONAL: Red Ink Continued to Flow in 2nd Quarter PG&E NAT'L: Court Okays Reed Smith as USGen Committee's Counsel PHILIP SERVICES: Commences CCAA Filing as Part of Reorg. Plan PRIME HOSPITALITY: Will Release 3rd Quarter Earnings on Oct. 30 PRUDENTIAL SECURITIES: Fitch Affirms Low-B Ratings on 4 Classes QWEST COMMUNICATIONS: Provides Update on GSA Review Process RELIANCE: Wants Plan Filing Exclusivity Extended Until Dec. 31 SK GLOBAL: Wants Lease Decision Period Extended to December 22 SOLECTRON: Affirms Q4 Results to Reflect Discontinued Operations SOUTH STREET CBO: S&P Takes Rating Actions on 1999-1 Notes TENFOLD CORP: Automates CardioTrac Data Quality Management TOYS 'R' US: $400 Million Notes Issue Gets Speculative Rating TYCO INT'L: Will Pay Regular Quarterly Dividend on Nov. 1, 2003 UNITED AIRLINES: Unsecured Committee Hires Wolff as ATSB Counsel U.S. STEEL: Realigns Corporate Administrative Functions VIDEO CITY: Fails to Beat Form 10-QSB Filing Deadline WCI STEEL: Receives Court Approval of First Day Motions WESTERN WIRELESS: Agrees to Acquire HickoryTech Wireless Assets WILLIAMS: Allegheny Pays Initial $100MM for Contract Termination WORLDCOM INC: Obtains Approval to Employ Deloitte as Consultant ZI CORPORATION: Provides Update on Company Ownership * President Urged to Maintain Steel Safeguard for Full 3 Years * BOND PRICING: For the week of September 22 - 26, 2003 ********* ACTERNA: S.D.N.Y. Court Approves Sale of Itronix to Golden Gate --------------------------------------------------------------- Acterna Corporation announced that the U.S. Bankruptcy Court for the Southern District of New York has approved the previously announced sale of its subsidiary, Itronix Corporation, to Golden Gate Capital for $40 million in cash plus the assumption of certain liabilities. Acterna anticipates that the sale transaction will close within the next two weeks. "The Bankruptcy Court's approval of the Itronix sale represents another important step forward for Acterna, its dedicated employees and customers," said John Peeler, Acterna's president and CEO. "Proceeds from this transaction, together with cash on hand, provide Acterna with ample liquidity to fund its operations and serve its customers upon emergence from chapter 11 in early October." Miller Buckfire Lewis Ying & Co., LLC, financial advisor to Acterna, advised on the transaction. Weil, Gotshal & Manges LLP provided legal counsel. Based in Germantown, Maryland, Acterna Corporation (OTCBB: ACTRQ.OB) is the holding company for Acterna, da Vinci Systems and Itronix. Acterna is the world's second largest communications test and measurement company. The company offers instruments, systems, software and services used by service providers, equipment manufacturers and enterprise users to test and optimize performance of their optical transport, access, cable, data/IP and wireless networks and services. da Vinci Systems designs and markets video color correction systems to the video postproduction industry. Itronix sells ruggedized computing devices for field service applications to a range of industries. Additional information on Acterna is available at http://www.acterna.com Itronix is a world-class developer of wireless, rugged computing solutions for mobile workers, which distinguishes itself in the market through its superior implementation capabilities and supporting services. Itronix has a full range of wireless field computing systems, from handhelds, to laptops to tablet PCs, in addition to providing award-winning iCare(TM) Implementation Services that range from project planning and management to first- line help desk support. Itronix serves mobile workers in markets such as commercial field service, telecommunications, utilities, insurance, government, public safety, and meter reading. Itronix's worldwide headquarters are located in Spokane, Washington. The corporation's European operations, Itronix Ltd., are located in Coventry, U.K., with sales operation offices in Frankfurt, Germany and Paris, France. Additional information is available on the Itronix web site at http://www.itronix.com ACTIVE LINK COMM: Voluntary Chapter 7 Case Summary -------------------------------------------------- Debtor: Active Link Communication Inc. 1840 Centre Point Circle Naperville, Illinois 60563 dba Communications World International Inc. Bankruptcy Case No.: 03-37869 Type of Business: The Debtor operates a distribution network for telecommunications products and sevices through franchises under the CommWorld name and company- owned outlets. Chapter 7 Petition Date: September 15, 2003 Court: Northern District of Illinois (Chicago) Judge: John H. Squires Debtor's Counsel: Mark E. Leipold, ESq. Gould & Ratner 222 N Lasalle St #800 Chicago, IL 60601 Tel: 312-236-3003 Total Assets: $828,000 Total Debts: $15,375,000 AE SUPPLY: Pays Williams Initial $100M to Terminate Tolling Pact ---------------------------------------------------------------- Allegheny Energy Supply Company, LLC, a subsidiary of Allegheny Energy, Inc. (NYSE: AYE), and its Allegheny Trading Finance unit today paid the initial $100-million installment under an agreement to terminate its 1,000-megawatt (MW) tolling agreement with Williams Power Company, Inc., a unit of Williams (NYSE: WMB). The termination of this tolling agreement, along with the recently completed sale of ATF's energy supply contract with the California Department of Water Resources and the termination of a second tolling agreement, are part of Allegheny's strategy to exit the western energy markets and refocus on its core assets. As previously announced on August 1, 2003, Allegheny will suspend payments under the Williams tolling agreement as of this initial payment. Following the initial payment, Allegheny will pay Williams two $14-million installments -- one 6 months after the initial payment and the other 12 months after the initial payment. Termination of the tolling agreement will occur when the final $14-million payment is made. Allegheny Energy (Fitch, BB-/B+/B Bank Facility Ratings, Evolving) is an integrated energy company with a balanced portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities and supplies energy and energy-related commodities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about three million people in Maryland, Ohio, Pennsylvania, Virginia, and West Virginia. More information about the Company is available at http://www.alleghenyenergy.com AIR CANADA: Discloses Compensation to Retained Professionals ------------------------------------------------------------ Sharon Hamilton, Vice President of Ernst & Young Inc., reports the estimate of accrued and unpaid fees and disbursements to Air Canada professionals as of July 15, 2003: Professional Function Total Fees ------------ -------- ---------- Ernst & Young Inc. Monitor C$643,620 Lenczner Slaght Royce Counsel to the Monitor C$87,718 Smith Griffin Stikeman Elliott Counsel to Air Canada C$586,966 Blank Rome U.S. counsel to Monitor $10,569 Willkie Farr & Gallagher U.S. counsel to Air Canada $20,200 The Monitor is not aware of any actual or threatened lawsuits against the firms in their Air Canada CCAA professional capacity, Ms. Hamilton tells Mr. Justice Farley. (Air Canada Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 609/392- 0900) AK STEEL: Names James L. Wainscott Acting Chief Exec. Officer ------------------------------------------------------------- AK Steel Holding Corporation (NYSE: AKS) said that by mutual agreement with the company's board of directors, Richard M. Wardrop, Jr., chairman and CEO, and John G. Hritz, president, have resigned from their positions with the company, effective immediately. The board said it had named James L. Wainscott, 46, acting CEO, effective immediately. Mr. Wainscott is senior vice president and CFO for AK Steel. Mr. Wainscott joined the company in 1995 as vice president and treasurer. AK Steel said that its board has formed an executive committee, comprised of independent directors Robert H. Jenkins, Lawrence A. Leser and Eugene A. Renna. The committee, which will be chaired by Mr. Jenkins, will provide corporate oversight and facilitate interaction with executive management. Mr. Jenkins also said the board of directors has begun the search for a new CEO, led by board member Donald V. Fites with the assistance of an executive search firm. "The board appreciates Dick's leadership of AK Steel over the last decade, during which time he led the company to industry leadership in virtually every significant measure. Likewise, John has served AK Steel and its predecessors since 1989, providing valuable leadership and enormous dedication to the organization," said Mr. Jenkins. "The board simply believes that now is the time for a new perspective to address the company's current challenges," Mr. Jenkins continued. "Despite continuing difficult market conditions, the board of directors believes AK Steel is a strong franchise with outstanding products, solid customer relationships and a talented management team. We are extremely confident in Jim Wainscott's leadership stepping into the acting CEO role during this important time," he said. "We have already taken many positive actions to address the challenges we face, and I look forward to the support of the entire organization in returning AK Steel to a level of performance commensurate with our potential," said Mr. Wainscott. AK Steel produces flat-rolled carbon, stainless and electrical steel products for automotive, appliance, construction and manufacturing markets, as well as tubular steel products. The company has about 10,000 employees in plants and offices in Middletown, Coshocton, Mansfield, Walbridge and Zanesville, Ohio; Ashland, Kentucky; Rockport and Columbus, Indiana; and Butler, Pennsylvania. In addition, the company produces snow and ice control products and operates an industrial park on the Houston, Texas ship channel. As reported in Troubled Company Reporter's July 24, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit ratings on integrated steel producer AK Steel Corp., and its parent, AK Steel Holding Corp., to 'B+' from 'BB-' based on the company's weaker than expected financial performance. The current outlook is negative. Middleton, Ohio-based AK Steel has about $1.3 billion in total debt. ALAMOSA: Sets Conference Call Today to Discuss Exchange Offer ------------------------------------------------------------- Alamosa Holdings, Inc. (OTC Bulletin Board: ALMO), the largest (based on number of subscribers) PCS Affiliate of Sprint (NYSE: FON PCS), which operates the largest all-digital, all-CDMA Third- Generation (3G) wireless network in the United States, announced the Company's senior management will hold a conference call today, at 4:30 p.m. Eastern, to discuss Alamosa's exchange offer for its public indebtedness which commenced on September 12, 2003. Alamosa management will make a brief presentation and hold a brief question and answer session for investors following their remarks. Conference Call Details Alamosa has scheduled a conference call, which will be broadcast live over the Internet, on Monday, September 22, 2003, at 4:30 p.m. Eastern Time. Alamosa will post the management presentation on its web site at 3:00 p.m. Eastern Time on Monday, September 22, 2003. Investors, analysts and the general public will also have the opportunity to listen to the conference call free over the Internet by visiting the company's Web site at http://www.alamosapcs.comor http://www.companyboardroom.com To listen to the live call online, please visit the Web site at least 15 minutes early to register, download and install any necessary audio software. A replay of the conference call and presentation will be available through midnight on October 10, 2003, on the Company's web site. A telephonic replay will be available beginning at 8:30 p.m. on September 22, 2003, by dialing 888-203-1112 and entering the passcode #563299. Alamosa Holdings, Inc. is the largest PCS Affiliate of Sprint based on number of subscribers. Alamosa has the exclusive right to provide digital wireless mobile communications network services under the Sprint brand throughout its designated territory located in Texas, New Mexico, Oklahoma, Arizona, Colorado, Utah, Wisconsin, Minnesota, Missouri, Washington, Oregon, Arkansas, Kansas, Illinois and California. Alamosa's territory includes licensed population of 15.8 million residents. Sprint operates the largest, 100-percent digital, nationwide wireless network in the United States, serving more than 4,000 cities and communities across the country. Sprint has licensed PCS coverage of more than 280 million people in all 50 states, Puerto Rico and the U.S. Virgin Islands. In August 2002, Sprint became the first wireless carrier in the country to launch next generation services nationwide delivering faster speeds and advanced applications on PCS Vision Phones and devices. For more information on products and services, visit http://www.sprint.com/mr PCS is a wholly-owned tracking stock of Sprint Corporation trading on the NYSE under the symbol "PCS." Sprint is a global integrated communications provider serving more than 26 million customers in over 100 countries. With approximately 70,000 employees worldwide and nearly $27 billion in annual revenues, Sprint is widely recognized for developing, engineering and deploying state-of-the art network technologies. As reported in the Troubled Company Reporter's September 18, 2003 edition, Standard & Poor's Ratings Services lowered its ratings on Alamosa Holdings Inc. (an affiliate of Sprint PCS) and related entities following the company's announcement of its financial restructuring plan. All ratings for Alamosa were placed on CreditWatch with negative implications. The corporate credit rating on Alamosa is 'CC'. The actions are based on Alamosa's proposed financial restructuring plan, which includes an offer to exchange $650 in new senior notes and $250 in convertible preferred stock for $1,000 in accreted value of all of the company's existing bonds. The deal also proposes a prepackaged Chapter 11 reorganization plan that would be executed if at least 97% of bondholders do not consent to the exchange offering. In the event of a Chapter 11 reorganization, bondholders are expected to receive the same consideration as in the previously described exchange offer. ALARIS MEDICAL: Signs New Five-Year Contract with Premier Inc. -------------------------------------------------------------- ALARIS Medical Systems Inc. (AMEX:AMI) has signed a five-year, multisource contract with Premier Inc., one of the nation's largest healthcare alliances. This new contract extends the company's existing and long-standing supply relationship with Premier and will include medication safety systems, including the company's market-leading Medley(TM) Medication Safety System with its Guardrails(R) Safety Software. The new contract takes effect on Feb. 1, 2004 with the expiration of the contract currently in place between ALARIS Medical Systems and the more than 1,500 hospitals included in the Premier buying alliance. The contract includes the newest additions to the Medley(TM) System, the Medley(TM) Syringe Module, the Guardrails(R) Clinical Advisories feature and advanced data reporting capabilities. In addition, the contract includes ALARIS Medical Systems' Signature Edition(R) GOLD Infusion System, as well as associated dedicated and non-dedicated disposable products. The Medley(TM) Syringe Module provides precise delivery of concentrated drugs. With the addition of the Medley(TM) Syringe Module, ALARIS Medical Systems is the only provider of error- prevention software in a modular point-of-care computer system that includes syringe delivery, large volume infusion therapy and monitoring in a single platform. In addition to the Medley(TM) Syringe Module, the new Premier contract includes the Guardrails(R) Clinical Advisories feature. This provides clinical messages that appear on the Medley(TM) System screen and provide additional information, customized by the institution, on the safe infusion of selected drugs. This and other unique features of the Medley(TM) Medication Safety System and the Guardrails(R) Safety Software provide hospitals and health care systems with a comprehensive medication error reduction infusion system to help them reduce the potential for patient harm. ALARIS Medical Systems Inc. (S&P/BB-/Positive), develops practical solutions for medication safety. The company designs, manufactures and markets intravenous medication delivery and infusion therapy devices, needle-free disposables and related monitoring equipment in the United States and internationally. ALARIS Medical Systems' proprietary Guardrails(R) Safety Software, its other "smart" technologies and its "smart" services help to reduce the risks and costs of medication errors, help to safeguard patients and clinicians and also gather and record clinical information for review, analysis and transcription. The company provides its products, professional and technical support and training services to over 5,000 hospital and health care systems, as well as alternative care sites, in more than 120 countries through its direct sales force and distributors. With headquarters in San Diego, ALARIS Medical Systems employs approximately 2,900 people worldwide. Additional information on the company can be found at http://www.alarismed.com ALPHARMA: Court Backs Challenge to Competitive Product Claims ------------------------------------------------------------- Alpharma Inc. announced that a recent federal court judgment supports an earlier finding by the Food & Drug Administration that the FDA has no record of approval for certain product claims made by PennField Oil Co. for its bacitracin methylene disalicylate product, a medicated feed additive for livestock and poultry. Alpharma is the sole manufacturer of bacitracin methylene disalicylate, sold under the registered trademark BMD, in the U.S. market entitled to make the full range of FDA-approved claims for performance important to producers of swine and poultry. Earlier this year, Alpharma sued the FDA in the U.S. District Court for the District of Maryland over the scope of label claims PennField is making for its product. "Alpharma sees this swift federal court action supporting the FDA's limit on the claims our competitor can make as an important victory, not only for our proprietary, fully FDA-approved product, but more importantly for our customers, who deserve and expect accurately and legally labeled animal health products," said Carol Wrenn, President, Alpharma Animal Health. "We are confident that FDA and state feed control regulators will take all appropriate enforcement actions against improperly labeled products in the marketplace based on this court decision and recent FDA actions," she said. Alpharma Inc. (NYSE: ALO) (S&P, BB- Corporate Credit and Senior Secured Debt Ratings) is a growing specialty pharmaceutical company with expanding global leadership positions in products for humans and animals. Uniquely positioned to expand internationally, Alpharma is presently active in more than 60 countries. Alpharma is the #5 manufacturer of generic pharmaceutical products in the U.S., offering solid, liquid and topical pharmaceuticals. It is also one of the largest manufacturers of generic solid dose pharmaceuticals in Europe, with a growing presence in Southeast Asia. Alpharma is among the world's leading producers of several important pharmaceutical-grade bulk antibiotics and is internationally recognized as a leading provider of pharmaceutical products for poultry, swine, cattle, and vaccines for farmed-fish worldwide. AMERCO: U.S. Trustee Appoints Equity Security Holders Committee --------------------------------------------------------------- Pursuant to Section 1102 of the Bankruptcy Code, William T. Neary, U.S. Trustee for Region 17, appoints these equity security holders the Official Committee of Equity Security Holders of AMERCO's Chapter 11 cases: 1. Heartland Advisors, Inc. 789 N. Water Street Milwaukee WI 53202 414-347-7777/fax 414-347-0937 Represented by: Eric Miller -- Chairman 2. Summit Capital Management, LLC 601 Union Street, Suite 3900 Seattle, WA 98101 206-467-1268/fax 206-447-6204 Represented by: Matt Rudolf 3. AMERCO Employee Savings, Profit Sharing and Employee Stock Ownership Plan c/o Kenneth B. Segel 9 Washington Square Albany, NY 12205 518-452-0941/fax 518-452-0417 Represented by: Peter Landis (AMERCO Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 609/392-0900) AMR CORP: S&P Assigns Junk CCC Rating to $300MM Sr. Unsec. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to AMR Corp.'s (B-/Negative/--) $300 million 4.25% senior unsecured convertible notes due 2023, a Rule 144a offering. "Issuance of the convertible notes bolsters further AMR's liquidity, with unrestricted cash now estimated at over $2.5 billion, more than double the level in April 2003, when the company nearly filed for bankruptcy," said Standard & Poor's credit analyst Philip Baggaley. AMR and its principal operating subsidiary, American Airlines Inc. (B-/Negative/--), were upgraded to current levels June 20, 2003, based on expected earnings and cash flow improvement as a result of the April 2003 cost-saving agreements with American's labor groups. AMR remains highly leveraged and vulnerable to any further airline industry revenue deterioration, but near-term liquidity is much improved. The annual $1.8 billion of labor concessions over five years and about $200 million of added concessions from suppliers and private lessors and creditors will materially improve American's operating cost structure, narrowing the airline's losses and restoring modestly positive operating cash flow over the next several quarters. AMR reported a second-quarter pretax loss, before special items (mostly a credit for federal airline aid) of $357 million, about half the $720 million pretax loss in the second quarter of 2002. Operating results improved sharply during the quarter, driven by a recovery in traffic as the Iraq war wound down and the phasing in of labor cost concessions. Cost per available seat mile improved sharply for American, to 9.5 cents in June from about 11 cents in April. Still, the airline continues to face a weak revenue environment and AMR carries a consolidated total of $22 billion of debt and leases plus $6 billion of unfunded pension and retiree medical obligations, leaving the companies' financial condition improved but still fragile. The labor and supplier savings are in addition to an ongoing program to lower other, nonlabor costs by an eventual $2 billion annually (for a total of about $4 billion of financial improvements), compared with pre-Sept. 11, 2001, expenses. Management states that about $900 million of these additional $2 billion of nonlabor savings were already reflected in 2002 results, and acknowledges that cost inflation will offset part of the expected future savings. AMR's financial turnaround is dependent on an expected gradual improvement in airline industry revenues, but a further setback caused by terrorism or other events could place renewed pressure on liquidity and prompt a downgrade. ANTARES PHARMA: Hosting Conference Call Today at 2:00 p.m. ---------------------------------------------------------- Antares Pharma, Inc. (OTC Bulletin Board: ANTR) announced that it would host a conference call for investors and analysts today, at 2:00 p.m. (Eastern time). Antares Pharma has recently announced new financing for the Company, the conversion of all debt into Company stock, and the signing of a technology license agreement with a global pharmaceutical company. The conference call will position these changes in relation to the Company's business model, technology platforms, future strategy and financial plans. Dr. Roger G. Harrison, CEO and President, and Lawrence M. Christian, CFO, of the Company, will host the call. Analysts and investors can participate in the conference call by dialing 877-407-9205 (201-689-8054 for international parties). Other interested parties can access a live audio-only Web broadcast through a link that will be posted on Antares Pharma's Web site at http://www.antarespharma.com Replay of the Web broadcast will be available until November 23, 2003. Replay via telephone is also available until September 29, 2003, by dialing 877-660-6853 (201-612-7415 for international parties). Both the account number (1628) and the confirmation number (77129) are required for telephonic playback. Antares Pharma -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $6 million -- 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. ARGO-TECH: Affirmed B+ Corp. Credit Rating Placed on Watch Neg. --------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'B+' corporate credit rating, on aerospace supplier Argo-Tech Corp. and removed them from CreditWatch, where they were placed on March 18, 2003. The outlook is negative. "The affirmation reflects a stabilized, albeit weak, financial profile and a growing military business mitigating the impact of the weak commercial aerospace market," said Standard & Poor's credit analyst Christopher DeNicolo. The ratings on Cleveland, Ohio-based Argo-Tech reflect participation in the cyclical commercial aerospace industry and high financial risk due to a sizable debt load. Those factors overshadow the company's established positions in niche markets and solid profit margins. The firm is the world's largest supplier of main engine fuel pumps, which are used in approximately two- thirds of large commercial aircraft in service. Argo-Tech also has leading positions in commercial and military airframe fuel pumps and valves, aerial refueling components installed on U.S. military aircraft, and components for ground fueling systems for major commercial airports. The firm derives around half of its revenues from the higher- margin aftermarket, which is still being affected by the stalled recovery in air traffic. In the wake of the Sept. 11, 2001, events, a soft global economy, SARS, and the war in Iraq, the most pronounced adverse effect has been on orders and deliveries of new jetliners, which is not expected to improve until 2006. However, this segment represents less than 15% of the company's revenues. A growing military business and increasing contributions from industrial activities partly offset the commercial aerospace revenue declines, but at lower margins. Future growth programs for Argo-Tech include Boeing's 767 aerial refueling tanker and its proposed 7E7 airliner, if these programs proceed as expected. Although revenue and earnings have been adversely affected by difficult conditions in the airline and commercial aircraft sectors, cost-reduction initiatives have enabled Argo-Tech to maintain operating margins in the mid-20% range. In addition, despite the pressure on earnings, the company has been able to repay over $30 million in debt since October 2001. In the near term, Standard & Poor's expects debt to EBITDA to be around 6x, with EBITDA and EBIT interest coverages around 2.0x and 1.5x, respectively. Improvement in credit protection measures is dependant on the recovery in the commercial aviation market, especially demand for aftermarket parts and services. A difficult operating environment, coupled with a heavy debt burden and somewhat constrained liquidity, will challenge management to strengthen credit protection measures to a level consistent with current expectations. Failure to do so could lead to a downgrade. ARMSTRONG HLDGS: Wants Court Nod for Further DIP Loan Amendment --------------------------------------------------------------- Debtors Armstrong World Industries, Inc., Nitram Liquidators, Inc., and Desseaux Corporation of North America, ask Judge Newsome to approve a further amendment of the Revolving Credit and Guaranty Agreement with JPMorgan Chase Bank, formerly known as The Chase Manhattan Bank, as agent for itself and a syndicate of financial institutions. The Debtors also seek the Court's permission to pay the Lenders' fees in connection with the amendment. Rebecca L. Booth, Esq., recounts that the parties previously agreed to amend the DIP Facility to lower the commitment from $400 million to $75 million, eliminate the revolving credit borrowing feature and limit the commitments under the DIP Facility to issuances of letters of credit, eliminate unnecessary reporting, reduce the administrative fees charged by JPMorgan Chase, and extend the Maturity Date to December 8, 2003. Ms. Booth reports that, as of June 30, 2003, AWI had $192.6 million in cash and cash equivalents, excluding cash held by its non-debtor subsidiaries. In the ordinary course of business, AWI has asked the Lenders from time to time to issue standby and import documentary letters of credit. Currently, standby letters of credit in the aggregate face amount of approximately $31.7 million have been issued. AWI believes that cash on hand and generated from operations and dividends from its subsidiaries, together with lines of credit and the DIP Facility, will be adequate to address its foreseeable liquidity needs -- but because the Lenders are not required to issue letters of credit that expire after the present Maturity Date, AWI must extend the Maturity Date for it to continue to be able to post letters of credit in the ordinary course of its business. The New Maturity Date -- December 2004 AWI as Borrower, Nitram and Desseaux as Guarantors, and the Lenders, led by JPMorgan Chase, agree to extend the Maturity Date to December 8, 2004, and to sign an amended Fee Letter. The Fees Under the amended Fee Letter, AWI will pay JPMorgan Chase for its own account and for the account of each bank participant an amendment fee in an amount equal to 1/10 of 1% of the Commitment of each Lender; provided, however, that AWI will only become obligated to pay the fee if AWI's Plan has not been confirmed by April 30, 2004. Under a separate amended fee letter with JPMorgan Chase, AWI will pay $50,000 as consideration for arrangement of the amendment, but again, AWI will only become obligated to pay the fee if AWI's Plan has not been confirmed by April 30, 2004. (Armstrong Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 609/392- 0900) AVOTUS: RoyNat Capital Acquires Additional 7.18% Equity Stake ------------------------------------------------------------- RoyNat Capital Inc. purchased an aggregate of 1,118,750 common shares of Avotus Corporation (TSX VEN: AVS) at a price of $0.10 per common share from another party by private agreement on September 8, 2003. The 1,118,750 common shares acquired by RoyNat represent approximately 7.18% of the issued and outstanding common shares of Avotus. Prior to the transaction, RoyNat owned 709,592 common shares, representing approximately 4.56% of the issued and outstanding common shares. In addition, RoyNat owns $750,000 aggregate principal amount of series A convertible debentures of Avotus and $913,161 aggregate principal amount of series B convertible debentures of Avotus. According to the interim financial statements of Avotus for the period ended June 30, 2003, there is outstanding $6,000,000 aggregate principal amount of Series A Debentures and $2,113,161 aggregate principal amount of Series B Debentures, the outstanding Debentures not held by RoyNat are held by a party unrelated to RoyNat, and the Other Debentureholder has an option to invest in Series B Debentures an additional aggregate principal amount of up to $4,800,000. The Debentures held by RoyNat were issued by Avotus to RoyNat on April 21, 2003, have a term of three years (subject to extension for a further two years at RoyNat's option), do not bear interest, may be demanded by RoyNat at any time, and are convertible into either common shares of Avotus or series A preferred shares of Avotus, which are then convertible into common shares of Avotus, at a price equal to the greater of (i) $0.16 per share and (ii) the lesser of (a) the market price of the common shares at the time of conversion and (b) $0.16 per share for the first two years of the term, increasing by 10% per share in each of the following years. On the date hereof, the Debentures held by RoyNat are convertible into an aggregate of 10,394,756 common shares and the Debentures held by the Other Debentureholder are convertible into an aggregate of 40,312,500 common shares. As a result of RoyNat's acquisition of 1,118,750 common shares, RoyNat owns 1,828,342 common shares, representing approximately 11.74% of the issued and outstanding common shares of Avotus as of September 8, 2003. Giving effect to the conversion of the Debentures held by RoyNat into an additional 10,394,756 common shares (but not the conversion of any other securities issued by Avotus), RoyNat would own, as a result of its acquisition of 1,118,750 common shares, a total of 12,223,098 common shares, representing approximately 47.07% of the then issued and outstanding common shares of Avotus. Giving effect to the conversion of the Debentures held by each of RoyNat and the Other Debentureholder (but not the conversion of any other securities issued by Avotus), RoyNat would own, as a result of its acquisition of 1,118,750 common shares, common shares representing approximately 18.44% of the then issued and outstanding common shares of Avotus. The common shares of Avotus were acquired for investment purposes. RoyNat does not currently intend to acquire additional shares of Avotus. RoyNat's investment in the Debentures and common shares of Avotus will be reviewed on a continuing basis and such holdings may be increased or decreased in the future. RoyNat Capital Inc., an indirect wholly owned subsidiary of the Bank of Nova Scotia, was founded in 1962 and today is Canada's leading merchant bank that specializes in building successful mid- sized companies with solution-based merchant banking services. * * * As previously reported, the Company retained the services of the investment banking firm Sokoloff & Company to assist the management team and Board of Directors in exploring a full range of strategic options for the Company. Avotus' goal is to enhance business value through a potential strategic alliance, through joint venture, merger, acquisition or otherwise. "Avotus' business strategy is to broaden our product line in the wireless and Voice over IP markets. At the same time as we are exploring our financing options, we want to look at all strategic options to grow our business and strengthen our competitive advantage" said Fred Lizza, President and CEO of Avotus. "Over the past several quarters, Avotus has streamlined its operations, increased financial efficiencies across all levels of the organization and generated profits from operations. These accomplishments have been significant, especially when viewed against a backdrop of challenging global economic conditions and the volatile state of the telecommunications marketplace in which Avotus competes. Based on these facts, we believe it is appropriate for Avotus to explore all strategic options available to broaden the market penetration of our communications cost management applications, increase revenues and accelerate our strategy to achieve profitability and sustained long term growth," said Lizza. BAUSCH & LOMB: Zarrella Will Present at UBS Conference Today ------------------------------------------------------------ Bausch & Lomb (NYSE:BOL) Chairman and Chief Executive Officer Ronald L. Zarrella will present an overview of the Company's operations at the UBS Global Life Sciences Conference in New York City today. The presentation will be available on the Investor Relations page of the Company's Web site -- http://www.bausch.com-- after the conference. Bausch & Lomb (Moody's, Ba1 Senior Notes Rating) is the eye health company, dedicated to perfecting vision and enhancing life for consumers around the world. Its core businesses include soft and rigid gas permeable contact lenses and lens care products, and ophthalmic surgical and pharmaceutical products. The Bausch & Lomb name is one of the best known and most respected healthcare brands in the world. Celebrating its 150th anniversary in 2003, the Company is headquartered in Rochester, New York. Bausch & Lomb's 2002 revenues were $1.8 billion; it employs approximately 11,500 people worldwide and its products are available in more than 100 countries. More information about the Company can be found on the Bausch & Lomb Web site at http://www.bausch.com BETHLEHEM STEEL: Solicitation Exclusivity Extended to October 31 ---------------------------------------------------------------- Pursuant to Section 1121(d) of the Bankruptcy Code, the Bethlehem Steel Debtors sought and obtained a Court order extending their Exclusive Solicitation Period to October 31, 2003, without prejudice to their right to seek additional extensions. George A. Davis, Esq., at Weil, Gotshal & Manges, LLP, in New York, asserts that the extension will provide the Debtors with a fair opportunity to solicit acceptances to the Plan. Mr. Davis assures the Court that the extension is not meant to delay the Chapter 11 cases for some speculative event or to pressure creditors to accede to a plan unsatisfactory to them, but merely to provide enough time for the Debtors to seek acceptances to the consensual Plan already filed. Mr. Davis remarks that the Debtors have sufficient liquidity and are paying their postpetition bills as they come due. This is unlikely to change given the reduced levels of the Debtors' obligations compared to funds available to them from the proceeds of the ISG Sale. Through prudent business decisions and cash management, the Debtors expect to have sufficient liquidity to continue through confirmation and consummation of the Plan. Thus, the Debtors are managing their remaining assets effectively and are preserving the value of their assets for the benefit of creditors. (Bethlehem Bankruptcy News, Issue No. 42; Bankruptcy Creditors' Service, Inc., 609/392-0900) BEVERLY ENTERPRISES: Plans to Enter into $225MM Credit Facility --------------------------------------------------------------- Beverly Enterprises, Inc. (NYSE:BEV) plans to enter into a new $225 million senior secured credit facility -- including a $75 million revolver and a $150 million term loan -- with a syndicate of lenders. In addition, the company expects to raise approximately $100 million in the form of subordinated notes on terms and conditions to be determined. If Beverly is able to successfully complete both financings, the company anticipates using the proceeds of the senior secured credit facility and subordinated notes primarily to pay existing indebtedness, including but not limited to $180 million of its Senior Notes due 2006. Offerings of the subordinated notes will be made only by means of a prospectus supplement to be filed under Beverly's existing shelf registration statement. Copies of the base prospectus for the existing shelf registration may be obtained from the company. Beverly Enterprises, Inc. and its operating subsidiaries comprise a leading provider of healthcare services to the elderly in the United States. They operate 423 skilled nursing facilities, as well as 22 assisted living centers, and 23 home care and hospice centers. Through AEGIS Therapies, they also offer rehabilitative services on a contract basis to nursing facilities operated by other care providers. BEVERLY ENTERPRISES: S&P Assigns BB Rating to $225M Secured Loan ---------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit rating and 'B+' senior unsecured rating on Beverly Enterprises Inc. and assigned its 'BB' rating to the company's proposed $225 million secured credit facility. The facility comprises a $75 million revolving credit facility due 2007 and a $150 million term loan B due 2008. At the same time, Standard & Poor's assigned its 'B' rating to Beverly's proposed $100 million subordinated notes, subject to review of final terms. Proceeds from the notes will be used to refinance existing debt and for general corporate purposes. The secured bank loan is rated one-notch higher than the corporate credit rating. The bank facility is secured by first priority security interests in certain tangible assets. According to Standard & Poor's review of the collateral package in a distressed default scenario, the estimated asset value offers a strong likelihood of full bank debt recovery in the event of default. "The speculative-grade ratings on Beverly Enterprises Inc. reflect the difficulties it faces in an industry that has been hampered by reimbursement cuts and rapidly escalating insurance costs," said Standard & Poor's credit analyst David Peknay. "The rating also reflects Standard & Poor's expectation that the company's turnaround efforts, including significant asset sales to reduce its substantial patient liability costs, will achieve a measure of success." Fort Smith, Arkansas-based Beverly Enterprises, operating 423 skilled nursing facilities and 22 assisted-living facilities, is one of the largest operators of nursing homes in the U.S. The company's efforts to improve its financial performance and reduce vulnerability to key industry risks have included the divestiture of about 100 nursing homes since December 2001, including 49 in patient liability plagued Florida. The company expects to complete additional asset divestitures in the next 6-12 months, concentrating primarily on facilities that pose disproportionately high patient liability risk. The company has used the proceeds of these sales for debt reduction and will continue to do so. BEVERLY ENTERPRISES: Fitch Rates New Sr. Secured Facility at BB --------------------------------------------------------------- Fitch Ratings has assigned a 'BB' rating to Beverly Enterprises, Inc.'s new $225 million senior secured bank facility. The new bank facility includes a $75 million, 4-year revolving credit facility and a $150 million, 5-year term loan B facility. In addition, Fitch has assigned a 'B+' rating to Beverly's planned $100 million subordinated notes issue. Fitch has also affirmed the company's existing 'BB-' senior unsecured debt rating. While the company is not expected to immediately draw on the revolver, proceeds from the term loan and notes sale are expected to be used primarily to repay existing indebtedness, including the company's $180 million senior notes due 2006. The Rating Outlook is Stable. Fitch believes that Beverly's 2003 profitability will likely be negatively impacted by the loss of Medicare givebacks (the Medicare Cliff) and increased insurance costs/reserves. The divestiture plan announced in Q3 '02 is intended to improve profitability by unwinding those facilities that account for a disproportionately high share of the company's patient care liability exposure. Beverly's strategy is to divest those facilities that are currently expected to account for more than 50 percent of the company's 2003 patient care liability costs. Profitability should improve beginning in October 2003 as facilities that represent significant portions of the company's liability cost are divested and with increased Medicare reimbursement beginning at the start of the federal fiscal year 2004 (October 1, 2003). On June 30, 2003, Beverly successfully completed the sale of the first tranche of facilities it intends to sell. During the first six months of 2003, Beverly primarily used disposition proceeds to reduce debt by $107 million on top of a $154 million reduction in 2002. Debt reductions included paying off of $112 million of off- balance sheet, synthetic lease arrangements. Beverly's success in selling this first tranche, which included a large portion of homes with high patient liability costs, is a positive indicator regarding the company's ability to consummate future asset sales and demonstrates the existence of a viable market for Beverly facilities. Fitch anticipates leverage will continue to moderate as additional divestiture proceeds are used to reduce debt levels. Concerns include the company's continued reliance on government funded reimbursement for the majority of its revenue, and increasing labor and insurance costs. Additionally, while Beverly's credit profile will be enhanced through de-leveraging with funds from asset sales, Fitch notes that free cash flow (cash from operations less capital expenditures) will be modest. BIOMERICA INC: Needs Additional Financing to Continue Operations ---------------------------------------------------------------- Biomerica, Inc. and Subsidiaries are primarily engaged in the development, manufacture and marketing of medical diagnostic kits and the design, manufacture and distribution of various orthodontic products. The Company has operating and liquidity concerns due to historically reporting net losses and negative cash flows from operations. Biomerica's shareholder's line of credit expired on September 13, 2003 and will not be renewed. The unpaid principal and interest will be converted into a note payable bearing interest at 8% and payable in monthly installments over four years. Biomerica has suffered substantial recurring losses from operations over the last couple of years. Biomerica has funded its operations through debt and equity financings, and may have to do so in the future. ReadyScript operations were discontinued in May 2001 and Allergy Immuno Technologies, Inc. was sold in May 2002. ReadyScript and Allergy Immuno Technologies, Inc. were contributors to the Company's losses in the fiscal year 2003. The Company reduced operating costs through certain cost reduction efforts and plans to concentrate on its core business in Lancer and Biomerica to increase sales. Additional cost reductions were made in the first quarter of fiscal 2004. Management believes that cash flows from operations and its available credit coupled with reduced costs and anticipated increased sales will enable the Company to fund operations for at least the next twelve months. The Company will continue to have limited cash resources. Although the Company's management recognizes the imminent need to secure additional financing there can be no assurance that the Company will be successful in consummating any such transaction or, if the Company does consummate such a transaction, that the terms and conditions of such financing will not be unfavorable to it. The failure by the Company to obtain additional financing will have a material adverse effect on the Company and likely result in their inability to continue as a going concern. Biomerica's independent certified public accountants have concluded that there is substantial doubt as to the Company's ability to continue as a going concern for a reasonable period of time, and have, therefore modified their report in the form of an explanatory paragraph describing the events that have given rise to this uncertainty. BNS CO.: Brings-In Legacy Partners as Investment Advisors --------------------------------------------------------- BNS Co. (OTCBB:BNSXA) has engaged Legacy Partners Group, LLC to advise the Company as it considers various strategic alternatives open to it following the sale of its Rhode Island Property for $20.2 million on August 26, 2003. The decision to hire an investment advisor was made at a meeting of the Board of Directors on September 3, 2003, a week after completion of the sale. Legacy Partners is a New York based investment bank focused on serving middle market companies with offices at 375 Park Avenue, New York City, New York -- http://www.legacypartnersgroup.com For further information, refer to the Company's Form 10-K filed with the SEC in March, Forms 10-Q for the first and second quarters of 2003 filed in April and August, the Company's proxy statement for the 2003 Annual Meeting filed in June, and the Company's Form 8-K filed in July, after the July 28, 2003 Annual Meeting of Stockholders. A copy of all filings may be obtained from the SEC's EDGAR Web site -- http://www.sec.gov-- or by contacting: Michael Warren, President and Chief Executive Officer, telephone (401) 848-6500. The Company does not maintain a web site. * * * As reported in Troubled Company Reporter's August 29, 2003 edition, BNS Co. completed the sale of the Company's North Kingstown, RI property for $20.2 million to Wasserman RE Ventures LLC, a Providence based developer with interests in properties throughout the U.S. The property consists of the former international headquarters for Brown & Sharpe Manufacturing Company (the name was changed to BNS Co. in April 2001). The North Kingstown property represented one of the last assets remaining in the Company. It also holds a gravel extraction and land fill operation in the UK which it intends to sell as well. The sale of the North Kingstown and UK properties are part of the Company's strategy to dissolve and adopt a plan for liquidation, which will be presented for stockholder approval at a later meeting. Such a plan may involve the sale of the Company, or the establishment of a liquidating trust and payment or provision for payment of claims against its assets, and then making one or more liquidating distributions to stockholders (or to the liquidating trust). No estimate of the timing and amount of any liquidating distributions can be made at this time, in part because the amount available for distribution may depend on the amount of the Company's assets required to be retained to pay uncertain future liabilities by order of the Delaware Court of Chancery, if that avenue of liquidation is later selected by the Company as part of its plan of dissolution and liquidation. Also, it is not yet certain when the UK property will be sold. CD WORLD: Trans World to Acquire Assets for $1.8 Million -------------------------------------------------------- Trans World Entertainment Corporation (Nasdaq: TWMC), a leading retailer of entertainment products, has reached an agreement in principal to acquire substantially all of the assets of CD World, Inc. CD World, currently operating in Chapter 11 bankruptcy, is a specialty music retailer, which owns and operates 13 freestanding stores located in New Jersey and Missouri. The transaction, which is expected to close in early October 2003, represents total consideration of $1.8 million and is subject to the approval of the U.S. Bankruptcy Court for the District of New Jersey. Trans World Entertainment is a leading specialty retailer of music and video products. The Company operates retail stores in 46 states, the District of Columbia, the U.S. Virgin Islands, Puerto Rico and an e-commerce site, www.fye.com. In addition to its mall locations, operated under the "FYE" (For Your Entertainment) brand, the Company also operates freestanding locations under the names Coconuts Music and Movies, Strawberries Music, Spec's, Planet Music and Second Spin. CHASE COMM'L: Fitch Affirms Various Series 1999-2 Note Ratings -------------------------------------------------------------- Fitch Ratings affirms Chase Commercial Mortgage Securities Corp., commercial mortgage pass-through certificates, series 1999-2, as follows: -- $77.3 million class A-1 'AAA'; -- $469.3 million class A-2 'AAA'; -- Interest-only class X 'AAA'; -- $41.1 million class B 'AA'; -- $37.2 million class C 'A'; -- $11.7 million class D 'A-'; -- $27.4 million class E 'BBB'; -- $11.7 million class F 'BBB-'; -- $27.4 million class G 'BB+'; -- $7.8 million class H 'BB'; -- $6.8 million class I 'BB-'; -- $8.8 million class J 'B+'; -- $6.8 million class K 'B'; -- $5.9 million class L 'B-'. The $14.7 million class M is not rated by Fitch. The affirmations reflect the overall stable performance and minimal reduction in the pool's collateral balance since issuance. As of the September 2003 distribution date, the transaction's principal balance was reduced by 3.7%, to $754 million from $782.7 million at issuance. GEMSA Loan Services, as master servicer, collected year-end 2002 financials for 98% of the pool. The weighted averaged debt service coverage ratio for YE 2002 remained stable at 1.40 times, compared to 1.40x at YE 2001 and 1.29x at issuance. There are two loans (4.7%) in special servicing. The largest loan specially serviced loan, Tuscan Inn at Fisherman's Wharf, (4.4%), is secured by full service hotel in San Francisco, California. The loan was transferred to the special servicer due to payment default. The loan is now current. The special servicer is in negotiations with the borrower and has yet to decide the work out plan. Fitch will continue to monitor this transaction, as surveillance is ongoing. CHOICE ONE: Forms Multi-Year Agreement With New England Patriots ---------------------------------------------------------------- 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, has entered into a telecommunications service and marketing partnership with the New England Patriots. As part of the multi-year agreement, Choice One has been named the official telecommunications provider for the New England Patriots, Gillette Stadium, the New England Revolution and the Kraft Group. Additionally, the New England Patriots and Choice One have agreed to a marketing sponsorship to promote Choice One's association with the team for the duration of the agreement. "We needed a provider that could address our complex telecommunications needs today and into the future," said Pat Curley, Chief Technology Officer of the New England Patriots. "Choice One took the time to fully understand our business and our telecommunications requirements. They presented us with a customized, cost-effective solution that will enable us to enhance the use of our voice and data telecommunications services. They have a very knowledgeable team of people that are committed to providing us outstanding service. "When selecting business partners, we look for companies with whom we can forge long-term relationships," added Curley. "As a successful, stable company with a reputation for high quality service, Choice One meets our criteria as a long-term partner. As a major corporate sponsor, Choice One has clearly demonstrated its commitment to the New England Patriots organization." "Choice One has approximately 20,000 business clients across its New England markets," stated Phil Yawman, Choice One's Executive Vice President, Corporate Development. "We are very proud to be recognized for our success in the marketplace by being selected as the official telecommunications provider for the New England Patriots, Gillette Stadium, the New England Revolution and the Kraft Group." "During the past several years, Choice One has enjoyed very successful relationships with other NFL organizations," added Mr. Yawman. "Our new agreement with the New England Patriots provides both organization various opportunities to substantially grow our businesses. We are confident that this partnership will be mutually beneficial for many years to come." Choice One also has multi-year agreements with the Buffalo Bills, Green Bay Packers and Pittsburgh Steelers. Terms of the deal 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 COMMSCOPE INC: Introduces New Enterprise Design Guide ----------------------------------------------------- CommScope, Inc. (NYSE: CTV), a leader in the design and manufacture of high-performance broadband communication cables, introduced the first comprehensive Enterprise Design Guide to the industry. This guide offers a one-source solution for virtually all the cabling needs of an enterprise system that transmits data, video, voice, and other selected applications. The guide leads installers, contractors and consultants through the process of designing and maximizing the performance of an enterprise network. The Enterprise Design Guide was created specifically for those who are involved in the design of Enterprise Network Systems. It provides one comprehensive publication that can be used to design network solutions by incorporating conduit as well as fiber optic, twisted pair, coax and wireless cables. The Enterprise Design Guide also contains examples of typical designs for Local Area (LAN), Wide Area (WAN) and Metropolitan Area Networks (MAN), including samples of architecture options, equipment, bills of materials and system capabilities. It describes the high-performance cabling and components that CommScope believes are needed to meet both today's and tomorrow's bandwidth requirements. "We believe CommScope is unique because we produce such a broad portfolio of cables for business communication systems," said Randy Crenshaw, Executive Vice President and General Manager for Network Products. "We strive to be a technology leader in the enterprise market as we provide fiber optic cables and components as well as high-performance copper cables to network system designers and installers." The Enterprise Design Guide is approximately 200 pages long and may be ordered through the CommScope web page, http://www.commscope.com CommScope, Inc. (NYSE: CTV) (S&P, BB Corporate Credit & B+ Subordinated Debt Ratings, Stable), is the world's largest manufacturer of broadband coaxial cable for Hybrid Fiber Coaxial applications and a leading supplier of fiber optic and twisted pair cables for LAN, wireless and other communications applications. CONE MILLS: Shareholders' Committee Wins ISS Support ---------------------------------------------------- The Cone Mills Shareholders' Committee, led by Marc Kozberg, a director of Cone Mills Corporation (NYSE: COE) announced that Institutional Shareholder Services has recommended that Cone Mills shareholders vote FOR the Committee's three director nominees on the GREEN proxy card at the Annual Meeting on September 25th. ISS, widely recognized as the nation's leading independent voting advisory firm, provides vote recommendations to hundreds of major institutional investment firms, mutual funds, and other fiduciaries. In its report, ISS noted that the primary strength of the dissident slate "rests with its financial experience, contacts, and its ability to broker a wide range of transactions." ISS concluded that: "ISS believe(s) that the dissident group, with its financial experience may play a key role in identifying other alternatives to realize shareholder value other than the proposed bankruptcy and subsequent asset sale. At this time, we believe that shareholders have no downward risk in exploring other alternatives to the proposed bankruptcy." In light of the Cone Mills' September 16th announcement, ISS questioned management's credibility and commented: "Although the detailed terms of the proposed bankruptcy and asset sale are not available, the shareholders are likely to receive little or no value for their investment. We believe that management should have taken the opportunity to explore other strategic alternatives that would have offered shareholders value." Marc Kozberg, who heads the Shareholders' Committee in its campaign to elect the three new independent directors, said, "We are pleased that ISS recognizes the superior qualifications of our nominees. The future of everyone's investment is at stake--it is critical that shareholders gain effective representation on the Cone Mills Board." Mr. Kozberg added, "Since time is short, we urge shareholders to vote FOR the Committee's nominees on the GREEN proxy cards today. (Shareholders sho5ld not return the company's white card for any reason.) Any shareholders who need assistance in voting should call our proxy solicitor, Innisfree M&A Incorporated, toll-free at 877-456-3507. Brokers who need assistance in helping their clients to vote may call Innisfree collect at 212-750-5833." COPYTELE: Accumulated Deficit Raises Going Concern Uncertainty -------------------------------------------------------------- CopyTele, Inc. was incorporated on November 5, 1982. Its principal operations include the development, production and marketing of thin high brightness flat panel video displays and the development, production and marketing of multi-functional encryption products that provide information security for domestic and international users over virtually every communications media. From inception through June 2001, the Company had met liquidity and capital expenditure needs primarily through the proceeds from sales of common stock in its initial public offering, in private placements, upon exercise of warrants issued in connection with the private placements and public offering, and upon the exercise of stock options. Commencing in the fourth quarter of fiscal 1999, it began to generate cash flows from sales of its encryption products, and, from June 2001 to January 2002, received development payments from Futaba. During the nine months ended July 31, 2003, the Company's operating activities used approximately $615,000 in cash. This resulted from payments to suppliers, employees and consultants of approximately $832,000, which was offset by cash of approximately $213,000 received from collections of accounts receivable related to sales of encryption products and approximately $3,000 of interest income received. In addition, the Company received approximately $827,000 in cash upon the exercise of stock options and incurred approximately $9,000 in registration costs relating to stock incentive plans. As a result, its cash and cash equivalents at July 31, 2003 increased to approximately $1,057,000 from approximately $855,000 at the end of fiscal 2002. The auditor's report on Copytele's financial statements as of October 31, 2002 states that the net loss incurred during the year ended October 31, 2002, the accumulated deficit as of that date, and other factors, raise substantial doubt about the Company's ability to continue as a going concern. Based on reductions in operating expenses that have been made and additional reductions that may be implemented, if necessary, the Company believes that its existing cash and accounts receivable, together with cash flows from expected sales of encryption products and flat panel displays, and other potential sources of cash flows, will be sufficient to enable it to continue in operation until at least the end of the third quarter of fiscal 2004. However, its projections of future cash needs and cash flows may differ from actual results. Copytele is seeking to improve liquidity through increased sales or license of products and technology and may also seek to improve its liquidity through sales of debt or equity securities. It currently has no arrangements with respect to additional financing. There can be no assurance that it will generate significant revenues in the future (through sales or otherwise) to improve its liquidity, that it will generate sufficient revenues to sustain future operations and/or profitability, that it will be able to expand its current distributor/dealer network, that production capabilities will be adequate, that other products will not be produced by other companies that will render its products obsolete, or that other sources of funding would be available, if needed, at terms that the Company would deem favorable. COVANTA ENERGY: Overview of Ogden's Joint Liquidating Plan ---------------------------------------------------------- Ogden New York Services, Inc. and 62 of its debtor-affiliates -- the Liquidating Debtors -- delivered their Joint Plan of Liquidation to the Court on September 8, 2003. A full-text copy of the Liquidation Plan is available for free at the Securities and Exchange Commission at: http://www.sec.gov/Archives/edgar/data/73902/000090342303000754/cov8k-ex22_0 909.txt A full-text copy of the Debtors' Disclosure Statement is available for free at: http://www.sec.gov/Archives/edgar/data/73902/000090342303000754/cov8kex2-3_0 909.txt The Liquidation Plan includes these provisions: A. The Funding of the Implementation of the Liquidation Plan On the Effective Date, the Liquidating Pledgor Debtors and the Liquidating Trustee will implement the Secured Creditor Direction and the DIP Lender Direction. The Secured Creditor Direction and the DIP Lender Direction will operate to fund the implementation of the Liquidation Plan by requiring that $500,000 of the Liquidation Proceeds that would otherwise be transferred to Reorganized Covanta will remain in the accounts of the Liquidating Debtors and will be transferred by the Liquidating Trustee to the Operating Reserve. However, to the extent that the sum of all the Cash in the accounts of the Liquidating Debtors is less than $500,000 on the Effective Date -- the Operating Deficiency Reserve Amount, then: (1) the Liquidating Trustee will transfer the sum of all the Cash in the Liquidating Debtors' accounts to the Operating Reserve, and (2) Reorganized Covanta will transfer the Operating Reserve Deficiency Amount to the Operating Reserve. B. Transfer of Liquidation Assets On the Effective Date, each Liquidating Debtor will irrevocably transfer and assign its Residual Liquidation Assets, if any, or cause the Residual Assets to be transferred and assigned to the Liquidating Trust, to hold in trust for the benefit of all Allowed Claim Holders with respect to each the Liquidating Debtor pursuant to the terms of the Liquidation Plan and the Liquidating Trust Agreement. Prior to the contemplated transfers, the Liquidating Trustee and the Liquidating Debtors will make the transfers contemplated by the Secured Creditor Distribution and the DIP Lender Direction to Reorganized Covanta and to the Operating Reserve. In accordance with Section 1141 of the Bankruptcy Code, on the Effective Date, title to the Residual Liquidation Assets will pass to the Liquidating Trust free and clear of all Claims and Equity Interests. The Liquidating Trustee will pay, or otherwise make Distributions on account of, all Claims against the Liquidating Debtors whose Residual Liquidation Assets were contributed to the Liquidating Trust strictly in accordance with the Liquidation Plan. For U.S. federal income tax purposes, the transfers of the Liquidating Debtors' Residual Liquidation Assets to the Liquidating Trust will be deemed transfers to and for the benefit of their beneficiaries followed by the deemed transfer by the beneficiaries to the Liquidating Trust. The beneficiaries will be treated as the grantors and deemed owners of the Liquidating Trust. The Liquidating Trustee will cause a valuation to be made of the Liquidation Assets. The valuation will be used by the Liquidating Trustee and the beneficiaries for U.S. federal income tax purposes, but will not be binding on the Liquidating Trustee in regards to the liquidation of the Residual Liquidation Assets. C. Distribution of the Bank Agreement Ogden FMCA Collateral On the Effective Date, Ogden FMCA will cause to be transferred to Credit Suisse First Boston, as holder of the Allowed Secured CSFB Claim, the Bank Agreement Ogden FMCA Collateral free and clear of all Claims and Equity Interests, in accordance with Section 1141 of the Bankruptcy Code, and except as otherwise provided by the Liquidation Plan. D. Dissolution of Liquidating Debtors After the contemplated transfers and pursuant to the DIP Lender Direction, each Liquidating Debtor will be dissolved pursuant to applicable state law. The Liquidating Trustee will have all the power to wind up the affairs of each Liquidating Debtor under applicable state laws. E. Appointment of the Liquidating Trustee The Liquidating Trustee will be designated by the Liquidating Debtors in the Notice of Designation, which will be filed with the Court on or before 30 days prior to the Confirmation Hearing. The Liquidating Trustee's appointment will become effective on the occurrence of the Effective Date. In its capacity as the representative of an Estate, the Liquidating Trustee will be the successor-in-interest to each Liquidating Debtor with respect to any action commenced by the Liquidating Debtor prior to the Confirmation Date, except with respect to the Claims of the Liquidating Pledgor Debtors and the Liquidating Non-Pledgor Debtors contributed to Reorganized Covanta pursuant to the Secured Creditor Direction and the DIP Lender Direction. All actions and any and all other claims or interests constituting Liquidation Assets, and all claims, rights and interests will be retained and enforced by the Liquidating Trustee as the Estate's representative pursuant to Section 1123(b)(3)(B) of the Bankruptcy Code. The Liquidating Trustee will be a party-in-interest as to all matters over which the Court has jurisdiction. The Liquidating Trustee will be paid for all reasonable and necessary Dissolution Expenses, including the reasonable and necessary fees and expenses of Retained Liquidation Professionals, out of the Operating Reserve. F. Appointment of the Oversight Nominee An Oversight Nominee will be designated by the Liquidating Debtors in the Notice of Designation, which will be filed with the Court on or before 30 days prior to the Confirmation Hearing. The appointment of the Oversight Nominee will become effective on the occurrence of the Effective Date. The Oversight Nominee will have the responsibility to review the activities and performance of the Liquidating Trustee, and will have the authority to remove and replace the Liquidating Trustee. The Oversight Nominee Expenses will be paid by the Liquidating Trustee out of the Operating Reserve. The proponents of the Liquidation Plan are: Liquidating Debtors Case Number ------------------- ----------- Alpine Food Products, Inc. 03-13679 BDC Liquidating Corp. 03-13681 Bouldin Development Corp. 03-13680 Covanta Concerts Holdings, Inc. 02-16332 Covanta Energy Sao Jeronimo, Inc. 02-40854 Covanta Equity of Alexandria/Arlington, Inc. 03-13682 Covanta Equity of Stanislaus, Inc. 03-13683 Covanta Financial Services, Inc. 02-40947 Covanta Huntington, Inc. 02-40918 Covanta Key Largo, Inc. 02-40864 Covanta Northwest Puerto Rico, Inc. 02-40942 Covanta Oil & Gas, Inc. 02-40878 Covanta Power Development of Bolivia, Inc. 02-40856 Covanta Power Development, Inc. 02-40855 Covanta Secure Services USA, Inc. 02-40896 Covanta Waste Solutions, Inc. 02-40897 Doggie Diner, Inc. 03-13684 Gulf Coast Catering Company, Inc. 03-13685 J.R. Jack's Construction Corporation 02-40857 Lenzar Electro-Optics, Inc. 02-40832 Logistics Operations, Inc. 03-13688 Offshore Food Service, Inc. 03-13694 OFS Equity of Alexandria/Arlington, Inc. 03-13687 OFS Equity of Babylon, Inc. 03-13690 OFS Equity of Delaware, Inc. 03-13689 OFS Equity of Huntington, Inc. 03-13691 OFS Equity of Indianapolis, Inc. 03-13693 OFS Equity of Stanislaus, Inc. 03-13692 Ogden Allied Abatement & Decontamination Svc, Inc. 02-40827 Ogden Allied Maintenance Corp. 02-40828 Ogden Allied Payroll Services, Inc. 02-40835 Ogden Attractions, Inc. 02-40836 Ogden Aviation Distributing Corp. 02-40829 Ogden Aviation Fueling Company of Virginia, Inc. 02-40837 Ogden Aviation Security Services of Indiana, Inc. 03-13695 Ogden Aviation Service Company of Colorado, Inc. 02-40839 Ogden Aviation Service Company of Pennsylvania 02-40834 Ogden Aviation Service International Corporation 02-40830 Ogden Aviation Terminal Services, Inc. 03-13696 Ogden Aviation, Inc. 02-40838 Ogden Cargo Spain, Inc. 02-40843 Ogden Central and South America, Inc. 02-40844 Ogden Cisco, Inc. 03-13698 Ogden Communications, Inc. 03-13697 Ogden Constructors, Inc. 02-40858 Ogden Environmental & Energy Services Co., Inc. 02-40859 Ogden Facility Holdings, Inc. 02-40845 Ogden Facility Management Corporation of Anaheim 02-40846 Ogden Facility Management Corp. of West Virginia 03-13699 Ogden Film and Theatre, Inc. 02-40847 Ogden Firehole Entertainment Corp. 02-40848 Ogden Food Service Corporation of Milwaukee, Inc. 03-13701 Ogden International Europe, Inc. 02-40849 Ogden Leisure, Inc. 03-13700 Ogden Management Services, Inc. 03-13702 Ogden New York Services, Inc. 02-40826 Ogden Pipeline Service Corporation 03-13704 Ogden Services Corporation 02-40850 Ogden Support Services, Inc. 02-40851 Ogden Technology Services Corporation 03-13703 Ogden Transition Corporation 03-13705 PA Aviation Fuel Holdings, Inc. 02-40852 Philadelphia Fuel Facilities Corporation 02-40853 (Covanta Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) CROWN CASTLE: Gets S&P's B- Rating for Planned $1.6B Facility ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B-' rating to the proposed $1.6 billion senior secured credit facility of Crown Castle Operating Co., a wholly owned subsidiary of Houston, Texas- based wireless tower operator Crown Castle International Corp. Simultaneously, Standard & Poor's affirmed its 'B-' corporate credit rating and all other outstanding ratings on Crown Castle International. The outlook has been revised to stable from negative, predicated on the closing of the proposed bank credit facility. Total debt was about $3.2 billion at June 30, 2003. The proposed bank credit facility, which comprises a $350 million revolver due 2007, a $296 million term loan A due 2007, and a $1 billion term loan B due 2010, is rated the same as the corporate credit rating. It will replace the existing $1.2 billion bank credit facility, which comprises a $494 million revolver due 2007, a $296 million term loan A due 2007, and a $399 million term loan B due 2008. After closing, Crown Castle will take a series of actions that include applying the incremental $601 million in term loan B to refinance debt at its Crown Castle UK Ltd (CCUK) subsidiary, bringing CCUK into the restricted group legal structure and thereby gaining full access to that subsidiary's moderate free cash flows and, before the end of the year, retiring the parent's 12.75% senior exchangeable preferred stock due 2010. Crown Atlantic, a joint venture with Verizon Communications Inc., will remain an unrestricted subsidiary such that Crown Castle will continue to not have access to its cash. Given the substantial magnitude of the fully drawn bank facility, it is not clear that the value of Crown Castle's tower portfolio would completely cover the credit facility under a distressed valuation. However, Standard & Poor's believes there is strong likelihood of substantial recovery of principal with minimal loss expected. "The outlook revision reflects improvement in Crown Castle's liquidity prospects that will result from the company gaining full access to CCUK's moderate free cash flows following the refinancing of CCUK debt," said Standard & Poor's credit analyst Michael Tsao. Crown Castle's current restricted group is not expected to generate sustainable free cash flows. However, by including CCUK in the restricted group and assuming moderate revenue growth, EBITDA margin around 40%, and annual capital expenditures of less than $100 million, Standard & Poor's projects that the restricted group will likely generate at least $70 million of annual free cash flow in the next several years. This level of free cash flow, along with the proposed $350 million bank revolver, will likely provide a degree of cushion against any prolonged weakness in network-related spending by wireless carriers. Covenants under the proposed bank loan, which remain the same as those in the existing bank loan, provide adequate headroom. Other than a potential payment of more than $280 million in 2007 to satisfy a contingent put relating to Verizon's stake in Crown Atlantic, Crown Castle does not face significant mandatory debt amortizations in the next few years. While Standard & Poor's views the tower business as having some favorable business characteristics, the rating is dominated by concerns over Crown Castle's significant financial leverage. The company used substantial debt in the past to acquire and build towers in anticipation of steep growth in cash flows that later did not materialize due to cutback in capital expenditures by wireless carriers, thereby leaving the company aggressively leveraged. ECHOSTAR COMMS: DBS Unit Commences $1.5BB Senior Note Offering -------------------------------------------------------------- EchoStar Communications Corporation's (NASDAQ: DISH) subsidiary, EchoStar DBS Corporation, is offering approximately $1.5 billion aggregate principal amount of senior debt securities in accordance with Securities and Exchange Commission Rule 144A. The proceeds of the offering are intended to be used to repurchase or redeem EchoStar DBS Corporation's 9-3/8% Senior Notes due 2009 and other outstanding debt securities. The notes have not been registered under the Securities Act of 1933, as amended, or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. EchoStar Communications Corporation (Nasdaq:DISH), through its DISH Network(TM), is the fastest growing U.S. provider of satellite television entertainment services with 9 million customers. DISH Network delivers advanced digital satellite television services, including hundreds of video and audio channels, Interactive TV, digital video recording, HDTV, international programming, professional installation and 24-hour customer service. Headquartered in Littleton, Colo., EchoStar has been a leader for 23 years in digital satellite TV equipment sales and support worldwide. EchoStar is included in the Nasdaq-100 Index (NDX) and is a Fortune 500 company. Visit EchoStar's Web site at www.echostar.com or call 1-800-333-DISH (3474). As of December 31, 2002, the Company's balance sheet shows a total shareholders' equity deficit of about $1.2 billion ECHOSTAR DBS: S&P Rates Proposed $1.5 Bill. Senior Notes at BB- --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to the proposed $1.5 billion (aggregate amount) senior notes of EchoStar DBS Corp., a subsidiary of satellite direct-to-home (DTH) TV provider EchoStar Communications Corp. (BB-/Stable/--). All outstanding ratings on EchoStar were affirmed. The proposed notes will be issued under Rule 144A with registration rights, with two tranches maturing in five years and one tranche maturing in eight years. EchoStar intends to use proceeds to repurchase or redeem its $1.6 billion 9.375% notes due 2009, which become callable in February 2004. The company also may repurchase other outstanding debt. Pro forma for the offering, EchoStar will have gross debt of roughly $7.2 billion before factoring in any potential debt repurchases or redemptions, and about $4.4 billion in unrestricted cash. In addition to using cash to repurchase debt, EchoStar has expressed an interest in bidding for assets of fixed satellite operator and satellite manufacturer Loral Space & Communications Ltd., which is operating under Chapter 11 bankruptcy protection. EchoStar's cash flow diversity would benefit from Loral's high- margin fixed satellite leasing operation, which is driven by long- term contracts. However, much of the satellite-leasing industry is in a slump, and satellite manufacturing is a low-margin business currently depressed by a lack of new contracts. "The ratings on EchoStar continue to reflect the company's position as the fourth-largest provider of pay TV services (serving 9 million subscribers), healthy subscriber growth and modest churn, improving cash flow and credit measures, and significant liquidity from a large, uncommitted cash balance," said Standard & Poor's credit analyst Eric Geil. These factors are tempered by strong competition from upgraded cable operators that can offer a broader array of interactive services, competition from larger rival DTH satellite TV provider DirecTV, a low price strategy that could restrain margin potential amid rising programming costs affecting the industry, and risk from potential acquisitions and investments. EchoStar's discretionary cash flow is rising, and the company has good liquidity from a roughly $4.4 billion unrestricted cash balance, pro forma for the proposed $1.5 billion notes. The cash balance excludes about $135 million cash reserved to satisfy satellite insurance requirements under bond covenants. EchoStar does not have a bank line, and is expected to maintain ample cash to meet short-term liquidity needs. Satellite capital spending will be largely discretionary to meet additional service needs, and replacement costs should be moderate, as the fleet is relatively young with significant remaining life expectancy. Debt maturities are insignificant until 2007, when $2 billion in notes is due. ELECTROPURE: July 31 Working Capital Deficit Tops $1.8 Million -------------------------------------------------------------- Electropure, Inc. has two reportable segments: water purification, and fluid monitoring, a start up segment. The EDI segment produces water treatment modules for sale to manufacturers of high purity water systems. The Membrane segment formerly produced ion exchange membranes for outside customers for use in electrodialysis, electrodeionization, electrodeposition and general electrochemical separations. The MI segment is developing technology that is anticipated to enable real time identification of contamination in fluids. The Company's reportable segments are strategic business units that offer different products, are managed separately, and require different technology and marketing strategies. The Company evaluates performance based on results from operations before income taxes not including nonrecurring gains and losses. At July 31, 2003, Electropure, Inc. had a working capital deficit of $1,897,360. This represents a working capital decrease of $1,547,107 compared to that reported at October 31, 2002. Including a $142,771 increase in accounts payable, the working capital decrease includes a $451,513 net increase in notes payable and accrued interest of $28,548 as well as the reclassification of a $1,000,000 loan due in January 2004 to a current liability. The working capital decrease in fiscal 2003 was partially offset by a $45,808 increase in inventories and a $44,139 reduction of other current liabilities. The Company's primary sources of working capital have been from short-term loans and from the sale of private placement securities. During fiscal 2003, it received $50,000 in net proceeds from the sale of 227,273 shares of common stock to its largest shareholder. Electropure also received $450,000 in short term loans from this shareholder and a $200,000 loan from an unaffiliated third party during the nine months ended July 31, 2003. In the opinion of management, available funds, accounts receivable, and proceeds to be realized from the sale of EDI products currently on order, are expected to satisfy Company working capital requirements through September 2003. Electropure's independent auditors have included an explanatory paragraph in their report on the financial statements for the year ended October 31, 2002 which raises substantial doubt about the Company's ability to continue as a going concern. In January 2004, a $1 million loan from the Company's largest shareholder will become due and payable. Currently, this loan is secured by a second deed of trust on the building which the Company purchased in January 2001. Management anticipates that if the Company is not in a position to satisfy the loan when it comes due, that it will seek to refinance the note either directly with the noteholder or with a third party which has not yet been identified. Currently, the Company is seeking working capital through manufacturing arrangements, strategic partnerships, loans and/or the sale of private placement securities so that it may expand its EDI marketing efforts and further the MIT research program. This approach is intended to optimize the value of its EDI technology and the MIT System as Electropure discusses licensing and/or joint venture arrangements with potential candidates. The implementation of these strategies will be dependent upon the Company's ability to secure sufficient working capital in a timely manner and will require the approval of its shareholders if any arrangement involves the sale or encumbrance of its assets. The Company will be required to raise substantial amounts of new financing in the form of additional equity investments, loan financings, or from strategic partnerships, to carry out its business objectives. There can be no assurance that it will be able to obtain additional financing on terms that are acceptable to it and at the time required by it, or at all. Further, any financing may cause dilution of the interests of its current shareholders. If unable to obtain additional equity or loan financing, the Company's financial condition and results of operations will be materially adversely affected. Moreover, estimates of its cash requirements to carry out its current business objectives are based upon various assumptions, including assumptions as to its revenues, net income or loss and other factors, and there can be no assurance that these assumptions will prove to be accurate or that unbudgeted costs will not be incurred. Future events, including the problems, delays, expenses and difficulties frequently encountered by similarly situated companies, as well as changes in economic, regulatory or competitive conditions, may lead to cost increases that could have a material adverse effect on Electropure and its plans. If unsuccessful in obtaining loans or equity financing for future developments, it is unlikely that the Company will have sufficient cash to continue to conduct operations, particularly research and development programs, as currently planned. Management believes that in order to raise needed capital, the Company may be required to issue debt at significantly higher interest rates or equity securities that are significantly lower than the current market price of its common stock. No assurances can be given that currently available funds will satisfy Company working capital needs for the period estimated, or that the Company can obtain additional working capital through the sale of common stock or other securities, the issuance of indebtedness or otherwise or on terms acceptable to it. Further, no assurances can be given that any such equity financing will not result in a further substantial dilution to the existing shareholders or will be on terms satisfactory to the Company. ENRON CORP: Court Clears ECT's $11.75M Aircraft Sale to JLT ----------------------------------------------------------- Pursuant to Sections 105, 363 and 365 of the Bankruptcy Code, Enron Corporation sought and obtained the Court's approval on: (a) ECT Investing Partners, LP's sale of a Dassault Aviation Falcon 900B-N573J aircraft to JLT Aircraft Holding Company, LLC in accordance with the terms and conditions of an Aircraft Purchase Agreement; (b) the consummation of the transactions contemplated; and (c) the rejection of an unexpired Amended and Restated N5733 Aircraft Subleasing Agreement dated as of October 25, 1999 between Wilmington Trust Company and Enron, as supplemented. ECT is a non-debtor affiliate of Enron, engaged in the business of holding investment assets, including certain residual interests in mortgage-backed securities. The Aircraft comprises a significant portion of ECT's physical assets. The Aircraft is a 12-seat 1987 Falcon 900B. Legal title to the Aircraft is held in trust by Wilmington Trust Company and leased to Enron. The Aircraft's engines have logged about 7,550 Airframe hours. Enron decided that it no longer needed a fleet of corporate aircraft after it filed for Chapter 11 protection. Thus, Enron and ECT determined to market and sell the Aircraft. Under the Purchase Agreement, ECT will sell to JLT the Aircraft and related property including: (a) the airframe with manufacturer's serial number 039 and U.S. Registration Mark N5732J; (b) three certain Garrett/Allied Signal Corp. model TFE 731-5BR-1C engines bearing manufacturer serial numbers P97166C, P97156C, and P9715BC; (c) all records, logs, manuals, technical data, maintenance records and other materials and documents that relate to the operation of the Aircraft that are (i) required to be maintained by the FAA, or (ii) in ECT's possession on the closing date or that comes into ECT's possession thereafter; and (d) all parts and appurtances thereto. The principal terms and conditions of the Purchase Agreement are: A. Purchase Price The cash consideration JLT will pay to ECT for the Aircraft and for the assignment of warranties will be $11,750,000 as adjusted by the Deposit and a Purchase Price Reduction equal to the amount required to restore the Aircraft to airworthy condition, as applicable. B. Deposit Escrow (a) Prior to the execution of the Purchase Agreement, JLT delivered to and deposited in trust with the Escrow Agent $300,000 in immediately available, good funds; (b) The Escrow Agent will promptly return the Deposit to JLT upon the earlier of: -- JLT's termination of the Purchase Agreement, -- Court order approving the sale of the Aircraft to a person other than JLT, -- JLT's termination of the Purchase Agreement, and -- JLT's termination of the Purchase Agreement solely because of ECT's failure to obtain the Court approval. The Escrow Agent's return to JLT of the Deposit will be JLT's exclusive remedy for ECT's failure to perform under the Purchase Agreement; and (c) JLT will cause the Escrow Agent to, and the Escrow Agent will, deliver the Deposit to ECT upon the earlier of: -- ECT's termination of the Purchase Agreement as a result of JLT's failure to fulfill the conditions to ECT's obligations, -- at the Closing of the sale to JLT, and -- JLT's termination of the Purchase Agreement other than as a result of a JLT Termination Event. The Escrow Agent's delivery ECT of the Deposit will be ECT's exclusive remedy for JLT's failure to perform under the Purchase Agreement. C. Closing Date Payments At the Closing, JLT will: (i) pay and deliver to ECT, by wire transfer in Good Funds to an account ECT designates, the Purchase Price less the Deposit for $11,450,000, as may be further adjusted by the Purchase Price Reduction, as applicable, and (ii) instruct the Escrow Agent in writing to deliver the Deposit to ECT, by wire transfer in Good Funds to an account ECT designates. Any accrued interest on the Deposit will be returned to JLT. D. Closing The closing of the transactions will take place on the earlier of: (i) two Business Days after the conditions to Closing are satisfied, (ii) 50 business days after the execution date -- the Outside Date, and (iii) other date mutually agreed to by the parties to allow sufficient time to correct the Non-Compliant Items and ECT will deliver the Aircraft to JLT on the Closing Date at the Gulfstream Facility in Dallas, Texas. All documents to be filed with the FAA on the Closing Date will be held in trust by FAA Counsel and filed upon mutual agreement of JLT and ECT. E. Closing Conditions (a) As to ECT's Obligations: It will be a condition of ECT's obligations under the Purchase Agreement that, as of the Closing Date: -- all of JLT's representations and warranties made in the Purchase Agreement will be true and correct in all material respects, -- JLT performed in all material respects all of its covenants and obligations under the Purchase Agreement, -- ECT obtained Court approval of the sale, -- JLT have completed the Inspection and delivered the Acceptance Certificate, and -- ECT have received verbal confirmation from FAA Counsel that the Aircraft is free and clear of Liens and that the Aircraft may, upon consummation of the transactions contemplated hereunder, be registered with the FAA Registry in the name of the JLT; (b) As to JLT's Obligations: It will be a condition of JLT's obligations under the Purchase Agreement that, as of the Closing Date: -- all of ECT's representations and warranties made in the Purchase Agreement will be true and correct in all material respects, -- ECT will have performed in all material respects all of its covenants and obligations under the Purchase Agreement, -- ECT will deliver the Aircraft to JLT, -- ECT obtain the Approval Order, and -- JLT received verbal confirmation from FAA Counsel that the Aircraft is free and clear of Liens and that the Aircraft may, upon consummation of the transactions contemplated hereunder, be registered with the FAA Registry in JLT's the name; and (c) Any waiver of a condition will be effective only if the waiver is stated in writing and signed by both parties; provided, however, that the consent of a party to the Closing will constitute a waiver by the party of any conditions to Closing not satisfied as of the Closing Date. F. Termination Either party may terminate the Purchase Agreement upon written notice to the other party if on or prior to the Closing, any of these events have occurred and the terminating party is not then in default of its obligations in any material respect: (a) If all conditions to the Closing required to obligate a party to close the transactions have been satisfied and a party has not tendered performance of its obligations or deliveries by the Closing Date; (b) The Aircraft will be lost, destroyed, materially damaged, or is involved in an accident or incident causing material damage thereto; (c) If (i) JLT fails to deliver the Acceptance Certificate to ECT by the Acceptance Time, (ii) the parties fail to agree to the Non-Compliant Items or the Purchase Price Reduction, if any, by the Acceptance Time, or (iii) JLT delivers to ECT a written notice of rejection of the Aircraft any time after the Inspection commences but prior to the Acceptance Time; and (d) If ECT have not obtained Court approval. G. Taxes (a) As of the Closing Date, ECT will have paid all Taxes ECT owed, excluding 2003 personal property taxes owed in Harris County, Texas, with respect to ECT's ownership of the Aircraft; (b) JLT will be solely responsible for and timely pay (i) all Transaction Taxes any taxing authority imposed or levied on or with respect to the sale and purchase of the Aircraft under the Purchase Agreement or JLT's use or ownership of the Aircraft after Closing and (ii) all federal, state, local and other license, recording, registration, transfer fees and all other fees and charges of any nature imposed or levied on or with respect to the sale and purchase of the Aircraft under the Purchase Agreement or JLT's use or ownership of the Aircraft after Closing, together with any penalties, fines and interest; and (c) JLT will not be responsible for (i) any taxes imposed on or measured by ECT's net income and (ii) any ad valorem taxes or property taxes attributable to taxable periods ending on or before the Closing Date, all of which will be the responsibility of ECT, including the 2003 Taxes, with respect to ECT's ownership of the Aircraft. H. Brokers Each party will be responsible for its own broker fees and related costs. In connection with the sale, ECT will pay $58,750 to its broker, JB&A Aviation. Ms. Gray asserts that the sale should be authorized because: (a) although the Aircraft is not directly property of the estate, the sale transaction affects Enron's Chapter 11 estate in that ECT is an indirect wholly owned subsidiary of Enron and it is in Enron's best interest to maximize ECT's value; (b) the Purchase Agreement requires an order from the Court as a condition precedent to sale closing; (c) the Purchase Agreement contemplates Enron's rejection of the Lease to transfer clear title to JLT; (d) the Aircraft is not integral to or contemplated to be part of Enron's reorganization; (e) the Purchase Agreement was negotiated at arm's length and represents fair market value for the Aircraft; (f) after an extensive marketing process, ECT, in consultation with Enron and the Creditors' Committee, determined that JLT's offer represents the best offer for the Aircraft at this time and under the circumstances; (g) other than the liens relating to the 2003 Taxes, which will remain on the Aircraft until Enron pays the 2003 Taxes as the Purchase Agreement requires, Enron is not aware of any liens encumbering the Aircraft; and (h) JLT is a good faith purchaser by virtue of Section 363(m) of the Bankruptcy Code. The Purchase Agreement requires that clear title to the Aircraft be transferred to JLT. Thus, Enron will reject the Lease effective as of the Closing Date. (Enron Bankruptcy News, Issue No. 79; Bankruptcy Creditors' Service, Inc., 609/392-0900) ENRON CORP: Files Amended Chapter 11 Plan with Bankruptcy Court --------------------------------------------------------------- Enron Corp. filed an amended Joint Chapter 11 Plan and related disclosure statement with the U.S. Bankruptcy Court. The disclosure statement includes revised estimated recovery percentages, before potential recoveries from litigation, for more than 350 classes of creditors. The estimated recoveries for unsecured claims against the three top debtors are: Enron Corp., 16.6 percent; Enron North America, 19.5 percent; and Enron Power Marketing, Inc., 22.5 percent. "We're pleased that we are continuing to generate support for this plan, which maximizes recovery for our stakeholders," said Stephen F. Cooper, Enron's acting CEO and chief restructuring officer. "This widespread support will help expedite this very complicated bankruptcy process." The amended plan also includes financial projections for the three going-forward businesses that will ultimately be separated from the bankruptcy proceedings: CrossCountry Energy, Prisma Energy International, and Portland General Electric (PGE). If PGE is not sold, the Plan provides for the distribution of PGE common stock to creditors. A break-up of PGE is not an option under the Plan. The Plan covers Enron's 178 debtor entities and must be approved by 50 percent of the creditors and two-thirds of the dollar amount of claims in at least one creditor class for each of the debtors. The Bankruptcy Court is expected to hold a hearing on the disclosure statement in late October. The amended Plan and accompanying disclosure statement can be viewed at http://www.enron.com/corp/pressroom/releases/2003/ene/091803rel.html. Enron's Internet address is http://www.enron.com EQUITY INNS: Declares Third Quarter Share & Preferred Dividends --------------------------------------------------------------- Equity Inns, Inc. (NYSE:ENN), a hotel real estate investment trust (REIT), announced that its board of directors has declared quarterly cash dividends of $0.13 per common share and $0.546875 per preferred B share for the third quarter ended September 30, 2003. The common and the preferred B dividend are payable November 3, 2003 and October 31, 2003, respectively, to common and preferred shareholders of record on September 30, 2003. Preferred B shareholders of record will receive a prorated dividend based upon the issuance date of August 11, 2003. Equity Inns, Inc. (S&P, B+ Corporate Credit Rating, Negative) is a self-advised REIT that focuses on the upscale extended stay, all- suite and midscale limited-service segments of the hotel industry. The company owns 94 hotels with 12,100 rooms located in 34 states. For more information about Equity Inns, visit the company's Web site at http://www.equityinns.com FIRST UNION: S&P Hatchets Three Note Classes to Default Level ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on classes K, L, M, and N of First Union National Bank Commercial Mortgage Trust's commercial mortgage pass-through certificates series 2000- C2. Concurrently, the ratings on classes H, J, and K are placed on CreditWatch with negative implications. At the same time, the ratings on 10 other classes are affirmed. The rating actions are primarily due to the interest shortfalls that will result from the master servicer's (Wachovia Bank N.A.) recovery of $5.1 million of advances related to the Crowne Plaza Downtown Phoenix hotel loan. Belmont Shores, a top 10 watchlist loan, was also a factor influencing the lowered rating actions. The specially serviced loans and watchlist loans represent 2.3% and 17.5% of total pool balance, respectively. The Crowne Plaza loan (original balance of $16.5 million; $19.6 million currently; 1.8% of total pool balance), which is secured by a 533-room full service hotel in Phoenix, Arizona, was transferred into special servicing Aug. 13, 2001 due to a delinquency. The borrower subsequently filed a Chapter 11 bankruptcy. To date, the servicer has accrued $5.1 million of principal and interest, property protection, and other advances. As part of the bankruptcy settlement, $3.9 million of the advances was capitalized into the mortgage loan amount and $1.2 million was forgiven. The interest rate on the loan was also modified with various interest rate step-ups, reaching 8.95% in years eight through 10. The term of the loan remains 10 years, and the loan is scheduled to mature in February 2011. The property was returned to the master servicer in August 2003. Based on the year- to-date June 30, 2003 financial statements, the servicer estimates the loan has a debt service coverage of 2.33x. The hotel's flag is currently a Wyndham. The $3.9 million in advances, which is currently deemed recoverable will be collected by the servicer from all Crowne Plaza payments. The impact to the trust will be approximately $150,000 a month, and will result in shortfalls to the certificates for approximately two years. The first interest shortfalls related to this recovery occurred on the Aug. 15, 2003 payment date. The remaining $1.2 million that has been forgiven under the bankruptcy plan has been declared non-recoverable by the master servicer and collectable from the trust collection account immediately. However, the master servicer has agreed to recover this over time in order to not disrupt the interest payments due the investment grade classes (classes G and above). The ratings on classes L, M, and N are lowered to 'D' as the interest shortfalls occurring in these classes are expected to continue without any near-term recovery expected. Based on current conditions, classes H and J are not expected to get the interest due for about eight months and will not be repaid accrued interest until early to mid 2004. Class K is not expected to get interest for 12 months and not be repaid until late 2004. The timing of the ultimate interest recovery for the classes with ratings placed on CreditWatch will determine the direction of the rating changes, if any are deemed necessary. Also of concern is the Belmont Shores Office Building ($29 million principal balance; 2.6% of the pool's principal balance), which is a 142,900-square-foot property in Belmont, California. (Silicon Valley). Major tenants include Oracle Corp. (62% of total square footage, which it is subleasing), Multiple Space Reactivity Inc. (10%), and McGraw-Hill Cos. (8%). Although the property is currently 99% occupied, 75% of the leased space is expiring in the next 18 months, with approximately 65% (mostly Oracle Corp.'s subleased space) not expected to renew. In the competitive Silicon Valley office market, re-leasing will be challenging. RATINGS LOWERED First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2000-C2 Rating Class To From Credit Support (%) L D B+ 2.82 M D B 2.31 N D B- 1.80 RATING LOWERED AND PLACED ON CREDITWATCH NEGATIVE First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2000-C2 Rating Class To From Credit Support (%) K B/Watch Neg BB- 4.21 First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2000-C2 RATINGS PLACED ON CREDITWATCH NEGATIVE First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2000-C2 Rating Class To From Credit Support (%) H BB+/Watch Neg BB+ 5.77 J BB/Watch Neg BB 5.00 RATINGS AFFIRMED First Union National Bank Commercial Mortgage Trust Commercial mortgage pass-thru certs series 2000-C2 Class Rating Credit Support (%) A-1 AAA 24.11 A-2 AAA 24.11 B AA 19.11 C A 15.26 D A- 13.72 E BBB+ 12.05 F BBB 10.52 G BBB- 9.23 Q BB 0.00 X AAA N/A FIRST VIRTUAL COMMS: Hires David Weinstein as VP of Marketing ------------------------------------------------------------- First Virtual Communications (Nasdaq: FVCX), a premier provider of rich media web conferencing and collaboration solutions, announced a change in its executive management team. David Weinstein has joined the Company as Vice President of Marketing. He will be responsible for developing and implementing First Virtual's worldwide marketing strategy and programs to accelerate revenue growth and market share. Mr. Weinstein will lead a team of professionals in the areas of corporate communications, marketing programs, product management and business development. "We continue to build the highest-quality team in the industry and are gaining momentum in the marketplace as a result. I am very pleased that we were able to attract someone with Dave's professional experience and record of success," said Jonathan Morgan, the Company's president and chief executive officer. "Dave will be based in our headquarters in Redwood City, California." Mr. Weinstein has over twenty years of executive leadership experience in the technology sector. Previously, he was president and CEO of Zack Systems. Prior to that, he served as the vice president of Marketing at Centigram Communications, Jetstream Communications, @Motion and Openwave Systems. Mr. Weinstein holds a Masters of Business Administration from Stanford University Graduate School of Business and resides in California with his family. Mr. Weinstein replaces Bob Romano, who left the Company to pursue other interests. First Virtual Communications is a premier provider of rich media web conferencing and communications solutions. The Company's award-winning Click to Meet(TM) product line is enterprise-class software that enables corporate, education, healthcare and government customers worldwide to present, share, sell, train and collaborate. Click to Meet integrates the user's choice of data, audio and multipoint interactive video into existing work environments and into everyday communication tools such as instant messaging, web browsing and e-mail. Click to Meet software solutions are widely deployed in over 1,500 customer locations and excel in such challenging environments such as military intelligence, emergency response, disaster recovery, corporate training and geographically dispersed tele-working locations, among others. Headquartered in Redwood City, California, First Virtual Communications has operations in France, United Kingdom, Japan and China. More information about First Virtual Communications can be found at http://www.fvc.com * * * Liquidity and Capital Resources In its SEC Form 10-Q filed with the Securities and Exchange Commission, the Company report: Since inception, the Company has financed its operations primarily through private and public placements of equity securities, revenue from sales of the Company's products and services and to a lesser extent through certain credit facilities and long-term debt, including the $3.0 million of term loan drawn down on June 23, 2003. As of June 30, 2003, the Company had cash and cash equivalents and short-term investments of $6.2 million. In order to improve liquidity and reduce costs, the Company completed the following actions in April 2003. The Company reached agreement with its bank for a $3 million credit facility that may be used by the Company at any time prior to December 31, 2003. The interest rate is equal to the bank's prime rate plus 2.25% with a floor at 6.5%. The Company paid a $22,500 commitment fee at the closing and is subject to a commitment fee of 0.25% per annum on any unused borrowings, with this fee paid quarterly. Funds drawn under the facility will be recorded as a secured term loan, fully amortized and repaid over a three-year period. The term loan facility is secured by all of the Company's assets, including intellectual property rights, and contains certain financial covenants, including the maintenance of cash deposits at the bank of not less than $2.9 million, as well as a liquidity covenant. The liquidity covenant requires that the sum of (i) the amount of the Company's unrestricted cash on deposit in the bank, plus (ii) the Company's eligible accounts receivable, divided by (iii) the amount outstanding under the loan agreement be at all times equal to 2.0 or higher. The liquidity covenant is only applicable if the loan is drawn down. On June 23, 2003, $3.0 million of term loan was drawn down and outstanding. The Company also entered into a private equity line financing agreement with Ralph Ungermann, Executive Chairman of the Company's Board of Directors, under which the Company may require Mr. Ungermann to purchase up to $1 million of its common stock at a purchase price of $1.55 per share during the period from April 14, 2003 through April 13, 2004. The Company may draw down funds under the private equity line financing agreement up to four times during the 12-month term of the agreement, with each draw for a minimum of $250,000. In April 2003, the Company also signed an agreement with its landlord to terminate the Company's lease for its Santa Clara, California headquarters and executed a new lease that will reduce annual rental expense and cash payments by approximately $900,000 for each of the next five years. The Company has experienced significant net operating losses since inception. In the six months ended June 30, 2003, the Company incurred losses of $5.0 million and used $4.9 million of cash in its operating activities. In the comparable period of 2002, the Company incurred net losses of $6.2 million and used $3.1 million of cash in its operating activities. Management currently expects that operating losses and negative cash flows will continue for the foreseeable future and that the Company's existing cash and investments, together with the funds provided pursuant to its credit facility with its bank and the financing agreement with Mr. Ungermann are adequate to fund the Company's operations through the first quarter of 2004. However, the Company's cash requirements depend on several factors, including the rate of market acceptance of its products and services, the ability to expand and retain its customer base and other factors. If the Company fails to achieve its planned revenue or expense targets, management believes that it has the plans, intent and ability to curtail capital and operating spending to ensure that cash and investments will be sufficient to meet the Company's cash requirements through March 31, 2004. In order to pursue business opportunities, the Company will be required to seek equity investments from existing or potential strategic partners in the future. Should the Company sell additional equity, the sale may result in dilution to the Company's current stockholders. The Company also plans to raise equity from the public and/or private equity markets that will likely result in dilution of the Company's current stockholders. There can be no assurance that any financing will be available at acceptable terms or at all. In the six months ended June 30, 2003, cash used in operating activities totaled $4.9 million, compared to $3.1 million in the six months ended June 30, 2002. The change in cash provided or used by operating activities reflects our operating performance and the timing of receipts and disbursements. During the six months ended June 30, 2003, net cash used in operating activities of $4.9 million was comprised of the net loss of $5.0 million and a $1.3 million increase in current net assets, partially offset by $1.5 million of adjustments for non-cash items such as depreciation, amortization and a loss on disposal of fixed assets. The increase in current net assets consisted of increases in receivables of $477,000 and prepaid expenses and other assets of $353,000, reductions in accounts payable of $147,000, accrued liabilities of $681,000 and deferred revenue of $217,000, offset in part by a $535,000 reduction in inventory. During the six months ended June 30, 2002, net cash used in operating activities was $3.1 million. This was comprised of the net loss of $6.2 million and a $107,000 increase in current net assets, partially offset by $3.1 million of adjustments for non-cash items such as depreciation, amortization and increases in the provisions for doubtful accounts and inventory. The increase in current net assets consisted of increases in receivables of $441,000 and prepaid expenses and other assets of $121,000 and a reduction in accrued liabilities of $1.2 million, offset in part by a $549,000 reduction in inventory and increases in accounts payable of $104,000 and deferred revenue of $1.2 million. Cash used in investment activities totaled $461,000 for the six months ended June 30, 2003, primarily for the acquisition of property and equipment. Cash provided by investment activities totaled $1.4 million for the six months ended June 30, 2002, primarily resulting from $1.8 million of net sales and maturities of short-term investments, partially offset by the acquisition of property and equipment. Cash provided by financing activities was $3.1 million for the six months ended June 30, 2003, principally consisting of proceeds from a term loan facility with our bank. Cash provided by financing activities was $5.0 million for the six months ended June 30, 2002, primarily from the issuance of stock. At June 30, 2003, First Virtual Communications' balance sheet shows a working capital deficit of a little over $1 million, while total shareholders' equity deficit dwindled to about $2 million from about $7 million six months ago. GENESIS HEALTH: John Arlotta Named to Lead NeighborCare Inc. ------------------------------------------------------------ Genesis Health Ventures, Inc. announced that John J. Arlotta, who joined the company as Vice Chairman in July, will become Chairman and Chief Executive Officer of the Company's pharmacy business upon completion of the spin-off of the Company's eldercare business, at which time Genesis Health Ventures will also change its name to NeighborCare, Inc. As previously announced, the Company's eldercare business is being spun-off into a separate publicly traded company, called Genesis HealthCare Corporation, and George V. Hager, Jr. will become the Chief Executive Officer of the new entity. Robert H. Fish, the current Chairman and Chief Executive Officer of Genesis Health Ventures, will retain his position until the completion of the spin-off and will remain with NeighborCare on a full-time basis until early 2004 to advise Arlotta and Hager on post spin-off transition matters. Fish will also serve as a director of both NeighborCare and Genesis HealthCare Corporation after the spin. "Genesis Health Ventures has reached a pivotal point in its development as we will, for the first time, focus solely on NeighborCare, our institutional pharmacy business," said Fish. "John's strong sales and marketing background, his operational expertise and his intense focus make him the right person to take NeighborCare to the next level." "I am thrilled to accept the position of Chairman and CEO of NeighborCare," said Arlotta. "NeighborCare's transition to an independently operated, publicly traded company is an exciting milestone in the evolution of this organization." Arlotta adds, "We are well underway with several strategic and organic growth initiatives, and maintain a relentless pursuit of both operating efficiencies and product development that bring maximum value to our customers and shareholders." Arlotta has spent over 30 years in the pharmacy services industry in a variety of sales, marketing, and general management roles. Most recently, Arlotta was the President and COO of Caremark Pharmaceutical Services - a leading provider of drug benefit services to health plans, corporations and insurance companies. Prior to Caremark, Arlotta spent 15 years at Baxter International where he started the original home IV therapy business for Baxter. Spin-off Update As previously announced, several initiatives must be completed prior to the spin-off including the effectiveness of Genesis HealthCare Corporation's Registration Statement on Form 10 as filed with the Securities and Exchange Commission, receipt of a private letter ruling from the Internal Revenue Service that the spin-off is non-taxable, and state licensure approvals. In addition, the Company will refinance its existing debt, excluding certain mortgages, to facilitate the separate capitalization of NeighborCare and Genesis HealthCare Corporation. The Company intends to complete all of these initiatives in the next thirty to forty-five days and is targeting to complete the spin-off in late October. Genesis Health Ventures (Nasdaq: GHVI) provides healthcare services to America's elders through a network of NeighborCare pharmacies and Genesis ElderCare skilled nursing and assisted living facilities. Other Genesis healthcare services include rehabilitation and respiratory therapy, group purchasing, and diagnostics. Visit http://www.ghv.com NeighborCare is the third largest institutional pharmacy and infusion provider in the nation serving long-term care facilities, retirement and assisted living communities, and home care. The Company's service offerings also include home medical and respiratory equipment, medication, and supplies, as well as a retail pharmacy division that serves the general public. In total, the Company's operations span the nation, supporting community healthcare needs in 35 states. Visit http://www.neighborcare.com Genesis HealthCare is one of the nation's largest long term care providers employing 35,000 in over 225 skilled nursing and assisted living residences in 13 eastern states and operates under the Genesis ElderCare name. Genesis also supplies contract rehabilitation therapy to over 750 healthcare providers in 21 states. The Company is headquartered in Kennett Square, Pennsylvania. GENOIL INC: Issuing 686K Shares to Close Creditor Settlements ------------------------------------------------------------- Genoil Inc. (TSX Venture - "GNO") will issue up to 686,193 common shares at $0.12 - $0.17 to conclude definitive shares for debt settlement agreements with approximately five creditors. The agreements represent amounts payable of approximately $106,440. These creditors have agreed to eliminate these debts in consideration of common shares of Genoil valued at $0.12 - $0.17. Genoil is a technology development company providing solutions to the oil and gas industry through the use of proprietary technologies. Genoil's shares are listed on the TSX Venture Exchange under the symbol GNO. The proposed issue of shares remains subject to Genoil filing formal application with the TSXV and therefore, remains subject to regulatory approval. * * * Going Concern Uncertainty In its recent SEDAR filing, the company disclosed that to date the Corporation has not attained commercial operations from its various patents and technology rights. $2,698,883 of principal and interest owed to a note holder was overdue at March 31, 2003. The future of the Corporation is dependent upon its ability to maintain the continued financial support of the note holder, and obtain adequate additional financing to fund the development of commercial operations from its various patents and technology rights. The consolidated financial statements are prepared on the basis that the Corporation will continue to operate throughout the next fiscal period as a going concern. A failure to continue as a going concern would then require that stated amounts of assets and liabilities be reflected on a liquidation basis, which would differ from the going concern basis. GENTEK INC: Has Until October 8 to Solicit Acceptances of Plan -------------------------------------------------------------- At the request of their secured bank group, GenTek Inc. and its debtor-affiliates agreed to contract their exclusive plan acceptance period to October 8, 2003. Accordingly, Judge Walrath grants the Debtors' request. (GenTek Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 609/392-0900) GENUITY INC: Disclosure Statement Hearing Convening on Sept. 30 --------------------------------------------------------------- To recall, the Genuity Inc. Debtors filed their Joint Consolidated Plan of Liquidation and their proposed Disclosure Statement on August 26, 2003. Pursuant to Section 1125 of the Bankruptcy Code, a Plan Proponent must provide holders of impaired claims with "adequate information" regarding a debtor's proposed Chapter 11 plan. Section 1125(a)(1) further provides that: "[A]dequate information" means information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of holders of claims or interests of the relevant class to make an informed judgment about the plan . . ." Thus, a Disclosure Statement must, as a whole, provide information that is "reasonably practicable" to permit an "informed judgment" by impaired creditors entitled to vote on the Plan. D. Ross Martin, Esq., at Ropes & Gray, LLP, in Boston, Massachusetts, asserts that the Debtors' Disclosure Statement contains "adequate information" on applicable subject matters, including, but not limited to, a discussion of: (a) the Plan; (b) the history of the Debtors' businesses; (c) the Debtors' indebtedness; (d) certain events preceding the Debtors' Chapter 11 cases, (e) significant events that occurred during the Chapter 11 cases; (f) significant litigation, including inter-creditor and debtor-creditor issues directly affecting distribution to creditors; (g) the administration of the Debtors' estates following confirmation of the Plan; and (h) tax consequences of the Plan. Accordingly, Judge Beatty will convene a hearing on September 30, 2002, at 2:30 p.m., to consider if the Debtors' Disclosure Statement contains "adequate information" within the meaning of Section 1125 of the Bankruptcy Code to enable the Debtors' creditors, who are entitled to vote, to make an informed decision on whether to accept or reject the Plan of Liquidation. (Genuity Bankruptcy News, Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900) GILAT SATELLITE: Will Purchase All Shares of rStar Corporation -------------------------------------------------------------- Gilat Satellite Networks Ltd. (Nasdaq:GILTF) is currently contemplating a purchase of all outstanding shares of common stock of rStar Corp. (Nasdaq:RSTRC) not already owned by Gilat at a price not yet determined but expected to be between $0.60 and $0.70 per share in cash. Gilat currently owns approximately 85% of the outstanding shares of rStar. It is currently anticipated that the purchase would be made through a tender offer, subject to customary conditions, in accordance with the rules of the Securities and Exchange Commission. Gilat also stated that, if it holds at least 90 percent of the outstanding rStar shares following completion of the offer, it may effect a "short-form" merger of rStar with a Gilat subsidiary. If such a merger takes place promptly after the offer, the consideration given to stockholders in the merger would be the same as the consideration received by tendering stockholders in the offer. Gilat could determine not to proceed with the offer if in its sole judgment changes in economic, business or market conditions make the offer unadvisable to Gilat. The tender offer for the outstanding rStar common stock described in this press release has not yet commenced. The Company advises all security holders to read any such tender offer statement if and when it is available, because it will contain important information. If and when they are available, shareholders can get the tender offer statement and other filed documents for free at the Securities and Exchange Commission's Web site -- http://www.sec.gov-- or from Gilat. Gilat Satellite Networks Ltd. -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $3.5 million -- with its global subsidiaries Spacenet Inc., Gilat Latin America and rStar Corporation, is a leading provider of telecommunications solutions based on Very Small Aperture Terminal satellite network technology - with more than 400,000 VSATs shipped worldwide. Gilat, headquartered in Petah Tikva, Israel, markets the Skystar Advantage(R), DialAw@y IP(TM), FaraWay(TM), Skystar 360E(TM) and SkyBlaster* 360 VSAT products in more than 70 countries around the world. Gilat provides satellite-based, end-to-end enterprise networking and rural telephony solutions to customers across six continents, and markets interactive broadband data services. Gilat is a joint venture partner with SES GLOBAL, and Alcatel Space and SkyBridge LP, subsidiaries of Alcatel, in SATLYNX, a provider of two-way satellite broadband services in Europe. Skystar Advantage, Skystar 360E, DialAw@y IP and FaraWay are trademarks or registered trademarks of Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at http://www.gilat.com GILAT SATELLITE: rStar Receives Notice of Gilat's Purchase Offer ---------------------------------------------------------------- rStar Corporation (Nasdaq-SCM:RSTRC) has received notice from Gilat Satellite Networks Ltd., (Nasdaq:GILTF) that Gilat is contemplating a purchase of all outstanding shares of common stock of rStar that it does not already own. rStar was informed that Gilat has not yet determined a purchase price but they expect it to be between $.60 and $.70 per share in cash. Gilat currently owns approximately 85% of the outstanding shares of rStar. Gilat also informed rStar that, if Gilat holds at least 90 percent of the outstanding rStar shares following completion of the offer, it may effect a "short-form" merger of rStar with a Gilat subsidiary. If such a merger takes place promptly after the offer, the consideration given to stockholders in the merger would be the same as the consideration received by tendering stockholders in the offer. rStar's Board of Directors announced that it will address the contemplated purchase if and when a specific offer is provided. Founded in 1997, rStar Corporation (Nasdaq-SCM:RSTRC) is a leading provider of satellite-based communications services in Latin America. Through its Starband Latin America (Holland NV) subsidiary, operates satellite-based rural telephony networks as well as high-speed consumer Internet access pilot networks for the SOHO and select consumer market segments in certain Latin American countries. Gilat Satellite Networks Ltd. (Nasdaq:GILTF) owns approximately 85% of rStar Corporation's issued and outstanding common stock. rStar Corporation headquarters are located in Sunrise, Florida. Gilat Satellite Networks Ltd. -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $3.5 million -- with its global subsidiaries Spacenet Inc., Gilat Latin America and rStar Corporation, is a leading provider of telecommunications solutions based on Very Small Aperture Terminal satellite network technology - with more than 400,000 VSATs shipped worldwide. Gilat, headquartered in Petah Tikva, Israel, markets the Skystar Advantage(R), DialAw@y IP(TM), FaraWay(TM), Skystar 360E(TM) and SkyBlaster* 360 VSAT products in more than 70 countries around the world. Gilat provides satellite-based, end-to-end enterprise networking and rural telephony solutions to customers across six continents, and markets interactive broadband data services. Gilat is a joint venture partner with SES GLOBAL, and Alcatel Space and SkyBridge LP, subsidiaries of Alcatel, in SATLYNX, a provider of two-way satellite broadband services in Europe. Skystar Advantage, Skystar 360E, DialAw@y IP and FaraWay are trademarks or registered trademarks of Gilat Satellite Networks Ltd. or its subsidiaries. Visit Gilat at http://www.gilat.com HANGER ORTHOPEDIC: Elects Cynthia L. Feldmann to Board of Direc. ---------------------------------------------------------------- Cynthia L. Feldmann has been elected a director on Hanger Orthopedic Group, Inc.'s (NYSE: HGR) Board. Ms. Feldmann has held a series of increasingly responsible positions in public accounting. Most recently she was a Partner with the global accounting firm, KPMG, LLP. During her career at KPMG, Ms. Feldmann served as the firm's Northeast Regional Relationship Partner and as the National Director of the Medical Technology Practice. One of her many accomplishments was her work in leading the Boston Audit Committee Institute Roundtable which was created to share audit committee and corporate governance best practices. Ms. Feldmann joined KPMG in 1994 as a Partner and National Director of the firm's Medical Technology Practice. Prior to this, she was employed for 15 years by Coopers & Lybrand ultimately, as Partner-in-Charge of the National Life Sciences Practice. Ms. Feldmann is filling a vacancy that was created by Dr. Risa Lavizzo- Mourey who resigned in order to handle the increased responsibilities created by her recent appointment to President and Chief Executive Officer of the Robert Woods Johnson Foundation. Prior to her recent appointment, she served as the Senior Vice President and Director, Health Care Group, at the Robert Wood Johnson Foundation, the Sylvan Eisman Professor of Medicine at the University of Pennsylvania's School of Medicine and the Director of the Institute on Aging at the University of Pennsylvania. Dr. Lavizzo-Mourey served as a member of Hanger's Board since 1998, including positions on the Audit and Nominating Committees. Chairman and Chief Executive Officer, Ivan R. Sabel stated, "Ms. Feldmann's excellent credentials and experience make her well suited for joining Hanger's Board of Directors. We are very pleased to be able to attract her to our Board and look forward to the contributions she will make to our company. At the same time, we will miss Dr. Lavizzo-Mourey but do understand the commitments of her new position make it impossible for her to continue on our Board. Dr. Lavizzo-Mourey has served Hanger unselfishly and made many valuable contributions. We certainly wish her well in her new endeavors." Hanger Orthopedic Group, Inc. (S&P, B+ Corporate Credit Rating), headquartered in Bethesda, Maryland, is the world's premier provider of orthotic and prosthetic patient-care services. Hanger is the market leader in the United States, owning and operating 591 patient-care centers in 44 states and the District of Columbia, with 3,139 employees including 875 certified practitioners. Hanger is organized into two business segments: patient-care, which consists of nationwide orthotic and prosthetic practice centers, and distribution, which consists of distribution centers managing the supply chain of orthotic and prosthetic componentry to Hanger and third party patient-care centers. In addition, Hanger operates the largest orthotic and prosthetic managed care network in the country. HARRAH'S: Fitch Affirms BB+ Rating over Horshoe Gaming Buy-Out -------------------------------------------------------------- Fitch Ratings has affirmed Harrah's Entertainment's 'BBB-' senior unsecured rating and 'BB+' senior subordinated rating. The affirmation follows the company's recent announcement that it will acquire Horseshoe Gaming for $1.45 billion, including the assumption of $533 million in debt. This represents a 7.2x multiple of Horseshoe's LTM EBITDA of $213 million. Announced concurrently with the acquisition, the purchase price is expected to be offset by proceeds from the planned sale of Harrah's Shreveport (estimated at $220 million - $240 million), though no buyer has been announced to date. Sale of the Shreveport property should facilitate regulatory approval and reduce exposure in that market (Harrah's is acquiring Horseshoe Casino, and currently also operates the Louisiana Downs in the Bossier City/Shreveport market). The Rating Outlook remains Stable. The acquisition enhances Harrah's business profile by adding three market-leading properties to a well-diversified asset base. However, the increased debt associated with the transaction reduces the company's financial flexibility within the rating category. Affirmation of current ratings incorporates the company's capacity to reduce debt over the next 12-18 months. The transaction is expected to close in 1Q04. With this acquisition, Harrah's adds properties in three markets in which it already operates (Hammond, Indiana; Tunica Mississippi; and Shreveport, Louisiana). However, from a strategic perspective, the acquisition adds two top- performing assets in two of those markets (Tunica and Shreveport), and provides an additional hedge in the third (Chicagoland) against the tax-impact on results in Joliet, Illinois. Management expects the acquisition to yield approximately $36 million in cost synergies over the next two years; but this may prove conservative if promotional savings are exacted. Importantly, the acquisition also provides valuable branding and cross marketing opportunities. Harrah's indicated that it plans to use the venerable Horseshoe name in branding new and existing properties, including potential properties in the United Kingdom. From a credit perspective, the transaction can be adequately absorbed within the existing rating category. Fitch estimates that on a pro forma LTM basis (excluding the sale of Harrah's Shreveport), leverage would increase to 3.8 times from 3.3x at June 30, 2003. Assuming a full year contribution from the acquisition in 2004, Fitch estimates that Harrah's could finish the year with leverage in the 3.5x range. While the run-up in leverage is considerable, Fitch notes that this is consistent with Harrah's strategy of financing acquisitions with debt, and thereafter deleveraging in a timely manner. Fitch takes comfort in Harrah's strong and stable discretionary free cash flow and its solid track record of integrating acquisitions. Harrah's intends to initially finance the transaction with borrowings under its credit facility and proceeds from the concurrent sale of Harrah's Shreveport. Thereafter, Harrah's has stated its intention to access the capital markets to term out at least half of the bank debt added by the transaction. With respect to Horseshoe's 8.625% senior subordinated notes, Harrah's indicated that the notes will most likely be redeemed when they become callable on May 15, 2004, and refinanced at a lower cost. HOLLYWOOD ENTERTAINMENT: Will Publish Q3 Results on October 13 -------------------------------------------------------------- Hollywood Entertainment Corporation (Nasdaq:HLYW), owner of the Hollywood Video chain of more than 1,850 video superstores, will report results of operations for the Company's third quarter on Monday, October 13, 2003. The Company will host an investor call at 4:30 p.m. EDT, which may be accessed by dialing 617-786-2960 and referring to the passcode 81372749. A replay of the call may be accessed by dialing 617-801- 6888 and referring to the passcode 52284741, or by visiting the home page of the Company's Web site -- http://www.hollywoodvideo.com-- or by visiting http://www.streetevents.com As previously reported, Hollywood Entertainment has a working capital deficit of about $112 million. Its corporate credit position is rated by Standard & Poor's at B+. IFCO SYSTEMS: Proposes Placement of 110 Million Euro Bond --------------------------------------------------------- IFCO Systems N.V.'s board of Directors has passed a resolution for the placement of a 110 million Euro bond with a maturity in 2010. IFCO Systems intends to list the planned bond on the Luxembourg Stock Exchange. The proceeds of the planned issue will be used to refinance IFCO's existing senior credit facility as well as provide the company with additional cash resources. * * * As previously reported in Troubled Company Reporter, Standard & Poor's withdrew its double-'C' bank loan rating on IFCO Systems N.V.'s $178 million secured bank credit facility. At the same time Standard & Poor's withdrew its corporate credit and subordinated debt ratings on the company, which was lowered to 'D' on March 15, 2002, after IFCO failed to make its interest payment on its 10.625% senior subordinated notes due 2010. IMP INC: Files for Chapter 11 Protection in N. California Court --------------------------------------------------------------- On September 2, 2003, IMP, Inc., a Delaware corporation, filed a voluntary petition for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Northern District of California, San Jose division, case no. 03-55665. No trustee, receiver or examiner has been appointed, and the Company will act as a debtor and debtor-in-possession subject to the supervision and orders of the Bankruptcy Court. IMP INC: Voluntary Chapter 11 Case Summary ------------------------------------------ Debtor: IMP, Inc. 166 Baypointe Parkway #166B Santa Clara, California 95050 Bankruptcy Case No.: 03-55665 Type of Business: The Debtor makes its own analog and mixed-signal microchips. The company also makes data communications ICs and power management ICs for communications, computer, and systems control applications. Chapter 11 Petition Date: September 2, 2003 Court: Northern District of California (San Jose) Judge: Marilyn Morgan Debtor's Counsel: Scott L. Goodsell, Esq. Campeau, Goodsell and Diemer 38 W Santa Clara Street San Jose, CA 95113 Tel: 408-295-9555 Total Assets: $16,588,000 (as of Dec. 31, 2002) Total Debts: $11,994,000 (as of Dec. 31, 2002) INFORMATION ARCHITECTS: Perceptre Independently Valued at $10MM --------------------------------------------------------------- Information Architects Corporation's (IACH.OB) lead product, Perceptre(TM) 2.0 has been valued at US $10.17 million by MSRE, Inc., an independent research firm based in Lake Oswego, OR. MSRE tested the functions of the enhanced systems and services offered by the Perceptre Information Portal including some of the new Version 2.0 functions, reviewed the materials available from Perceptre including customer contracts, customer lists, financial information, as well as other public and proprietary information sources to determine the viability and value of Perceptre based on Information Architect's present marketing and sales approach for this internet-based background search service. In the report delivered to Information Architects, MSRE further stated that, "Due to the current circumstances and existing strategic partnerships with minority owned resellers, Perceptre will continue to have exceptional leverage with US Federal and State government contracts and will be able to advance this opportunity within a decision window that is expected to last through 2004." "This independent valuation reinforces to our shareholders the inherent worth of our Perceptre program. We intend to continue to prove to the marketplace and investors the value of both Perceptre as a product, as well as Information Architects as a worthy collaborator and investment opportunity," commented Michael L. Weinstein, CEO of Information Architects. Information Architects Corporation is a holding company focused on acquiring technology companies in the security/national security sectors that complement its current software offerings in the areas of on-line, pre-employment screening and background investigation, as well as telephone call time recording and taping. Today, the Company's lead product Perceptre offers its government and commercial sector customers fast, inexpensive, best-of-class, on-line background reviews of potential and current personnel as a "one screen aggregation of data." Records accessible via the Perceptre secured site, single-name input include: county, state and federal criminal & civil court records; motor vehicle records/driving history; personal & business credit reports; bankruptcy & tax liens; birth certificate & social security number trace and verification; sexual offender records; education, employment verification, professional license/certifications, as well as state workers compensation search records; and real estate property services; to name a few. * * * On August 21, 2003, the Board of Directors of Information Architects Corporation decided to terminate the services of Salberg & Company, P.A. as the Company's auditors, and to engage Hunter, Atkins and Russell CPA's as the Company's independent auditors, effectively immediately. The accountant's report on the financial statements for the past two years contained a going concern qualification; such financial statements did not contain any adjustments for uncertainties stated therein. At June 30, 2003, Information Architects' balance sheet shows a working capital deficit of about $1.7 million, and a total shareholders' equity deficit of about $1.4 million. INTEGRATED DEFENSE: S&P Affirms BB- Corporate Credit Rating ----------------------------------------------------------- Standard & Poor's Ratings Services affirmed its ratings, including the 'BB-' corporate credit rating, on defense electronics supplier Integrated Defense Technologies Inc. and removed them from CreditWatch, where they were placed on Feb. 27, 2003. The outlook is developing. IDT currently has around $200 million in rated debt. "The affirmation follows the affirmation of ratings on DRS Technologies Inc. (corporate credit rating also 'BB-'), which is in the process of acquiring IDT," said Standard & Poor's credit analyst Christopher DeNicolo. DRS is acquiring IDT with a combination of cash and stock for a total consideration of about $548 million, which includes repaying IDT's outstanding debt. The transaction is expected to close by the end of 2003. Huntsville, Alabama-based IDT focuses on defense electronics, addressing niche markets for electronic test equipment, warfare simulators, communications monitoring, and specialty radars. Some well-supported programs, with a high percentage of sole-source contracts, mitigate participation in the highly competitive domestic defense industry. Nevertheless, the business risk profile remains well below average, with the firm facing much larger defense competitors and normal industry risks of program cancellations and cost overruns. IDT recently won a contract, teamed with Cubic Defense Applications, to supply aerial combat training equipment for U.S. Air Force, Navy, and Marine aircraft worth a total $535 million (70% of which will go to IDT), the largest in the company's history. If the acquisition by DRS proceeds as planned and all of IDT rated debt is repaid, ratings on IDT will be withdrawn. If the acquisition is not completed, the ratings will depend on management's strategy regarding keeping the company independent or finding another suitor. INTERMET: Weaker-Than-Expected Cash Flow Spurs S&P to Keep Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit and its other ratings for automotive casting company Intermet Corp. on CreditWatch with negative implications. As of June 30, 2003, the Troy, Michigan-based company had about $285 million of debt outstanding. The CreditWatch listing is the result of weaker-than- anticipated cash flow generation resulting from very challenging end-markets, which are not expected to improve materially in the near term," said Standard & Poor's credit analyst Eric Ballantine. "In addition, operating results are not anticipated to improve significantly in the near term and could potentially lead to financial covenant violations. The company expects to be in compliance with its financial covenants in the third quarter and has initiated conversations with its lending institutions about potential waivers or amendments if needed." Intermet's liquidity position continues to weaken, as a result of limited room under its financial covenants. As of June 30, 2003, the company had about $20 million in bank credit facility availability. However, Intermet's financial covenants tighten at the end of September 2003, which would further erode the company's liquidity and may result in a covenant violation. "We expect that if Intermet does break bank covenants, it will be able to obtain a wavier or amendment. Still, liquidity may not be sufficient to maintain the current rating," Mr. Ballantine said. Standard & Poor's will review Intermet's plan to improve liquidity and operating performance within the context of very difficult end-markets. Currently, Standard & Poor's believes ratings will not decline by more than one notch, if at all. INTEGRATED HEALTH: Plan Declared Effective on September 9, 2003 --------------------------------------------------------------- Joseph M. Barry, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, advises the Court that Integrated Health Services Inc. and its debtor-affiliates' Amended Reorganization Plan became effective on September 9, 2003. Pursuant to the Plan, all entities seeking an award by the Bankruptcy Code of compensation for services rendered or reimbursement of expenses incurred through and including the Confirmation Date under Sections 503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code must file and serve with the Bankruptcy Court their final applications no later than October 24, 2003. (Integrated Health Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-0900) INTERPOOL INC: Will Pay Cash Dividend on Common Stock on Oct. 15 ---------------------------------------------------------------- Interpool, Inc. (NYSE:IPX) will pay a cash dividend of $.0625 cents per share for the third quarter of 2003. The dividend will be payable on October 15, 2003 to shareholders of record on October 1, 2003. The aggregate amount of the dividend is expected to be approximately $1,700,000. The amount of the quarterly dividend is based on an indicated annualized dividend rate of 25 cents per share. Interpool (Fitch, BB+ Preferred Share Rating, Stable) is one of the world's leading suppliers of equipment and services to the transportation industry. It is the world's largest lessor of intermodal container chassis and a world-leading lessor of cargo containers used in international trade. Interpool operates from over 240 locations throughout the world. KAISER ALUMINUM: Obtains Nod to Hire Charles River as Consultant ---------------------------------------------------------------- Kaiser Aluminum Corporation and its debtor-affiliates sought and obtained the Court's authority to employ Charles River Associates in the ordinary course of business as management consultants to provide assessment of the outlook for the heat-treated aluminum plate market. Specifically, Charles River's responsibilities will include: (a) Assessment of the base year -- 2001/2002 -- plate demand/supply balance globally; (b) Analysis of plate supply-side issues, including calibration of relative costs of key global suppliers and future capacity outlook; (c) Determining if the Debtors should invest in certain equipment from the results of the analyses and assessments; and (d) Review other strategic implications for the Debtors that may originate from the study. The Debtors reached an agreement with these parties regarding the employment of Charles River: * the Official Committee of Unsecured Creditors; * the Official Committee of Asbestos Claimants; * the United States Trustee for the District of Delaware; and * Martin J. Murphy, the legal representative of future asbestos claimants. The Debtors will pay Charles River, on a monthly basis, not more than $50,000 during any six-month period. The terms of Charles River's compensation will only apply to the heat-treated aluminum plate market assessment project. (Kaiser Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEGACY HOTELS: Will Participate in Scotia Conference on Wed. ------------------------------------------------------------ Legacy Hotels Real Estate Investment Trust (TSX:LGY.UN) will participate in Scotia Capital's Seventh Annual 'Back to School' Conference held in Toronto on September 24, 2003. Neil J. Labatte, Legacy's President and Chief Executive Officer, will present at approximately 1:20 p.m. Eastern Time. Interested participants can access a live audio webcast of the presentation and slide materials through Legacy's website at http://www.legacyhotels.ca. A replay of the presentation will be archived for 90 days. The webcast will last for approximately 40 minutes. Legacy is Canada's premier hotel real estate investment trust with 24 luxury and first-class hotels and resorts with over 10,000 guestrooms located in Canada and the United States. The portfolio includes landmark properties such as Fairmont Le Chateau Frontenac, The Fairmont Royal York, The Fairmont Empress and The Fairmont Olympic Hotel, Seattle. * * * As previously reported, Standard & Poor's Ratings Services downgraded its ratings on Legacy Hotels Real Estate Investment Trust (Legacy REIT or the trust) to 'BB-'. At the same time, the senior unsecured debt rating was lowered to 'B+' from 'BB+'. The outlook is negative. The 'BB-' long-term corporate credit rating on Legacy REIT reflects the deterioration of its business risk profile and financial risk profile. Legacy REIT's credit strengths include a portfolio of good quality real estate assets and its prominent market position. Legacy REIT's credit weaknesses include the aggressive business and financial policies of management, weak and deteriorating credit measures, liquidity concerns, and uncertainty in the lodging sector in general. Standard & Poor's is concerned with Legacy REIT's business and financial strategies given a challenging lodging environment when it is experiencing weakening credit measures. LENNOX INT'L: Will Present at Morgan Stanley Conference Tomorrow ---------------------------------------------------------------- Rick Smith, chief financial officer of Lennox International Inc. (NYSE: LII), will speak at the Morgan Stanley Convertible Conference on Tuesday, September 23, beginning at 10:30 a.m. Mountain Time. The presentation will be broadcast live on the Internet at http://www.lennoxinternational.comand will be archived on the Web site for the next 30 days. A Fortune 500 company operating in over 100 countries, Lennox International Inc. (S&P, BB- Corporate Credit Rating, Stable) is a global leader in the heating, ventilation, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information is available at http://www.lennoxinternational.com MAJESTIC STAR: Amends Consent Solicitation & Notes Tender Offer --------------------------------------------------------------- The Majestic Star Casino, LLC and The Majestic Star Capital Corp. announced that it has amended the terms of its offer to purchase and consent solicitation for its 10 7/8% Senior Secured Notes due 2006 as follows: * Holders who tendered their Notes and delivered their Consents prior to 5:00 p.m., New York City time, on Thursday, September 18, 2003 may validly withdraw those tenders and may validly revoke those Consents at any time prior to 5:00 p.m., New York City time, on Monday, September 22, 2003 by following the procedures set forth in the Amended Offer Documents referred to below. Any Notes tendered and any Consents delivered prior to 5:00 p.m., New York City time, on Thursday, September 18, 2003 that are not validly withdrawn or revoked prior to 5:00 p.m., New York City time, on Monday, September 22, 2003 may not be withdrawn or revoked thereafter. * Holders who tender their Notes and deliver their Consents on or after 5:00 p.m., New York City time, on Thursday, September 18, 2003 will have no withdrawal rights and may not withdraw those tenders and may not revoke those Consents at any time. * The Consent Date has been extended to 5:00 p.m., New York City time, on Monday, September 22, 2003. * The Expiration Date has been extended to 5:00 p.m., New York City time, on Wednesday, October 1, 2003. As of 5:00 p.m., New York City time, on Wednesday, September 17, 2003, $44,805,000 of the aggregate outstanding principal amount of Notes had been tendered in the Offer and Consent Solicitation. The complete terms and conditions of the Offer and Consent Solicitation are set forth in the Offer to Purchase and Consent Solicitation Statement dated August 26, 2003 and the related Letter of Transmittal, as amended by Supplement No. 1 thereto dated September 18, 2003. The Majestic Star Casino, LLC is a multi-jurisdictional gaming company that directly owns and operates one dockside gaming facility located in Gary, Indiana and, pursuant to a 2001 acquisition through its unrestricted subsidiary, Majestic Investor Holdings, LLC, owns and operates three Fitzgeralds brand casinos located in Tunica, Mississippi, Black Hawk, Colorado and downtown Las Vegas, Nevada. For more information about the Company, visit http://www.majesticstar.comor http://www.fitzgeralds.com The Majestic Star Casino, LLC and Majestic Investor Holdings, LLC make available free of charge their annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange Commission. You may obtain a copy of such filings at http://www.sec.govor from applicable Web sites. * * * As reported in the Troubled Company Reporter's September 2, 2003 edition, Standard & Poor's Ratings Services placed its 'B' corporate credit rating for Majestic Star Casino LLC on CreditWatch with positive implications following the company's announcement that it plans to refinance the existing debt at both Majestic Star and at its unrestricted subsidiary, Majestic Investor Holdings LLC. Standard & Poor's has determined that if the transaction closes under terms substantially in line with those described, the corporate credit rating for Majestic Star will be raised to 'B+'. At the same time, Standard & Poor's assigned its 'BB-' rating to Majestic Star's proposed $80 million four-year senior secured credit facility, and a 'B' rating to its proposed $270 million senior secured notes due 2010. Gary, Indiana-based Majestic Star is a casino owner and operator. Pro forma for this transaction, Standard & Poor's expects that total debt outstanding at June 30, 2003, would have been $306 million. MARYLEBONE ROAD: Class A-3 Rating Cut to Speculative Grade Level ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on Marylebone Road CBO 3 B.V.'s class A-2 and A-3 tranches of credit- linked notes due 2013. The ratings remain on CreditWatch with negative implications, where they were placed June 13, 2003. At the same time, the rating on the class A-1 tranche was affirmed and removed from CreditWatch where it was placed June 13, 2003. The rating actions follow three declared credit events, estimated and final valuations of those defaulted obligations, and further deterioration of credit quality that has occurred in the underlying Eur850 million reference portfolio. The ratings reflect the credit quality of the reference credits, the level of credit enhancement provided by subordination, and Marylebone Road CBO 3's ability to meet its payment obligations as issuer of the credit-linked notes. RATINGS LOWERED AND REMAINING ON CREDITWATCH Marylebone Road CBO 3 B.V. Class Rating To From A-2 AA/Neg AAA/Neg A-3 BB+/Neg A/Neg RATINGS AFFIRMED AND REMOVED FROM CREDITWATCH Marylebone Road CBO 3 B.V. Class Rating To From A-1 AAA AAA/Neg MORRIS PUBLISHING: Reports Improved Second Quarter Performance -------------------------------------------------------------- Morris Publishing Group LLC announced its results of operations for the second quarter ended June 30, 2003. The Company reported that revenue increased by 2.0% in the second quarter over the same period a year ago, driven by growth in all advertising categories: retail, classified and national. Total revenues for the second quarter were $111.1 million. Total advertising revenues were up 2.5% for the second quarter and up 2.5% year to date, driven by all three categories of advertising. Retail advertising was up 1.7% for the second quarter and 1.6% year to date. Classified advertising revenue was up 2.3% for the second quarter and 3.3% year to date. National revenue was up 9.8% for the second quarter and 5.5% year to date. Circulation revenue was down 0.7% for the second quarter and 0.8% year to date. William S. Morris IV, chief executive officer, said this quarter's revenue represents a continued stable growth trend. "We are pleased with our revenue improvement in the second quarter, particularly that increases were seen in all categories of advertising." EBITDA (net income before net interest expense, including amortization of debt issuance costs, provision for income taxes, depreciation and amortization expense) for the June 2003 fiscal quarter was $28.7 million. The results represent lower EBITDA than the same period last year due to the planned expenses associated with investments in shared services initiatives. EBITDA margin for the June 2003 fiscal quarter was 25.8%, in line with the full-year 2002 EBITDA margin. On August 7, 2003, the Company and its parent, Morris Communications Company LLC realigned various aspects of their debt and capital structure, including the following: - The Company issued $250.0 million in aggregate principal amount of its 7% Senior Subordinated Notes due 2013, issued under an Indenture with Wachovia Bank, National Association, as trustee. - The Company entered into new $400.0 million senior secured credit facilities, which rank senior to the notes and are guaranteed by Morris Communications and its restricted subsidiaries, including all of the Company's existing subsidiaries. - The Company repaid its intercompany debt due to its parent, Morris Communications, which in turn repaid its existing senior secured credit facilities. As a result, the Company incurred a non-cash financing loss on extinguishment of debt of approximately $6.4 million related to the write-off of unamortized deferred loan costs. - Morris Communications contributed various real estate and trademarks primarily used in the newspaper business to the Company. The Company distributed to Morris Communications various parcels of real estate and related personal property that are not part of the newspaper business. These contributions and distributions will not affect the combined financial statements of the Company. - The Company entered into a management agreement with Morris Communications, whereby Morris Communications and its subsidiary, Mstar Solutions, will provide a wide range of management and general corporate services to the Company for certain fees payable by the Company. Total debt outstanding at June 30, 2003, proforma for these and other related transactions was $550.0 million. Morris Publishing Group LLC is a wholly owned subsidiary of Morris Communications Company LLC, a privately held media company based in Augusta, Ga. Morris Publishing Group was formed in 2001 and assumed the operations of the newspaper business segment of its parent, Morris Communications. Morris Publishing publishes 26 daily, 10 nondaily and 23 free community newspapers in the United States. * * * As reported in the Troubled Company Reporter's July 28, 2003 issue, Standard & Poor's Ratings Services assigned its 'BB' corporate credit rating to Morris Publishing Group LLC. At the same time, Standard & Poor's assigned its 'BB' rating to the company's planned $450 million senior secured credit facilities. These bank loan facilities will consist of a $200 million 7-year revolving credit facility and $250 million 7.5-year term loan. In addition, a 'B+' rating was assigned to the planned $200 million senior subordinated notes due 2013 of Morris Publishing and its subsidiary, co-issuer Morris Publishing Finance Co. Proceeds will be used to repay Morris Publishing's existing debt to holding company parent Morris Communications Co. LLC, which will repay its existing credit facilities. The outlook is stable for the Augusta, Georgia-headquartered media company. Pro forma for the debt transactions, Morris Publishing will have about $550 million of debt outstanding. MEDICALCV INC: Seeking Additional Financing to Fund Future Ops. --------------------------------------------------------------- Medicalcv Inc. is a cardiothoracic surgery device manufacturer. Its primary products are mechanical heart valves known as the Omnicarbon Series 3000 and Series 4000, which it manufactures and markets. Its heart valves are used to treat heart failure caused by the aging process, heart diseases, prosthetic heart valve failure and congenital defects. To date, it has distributed the Omnicarbon 3000 and 4000 heart valves primarily in Europe, South Asia, the Middle East and the Far East. In fiscal year 2003, it derived 62 percent of its net sales from Europe. As an innovator of heart valve technology, the Company has more than 33 years of experience in developing, manufacturing and marketing five generations of heart valves, and has sold approximately 140,000 heart valves worldwide. As of July 31, 2003, Medicalcv had an accumulated deficit of $18,194,058 and has incurred losses in each of the last seven fiscal years. Since 1994, it has invested in developing a bileaflet heart valve, a proprietary pyrolytic carbon coating process and obtaining premarket approval from the FDA to market its Omnicarbon 3000 heart valve in the U.S. Company strategy has been to invest in technology to better position it competitively once FDA premarket approval was obtained. It is expected that cumulative net losses will continue at least through fiscal year 2004 because of anticipated spending necessary to market the Omnicarbon 3000 heart valve in the U.S. and to establish and maintain a strong marketing organization for domestic and foreign markets. The Company's ability to continue as a going concern depends upon its ability to obtain additional debt and/or equity financing in the second quarter of fiscal year 2004. It is currently seeking additional financing to fund its operations and working capital requirements. The Company cannot provide any assurance, however, that such additional financing will be available on terms acceptable to it or at all. It will need to obtain additional capital prior to the maturity date of its revolving line of credit with PKM on September 17, 2003, or otherwise extend or restructure this debt to continue operations. Medicalcv anticipates that it will need to raise between $8,000,000 and $10,000,000 of additional equity or debt financing to fund operations and working capital requirements beginning in September 2003. It expects to face substantial difficulty in raising funds in the current market environment and has no commitments at this time to provide the required financing. If it does obtain the foregoing financing, it believes it will have sufficient capital resources to operate and fund the growth of its business for the remainder of fiscal year 2004 and fiscal year 2005. There is no assurance, however, that it will be able to raise sufficient additional capital on terms that it considers acceptable, or at all. The terms of any equity financing are expected to be highly dilutive to its existing security holders. The delisting of its securities from the Nasdaq SmallCap Market that occurred in March 2003 will negatively affect its ability to raise capital. If unable to obtain adequate financing on acceptable terms, the Company has indicated that it will be unable to continue operations. MERITAGE CORP: Prices Add-On Offering of 9.75% Senior Notes ----------------------------------------------------------- Meritage Corp. (NYSE: MTH) has priced an add-on offering of $75 million in aggregate principal amount of its 9.75% senior notes due June 1, 2011. The notes were priced at 109.0% of their face amount implying a yield to worst of 7.642%. The company intends to use the net proceeds from the offering for general corporate purposes, which will include the paydown of the company's senior credit facility. Closing of the offering is expected to occur on Sept. 25, 2003. These notes will be issued under an add-on provision of the indenture that governs the 9.75% senior notes due 2011 issued by Meritage on May 31, 2001 and Feb. 21, 2003. Collectively, they will constitute a single series of notes with those notes, bringing the aggregate principal amount outstanding of the 9.75% senior notes due 2011 to $280 million. In connection with the offering, the company has agreed to file an exchange offer registration statement under the Securities Act in order to exchange the unregistered notes for substantially identical registered notes. Following the exchange offer, the notes will be identical to and trade with the 9.75% senior notes due 2011 issued by Meritage on May 30, 2001 and Feb. 21, 2003. The notes have been offered only to qualified institutional buyers in the United States under Rule 144A under the Securities Act of 1933, as amended, and certain investors outside of the United States under Regulation S under the Securities Act. The offering of the notes has not been registered under the Securities Act or any state securities laws and the notes may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws. Meritage Corp. (Fitch, BB Senior Unsecured Debt Rating, Stable) designs, builds and sells distinctive single-family homes ranging from entry-level to semi-custom luxury. Meritage operates in the Phoenix and Tucson, Ariz., markets under the Monterey Homes, Hancock Communities and Meritage Homes brand names; in the Dallas/Ft. Worth, Austin and Houston, Texas, markets as Legacy Homes and Hammonds Homes; in the East San Francisco Bay and Sacramento, Calif., markets as Meritage Homes; and in the Las Vegas, market as Perma-Bilt Homes. MERRILL LYNCH: S&P Downgrades Class F Notes Rating a Notch to B- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on class F of Merrill Lynch Mortgage Investor's mortgage pass-through certificates series 1995-C3. At the same time, ratings were raised on classes C, D, and E, and ratings were affirmed on classes A-3 and B from the same transaction. The rating actions reflect the increase in credit support levels from a 62% paydown of the loan pool and improved financial performance of the remaining properties in the loan pool, with a year-end 2002 net cash flow weighted average debt service coverage ratio of 1.48x (85% of loans reporting), up from 1.31x at issuance. These are offset by the potential losses associated with three real estate owned (REO) properties ($7.4 million, 3.0% of loan pool) and three 90-plus days delinquent loans ($12.4 million, 5.1%). As of August 2003, the loan pool balance was $243.28 million with 72 loans, down from $643.60 million with 149 loans at issuance. In addition to the specially serviced loans mentioned above, as of August 2003 there were 13 loans ($48.1 million, 19.8%) on the master servicer's (GMAC Commercial Mortgage), watchlist. To date, realized losses to the trust total $2.2 million. Three of the specially serviced loans (two REO and one 90-plus days delinquent totaling $6.8 million, 2.8%) secured by former Ramada Inn Hotels, have the same borrower. One REO hotel in Atlanta, Georgia. recently sold for a realized loss of approximately $3.4 million, which should be reflected in the next trustee report. The special servicer, CRIIMI Mae Services L.P., is reviewing an offer on the other REO hotel in Nashville, Tennessee. The total exposure balance is $2.8 million; the hotel was appraised for $800,000 in March 2003. CRIIMI Mae anticipates a loss of approximately $2.2 million on this loan. Currently, there are some prospective buyers to purchase the property. Lastly, the borrower has secured financing to pay off the other delinquent loan for a hotel in Montgomery, Alabama. The loan balance is $795,000, and the closing is expected to occur by Sept. 30, 2003. CRIIMI Mae has accepted a $1.25 million offer to sell the third REO property (total exposure is approximately $2.0 million), an EconoLodge Hotel in Memphis, Tennessee. The sale is projected to close by Oct. 16, 2003. The seventh largest loan in the pool is one of the 90-plus days delinquent loans. The $7.3 million loan, secured by a 49,000-square-foot retail center, consisting of three buildings, in Orlando, Florida, was appraised at $9.9 million in February 2003. The loan transferred to special servicing in August 2002 due to imminent monetary default when several tenants vacated the property due to a decline in business. The year-end 2002 DSCR was 0.99x, with an occupancy of 87%. The borrower plans to sell one of the buildings and use the proceeds to pay down a portion of the loan balance. Lastly, the borrower of the remaining 90-plus day delinquent loan ($4.3 million, 1.8%) recently agreed to a deed-in-lieu of foreclosure, which the special servicer expects to close by mid October 2003. The collateral is a 181,332-sq.-ft. retail center in Cadillac, Michigan. Kmart, the anchor tenant, recently rejected its lease and vacated 114,240 sq. ft. (63% of the center). As of June 2003, the property was 33% occupied, with a DSCR of 0.76x. Standard & Poor's is concerned with two of the top 10 loans (first and fourth) on the watchlist. The borrower of the largest loan ($12.8 million, 5.3%), a multifamily complex in Arlington, Texas, reported a decline in year-end 2002 DSCR to 1.00x from 1.37x at issuance. As of September 2003, the borrower reported an occupancy of 93.3%, similar to the 94% occupancy rate at issuance. The fourth largest loan ($9.0 million, 3.7%), secured by a multifamily complex in Taylors, South Carolina, reported a decline in DSCR to 0.78x from 1.28x at issuance. Seven of the remaining 11 loans are on the watchlist due to DSCR below 1.10x, and the other four loans due to a decline in occupancy at the properties. Standard & Poor's stressed the specially serviced loans and some of the watchlist loans in its analysis, and the stressed credit enhancement levels adequately support the rating actions. The loan pool has multiple property types that include multifamily (60%), retail (23%), and healthcare (10%). The properties are geographically disbursed throughout 25 states; Texas, with 36% of the loan pool balance, is the only state with a concentration in excess of 10%. RATINGS LOWERED Merrill Lynch Mortgage Investors Inc. Mortgage pass-through certs series 1995-C3 Rating Class To From Credit Support (%) F B- B 5.69 RATINGS RAISED Merrill Lynch Mortgage Investors Inc. Mortgage pass-through certs series 1995-C3 Rating Class To From Credit Support (%) C AAA AA+ 51.99 D AA BBB+ 36.11 E BB+ BB 17.60 RATINGS AFFIRMED Merrill Lynch Mortgage Investors Inc. Mortgage pass-through certs series 1995-C3 Class Rating Credit Support (%) A-3 AAA 81.09 B AAA 65.22 NAT'L CENTURY: Seeks Clearance for Garland Settlement Agreement --------------------------------------------------------------- Joseph M. Witalec, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, relates that before the Petition Date, pursuant to a Sales and Subservicing Agreement, NPF XII, Inc. purchased certain eligible accounts receivable from Garland Physicians' Hospital, Ltd. In December 2002, Garland and certain of the Debtors, including NPF XII, entered into a settlement agreement under which the parties settled the amounts due under the accounts receivable financing program. Garland and NPF-LL, Inc. are parties to an Equipment Lease Agreement dated December 17, 2001. The Lease Documents were unaffected by the December 2002 settlement. Garland remains obligated to continue making payments under the Lease Agreement. However, since March 17, 2003, when Garland made only a partial payment, Garland has been in default under the Lease. Garland failed to make any subsequent monthly payments. The aggregate amount payable to NPF-LL under the Lease Documents as of August 2003 is $2,222,790. Subsequently, Garland advised NPF-LL that it is unable to perform its payment obligation under the Lease. In connection with its financial restructuring, Garland entered into an agreement for the sale of substantially all of its assets to Vista Hospital of Dallas, L.P. To consummate the Vista Transaction, Garland must agree to acquire and transfer the Leased Equipment to Vista Land & Equipment, LLC, which is an affiliate of Vista Hospital. After arm's-length negotiations, NPF-LL, Garland and The Provident Bank, in its capacity as agent for the Debtors' secured bank lenders, entered into a Settlement Agreement. The principal terms of the Agreement are: A. Settlement Amount Garland will cause Vista Land to pay $1,650,000 to the NPF-LL cash collateral account at Provident by wire transfer at the time that the Leased Equipment is transferred to Vista Land. The Provident account details are: The Provident Bank Cincinnati, Ohio ABA # 042 000 424 Acct # 0521 303 Acct Name: NPF LL, Inc./Provident Bank Cash Collateral Account Attn: Jay Clements (513) 579-2064 B. Transfer of Title On payment of the Settlement Amount, NPF-LL will transfer its interests in the Leased Equipment to Vista Land as Garland's designee. C. Transfer of Liens to Proceeds The conclusion of the relationship between NPF-LL and Garland, and the release of NPF-LL's interests under the Lease Documents in the Leased Equipment, will bind any and all parties that may assert a lien, claim or interest in or to the Lease Documents, with any liens transferring to the proceeds. The Leased Equipment will be transferred to Vista Land free and clear of all adverse claims, liens and interests, with claims, liens and interests attaching to the Settlement Amount. D. Mutual Releases The Settlement Agreement provides for an exchange of mutual releases between NPF-LL and Provident, on the one hand, and Garland on the other hand, on the terms and subject to the conditions set forth in the Settlement Agreement. NPF-LL believes that the proposed settlement will maximize the recovery under the Lease Documents. If the settlement is not consummated, Garland has indicated that it may have difficulty continuing normal business operations. If that occurs, the Debtors would be required to exercise their remedies, at additional costs, to collect Garland's outstanding obligations under the Lease Documents. There is no assurance that the Debtors would be able to collect as much as they will receive pursuant to the Settlement Agreement. Accordingly, the Court authorizes the Debtors to enter into the Garland Settlement Agreement and implement it. (National Century Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 609/392-0900) NAT'L CONSTRUCTION: Feb. 28 Net Capital Deficit Widens to C$920K ---------------------------------------------------------------- National Construction Inc. (TSX Venture Exchange: NAT, OTCBB: NATS) announced results for the year-ended February 28, 2003. (All subsequent amounts are expressed in Canadian dollars, unless specified otherwise). Year-ended February 28, 2003 Revenues were $68.3 million for the year ended February 28, 2003 compared to $29.4 for the year ended February 28, 2002. Gross profit for the year totaled $0.7 million compared to $2.8 million for the year-ended February 28, 2002. Selling, general and administrative expenses totaled $4.8 million compared to $5.2 million 2002. The net loss for the year-ended February 28, 2003 was $4.2 million compared to $2.9 million last year. At February 28, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $920,000. National announced that it is restating its financial statements for the first quarter ended May 31, 2002. The impact of the restatement is the elimination of future income tax assets of $573,557 at May 31, 2002. National also announced that it has reached a settlement of $1.4 million for a major claim on the Interquisa Canada PTA (Purified Terephthalic Acid Plant) project in Montreal East. The complete financial statements for the year-ended February 28, 2003 and restated financial statements for the three months ended May 31, 2002 are available at SEDAR at http://www.sedar.com National Construction Inc. is a multi-trade industrial construction and maintenance contracting services company primarily servicing Eastern Canada. Established in 1941, National provides piping, mechanical installation, electrical and instrumentation services to industrial clients, mainly in the petrochemical and chemical, oil and natural gas, energy, pulp and paper, and mining and metallurgy sectors. National also provide maintenance services for operating facilities in the petrochemical industry. National currently has four subsidiaries, National Construction Group Inc., National Maintenance Inc; Auprocon Limited and Entretien Industriel N-S Inc. all of which are wholly-owned. NEXTEL COMMS: Will Redeem All 9.75% and 12% Redeemable Notes ------------------------------------------------------------ Nextel Communications Inc. (NASDAQ:NXTL) will redeem all of its 9.75% Senior Serial Redeemable Discount Notes due 2007 and 12% Senior Serial Redeemable Notes due 2008. About $912 million in principal amount of the 9.75% notes, and about $274 million in principal amount of the 12% notes, were outstanding as of June 30, 2003. The redemption of the 9.75% notes is being made pursuant to the terms of the notes. The 9.75% notes are redeemable at Nextel's option at a redemption price equal to 102.4375% of the outstanding principal amount plus an amount equal to accrued but unpaid interest. The redemption date for the 9.75% notes has been set for October 31, 2003. The redemption of the 12% notes is being made pursuant to the terms of the notes. The 12% notes are redeemable at Nextel's option at a redemption price equal to 106.0% of the outstanding principal amount plus an amount equal to accrued but unpaid interest. The redemption date for the 12% notes has been set for November 1, 2003. Nextel Communications (S&P, BB- Corporate Credit Rating, Stable), a Fortune 300 company based in Reston, Va., provides fully integrated wireless communications services across the United States through its all-digital wireless network. N-VIRO INTERNATIONAL: Red Ink Continued to Flow in 2nd Quarter -------------------------------------------------------------- N-Viro International Corp. (OTC Bulletin Board: NVIC.OB) announced the Company's financial results through the second quarter of 2003. Second Quarter Results Overall revenue increased $168,000, or 14%, to $1,408,000 for the quarter ended June 30, 2003 from $1,240,000 for the quarter ended June 30, 2002. The increase in revenue was due primarily to the addition of service fee revenue for the management of alkaline admixture in 2002. Gross profit decreased $16,000, or 4%, to $346,000, primarily due to the increased percentage of total revenue derived from the service fees for the management of alkaline admixture. The gross profit margin decreased to 25% from 29%, and was the net result of an increase in costs on purchasing the alkaline admixture used in the process, offset by a decrease in costs to start up the soil blending operation, started in May, 2002. Operating expenses increased $132,000, or 26%, to $644,000, primarily due to an increase of $232,000 in insurance and outside professional fees, partially offset by a decrease of $100,000 in personnel-related, selling and stockholder relation costs. Included in the increase of $232,000 for insurance and outside professional fees was $86,000 for expenses related to a derivative action filed by a stockholder, and $82,000 in one-time costs, paid for in the prior year and previously deferred in the Company's balance sheet, related to the contracts with investment banking firms to obtain equity and debt financing. As a result of the foregoing factors, the Company recorded an operating loss of $298,000 for the second quarter of 2003 compared to an operating loss of $150,000 for the same period in 2002, an increase in the loss of $148,000. Net nonoperating expense increased by $110,000 to a net nonoperating expense of $87,000 for the second quarter of 2003 from net nonoperating income of $23,000 for 2002. The increase was primarily due to an increase in interest expense of $59,000 and a decrease of income of $42,000 in the equity of a joint venture, to a loss of $15,000 in 2003 from income of $27,000 in 2002. Basic and diluted loss per share was $0.15 for the second quarter 2003 as compared to a loss per share of $0.05 for the same period in 2002. Year-to-Date Results Overall revenue decreased $5,000, or 0.2%, to $2,653,000 for the six months ended June 30, 2003 from $2,658,000 for the six months ended June 30, 2002. The decrease in revenue was due primarily to increased service fee revenue for the management of alkaline admixture. Gross profit decreased $154,000, or 18%, to $678,000 for the six months ended June 30, 2003 from $832,000 for the six months ended June 30, 2002. This decrease in gross profit was primarily due to the increase in the cost of supplying alkaline admixture to all domestic facilities and additional product shipping costs at its management facility operation. The gross profit margin decreased to 26% from 31%, and was primarily due to the increased costs associated with the sale of alkaline admixture and the Company's management facility operation for the same period. Operating expenses increased $113,000, or 11%, to $1,095,000 for the six months ended June 30, 2003 from $982,000 for the six months ended June 30, 2002. The increase was primarily due to an increase of $270,000 in insurance and outside professional fees, partially offset by a decrease of $159,000 in personnel-related, selling and stockholder relation costs. Included in the increase of $270,000 for insurance and outside professional fees was $142,000 for expenses related to a derivative action filed by a stockholder, and $82,000 in one-time costs, paid for in the prior year and previously deferred in the Company's balance sheet, related to the contracts with investment banking firms to obtain equity and debt financing. As a result of the foregoing factors, the Company recorded an operating loss of $417,000 for the six months ended June 30, 2003 compared to an operating loss of $150,000 for the six months ended June 30, 2002, an increase in the loss of $267,000. Net nonoperating expense increased by $153,000 to a net nonoperating expense of $105,000 for the six months ended June 30, 2003 from net nonoperating income of $48,000 for the six months ended June 30, 2002. The increase was primarily due to an increase in interest expense of $75,000 and a decrease of income of $65,000 in the equity of a joint venture, to a loss of $13,000 in 2003 from income of $52,000 in 2002. Basic and diluted loss per share was $0.20 for the six months ended June 30, 2003 as compared to a loss per share of $0.04 for the same period in 2002. Commenting on the results, Terry J. Logan, Company CEO stated, "We are encouraged by the increase in ongoing revenues this year compared to last year of almost $92,000, but this increase has brought with it exposure to additional costs that has adversely impacted our gross profit. Late last month we finished litigation with a stockholder that impacted us directly in the form of increased professional fees and indirectly with time spent by management and our board. We hope to put this chapter behind us and refocus efforts to become profitable." N-Viro International Corporation develops and licenses its technology to municipalities and private companies. N-Viro's patented processes use lime and/or mineral-rich, combustion byproducts to treat, pasteurize, immobilize and convert wastewater sludge and other bio-organic wastes into biomineral agricultural and soil-enrichment products with real market value. More information about N-Viro International can be obtained by contacting the office or on the Internet at http://www.nviro.com As reported in the Troubled Company Reporter's September 19, 2003 edition, in February 2003 the Company closed on an $845,000 credit facility with a local bank. This senior debt credit facility is comprised of a $295,000 four year term note at 7.5% and a line of credit up to $550,000 at Prime plus 1 % and secured by a first lien on all assets of the Company. The Company will use the funds to refinance existing debt and to provide working capital. Previously, the Company had a $750,000 line of credit with another financial institution, secured by a $400,000 restricted Certificate of Deposit, required and held by this financial institution. Effectively, the former line of credit provided only $350,000 of additional working capital. The effective increase in the line will provide the Company with additional working capital, and the debt refinance will provide lower cost and longer term debt, improving cash flow. To secure the credit facility, the Company was required by the financial institution to obtain Additional Collateral of $100,000 from a real estate mortgage from a third party. Messrs. J. Patrick Nicholson, the Chairman of the Board and Consultant to the Company; Michael G. Nicholson, the Company's Chief Operating Officer and a Director; Robert F. Nicholson, a Company employee, and Timothy J. Nicholson, a Company employee, collectively provided the $100,000 Additional Collateral. In exchange for their commitment, the Company has agreed to provide the Nicholsons the following: (1) an annual fee in an amount equal to two percent (2%) of the aggregate value of the Mortgage or Mortgages encumbering the Additional Collateral, which fee originally shall be $2,000.00 per annum; (2) interest at an annual rate of 5% of the aggregate value of the Mortgage or Mortgages encumbering the Additional Collateral beginning on the first anniversary date of the closing of the Credit Facility, and (3) grant, jointly, a warrant to acquire in the aggregate, 50,000 shares of the Company's voting common stock at a purchase price of $0.90 per share, which was the closing market price of the Company's common stock on the prior business day to the closing of the Credit Facility. In addition, the Company granted to the Nicholsons a lien upon the Company's inventory and accounts receivable. This lien is subordinated to both existing liens on the Company's assets and all liens granted by the Company in favor of the financial institution providing the Credit Facility. The Company is in violation of financial covenants contained in the agreement, concerning the maintenance of both a tangible net worth amount and positive debt service coverage ratio for the period, of which requires positive earnings. The Company's bank waived this violation in light of the Company's net loss for the six months ended June 30, 2003. The Company is currently actively pursuing sale of its investment in Florida N-Viro, LP, which may provide, in management's opinion, additional funds to finance the Company's cash requirements. Because these efforts are still in progress, there can be no assurance the Company will successfully complete these negotiations. Notwithstanding the above, the Company has in the past and continues to sustain net and operating losses. In addition, the Company has used substantial amounts of working capital in its operations which has reduced its liquidity to a low level. These matters raise substantial doubt about the Company's ability to continue as a going concern. PG&E NAT'L: Court Okays Reed Smith as USGen Committee's Counsel --------------------------------------------------------------- The USGen Unsecured Creditors' Committee sought and obtained the Court's permission to retain Reed Smith as its counsel. Reed Smith is expected to: (a) advise the Committee with respect to its duties and powers; (b) consult with USGen concerning the administration of its case; (c) assist the Committee in its investigation of the acts, conduct, assets, liabilities, including USGen's financial condition and business operation, and the desirability of the continuation of such business, and any other matters relevant to the case or the formulation of a Plan; (d) prepare all necessary motions, applications, answers, orders, reports, or other papers in connection with the administration of USGen's estate; (e) receive any proposed Plan and Disclosure Statement, participate with USGen or others in the formulation or modification of a Plan, or propose a Committee Plan if appropriate; and (f) perform other legal services as may be required and in the Committee's interest. Reed Smith will be paid its customary hourly rates, and reimbursed for expenses incurred in its service to the Committee. Reed Smith's current hourly rates are: Partners $275 - 500 Associates 180 - 325 Paraprofessionals 145 - 200 (PG&E National Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) PHILIP SERVICES: Commences CCAA Filing as Part of Reorg. Plan ------------------------------------------------------------- Philip Services Corporation (OTC:PSCD.PK) (TSE:PSC) announced that it and certain of its subsidiaries, including its two Canadian operating subsidiaries, Philip Services Inc. and Philip Analytical Services Inc., have filed voluntary applications for protection under the Companies' Creditors Arrangement Act with the Ontario Superior Court of Justice (Commercial Division) in Toronto. The purpose of the Canadian filing is to assist the Company in carrying out the reorganization plan sponsored by High River Limited Partnership, an affiliate of Carl C. Icahn, which was selected by the Company and which selection was affirmed by the U.S. Bankruptcy Court by order made on Sept. 12, 2003. Under the Canadian filing, the Canadian Court has (i) recognized the U.S. Bankruptcy Proceedings, (ii) stayed all claims by Canadian claimants against the Company and its subsidiaries subject to the Chapter 11 proceedings under the U.S. Bankruptcy Code, and (iii) directed all Canadian claimants with claims against the US Debtors to assert such claims in the US Proceedings. The recognition of the US Proceedings by the Canadian Court will facilitate the effective coordination of the Company's restructuring in both countries. "We will continue to provide our Canadian customers with the high level of service that we have delivered in the past, pay employees in the normal course, and continue their ordinary course benefits," said Robert L. Knauss, principal executive officer and chairman of the board. Mr. Knauss added, "The implementation of the High River Plan will start us on the road to recovery and financial stability, and upon confirmation of the Plan, will provide assurance that the Company will emerge as an ongoing entity no longer burdened by excess debt and troublesome legacy issues which will benefit all stakeholders." Ernst & Young Inc. has been appointed as interim receiver over the key business assets of the Company's Canadian subsidiaries to facilitate the Canadian transactions required by the High River Plan. Under the High River Plan, High River Limited Partnership, among other things, will provide an exit loan facility of US$150 million to the reorganized Company and will pay US$20 million for a 20% equity interest in the reorganized Company on the effective date of a plan of reorganization. On completion, entities owned by Carl C. Icahn would, in the aggregate, own a majority of the outstanding shares of the reorganized Company. The business operations of the Canadian subsidiaries would be continued by one or more new subsidiaries of the reorganized Company. A disclosure statement for the plan of reorganization and the plan of reorganization itself have not yet been presented to or approved by the U.S. Bankruptcy Court for the Southern District of Texas. The approval of the Canadian Court will also be necessary before completion of the Canadian transactions required by the High River Plan. Confirmation of the High River Plan is, as in all Chapter 11 proceedings, subject to confirmation by a vote of certain creditors and no assurance can be given that the Plan will be confirmed as currently proposed. Headquartered in Houston, Philip Services Corporation is an industrial and metals services company with two operating groups: PSC Industrial Services provides industrial cleaning and environmental services; and PSC Metals Services delivers scrap charge optimization, inventory management, remote scrap sourcing, by-products services and industrial scrap removal to major industry sectors throughout North America. The Company and most of its U.S.-domiciled subsidiaries filed for Chapter 11 protection on June 2, 2003. PRIME HOSPITALITY: Will Release 3rd Quarter Earnings on Oct. 30 --------------------------------------------------------------- Prime Hospitality Corp. (NYSE: PDQ), will release its third quarter earnings on Thursday, October 30, 2003 to be followed by a conference call that day at 9:30 a.m. Eastern Time. Participating on the call will be A.F. Petrocelli, Chairman and CEO, and Richard Szymanski, Senior Vice President and CFO. To Participate: 1. Dial In Number: 1-800-603-4335 2. Give the operator your name and company affiliation. 3. The system will connect you with the conference group. A playback will be available two hours after the completion of the conference call through 11/13/2003. To listen to the tape, call 1-800-642-1687 and enter the conference ID#: 2902984. If you have any questions about the teleconference please call Colleen O'Hanlon, 973-882-1010. Prime Hospitality Corp., one of the nation's premiere lodging companies, owns, manages, develops and franchises more than 240 hotels throughout North America. The Company owns and operates three proprietary brands, AmeriSuites(R) (all-suites), Prime Hotels & Resorts(sm) (full-service) and Wellesley Inns & Suites(R) (limited service). Also within Prime's portfolio are owned and/or managed hotels operated under franchise agreements with national hotel chains including Hilton, Radisson, Sheraton and Holiday Inn. Prime can be accessed over the Internet at http://www.primehospitality.com As reported in Troubled Company Reporter's July 30, 2003 edition, Standard & Poor's Ratings Services affirmed its 'BB-' corporate credit and 'B' subordinated debt ratings for Prime Hospitality Corp. At the same time, the ratings were removed from CreditWatch where they were placed on July 2, 2003. The outlook remains negative, reflecting the continued soft lodging environment. PRUDENTIAL SECURITIES: Fitch Affirms Low-B Ratings on 4 Classes --------------------------------------------------------------- Prudential Securities Secured Financing Corp.'s commercial mortgage pass-through certificates, series 1999-NRF1, are upgraded by Fitch Ratings as follows: -- $51.1 million class B to 'AAA' from 'AA'; -- $46.5 million class C to 'AA' from 'A'; -- $46.5 million class D to 'BBB+' from 'BBB' -- $13.9 million class E to 'BBB' from 'BBB-'. Fitch also affirms the following classes: -- $71 million class A-1 'AAA'; -- $480.3 million class A-2 'AAA'; -- Interest-only class A-EC 'AAA'; -- $20.9 million class F 'BB+'; -- $25.6 million class G 'BB'; -- $9.3 million class H 'BB-'; -- $9.3 million class J 'B+'. The $15.8 million class K, $6.5 million class L and $10.7 class M certificates are not rated by Fitch. The rating upgrades reflect the consistent loan performance combined with the reduction of the pool's collateral balance, which has resulted in increased subordination levels. As of the August 2003 distribution date, the transaction's aggregate principal balance has decreased 13.1%, to $807.3 million from $928.9 million at closing. CapMark Services, LP, the master servicer, collected year-end 2002 financials for 93.6% of the pool balance. Based on the information provided, the resulting YE 2002 weighted average debt service coverage ratio is 1.60 times, compared to 1.57x at YE 2001 and 1.45x at issuance for the same loans. The deal has few loans of concern. Currently, three loans (0.70%) are in special servicing. The largest loan, Best Western Luxbury Hotel (0.4%), is secured by a hotel in Fort Wayne, Indiana and is 90 days delinquent. The borrower is currently receiving offers on the property. The next largest specially serviced loan, Fountain View Retirement Village of Grant (0.2%), is secured by a health care property in Grant, Michigan and is also 90 days delinquent. The loan transferred to the special servicer in May 2003. The special servicer continues to work with the borrower to bring the loan current. The borrower maintains that they can not afford the insurance that is required in the loan documents. The final loan in special servicing, Wagner Hardware Company (0.1%), is secured by a warehouse property in Mansfield, Ohio. The building is currently 100% vacant due to the single tenant vacating the property. The borrower is negotiating a sale of the property that would result in minimal losses to the pool. Fitch will continue to monitor this transaction, as surveillance is ongoing. QWEST COMMUNICATIONS: Provides Update on GSA Review Process ----------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) announced that the Inspector General of the General Services Administration has referred to the GSA Suspension/Debarment Official the question of whether Qwest should be considered for debarment. This is a continuation of a review that was initiated by the General Counsel's office of the GSA in July 2002. The company has been informed that the basis for the referral is last February's indictment against four former employees in connection with a transaction with the Arizona School Facilities Board in June 2001 and a civil complaint filed the same day by the Securities and Exchange Commission against the same former employees and others relating to the Arizona School Facilities Board transaction and a transaction with Genuity Inc. in 2000. The company is cooperating fully with the GSA and believes that it will remain a supplier to the government, although it cannot predict the outcome of this referral. Qwest Communications International Inc. (NYSE: Q) -- whose December 31, 2003 balance sheet shows a total shareholders' equity deficit of about $1 billion -- 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 www.qwest.com RELIANCE: Wants Plan Filing Exclusivity Extended Until Dec. 31 -------------------------------------------------------------- Reliance Group Holdings and Reliance Financial Services ask Judge Gonzalez for another extension of their exclusive periods to file a plan and solicit acceptances of that plan. Steven R. Gross, Esq., at Debevoise & Plimpton, tells Judge Gonzalez that since the Settlement with the Pennsylvania Liquidator, the parties are now able to devote their attention to formulating a Reorganization Plan. However, this cannot be completed overnight because it will take time to implement the Settlement due to the complexity of the issues. Mr. Gross assures the Court that the Debtors and the Committees are working on Reorganization Plans, one of which will be filed to be confirmed before the end of this year. The dispute on the merits and priority status of various tax claims asserted by New York State and New York City continue to hinder the discussions. Since these taxing authorities have not provided a full explanation of their claims, the process of assessing the tax exposure and negotiating compromises will require more time. As a result, the Debtors ask the Court to extend their exclusive filing period to and including December 31, 2003, and their exclusive solicitation period to and including March 3, 2004. Mr. Gross assures Judge Gonzalez that creditors will not be prejudiced by the requested extension because the Debtors are continuing to preserve the estate's assets, making minimal expenditures for administrative expenses. Termination of the Exclusive Periods at this juncture could harm and prejudice the Debtors' estates. In view of the litigious nature of the Debtors' Chapter 11 proceedings, the uncertainty resulting from premature termination of the Exclusive Periods could have a substantial adverse impact on the stability of the Debtors' Chapter 11 cases. (Reliance Bankruptcy News, Issue No. 40; Bankruptcy Creditors' Service, Inc., 609/392-0900) SK GLOBAL: Wants Lease Decision Period Extended to December 22 -------------------------------------------------------------- SK Global America, Inc. is currently a party to four unexpired non-residential real property leases that have neither been assumed nor rejected. Some of these Leases may be valuable assets of the Debtor's Chapter 11 estate or may be integral to the continued operation of its business. The Debtor asks Judge Blackshear to extend its deadline to assume or reject the Leases to December 22, 2003, without prejudice to the rights of each of the lessors under the Leases to seek, for cause shown, an earlier date upon which the Debtor must assume or reject a specific Lease. Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York, explains that additional time is needed for the Debtor to analyze the Leases to avoid what would be either a premature assumption or rejection of them. If the Debtor were to assume the Leases prematurely, Mr. Ratner points out that the Debtor, its estate and creditors would incur unnecessary administrative costs for the Leases, which ultimately may not be important as the Debtor continues to work on a business plan that may include relocation or consolidation of its operations. In addition, any post- assumption breach by the Debtor under an assumed Lease would give rise to an administrative expense claim. As an international trading company with several offices located throughout the U.S., annual sales exceeding $2,600,000 and numerous trading partners located in the country and abroad, the Debtor's financial affairs and contractual relationships are complex and extensive. Mr. Ratner notes that the Debtor's case is still in its early stages. During the first 60 days of its case, the Debtor expended significant time and resources on issues relating to its orderly transition to operating in a Chapter 11 context. Mr. Ratner explains that it's simply not possible for the Debtor to make a reasoned decision as to the assumption or rejection of the Leases prior to the current deadline. The Debtor does not want to inadvertently forfeit any Lease as a result of the "deemed rejected" provision of Section 365(d)(4) of the Bankruptcy Code. Mr. Ratner assures the Court that granting the Debtor a 90-day extension will not prejudice the Lessors because: (a) the Debtor is current on its postpetition rent obligations under the Leases; (b) the Debtor has the financial wherewithal and intent to continue to timely perform all of its postpetition obligations under the Leases as required by Section 365(d)(3) of the Bankruptcy Code; and (c) in all instances, individual Lessors may ask, for cause shown, that the Court fix an earlier date by which the Debtor must assume or reject a Lease. (SK Global Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 609/392-0900) SOLECTRON: Affirms Q4 Results to Reflect Discontinued Operations ---------------------------------------------------------------- Solectron Corporation (NYSE:SLR), a leading provider of electronics manufacturing and supply-chain services, said its fiscal fourth-quarter results will include discontinued operations. On previous earnings conference calls, Solectron said it intends to divest certain operations that are not central to the company's future strategy. In the fourth quarter, several of these operations met the criteria required by Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to be reported as discontinued operations. As a result, each line item within Solectron's GAAP financial statements will exclude amounts related to discontinued operations and the company will report these amounts as "discontinued operations" for all periods presented. This presentation ensures that each line item within the company's statements of operations reflects amounts related only to the company's continuing operations and those operations for which the company has not yet met the SFAS No. 144 criteria for discontinued operations. The company also affirmed its guidance, which includes discontinued operations, for fourth-quarter sales of $2.6 billion to $3 billion and a pro forma loss per share of 6 to 2 cents. Solectron will report earnings after the close of market Sept. 25. Management will host a Webcast to discuss fourth-quarter and year-end results at 2 p.m. PDT/5 p.m. EDT. The Webcast will be accessible at http://www.solectron.com/investor. Solectron (Fitch, BB- Corporate Credit Rating, Negative) -- http://www.solectron.comprovides a full range of global manufacturing and supply-chain management services to the world's premier high-tech electronics companies. Solectron's offerings include new-product design and introduction services, materials management, high-tech product manufacturing, and product warranty and end-of-life support. The company is based in Milpitas, Calif., and had sales of $12.3 billion in fiscal 2002. SOUTH STREET CBO: S&P Takes Rating Actions on 1999-1 Notes ---------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings on the class A-1LB, A-1, A-2L, and A-2 notes issued by South Street CBO 1999-1 Ltd., a high-yield arbitrage CBO transaction managed by Colonial Asset Management, on CreditWatch with negative implications. At the same time, the rating on the class A-1LA notes is affirmed. The ratings on classes A-1LB, A-1, A-2L, and A-2 were previously lowered April 30, 2003. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the notes since the ratings were lowered April 30, 2003. These factors include continuing par erosion of the collateral pool securing the rated notes and a negative migration in the credit quality of the performing assets within the pool. According to the most recent monthly trustee report (Aug. 18, 2003), the deal holds $52.61 million worth of securities that are in default, $6.97 million of which have defaulted since the last rating action. Standard & Poor's noted that as a result of asset defaults, the overcollateralization ratio for the class A notes has suffered since the previous rating action. As of the August trustee report, the class A overcollateralization ratio was at 77.99%, versus the minimum required ratio of 115.00%, and compared to a ratio of 81.13% at the time of the April rating action. The transaction is also failing the interest coverage test. According to the most recent report, the interest coverage ratio was at 101.50%, down from a ratio of 116.35 at the time of the last rating action, and compared to a minimum required ratio of 130%. In addition, the transaction is failing two of the required rating tests. The performing portfolio currently holds 48.50% of collateral with ratings of 'B' and above, compared to the required minimum of 75.00%. Also, the performing portfolio currently holds 67.45% of collateral rated 'B-' and above, compared to the required minimum of 95.00%. Standard & Poor's will be reviewing the results of current cash flow runs generated for South Street CBO 1999-1 Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing, and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared to the projected default performance of the performing assets in the collateral pool to determine whether the ratings currently assigned to the notes are consistent with the credit enhancement available. RATINGS PLACED ON CREDITWATCH NEGATIVE South Street CBO 1999-1 Ltd. Rating Current Class To From Balance ($ mil.) A-1LB BBB/Watch Neg BBB 10.00 A-1 BBB/Watch Neg BBB 55.0 A-2L CCC-/Watch Neg CCC- 24.0 A-2 CCC-/Watch Neg CCC- 36.0 RATING AFFIRMED South Street CBO 1999-1 Ltd. Balance ($ mil.) Class Rating Orig. Current A-1LA AAA 85.000 38.310 OTHER OUTSTANDING RATING South Street CBO 1999-1 Ltd. Balance ($ mil.) Class Rating Orig. Current A-3 CC 45.50 45.50 TENFOLD CORP: Automates CardioTrac Data Quality Management ---------------------------------------------------------- TenFold(R) Corporation (OTC Bulletin Board: TENF), provider of the Universal Application(TM) platform for building and implementing enterprise applications, is releasing a powerful new feature that automates record quality maintenance for the Universal Application-powered CardioTrac(TM) application. CardioTrac, a Universal Application-powered cardiac patient tracking and reporting application, maintains cardiac procedure outcomes data. The new automated record quality tool allows administrators to automatically and flexibly manage data cleansing to insure high data quality. This new tool will significantly reduce the effort administrators otherwise have to expend to manually cleanse third-party data. It will also improve batch processing performance and end-user response time. "We are pleased to be able to add this great new feature to CardioTrac," said Elton Orme, TenFold's Manager of Support Services. "System Administrators will use this tool to remove invalid data created by and dumped into CardioTrac by third-party systems. These System Administrators will now be able to automatically remove such unwanted data based on criteria they specifically identify." "Because CardioTrac is powered by TenFold's Universal Application platform, we were able to quickly introduce this powerful feature into CardioTrac in response to our customer's request for data cleansing automation," said Robert Jacobs, Ph.D., Director of TenFold Support Services. "Using the Universal Application has enabled us to translate our customer's manual process quickly into application functionality, which gives them Speed, Quality and Power that no other technology could deliver. With the Universal Application, this feature can be built and tested in less than two days," added Dr. Jacobs. CardioTrac is in use today at over twenty hospitals throughout the United States and is available on over twenty-five hardware and software platforms. TenFold (OTC Bulletin Board: TENF) -- whose June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $12 million -- licenses its breakthrough, patented technology for applications development, the Universal Application platform, to organizations that face the daunting task of replacing legacy applications or building new applications systems. Unlike traditional approaches, where business and technology requirements create difficult IT bottlenecks, Universal Application technology lets a small, primarily non-technical, business team design, build, deploy, maintain, and upgrade new or replacement applications with extraordinary speed and limited demand on scarce IT resources. For more information, visit http://www.10fold.com TOYS 'R' US: $400 Million Notes Issue Gets Speculative Rating ------------------------------------------------------------- Fitch Ratings has assigned a 'BB+' rating to Toys 'R' Us' $400 million issue of 7.375% notes due 2018. The proceeds from the financing, together with existing cash balances, will be used to repay two debt issues totaling $800 million that mature in January and February of 2004. The Rating Outlook is Stable. The rating reflects TOY's soft operations, which will continue to be impacted by the weak retail environment and competitive pressures from Wal-Mart and Target. Offsetting these factors are TOY's improved free cash flow and solid liquidity. The Stable Outlook reflects TOY's more conservative financial posture, and the expectation that there will be no further deterioration in the company's credit measures. TOY's comparable store sales in its U.S. toy stores declined 2.4% in the second quarter of 2003, following a 1.5% decline in the first quarter. Of its other businesses, TOY's international toy stores and Babies 'R' Us have performed well, while its Kids 'R' Us chain continues to struggle. The EBITDA margin was 7.0% in the twelve months ended Aug. 2, 2003, flat with full-year 2002. TOY has taken a number of positive steps, including remodeling its U.S. toy stores, adding exclusive merchandise and enhancing customer service levels, though the impact of these efforts has been muted by the weak retail environment. Soft operations have exerted pressure on TOY's bondholder protection measures. Financial leverage remains high, with adjusted debt/EBITDAR of 4.7 times in the twelve months ended Aug. 2, 2003 compared with 4.4x in 2002. The increase in leverage is temporary and reflects the pre-funding of upcoming debt maturities. EBITDAR/interest plus rents of 2.7x in the latest twelve months was flat compared with 2002. These measures are expected to show gradual improvement over the next couple of years. TOY has built a solid liquidity position, with $925 million of cash on hand as of mid-year 2003. This cash, plus proceeds from the new issuance and availability on TOY's $685 million long-term bank facility should be more than adequate to finance substantial seasonal working capital needs and near-term debt maturities. Going forward, TOY is expected to use its free cash flow for debt reduction as share repurchase activity remains on hold. TYCO INT'L: Will Pay Regular Quarterly Dividend on Nov. 1, 2003 --------------------------------------------------------------- The Board of Directors of Tyco International Ltd. (NYSE-TYC, LSE- TYI, BSX-TYC) has declared a regular quarterly cash dividend of one and one quarter cents per common share. The dividend is payable on November 1, 2003 to shareholders of record on October 1, 2003. Tyco International Ltd. is a diversified manufacturing and service company. Tyco is the world's largest manufacturer and servicer of electrical and electronic components; the world's largest designer, manufacturer, installer and servicer of undersea telecommunications systems; the world's largest manufacturer, installer and provider of fire protection systems and electronic security services; and the world's largest manufacturer of specialty valves. Tyco also holds strong leadership positions in disposable medical products, plastics and adhesives. Tyco operates in more than 100 countries and had fiscal 2002 revenues from continuing operations of approximately $36 billion. * * * As previously reported, Fitch Ratings affirmed its ratings on the senior unsecured debt and commercial paper of Tyco International Ltd., as well as the unconditionally guaranteed debt of its wholly owned direct subsidiary Tyco International Group S. A., at 'BB'/'B', respectively. The Rating Outlook has been changed to Stable from Negative. The ratings affect approximately $21 billion of debt securities. The change to Outlook Stable reflects Tyco's progress with respect to reestablishing access to capital, addressing its liability structure, implementing steps to improve operating performance, and demonstrating cash generation despite a difficult economic environment in a number of key end-markets. The impact of fundamental favorable changes in Tyco's financial policies and profile since late fiscal 2002 is constrained by economic weakness in its markets, potential legal liabilities related to shareholder lawsuits and SEC investigations, and the possibility, although reduced, of further accounting charges and adjustments. The ratings could improve over time as Tyco demonstrates more consistent results and that it has put behind it the accounting concerns that have obscured the transparency of its financial reporting in the past. UNITED AIRLINES: Unsecured Committee Hires Wolff as ATSB Counsel ---------------------------------------------------------------- The Official Committee of Unsecured Creditors in the Chapter 11 cases of United Airlines Inc. and its debtor-affiliates seeks the Court's authority to retain Wolff & Associates, LLP of Indianapolis, as its advisor in matters pending before the Air Transportation Stabilization Board. Dana J. Lockhart of Airbus North America Holdings, Committee Chairman, informs the Court that Kenneth K. Wolff is the managing partner, controlling interest holder and sole employee of Wolff. Mr. Wolff has extensive experience in the airline and finance industries. Mr. Wolff was employed by ATA Holdings Corp., the parent corporation of ATA Airlines, for approximately 13 years. Between 1990 and 2003, Mr. Wolff was responsible for arranging financing for the rapid growth of ATA Holdings Corp. from 2,000 to 7,500 employees, from $280,000,000 to $1,300,000,000 in revenues and from 19 airplanes to 82 airplanes. Mr. Wolff was directly involved with ATA as the second airline to complete a government guaranteed loan package in 2002. Mr. Wolff will be paid $350 per hour. He may hire independent contractors at rates not to exceed $300 per hour on an as-needed basis. Mr. Wolff will be reimbursed for all expenses incurred in connection with these services. Mr. Wolff assures Judge Wedoff that he does not have an interest materially adverse to the Committee, the Debtors, their creditors or other parties-in-interest in these cases. As the Committee's advisor, Mr. Wolff is expected to: a) assist the Committee in matters related to United's submission of an application to the ATSB; b) communicate with the Committee's legal counsel; c) assist the Committee with documentation for the ATSB; d) participate in hearings before the Bankruptcy Court on ATSB- related matters; e) participate in Committee meetings; and f) provide other services as mutually agreed by Wolff and the Committee. (United Airlines Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) U.S. STEEL: Realigns Corporate Administrative Functions ------------------------------------------------------- United States Steel Corporation (NYSE: X) is realigning its corporate administrative functions to include the creation of a business services organization. The new group, which includes a significant portion of the company's administrative personnel, will be responsible for routine activities previously spread across multiple organizations, as well as the development and management of the company's systems and information technology. The business services organization will be under the direction of Eugene P. Trudell, who has been named vice president-business services, effective October 1, reporting to U. S. Steel President and Chief Operating Officer John P. Surma. U. S. Steel Chairman and CEO Thomas J. Usher said of this announcement, "We have been aggressive in pursuing our cost- reduction objectives, and this administrative realignment is a critical step in the process. In Gene's capable hands, the new business services organization will quickly move us closer to our goals." Surma added, "The most important feature of the business services organization will be a shared-services model for administrative activities with a strong focus on performance, accountability and continuous improvement. This new structure is expected to simultaneously reduce costs, enable future growth and provide administrative flexibility. Gene's demonstrated ability to cost- effectively deliver high quality services across many components of our business makes him the perfect choice to fill this challenging position." Trudell, 55, began his career with U. S. Steel in 1970 as an order detailer in commercial order entry at the company's headquarters in Pittsburgh. In 1977, he moved to marketing administrative services as a systems designer, and progressed through a number of increasingly responsible positions in tubular marketing and business planning. In 1984, he was named supervisor of the commercial systems department. He was promoted to department manager of U. S. Steel quality systems in 1987. In 1989, Trudell was transferred to Mon Valley Works, near Pittsburgh, where he was named manager-business systems. He served in that capacity until 1993, with Clairton Works and the Fairless Plant added to his area of responsibility in 1990 and 1991, respectively. His responsibility for these three facilities was expanded in 1993 to include process control, when he was named manager-systems and process control. He returned to headquarters in 1996 when he was promoted to general manager-computer services, a position he held until 2002, when he was named managing director - information technology services. Trudell earned a bachelor's degree in education from Duquesne University in Pittsburgh in 1970. He is a former president and current member of the Steel Industry Systems Association, an organization that provides a forum for systems professionals to gather and discuss the implementation of systems within the steel industry. For more information about U. S. Steel visit http://www.ussteel.com * * * As reported in Troubled Company Reporter's May 9, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on integrated steel producer United States Steel Corp. to 'BB-' from 'BB' based on concerns about the firm's increased financial risk. Standard & Poor's removed its ratings on Pittsburgh, Pennsylvania- based United States Steel from CreditWatch, where they were placed with negative implications on Jan. 9, 2003. The current outlook is negative. The company had about $1.7 billion in lease-adjusted debt at March 31, 2003. At the same time, Standard & Poor's assigned its 'BB-' rating to United States Steel Corp.'s $350 million senior notes due 2010. VIDEO CITY: Fails to Beat Form 10-QSB Filing Deadline ----------------------------------------------------- Video City, Inc., has not been able to compile the requisite financial data and other information necessary to enable it to have sufficient time to complete the Company's Quarterly Report on Form 10-QSB for the quarter ended July 31, 2003, due to a shortage of personnel and other resources. Per FAS 144 the operations for the three months and six months ended July 31, 2002 will be shown as discontinued operations in the earnings statement, due to the sale and anticipated sale of substantially all of the Company's assets. The Company had revenues of $4.0 million and $7.9 million, respectively, for the three-months and six-months periods ended July 31, 2002. The Company's revenue for the three-months and six-months periods ended July 31, 2003 are $1.6 million and $3.4 million, respectively. The Company divested 26 stores between the periods beginning November 6, 2002 and ending July 31, 2003. At April 30, 2003, the company's working capital deficit is disclosed at about $3 million while net capital deficit tops $1.4 million. WCI STEEL: Receives Court Approval of First Day Motions ------------------------------------------------------- U.S. Bankruptcy Judge William T. Bodoh has approved first day motions presented by WCI Steel, Inc., including orders allowing the company to continue to pay salaries, wages and benefits to its employees and to honor pre-petition obligations to its employees. The court also approved on an interim basis a $100 million debtor- in- possession credit facility from Congress Financial Corporation, Bank of America, N.A. and other lenders under its existing $100 million working capital facility (which includes a $15 million junior participation by The Renco Group, Inc., WCI's ultimate parent). This facility is expected to provide WCI with the liquidity necessary to meet its obligations to its suppliers, customers and employees during the Chapter 11 reorganization process. The company is also seeking approval of a $10 million subordinated secured financing facility from Renco. It is expected that a hearing on this supplemental financing will occur at the time of the final hearing on the $100 million facility. Commenting on these orders, Edward R. Caine, president and chief executive officer of WCI, said, "We are moving forward, under Chapter 11 protection, to complete our restructuring plan and make WCI a strong competitor once again. Our first day orders assure that employee compensation continues without interruption and that WCI will maintain normal operations during this process." On Sept. 16, 2003, WCI filed a voluntary petition for protection under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Northern District of Ohio, Eastern Division in Youngstown. WCI is an integrated steelmaker producing more than 185 grades of custom and commodity flat-rolled steel at its Warren, Ohio facility. WCI products are used by steel service centers, convertors, electrical equipment manufacturers and the automotive and construction markets. The company has approximately 1,800 employees. WESTERN WIRELESS: Agrees to Acquire HickoryTech Wireless Assets --------------------------------------------------------------- Western Wireless Corporation (Nasdaq:WWCA), a leading provider of wireless communications services to rural America, has signed a definitive agreement to acquire the wireless assets of HickoryTech Corporation (Nasdaq:HTCO) for $25 million, subject to working capital and construction in progress adjustments to be determined at closing. The purchase price will be paid in the form of approximately 1 million shares of HickoryTech common stock currently owned by Western Wireless and $12.8 million in cash. The licenses to be acquired include the Minnesota 10 Rural Service Area and the Minneapolis/St. Paul Metro A-2 cellular licenses, as well as the Mankato-Fairmont and Rochester-Austin-Albert Lea Basic Trading Area PCS licenses. "We are very excited about this opportunity to expand our business in Minnesota," said Mikal Thomsen, President of Western Wireless. "We look forward to bringing the quality service that our customers expect to Mankato, Rochester and surrounding communities." Licensed population in the cellular markets is approximately 425,000. Licensed population in the PCS markets is approximately 500,000. Service is currently marketed predominately within the cellular markets. Western Wireless will acquire about 25,000 subscribers upon completion of the transaction. The transaction is expected to close during the fourth quarter of 2003 subject to Federal Communications Commission and other required approvals. Western Wireless Corporation, located in Bellevue, Washington, was formed in 1994 through the merger of previously unrelated rural wireless companies. Following the merger, Western Wireless continued to invest in rural cellular licenses, acquired six PCS licenses in the original auction of PCS spectrum in 1995 through its VoiceStream subsidiary, and made its first international investment in 1996. Western Wireless went public later in 1996 and completed the spin-off of VoiceStream in 1999. Western Wireless now serves over 1.2 million subscribers in 19 western states under the Cellular One(R) and Western Wireless(R) brand names. Through its subsidiaries and operating joint ventures, Western Wireless is licensed to offer service in eight foreign countries. The Company's restated March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $508 million, while its restated June 30, 2003 balance sheet shows a total shareholders' equity deficit of about $465 million. WILLIAMS: Allegheny Pays Initial $100MM for Contract Termination ---------------------------------------------------------------- Williams (NYSE: WMB) has received an initial payment of $100 million cash associated with the expected termination of its long- term contract to supply up to 1,000 megawatts of power to a subsidiary of Allegheny Energy Inc. (NYSE: AYE). The termination agreement between Allegheny and Williams was announced on Aug. 1. The termination agreement provides that payment and associated supply rights and obligations under the contract are suspended upon receipt of the initial $100 million payment plus any outstanding amounts owed under the supply contract. Approximately $6 million in additional cash was received related to these outstanding amounts. Although it has the right to make the termination effective earlier, Williams anticipates it will terminate the supply contract upon its receipt of the final $28 million of the termination payment, which is due in installments of $14 million within six and twelve months from the initial payment date. Williams expects to immediately begin marketing the power previously obligated under the contract. Williams (S&P, B+ Long-Term Corporate Credit Rating, Negative), through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com WORLDCOM INC: Obtains Approval to Employ Deloitte as Consultant --------------------------------------------------------------- The Worldcom Debtors sought and obtained the Court's authority to employ Deloitte & Touche LLP as consultants, nunc pro tunc to July 15, 2003. Robert Blakely, WorldCom Chief Financial Officer, relates that the Debtors selected Deloitte as their consultants because of its diverse experience and extensive knowledge, including, without limitation, in the fields of consulting, accounting and systems controls. Deloitte is one of the Big Four accounting firms, and has the necessary depth and range of skills to assist the Debtors in these Chapter 11 cases. Deloitte will assist the Debtors: (i) in gathering documents and information identified by the Debtors in connection with the completion of their financial reporting processes; (ii) in documenting and remediating the Debtors' financial and related internal control processes; and (iii) regarding issues specific to companies in bankruptcy, including, without limitation, the requirements of SOP 90-7 -- Financial Reporting by Entities in Reorganization Under the Bankruptcy Code. In connection with these Projects, Deloitte is also prepared to provide other assistance as the Debtors may request. The specific procedures that Deloitte will perform in connection with the Projects will include assisting the Debtors: * in establishing a project management office at the Debtors' premises; * in conducting interviews with the Debtors' finance, accounting, systems and operating personnel regarding the information and the status of the Projects; * in their review of schedules, timetables and work plans prepared, as well as assistance with the preparation of updated project plans, task lists and timelines; * in accumulating and analyzing their financial, systems, control and operational information and other relevant data in connection with the completion of their financial reporting process; * in documenting their financial and related control processes and functions and helping the Debtors in preparing remediation actions that the Debtors may deem necessary; and * with other project management and facilitation activities. According to Mr. Blakely, Deloitte will be compensated based on the hours actually expended by each professional at 75% of each professional's then current regular hourly billing rate. The range of Deloitte's hourly billing rates by classification of personnel for the engagement before any applicable discount are: Partner/Principal/Director $550 - 750 Senior Manager 500 - 590 Manager 400 - 520 Senior Accountants/Senior Consultants 250 - 400 Staff Accountants/Consultants 150 - 275 Paraprofessionals 75 - 120 Mr. Blakely states that Deloitte has not received an advance payment retainer for services to be rendered to the Debtors. Deloitte is not a prepetition creditor of the Debtors. Anthony Kern, a principal at Deloitte, attests that the firm is a "disinterested person" as that term is defined in Section 101(14) of the Bankruptcy Code. Mr. Kern, however, discloses that Deloitte has provided unrelated services to certain parties-in- interest in the Debtors' cases. Deloitte assisted MatlinPatterson Global Advisors LLC and Silver Lake Partners in the acquisition of certain of the Debtors' debt. Deloitte is a defendant in a number of lawsuits filed by Adelphia Communications Corporation. Deloitte provided privileged, non- testifying litigation support services to certain defendants in actions brought by purchasers of WorldCom and MCI debt securities. Certain WorldCom lenders have provided financing to Deloitte. Deloitte also purchases communication services from the Debtors. Deloitte Consulting LP, an affiliate, provided ordinary course services to the Debtors on four projects that were completed in May 2003. Nevertheless, Mr. Kern ascertains that Deloitte does not hold or represent an interest adverse to the Debtors' estates that would impair its ability to objectively perform professional services for the Debtors. Mr. Kern also notes that Deloitte has established an ethical wall and confidentiality safeguards among the engagement teams providing litigation support services and financial analysis to creditors and the WorldCom engagement team. (Worldcom Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900) ZI CORPORATION: Provides Update on Company Ownership ---------------------------------------------------- Zi Corporation (Nasdaq: ZICA) (TSX: ZIC), a leading provider of intelligent interface solutions, issued an update of the information it has recently received concerning the number of shares of the Company's stock held in one or more funds formerly managed by Lancer Management Group LLC and related parties. Through various court proceedings, certain of the Lancer funds and management companies are in receivership or creditor protection. The court appointed receiver (and party in control with respect to the fund under creditor protection; collectively referred to herein as the Receiver) filed an initial report on September 8 in the U.S. District Court in Florida, noting, among other things, that numerous substantial investment position discrepancies have been identified in many of the funds' holdings and the Receiver therefore remains uncertain of the funds' ownership interest in many of those portfolio companies, which uncertainty the Company understands may include Zi. The initial report also discloses that the Receiver may apply to the court for abatement of its obligation to make regulatory filings with the U.S. Securities and Exchange Commission or other appropriate agencies. The Company is treating the Receiver as the authoritative source for information and believes it has the best access to information that may become available so that it, as the representative of a Zi shareholder, can make definitive disclosure regarding its shareholdings in the Company. As of September 17, 2003 the Receiver was unable to provide the Company with information pertaining to the holdings of the funds. The Company has offered assistance to the Receiver including the provision of copies of its shareholder records. At this time, the Company's information regarding its shareholders includes: on December 31, 2002 there were 225 registered shareholders which the Company's transfer agent has advised represents 13,000 beneficial owners of stock. As the Company reported in its Form 20F at December 31, 2002, there were 187 registered shareholders in the United States representing 24.8 million shares, or approximately 65 percent of the total number of shares outstanding. The remaining 38 registered shareholders at December 31, 2002 are elsewhere, primarily in Canada. In each of Canada and the United States one registered shareholder dominates the registered shareholder list. In Canada, CDS & Co. is the registered holder of 94 percent of the Canadian shares and, in the United States, Cede & Co. is the registered holder of 97 percent of the United States shares. CDS and Cede provide securities post-trade clearance, settlement, risk management and safekeeping services for securities holders. CDS and Cede report 155 accounts, which is reflective of the number of securities dealers holding positions in the Company on behalf of their individual clients. Zi Corporation -- http://www.zicorp.com-- is a technology company that delivers intelligent interface solutions to enhance the user experience of wireless and consumer technologies. The company's intelligent predictive text interfaces, eZiTap(TM) and eZiText, allow users to personalize the device and simplify text entry providing consumers with easy interaction for short messaging, e-mail, e-commerce, Web browsing and similar applications in almost any written language. eZiNet(TM), Zi's new client/network based data indexing and retrieval solution, increases the usability for data-centric devices by reducing the number of key strokes required to access multiple types of data resident on a device, a network or both. Zi supports its strategic partners and customers from offices in Asia, Europe and North America. A publicly traded company, Zi Corporation is listed on the Nasdaq National Market (ZICA) and the Toronto Stock Exchange (ZIC). At March 31, 2003, Zi Corporation's balance sheet disclosed a working capital deficit of about $2 million. * President Urged to Maintain Steel Safeguard for Full 3 Years -------------------------------------------------------------- 98 Members of Congress from 31 states sent a letter to President Bush urging the Administration to uphold its commitment to the Section 201 steel tariffs that were imposed on March 5, 2002 by keeping them in place for the full, intended three-year term. The letter, initiated by Steel Caucus Chairman Phil English (R-PA) and Vice-Chairman Pete Visclosky (D-IN), was sent to the President in anticipation of the September 19 release of the International Trade Commission's (ITC) Midterm Review Report on the President's Steel Program. The Members of Congress wrote, "America's steel industry and its steelworkers have accomplished a dramatic restructuring in a remarkably short period of time, but that recovery is only in its infancy. It is essential that the 201 relief remain in place for the full term, not only for the industry and its workers to continue the consolidation process they have begun, but for the problems of excess capacity and government subsidies you are addressing through multilateral negotiations to be resolved." The bipartisan group of Congressmen also applauded the President's decision to appeal a negative ruling on the tariffs from the World Trade Organization (WTO). In addition, 22 U.S. Senators and 46 U.S. Representatives voiced their support for the Steel Program during the ITC's 332 and 204 hearings earlier this summer. Since 1997, 41 steel companies have entered into bankruptcy as the result of a surge in imports, and 56,000 jobs were lost. The President's Steel 201 Program has allowed the industry to restructure and consolidate at a historic level, including an investment of over $3.6 billion in consolidation, reinventing labor relations and restructuring management costs. A signed copy of the letter is available by contacting David Stewart in Congressman Phil English's office at 202.225.5406 or Ben Bochnowski in Congressman Peter Visclosky's office at 202.225.2461. The text of the letter follows: The Honorable George W. Bush The White House 1600 Pennsylvania Avenue, NW Washington, DC 20502 Dear Mr. President: Very shortly you will have the opportunity to evaluate the report submitted to you by the U.S. International Trade Commission on the effect of the steel 201 safeguard at its mid-point. We applaud your determination to withstand the pressure being exerted on your Administration by foreign steel interests and consumers to repeal the declining tariffs prior to your consideration of the International Trade Commission's report as well as your defense of the safeguard laws, and your right to initiate them, by your swift appeal of the World Trade Organization Dispute Panel's ruling. The comprehensive steel strategy you initiated in March of 2002 has only begun to yield results. America's steel industry and its steelworkers have accomplished a dramatic restructuring in a remarkably short period of time, but that recovery is only in its infancy. It is essential that the 201 relief remain in place for the full term, not only for the industry and its workers to continue the consolidation process they have begun, but for the problems of excess capacity and government subsidies you are addressing through multilateral negotiations to be resolved. Since March of 2002, the industry has invested over $3.6 billion dollars in restructuring. The United Steelworkers of America, working with the newly formed ISG, US Steel and Wheeling-Pitt, has negotiated ground-breaking labor agreements that have facilitated the necessary yet difficult process of streamlining the workplace both on the management and worker sides. This has not come without a price. Fifty-six thousand steelworkers lost their jobs and 200,000 steelworker retirees, widows and dependents lost pension and health care benefits. The industry and its workers have, and will continue to do their part to make the necessary adjustments to import competition that you called for when granting 201 relief. This was designed to be a three-year program and additional restructuring and consolidation is underway. Steelworkers still need to be trained or retrained, capital investments and improvements have yet to be fully implemented, and the process of integrating large companies, like ISG's acquisition of Bethlehem or US Steel's acquisition of National, will take time -- time that the full three years and one day of relief envisions. It is vitally important that the protection that the 201 relief affords continue for its full term. When you announced this multilateral steel initiative in June of 2001, you said: "The U.S. steel industry has been affected by a 50-year legacy of foreign government intervention in the market and direct financial support of their steel industries. The result has been significant excess capacity, inefficient production, and a glut of steel on world markets." After a fifty-year assault, in just 18 months of relief provided by the steel safeguard, the industry has consolidated and is making additional progress toward cost reduction and efficiency, steel prices remain low and supply is plentiful. Those that urge repeal of the tariffs before its full three-year term is over have enjoyed years of profits generated by access to cheap, unfairly traded steel. Now is not the time to turn your back on those that have sacrificed and suffered to pull our domestic industry out of crisis. If Section 201 relief is cut short, or if dumped and subsidized steel imports are allowed to once again flood the U.S. market, all the efforts undertaken by the industry and its workers will be for naught. The 201 relief must stay on course for its full three-year duration to provide the domestic industry and its workers the time they need to complete their part of the bargain. Your Administration should not change at the midpoint the conditions under which the industry is restructuring nor flag in its efforts to reduce global excess capacity. Sincerely, Abercrombie, Neil, D-HI Jones, Stephanie Tubbs, D-OH Aderholt, Robert, R-AL Kanjorski, Paul, D-PA Andrews, Rob, D-NJ Kaptur, Marcy, D-OH Baca, Joe, D-CA Kilpatrick, Carolyn C., D-MI Ballance, Frank, D-NC Kleczka, Gerald, D-WI Becerra, Xavier, D-CA Kucinich, Dennis, D-OH Bell, Chris, D-TX Lampson, Nick, D-TX Berkley, Shelley, D-NV Langevin, Jim, D-RI Berry, Marion, D-AR Lantos, Tom, D-CA Bilirakis, Michael, R-FL LaTourette, Steve, R-OH Bishop, Rob, R-UT Levin, Sander, D-MI Bishop, Sanford, D-GA Lewis, John, R-GA Boehlert, Sherwood, R-NY Lucas, Ken, D-NY Bonner, Jo, R-AL Matheson, Jim, D-UT Brady, Robert, D-PA McGovern, James, D-MA Brown, Corrine, D-FL McNulty, Michael, D-NY Brown, Henry, R-SC Michaud, Mike, D-ME Brown, Sherrod, D-OH Millender-McDonald, Juanita, D-CA Capito, Shelley Moore, R-WV Miller, George, D-CA Cardin, Ben, D-MD Mollohan, Alan, D-WV Cardoza, Dennis, D-CA Murphy, Tim, R-PA Carson, Brad, D-OK Murtha, John, D-PA Carson, Julia, D-IN Myrick, Sue, R-NC Conyers, John Jr., D-MI Ney, Bob, R-OH Costello, Jerry, D-IL Oberstar, Jim, D-MN Cramer, Bud, D-AL Pallone, Frank, D-NJ Cummings, Elijah, D-MD Pastor, Ed, D-AZ Davis, Artur, D-AL Payne, Donald, D-NJ Delahunt, William, D-MA Pickering, Charles, R-MS DeLauro, Rosa, D-CT Pomeroy, Earl, D-ND Dingell, John, D-MI Quinn, Jack, R-NY Doyle, Mike, D-PA Regula, Ralph, R-OH English, Phil, R-PA Ross, Mike, D-AR Evans, Lane, D-IL Ruppersberger, Dutch, D-MD Fattah, Chaka, D-PA Ryan, Tim, D-OH Filner, Bob, D-CA Sandlin, Max, D-TX Gephardt, Dick, D-MO Schakowsky, Jan, D-IL Gerlach, Jim, R-PA Shimkus, John, R-IL Green, Gene, D-TX Skelton, Ike, D-MO Greenwood, James, R-PA Spratt, John, D-SC Grijalva, Raul, D-AZ Strickland, Ted, D-OH Gutierrez, Luis, D-IL Stupak, Bart, D-MI Hall, Ralph, D-TX Towns, Edolphus, D-NY Hart, Melissa, R-PA Turner, Jim, D-TX Hinchey, Maurice, D-NY Visclosky, Pete, D-IN Hoeffel, Joseph, D-PA Walsh, Jim, R-NY Holden, Tim, D-PA Weldon, Curt, R-PA Houghton, Amo, R-NY Wilson, Joe, R-SC Israel, Steve, D-NY Wynn, Albert, D-MD * BOND PRICING: For the week of September 22 - 26, 2003 ------------------------------------------------------- Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 9.875% 03/01/07 68 Adelphia Communications 10.875% 10/01/10 68 American & Foreign Power 5.000% 03/01/30 66 AMR Corp. 9.000% 09/15/16 72 Aurora Foods 9.875% 02/15/07 57 Burlington Northern 3.200% 01/01/45 55 Calpine Corp. 7.875% 04/01/08 69 Calpine Corp. 8.500% 02/15/11 69 Calpine Corp. 8.625% 08/15/10 70 Calpine Corp. 8.750% 07/15/07 74 Century Communications 8.875% 01/15/07 69 Cincinnati Bell Telephone 6.300% 12/01/28 74 Coastal Corp. 6.950% 06/01/28 70 Coastal Corp. 7.420% 02/15/37 73 Comcast Corp. 2.000% 10/15/29 33 Continental Airlines 7.033% 06/15/11 74 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 34 Crown Cork & Seal 7.500% 12/15/96 73 Cummins Engine 5.650% 03/01/98 67 Dan River Inc. 12.750% 04/15/09 68k Delta Air Lines 7.900% 12/15/09 75 Delta Air Lines 8.300% 12/15/29 65 Delta Air Lines 9.000% 05/15/16 68 Elwood Energy 8.159% 07/05/26 70 Enron Corp. 7.875% 06/15/03 19 Fibermark Inc. 10.750% 04/15/11 65 Finova Group 7.500% 11/15/09 51 Gulf Mobile Ohio 5.000% 12/01/56 63 IMC Global Inc. 7.300% 01/15/28 73 Internet Capital 5.500% 12/21/04 63 Level 3 Communications Inc. 6.000% 09/15/09 62 Level 3 Communications Inc. 6.000% 03/15/10 61 Liberty Media 3.500% 01/15/31 73 Liberty Media 3.750% 02/15/30 61 Liberty Media 4.000% 11/15/29 65 Loral Cyberstar 10.000% 07/15/06 60 Lucent Technologies 6.450% 03/15/29 69 Lucent Technologies 6.500% 01/15/28 69 Mirant Corp. 2.500% 06/15/21 48 Mirant Corp. 5.750% 07/15/07 48 Missouri Pacific Railroad 4.750% 01/01/30 71 Missouri Pacific Railroad 5.000% 01/01/45 63 Northern Pacific Railway 3.000% 01/01/47 52 Northwest Airlines 7.875% 03/15/08 74 NTL Communications Corp. 7.000% 12/15/08 19 Revlon Consumer Products 8.625% 02/01/08 53 Universal Health Services 0.426% 06/23/20 65 US Timberlands 9.625% 11/15/07 56 Viropharma Inc. 6.000% 03/01/07 51 Worldcom Inc. 6.250% 08/15/03 33 Worldcom Inc. 6.400% 08/15/05 33 Worldcom Inc. 6.950% 08/15/28 33 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 ***